There are numerous famous millionaire investors in the world (and some billionaire share-buying gurus), but there are also less well-known ones. Some of those ‘everyday investors’ have built a seven-figure nest egg in their Self-Invested Personal Pensions (SIPP). Hargreaves Lansdown has over 3,000 such SIPP millionaires among its customers. Some 90% of them are men and their median age is 62. Here are some of their tips on buying SIPP shares, which I think I can apply to try and improve my own long-term investment returns and wealth.
The sooner the better
When these investors were asked for the ‘magic sauce’, the most common answer was to start contributing at an early age and raise contributions regularly.
Not everyone may be able to keep raising SIPP contributions. But I think starting early is an achievable goal, even for investors with limited funds to put into a pension. I think that if one cannot start early, it makes sense to start as soon as possible rather than putting off investing.
That can make a difference because it allows SIPP shares to compound over years in some cases. But I see another benefit. Some of the SIPP shares I choose are unlikely to compound multiple times over. In fact, they may end up losing me money. Investment can improve with experience and education. The earlier one starts buying SIPP shares, the longer one has to learn about investment and hopefully reap the rewards of some hard lessons.
Knowledge matters
The millionaire investors also emphasised the important role that knowledge can play when it comes to buying shares. That includes taking time to understand what one is investing in.
I think that advice makes a lot of sense no matter what one’s investment ambitions are. In most areas of life, people would not dream of doing something with no knowledge, whether it was driving a car or building a home extension. But for some reason, lots of people invest in companies they do not understand at all.
It can be difficult enough to assess how well a company might do in future even when one understands it well. Doing that with no understanding is not investment, but mere speculation. Like Warren Buffett, when buying SIPP shares, I aim to stay inside my circle of competence.
Popular SIPP shares can be blue-chips
As well as those tips, Hargreaves Lansdown listed the top shares held by these millionaires.
They are Aviva, BP, GlaxoSmithKline, Legal & General, Lloyds, National Grid, Scottish Mortgage Investment Trust, Shell, Unilever and Vodafone. What strikes me about that list is that every single one of those shares is a blue-chip FTSE 100 name.
That does not mean buying those shares now would necessarily be the right thing for my own portfolio. But it is a reminder that it is possible to do well as a private investor by sticking to well-known, large companies.
