How I’d invest £5k right now

Rupert Hargreaves explains how he would invest £5,000 in a basket of stocks and shares today to generate income and capital growth.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

If I had a lump sum of £5,000 to invest right now, I would deploy this capital in a combination of high-quality growth stocks and income investments. 

I think a portfolio split between these two asset classes could produce the best returns on my money. It could also put me on track to generating a passive income from my savings. 

Invest for growth

When it comes to finding growth stocks for my portfolio, I will focus on technology companies. There is no denying this is the fastest growing industry today and, as the world becomes more digitally focused, I think this trend will only continue. 

Should you invest £1,000 in Berkeley Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Berkeley Group made the list?

See the 6 stocks

As such, I would buy Softcat and Computacenter for my portfolio of growth shares. These companies provide computer services to clients to help build out their technology systems

I would buy these stocks over other technology firms because I think there will always be a need for the sort of assistance services both offer. Not every company is a specialist technology business.

However, every business does need specialist technology. Whether it be advanced cyber security systems or cloud computing software, corporations worldwide digitising their systems will need assistance. 

As two of the largest companies in the country specialising in IT services, Softcat and Computacenter seem to be well-placed to capitalise on this trend. 

The most considerable risk facing these companies is competition. The technology market is highly competitive, and both firms need to keep investing in their product to stay ahead. 

Income stocks

When it comes to income investments, I will buy Phoenix Group for my portfolio. This company manages pension policies, which it acquires from other corporations. It can then use its economies of scale to reduce costs and improve cash generation. Cash generated from the assets supports Phoenix’s dividend. The stock currently supports a dividend yield of around 7%. 

I would also acquire BAE Systems for my portfolio. With a dividend yield of around 5%, I am attracted to this company as an income investment. The group generates the majority of its sales from multi-billion pound contracts with governments around the world. These contracts can last for decades, which produces a guaranteed, predictable income stream for the group. 

Few other businesses have the same kind of revenue visibility. 

While these companies both look attractive as income investments today, I should note that dividend income is never guaranteed. Income is paid out of business profits. Therefore, if profits fall, the dividend is usually the first thing to go. That is something I will be keeping an eye on as we advance. 

Even after taking this risk into account, I would be happy to add BAE and Phoenix to my £5,000 income and growth stocks portfolio, considering the qualities outlined above. 


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Softcat. 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.

More on Investing Articles

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

Beware! Traders are betting these UK shares will fall

It's always worth keeping an eye on which UK shares are popular with short sellers. Paul Summers highlights the top…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

See how much ISA investors need to aim for to achieve a £3,000 monthly second income

Harvey Jones shows how it's possible to build a second income totalling £36,000 a year, from a portfolio of FTSE…

Read more »

Young woman holding up three fingers
Investing Articles

Just released: our 3 top income-focused stocks to consider buying in August [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

BHP shares rise on strong trading update! Is it time to buy in?

BHP shares are up thanks to a strong operational update in tough conditions. Discover why I believe they could continue…

Read more »

Chalkboard representation of risk versus reward on a pair of scales
US Stock

Why the next two weeks will be huge for the Nvidia share price

Jon Smith flags up both the upcoming earnings and headline risk regarding Chinese exports as volatility events for the Nvidia…

Read more »

UK supporters with flag
Investing Articles

These soaring UK shares are smashing the S&P 500

Mark Hartley identifies two UK shares that are giving the US market a run for its money. But are they…

Read more »

Google office headquarters
Investing Articles

Looking for stocks to buy? Here are 3 shares the pros have been snapping up

There are many different ways to identify stocks to buy. One strategy that Edward Sheldon finds very effective is to…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
Growth Shares

Has the Marks & Spencer share price lost it’s spark?

Jon Smith points out why the Marks & Spencer share price performance has been underwhelming recently, but eyes up the…

Read more »