If I had £1,000 to invest in the stock market today, I would buy shares using a diversified approach.
I would also use a low-cost broker, such as Freetrade. Most online stock brokers charge a commission for every deal placed. This can range from a few pounds to £15, or more. With a lump sum of £1,000, paying a commission on every trade does not make much sense.
Indeed, if I spread my portfolio across 10 different stocks and paid £10 for each trade, I would instantly lose 10% of my money to commission costs alone. The numbers speak for themselves.
I would also look to buy shares that offer the most growth potential over the next 10 years.
Buy shares for a portfolio
Following this strategy can be challenging. Even the professionals struggle to pick winning stocks consistently. This is the reason why I would diversify my portfolio across a basket of different growth equities. Some of the most attractive growth stocks on the market at the moment, in my opinion, are technology companies.
One of the tech stocks I would buy to play this theme is IT consultancy Kainos. As the world’s digital footprint explodes, I think the demand for IT consultancy services will only increase.
Every company now has to have a digital presence, but not every corporation has the skills required to maintain this. Organisations like Kainos will be instrumental in helping these businesses move into the 21st century.
Unfortunately, the sector is highly competitive. As such, the company’s growth cannot be taken for granted. Dealing with this competition is the biggest challenge the group will face.
As well as tech, I would also add stocks in other growth sectors to my portfolio. The property industry is another growth area I want to build exposure to. I would do that with LSL Property.
This company owns a portfolio of property businesses. This ranges across estate agency to surveying and mortgage broking. It is growing through organic expansion and bolt-on acquisitions. As the UK property market continues to expand, I believe LSL’s growth will continue.
Once again, the biggest challenge the business will have to deal with is competition, as LSL is a small fish in the big real estate pond.
The most speculative stock I would buy is hydrogen start-up AFC Energy. This business could revolutionise the hydrogen market through its green technology. This firm is still in its early stage development, which is why it is so risky. There is a high chance the company could struggle to survive before commercialising its technology.
Still, I think the stock has tremendous potential to revolutionise the energy market. In my opinion, this potential more than offsets the risks associated with the business.
According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…
And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential…
It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…
But you need to get in before the crowd catches onto this ‘sleeping giant’.
- IAG stock – clear for take-off?
- 7% yields! Top dividend shares I’d buy for 2022
- Too cheap to miss? 3 penny stocks I’d buy right now
- 5 FTSE 250 shares to buy for 2022
- 3 UK dividend shares to buy yielding 6%
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Kainos. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.