As 2025 approaches, many of us are thinking about new financial goals and a good place to start is using a stocks and shares ISA.

ISAs are a popular investment option in the UK, allowing individuals to invest in a wide range of stocks, commodities and other assets, tax-free.

With recent changes meaning that higher capital gains tax is paid on share sales, an ISA is now more attractive than ever.

Please note that tax treatment depends on each customer’s individual circumstances and may be subject to change in the future. The content of this article is provided for informational purposes only. This is not tax advice nor does it constitute any form of tax advice. Readers are responsible for carrying out their own due diligence and obtaining professional advice before making any investment decisions.

Here is how I would go about planning my Stocks and Shares ISA for the coming year, step by step.

Personal goals

The objectives behind an investment should shape every ISA strategy. For example, am I investing with retirement in mind? Do I want to use this ISA to build wealth over the next 10-20 years? Or am I looking for medium-term goals, like buying a house?

Answering these questions will help me narrow down my choices in terms of investment style and asset allocation.

Risk tolerance

When building an investment portfolio, it is important to consider risk tolerance. Assets allowed in an ISA can range from lower risk options like bonds to higher risk commodities and stocks.

Diversified equity funds or trusts are a good compromise.

Balancing a Portfolio between high and low risk assets can provide both growth potential and stability.

Search options

The UK offers a wide range of investment options, so taking the time to do research is essential.

I would start by reviewing my existing portfolio to ensure I am not overexposed to any one sector. Next, I would consider opportunities in sectors that look promising for 2025.

For example:

• Technology and Innovation: Many technology companies continue to demonstrate robust growth and adaptability.
• Energy and Renewables: With the global push toward cleaner energy, companies involved in renewable energy and infrastructure may have long-term potential.
• Consumer Staples and Healthcare: These sectors are traditionally more stable and can provide balance in an otherwise high-risk portfolio.

One of my favorites

One stock that I think would be a great base to consider for a first ISA is UK Products and Services Specialist. Diploma (LSE: DPLM).

As a supplier of technical parts for factories, laboratories and large projects, the company benefits from growth in several different sectors. Its various activities develop critical solutions for the health, energy, aerospace and industrial sectors. This level of diversification makes it a highly defensive stock that generally benefits from growth regardless of economic conditions.

The share price reflects this, with annualized growth of 21.1% over the last five years.

There are certain risks associated with Diploma’s business model.

First, it is highly dependent on an efficient supply chain. Supply chain disruptions, whether due to geopolitical factors, material shortages or transportation issues, could hamper its ability to meet customer demand or result in higher expenses.

It also operates in competitive sectors where it competes with both large multinational distributors and specialized local players. If competitors innovate more quickly or offer higher quality products, Diploma could lose market share in certain areas.

However, it has all the signs of a solid and reliable growth stock: low debt, sufficient interest coverage and a history of consistent growth. Profits have grown at a rate of 18.8% over the past three years and are expected to continue at a rate of 16.9% in the future.