It is now one of my best stocks to buy with 1k

I don’t think it’s a good idea for me to just invest in one stock and give it up. I would love to diversify into several stocks.

So, with £ 1k to invest now, I’ll follow two possible steps. First, I can spend money investing in a stock until I plan to invest more money later. And, that way, build a diversified portfolio of shares over time.

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Second, I can invest in one or more stock funds because they hold a lot of stock. Thus, my 1k investment will be supported by many underlying businesses. For example, I would probably choose managed funds, low cost tracker funds or investment trusts.

Achieving diversity

I now hold such investment trusts in my portfolio Smithson Investment Trust And Finsbury Growth and Income Trust. And they sit side by side with different tracker funds and individual company stocks.

My vision for investment is to have a diversified core fund and investment trust. And I try to achieve high returns by carefully selecting individual company stocks.

However, my view of diversification and careful stock selection does not guarantee a positive investment outcome. All stocks and share-supported investment vehicles carry risk. And their performance depends on factors such as the strength of the underlying business and the feelings of the investors.

Still, I try to minimize some risks and risks in order to hold on to my investment for the long haul. Although it is not always possible to change my investment thesis if something happens in the business. Sometimes it is necessary for me to sell a stock at a loss if the ‘story’ changes too much.

And some businesses are more suited to the long-term investment horizon in my view. So I want to avoid the ups and downs that come with more speculative companies and cyclical firms, such as banks, housebuilders, travel companies and others.

Instead, I focus on companies with stable customer demand and a competitive edge. And such stocks are often found in utilities, energy, IT, branded fast-moving consumer goods, pharmaceuticals, food supplies and other sectors.

Here is my best stock to buy now

For example, at the moment, I’ve got my eye on such stocks Tate and Lyle, Cranwick, Unilever, British American tobacco And SSE. But if I only have k 1k to invest and only have to pick one stock, I want to take it On the national grid, Regulated energy infrastructure agencies, including operations in the United Kingdom and the United States.

With a share price close to 909p, National Grid’s visionary dividend yielded about 5.6% from Yield Trading Year to March 2023. And Citi analysts point to a modest double-digit growth in revenue for the next two years.

I think the company has a competitive advantage in the market due to its controlled monopoly position at the center of the UK power system. But the business carries a lot of debt and future regulatory changes could affect the firm’s ability to continue to pay dividends to liberal shareholders.

Still, National Grid is one of my best stocks to buy now with £ 1k. And I will embrace the risks and focus on collecting and reinvesting dividends as part of my diversified portfolio.

5 stocks to try to create wealth after 50

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Kevin Godbold owns shares in Finsbury Growth and Income Trust and Smithson Investment Trust plc. The Motley Fool UK is recommended by British American Tobacco, Finsbury Growth and Income Trust, National Grid and Unilever. Opinions about the companies mentioned in this article may differ from those of the author and therefore our official recommendations for subscription services such as Share Advisor, Hidden Winner and Pro. Here at The Motley Fool we believe that considering different range of insights makes us a better investor.

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