How I’m investing in my ISA and SIPP at 40+

Investing within a tax-efficient account such as an ISA aged 40+ is a savvy move. But what’s the best investment strategy at this age?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Smiling family of four enjoying breakfast at sunrise while camping

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investing within an ISA and/or SIPP (Self-Invested Personal Pension) in your 40s is generally a smart move. Investing at this age can potentially set up strong wealth streams for the future.

Of course, the challenge is working out where to invest. With these tax-efficient accounts, there are a lot of options and it’s hard to know what the best investment strategy is.

Here, I’m going to discuss where I’m investing my ISA and SIPP in my 40s. This is how I’m trying to build wealth for the future.

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.

My goals

Before I look at where I’m investing, it’s worth touching on my financial goals and risk profile. This is because my investment strategy is based on these goals and my risk tolerance.

My main goal is to build a seven-figure investment portfolio over the next 15 years or so in order to retire at a relatively young age (around 60).

As for my risk tolerance, it’s relatively high. I don’t mind taking on some risk in the pursuit of higher gains. With an investment horizon of around 15 years, I have time to ride out stock market volatility.

My investment strategy

In terms of how I plan to achieve my goal, I’ve developed an investment strategy that combines ‘growth’, ‘quality’, and ‘thematic’ approaches to investing.

What I’m essentially trying to do is invest in high-quality companies that are poised to benefit from powerful long-term growth themes and trends (the ageing population, the shift to electronic payments, etc), and grow their revenues and earnings significantly over the next decade and beyond.

Ultimately, I’m trying to find businesses that are capable of multiplying my capital many times over in the long run.

Funds

Now, I implement this strategy with both investment funds/trusts and individual stocks.

Some funds I own include:

  • Fundsmith Equity – this is an actively-managed fund that invests in high-quality businesses globally
  • Schroder Global Healthcare – this provides broad exposure to the healthcare sector (which looks set to benefit from the ageing population in the years ahead)
  • Sanlam Global Artificial Intelligence – this provides exposure to companies engaged in artificial intelligence (AI)

All of these products have strong long-term track records and appear to have a lot of growth potential going forward.

Stocks

As for stocks, I own three main types within my ISA and SIPP.

First, I have large-cap US growth stocks. Some examples include Apple, Nvidia, and Mastercard. These are some of the most dominant companies in the world today, and they all look well placed to generate strong growth in the years ahead, in my view.

Then, I have blue-chip UK stocks. Some examples here include Diageo, InterContinental Hotels (IHG), and Sage. These dividend-paying stocks bring stability to my portfolio however, as they still have plenty of long-term growth potential. IHG, for example, looks set to benefit from the retirement of the Baby Boomers.

Finally, I have a mix of smaller US and UK growth stocks. Some examples here include UK software company Cerillion and US data firm Snowflake. These kinds of stocks have the potential to provide blockbuster returns. But they are more speculative in nature, so they have smaller weightings in my portfolio.

A long-term focus

Overall, I think this is an effective way to build wealth over the long run. I expect my portfolio to have ups and downs over the next 15 years. But, over the long term, I think I’ll do well.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon has positions in Apple, Cerillion Plc, Diageo Plc, InterContinental Hotels Group Plc, Mastercard, Nvidia, Sage Group Plc, Snowflake, Fundsmith Equity, Schroder Global Healthcare, Sanlam Global Artificial Intelligence. The Motley Fool UK has recommended Apple, Cerillion Plc, Diageo Plc, InterContinental Hotels Group Plc, Mastercard, Nvidia, Sage Group Plc, and Snowflake. 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.

More on Investing For Beginners

Inflation in newspapers
Investing For Beginners

These FTSE stocks could surge with inflation back at 2%

Jon Smith explains several reasons why lower inflation is good for FTSE stocks, and provides examples of those he thinks…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Here’s how I’d aim to get rich with Warren Buffett’s strategy, starting with just £500

Our author says Warren Buffett's strategy of long-term wealth building can make even the most humble of us richer over…

Read more »

Investing For Beginners

Why I can’t afford to not invest in these FTSE 100 shares

Jon Smith explains why certain FTSE 100 shares from sectors including banking and property have driven the index's gains recently.

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing For Beginners

This UK stock has gained 42% since I bought it, but I think it’s still a bargain

Jon Smith outlines his reasons for thinking that a UK stock he owns has the potential to keep rallying for…

Read more »

Woman sneaker shoe and Arrow on street with copy space background
Investing Articles

£20k in savings? Here’s how I’d aim to grow that into £1m and generate passive income

Our author says turning £20k into £1m is really possible with patience and strategy. Here's how he's planning his passive…

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

My top 3 picks today for a £20,000 Stocks and Shares ISA

Here are three very different investments to consider for a Stocks and Shares ISA, covering both the UK and US…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

If I’d put £15k into this FTSE 250 stock in 2008, I’d have over £1.26m today

This multi-billion-pound business has created plenty of millionaires over the last 16 years, but can it repeat this performance?

Read more »

Investing Articles

If I’d put £5k in a FTSE 100 tracker fund 5 years ago, here’s what I’d have now

Investing in a FTSE 100 index fund is a terrific way to start building wealth passively with minimum effort. But…

Read more »