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A Stocks and Shares ISA‘ s an unmissable vehicle for any investor building wealth. It allows investors to generate wealth and earn a passive income, and here’s the important bit, without being taxed on gains or earnings.
However, building the ideal portfolio within a Stocks and Shares ISA isn’t easy. So I turned to DeepSeek, the artificial intelligence (AI) lab that shocked the stock market a couple of weeks back.
DeepSeek’s R1 model’s surprisingly detailed, and upon being asked for the perfect Stocks and Shares ISA portfolio, started by highlighting different platform providers, tax efficiencies, and top performing strategies before providing me with a suggested asset breakdown.
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.
Here’s what DeepSeek ‘thinks’
While pitching Halifax as the best place to hold my investment, DeepSeek told me to invest 50% in a global ETF (exchange-traded fund), such as Vanguard US Equity (which isn’t actually global) and JP Morgan Global Growth. This is a fairly common strategy for new investors.
Next, DeepSeek told me to put another 30% into UK value shares such as Legal & General and B&M. These shares, it’s fair to say, haven’t performed overly well in recent years. Despite strong dividends, I’d be surprised to see either of these stocks take off in the coming years.
A further 15%, DeepSeek says, should go into bonds — it specifically notes UK gilts and corporate bonds. The remaining 5% should be invested in thematic funds, such as artificial intelligence (AI) or healthcare.
A world away from my own portfolio
Currently, my portfolio’s probably around 40% US stocks, 20% UK stocks, 5% bonds, and 35% cash. And while past performance is no indication of future performance, I prefer it my way. My portfolio — which includes around 25 investments — grew by around 80% over the past 12 months. My calculations suggest that the DeepSeek perfect portfolio would have grown by closer to 10%.
An alternative
Honestly, I’m not hugely keen on any of the recommendations made by DeepSeek. For diversification, I hold Scottish Mortgage Investment Trust (LSE:SMT) but I also like Berkshire Hathaway. I’m also considering companies such as Standard Chartered, Jet2 or Currys for UK value.
One of the above I think all new investors should consider is Scottish Mortgage. The trust’s shares have shown remarkable volatility in recent years. However, its long-term performance has been spectacular, with shares more than tripling in value over the last decade.
Some investors may be concerned that some of its largest holdings have rather frothy valuations, or appear expensive. But I’d suggest that growth may come from the lesser-known and smaller holdings. After all, management has a reputation for finding the next big winner before almost anyone’s heard of them.
What’s more, it’s currently trading with a 10% discount to its net asset value. In other words, the stock’s cheaper than its holdings.
