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Most investors like the concept of compounding profit over the long term. But it can be trickier to stick to a regular monthly investment plan. In reality, the two go hand in hand. Using a Stocks and Shares ISA and adopting a sensible strategy can enable someone to speed up the process. Here’s how.
Building a strong portfolio
The benefit of using an ISA is that an investment portfolio can grow faster. Any dividends received aren’t subject to dividend tax, meaning the full amount can be enjoyed or reinvested. Further, when selling a growth stock for a profit, there’s no capital gains tax.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Of course, these advantages apply only if the portfolio is well-positioned. Therefore, the following key point is how to build a robust ISA. To do this, an investor needs to diversify their risk. This can be done in multiple ways.
Risk needs to be spread across sectors, so that means owning companies from consumer staples through to tech. It also relates to geography, owning companies with exposure not just to the UK but around the world. Finally, not just putting all the money in a handful of names, but rather a broader portfolio, can act to reduce the concentration risk associated with one or two stocks.
Show me the money
Now let’s talk about numbers. Putting away £500 a month isn’t going to work for everyone, but let’s assume this is the figure. I’m also going to assume an annual growth rate of 6% for the portfolio, which I believe is reasonable over the long term. By the end of year eight, the portfolio could be worth £62.2k.
This is just a projection based on my assumptions. A higher or lower growth rate might be achieved in practice, which could give the investor a larger or smaller pot size.
Looking for nuggets
One stock I believe fits the bill is Blackrock World Mining Trust (LSE:BRWM), up 73% over the past year. Over a broader five-year time horizon, the stock’s up 58%, exceeding the annual 6% target gain.
The investment trust buys mining and metals companies and is actively managed by BlackRock’s natural resources team. Among the current top 10 holdings are Glencore, Anglo American, and Rio Tinto.
Given the commodity rally in 2025, the trust did very well. I think the move in precious metals will continue for the coming years. Base metals like copper and nickel are becoming increasingly valuable for industrialisation globally, as well as for the transition to cleaner energy products (like EVs).
The exposure to gold is also significant. I think we’re in for another rocky year as far as geopolitics and macroeconomic uncertainty go. So owning stocks that directly benefit from rising gold prices (which people buy as a safe haven) should serve the trust well.
In terms of risks, commodity stocks are known to be volatile. The movement in the trust price in the past has also been volatile. Therefore, investors need to be aware that they could experience large swings before committing.
Yet despite this concern, I think it’s a good stock that could be considered for an ISA as part of a long-term growth strategy.
