After opening a Stocks and Shares ISA, it can be quite unnerving as a new investor to see all the options available. What on earth to buy first?!
Personally, I think it’s smart idea to stick to established businesses and the principle of diversification. With that in mind, here are five starter stocks that I think are worth considering for a freshly-minted ISA.
Diversification
First up is the Vanguard FTSE All-World UCITS ETF (LSE: VWRL). This low-cost exchange-traded fund (ETF) tracks the performance of the FTSE All-World Index.
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What does that mean? Well, the index is comprised of 3,654 large and mid-sized stocks in developed and emerging markets. So this ETF immediately gives a portfolio exposure to thousands of companies from around the world.
That said, there is a natural bias towards the US, where most of the world’s largest companies are listed. The top holdings are Apple, chipmaker Nvidia, Microsoft, and Amazon.
Indeed, around 65% of the portfolio is in US stocks. Therefore, if the US market was to take a tumble — due to a slowdown in AI spending, say, or Donald Trump’s proposed tariffs — then this ETF would likely underperform for a while.
Longer term, however, I think this should provide a solid foundation and drive decent returns.
Going for growth
Sticking with the diversification theme, another option is Scottish Mortgage Investment Trust (LSE: SMT). This large FTSE 100 trust is managed by professional stock-pickers who have an excellent long-term track record of beating the global index highlighted above.
Naturally, this isn’t guaranteed to continue, as the managers could start picking more duds than winners. Still, I love the look of the 94-stock portfolio today. It includes e-commerce giant MercadoLibre, which continues to outcompete Amazon (another holding) in Latin America, and Instagram owner Meta Platforms.
Two other holdings that are crushing it are Netflix and Spotify. The first continues to engage eyeballs far and wide, while the other is rapidly capturing the world’s ears.
Additionally, the trust has investments in private companies that investors cannot otherwise access, including rocket pioneer SpaceX and TikTok owner ByteDance.
Admittedly, these unlisted firms do add a bit of risk to the portfolio because they are harder to reliably value. Indeed, one holding — Swedish EV battery maker Northvolt — quickly imploded last year due to mounting debts and an EV downturn.
Nevertheless, I expect the trust to deliver strong returns over the long run.
Growth and income
The final three stocks are all FTSE 100 blue-chips that offer a blend of stability, growth, and dividends.
First is AstraZeneca, which is a global leader in oncology. In 2024, revenue spiked 21% year on year to $54.1bn on a constant currency basis, while pre-tax profits surged 38% to $8.7bn.
While late-stage drugs trials results can always disappoint investors, the company has a massive pipeline and spends a tonne on research and development to stay ahead.
The other two shares are Coca-Cola HBC — bottling partner to the US beverage giant — and financial services group Legal & General.
Both firms could suffer during a recession if customers reign in spending (on branded soft drinks and insurance, respectively). But they also have very strong competitive positions, large customer bases, and offer dividends.
In fact, Legal & General stock carries a massive 8.9% dividend yield!
