£500 at a single time might not sound like a whole lot to start building my investment portfolio with, but over time it amounts to a lot. In a single year, just by saving £500 a month, I have an amount of £6,000 to invest. And if I start buying stocks every single month, then chances are that I could end up with an even higher amount by the end of the year.
Long-term growth stocks
The next question though, is this: how should I ensure the best returns on my investment portfolio? People can have varied investing goals, but if I did not have a clear objective to start with, I would just stash away £500 every single month and buy long-term growth stocks with it. The good news is that the UK’s markets offer plenty of choices to buy such shares. Many FTSE 100 companies, for instance, have given investors great returns over time. And they could continue to do so.
Building my investment portfolio for growth
Since I tend to have a top-down approach to investing, I would first consider the sectors most likely to do well. As an example, one that I think has a great long-term future is e-commerce. And FTSE 100 constituents alone offer much choice across this segments. There are retailers selling online, packaging providers, warehousers and even delivery services providers.
Another long-term set of stocks for me to consider are green energy shares. FTSE 100 utilities that focus on harnessing renewable energy are among these. In fact, I am also looking carefully at the now oil biggies’ pivot towards clean energy sources. Also, miners that are transitioning from fossil fuels like coal and producing metals that will be in demand as electric vehicles replace cars run on petrol at present.
Dividend stocks to consider
I would consider stocks that could pay lucrative dividends in the very long-term too. These would help me build up a retirement income, and who knows, might even help me retire earlier than I had planned! To this extent, I would consider buying stocks that consistently paid dividends over the years and have displayed financial health over time as well.
Some of the best dividend stocks to hold over time are not always the ones that have the biggest yields, but are also the ones that have grown their dividends the most over time. Of course, at any point in time, I do not know if the companies will continue to pay dividends in the future as well. But it is a good place to start!
Foolish final thoughts
I think that with a blend of long-term growth stocks as well as solid dividend-paying stocks, I could end up quite a bit ahead. Even without investing, my £500 a month becomes £30,000 over five years. And with rising stock markets and sustained dividends, my gains could be far bigger.
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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.
