I don’t think there are many retail investors that will be finishing 2022 overjoyed at their performance. However, with December arriving next week, I’m already thinking about ideas to boost my returns for next year. Given the tax benefits I get from investing within my Stocks and Shares ISA, it makes sense to focus on the ISA as my investment base.
Keep it simple, use the ISA
In the recent Autumn Statement, fresh cuts to the dividend and capital gains allowances were made. This makes it even more important for me to make use of my ISA. In order to maximise my returns next year, I want to add as many of my new picks in my ISA.
This allows me to increase my return because when I sell a stock, or receive a dividend, I get to keep the full benefit.
Look at IPOs
There were very few interesting initial public offerings (IPOs) this year. This is largely due to weak investor confidence causing some companies to wait. I expect 2023 to see some good opportunities present themselves with new stocks.
Some examples include Stripe, TikTok and Reddit. Buying shares at the IPO can offer me some lucrative long-term returns.
Banking sector dividends
I’ve noticed that since the pandemic-induced pressure of not paying dividends from banks has eased, the dividend per share has been rising quickly. Part of this is down to the bounce back in profitability from major banks, thanks to rising interest rates.
I think this theme could continue in 2023. Therefore, to supercharge my income portfolio within my ISA, I want to consider buying some banking stocks for high dividend payouts next year.
Energy sector hotshots
It has been a year of unusually high profits for energy companies. Even though part of this is due to the situation in Ukraine, I think prices could remain elevated for a while to come.
Further, companies such as SSE are using the excess profits to push more into investment projects for years to come. This should help to future-proof these companies in areas such as renewable energy.
As a result, I might buy some stocks from this area for capital appreciation potential for next year.
Investing, not trading
The volatility thrown up in 2022 has meant I have made some mistakes in buying and selling too much. This is more akin to a trading mentality. It’s a lot harder to make good judgement calls if I’m trying to buy and sell a stock for a profit in a day.
Particularly when thinking about my ISA. It’s a vehicle I want to use for long-term ideas that can benefit me a decade or more down the line. So by holding stocks and allowing gains to compound over time, it helps me boost my overall results down the line.
Benefiting from my ISA
I don’t know what the market will throw at me next year. There are risks to all of my above ideas. For example, a hotly anticipated IPO could flop big time. Core commodity prices could plummet, or higher windfall taxes could be imposed on individual energy companies.
Yet if I spread my risk and don’t allocate too much to any one idea, I think my diversified ISA could enjoy better returns in 2023.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
