My Stocks and Shares ISA is largely empty at the moment, but not for long. I’ve just been offered a brilliant buying opportunity on a plate.
Normally, I’d be have started filling up this year’s ISA months ago, but I’ve been having too much fun populating my brand new self-invested personal pension (SIPP). That job is almost done, so now I’m switching to my ISA and I could hardly have picked a better time than today.
I love buying cheap UK shares, particularly in the middle of a stock market dip and we’ve got a big one today after December’s consumer price inflation figure came in higher than expected at 4%, smashing hopes that the Bank of England would soon cut interest rates.
Shares are cheaper today
The FTSE 100 has fallen 1.66% at I write (17 January) to a six-week low just over 7,400. January’s bumpy start has now wiped out all of December’s Santa rally. That’s fine by me, even though it has knocked the value of my existing holdings.
It doesn’t matter how much my portfolio is worth from one day to the next. Just as long as the overall trajectory is upwards. On days like today, stock market volatility works in my favour. My favourite blue-chips are now available at reduced prices and it’s a great time to buy them.
Housebuilding stocks have been hit particularly hard as interest rate cut hopes recede on today’s news.
Taylor Wimpey, one of my most successful stock picks of 2023, is 3.22% cheaper than it was yesterday. I’m scrambling around to find some cash to buy it at the reduced price, in case the dip proves shortlived.
Insurer and fund manager Legal & General Group is another favourite portfolio holding. As the FTSE falls, it has inevitably followed, having dipped 2.66% this morning. It’s another unmissable opportunity.
I’m investing for the long term
Both stocks pay generous dividends. Their yields are slightly higher today, because their share prices are lower. So by purchasing more I will be locking into a higher passive income stream. Right now Taylor Wimpey yields 6.71% and L&G yields a bumper 8.05%.
I’ve been screwing up my courage to buy volatile UK teck stock Ocado Group for months. In today’s risk-off environment, I can get it at a 3.75% discount. Commodity miner and trader Glencore, another stock I bought last year, is down 3.68% this morning. The yield has jumped to 8.34% as a result. I’m considering upping my stake.
When I started investing, I hated it when share prices fell. Now I have learned to love it and take full advantage. Naturally, there is no guarantee that my stock picks will recover, given the threats out there, including rocket attacks in the Red Sea. By purchasing in a dip, at least I reduce the downside risk if stocks fall further. I also increase my potential when share prices recover.
I’ve no idea when the next rally will arrive, but I’m buying cut-price shares for my Stocks and Shares ISA to make sure I’m ready when it does.
