In uncertain times investors can turn away from UK shares and cling to so-called ‘safe-haven’ assets like gold. But this is a surefire way to lose money, in my opinion. Instead I’m focused on the best shares to buy now.
The theory for gold goes that there is a limited supply of the precious metal. So, it will hold its value when all about it are losing theirs.
But there’s a problem with gold. Even if prices continue to rise — and they dropped 7{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} from August to late October 2020 — you are staking your financial future on an asset that produces zero yield. No yield means no compound interest.
Instead I’m picking the below as the best UK shares to buy now. And I think they will help me to boost my pension pot and get me through retirement with a healthy profit.
My best shares to buy now
£15,000 invested in the Scottish Mortgage Investment Trust (LSE:SMT) in October 2019 would be worth £30,000 in October 2020. That’s a juicy rise. Especially in the troubled, volatile times we all face.
So why do I think the SMT share price will continue its steady rise?
Part of it is fund manager James Anderson’s forward-thinking outlook. “We look to add value over five-year time frames, preferably much longer“, he says.
If we run through the trust’s biggest holdings, the largest at 12{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b}, is Tesla. Now, not everyone loves Elon Musk. But his laser-focus on the future is admirable. Better lithium-ion battery technology to power the solar, electric vehicle and net-zero revolution will be critical. And Tesla has five gargantuan Gigafactories up and running or being built. It’s this infrastructure that, to my mind, matters much more than an electric car with an ‘Insane’ acceleration mode.
The second-largest holding is Amazon. I see Amazon benefiting strongly not just from the tectonic Covid-19-induced rise in online sales. But also from its web services and cloud division, which powers a whopping number of the world’s websites. I’ve run through that argument for the Motley Fool before. Suffice it to say, I’m a fan.
Chinese e-commerce and consumer goods giants Alibaba, Tencent, and Meituan Dianping round out the list. I am pretty sure these mega brands will continue to take over the world.
When to buy
As I write, the SMT share price is trading at a 1{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} premium to its net asset value (NAV). This has been as high as 4{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} as recently as July. So I think the best UK shares to buy now are also some of the cheapest, relative to their 63.8{429fc2506e610357e12b2a5665db82631200a2e00b3a1d8839077d76f18e2e8b} share price gain over the same period.
Yes, the dividend payment from SMT is pretty tiny. But it has increased every year for the last five. And I see this trend continuing. The more that Big Tech grows, the more the fund can pay out in dividends.
A final note
SMT is like a tracker for the best shares to buy now, if only they weren’t so expensive and difficult to hold. A single Amazon share will set you back $3,252.30 alone! And you can forget about Chinese stocks and shares.
So I don’t see a downside in investing in Scottish Mortgage investment Trust. For me it’s just about finding an entry point and holding forever. And I can’t say that about many shares.
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More reading
- Forget the Lloyds share price! I’d buy these 2 FTSE 100 shares instead
- Stock market crash winners! I’d buy these 2 double-your-money investment trusts
- These have been among the top FTSE 100 shares over the last 12 months. Are they worth buying?
- Exposure to tech stocks: Scottish Mortgage Investment Trust vs Allianz Technology Trust
TomRodgers 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.
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