For me, the idea of investing in a Stocks and Shares ISA is to try and build wealth over the long term.
That can take various forms as different investors each have their own strategy. Seeing things from the perspective of a long-term investor, I think I could realistically aim to double the value of my Stocks and Shares ISA.
Here are three ways I could do that.
Invest twice as much
At the simplest level, if I want to double my ISA value I ought to invest twice as much as I currently do.
That may sound so obvious it does not need saying. But in fact, imagine I am currently putting £50 a month into a Stocks and Shares ISA. Simply doubling that to £100 each month might not sound like a big move. But it is. From a standing start, that would double the value of my ISA compared to what it otherwise would be.
If I already had funds in my ISA (as I do), doubling my regular contributions will not necessarily double the total value. It would, however, give me more money to invest. Over the long term that could make a big difference to my investment returns.
Compound dividends
Another approach would be to reinvest my dividends rather than taking them out as cash. That is known as compounding and has been the key to financial success enjoyed by many investors.
Take insurer Phoenix as an example. Its current dividend yield is 9.8%. If I bought its shares today (before they go ex-dividend next week) and then reinvested dividends each time they were paid, after eight years my Stocks and Shares ISA would already contain twice as many Phoenix shares without me having contributed another penny.
That example presumes that dividends and the Phoenix share price are constant, which in practice they may not be. But it still illustrates how compounding dividends could help me turbocharge building wealth through my Stocks and Shares ISA.
Buy into brilliant companies
I could also double my money by investing in shares that double in price.
Millions of people are trying to do the same thing at the same time, so it can be difficult.
But if I had bought Apple for my Stocks and Shares ISA five years ago, the value of my stake would have tripled. I could have done the same investing in British company Judges Scientific five years ago.
Buying into Alphabet, I could have comfortably doubled my money. The same would have been true if I had added shares of Belfast-based Kainos to my Stocks and Shares ISA five years back. In fact, its share price has almost tripled in that time.
While lots of companies do not achieve anything like such strong results, some do. Spending time today to try and find the potential winners of the coming years could hopefully help me double or even triple the worth of my ISA – if I make the right choices!
