I just put £4k into my SIPP. Here’s where I’m going to invest it

Edward Sheldon’s been contributing to his SIPP to build wealth for retirement. Here’s a look at where he’s investing his money.

| More on:

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.

The words "what's your plan for retirement" written on chalkboard on pavement somewhere in London

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 in a SIPP (Self-Invested Personal Pension) is one of the best ways to build wealth for retirement in the UK. Not only are all gains income tax-free, but contributions are boosted by tax relief.

Last week, I put £4k into my SIPP in an effort to build my retirement savings. Here’s how I’m going to invest it.

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.

An near-instant 25% return

Let me start by saying that I’ll have more than £4k to invest. Thanks to tax relief, I’ll receive another £1k in my account from the government in the next few months (a risk-free 25% return). So in total, I’ll have £5k to invest.

If I invest this well, this could grow to a large sum by the time I come to retire.

Today, I’m 44. If I was to generate a 9% return on that £5k for the next 20 years, it could be worth around £28k by the time I’m 64. If I was to keep growing it at 9% a year until I was 70, I could be looking at nearly £50k.

Where I’m investing

Now, I’m not going to invest this money all at once. I prefer to drip feed money into the markets over time (especially after they’ve had a great run).

However, one product I will put some money into right now is the Schroders Global Healthcare fund. There are two reasons why.

First, my portfolio is very tech-heavy at present. I want to diversify into other sectors to reduce my risk levels. Second, healthcare offers a nice mix of growth and defence, to my mind. If we were to see an economic slowdown, companies in this sector may provide some protection.

It’s worth noting that this fund returned 11% a year for the five years to the end of May. Past performance is not an indicator of future returns though.

A promising holding

One stock in the fund I’m really excited about is Novo Nordisk (NYSE:NVO). It’s the maker of GLP-1 weight-loss drugs Wegovy and Ozempic.

This company’s having a huge amount of success right now, thanks to its weight-loss drugs. This year, revenue’s forecast to grow 26% to $41bn.

I suspect the growth story here is just getting started. According to analysts at Barclays – who have called obesity drugs the healthcare ‘story of the decade’ – the industry could be worth $200bn annually by 2030 (versus $11bn in 2023).

Given the potential market size, some analysts believe these drugs could become one of the pharma industry’s biggest success stories.

It’s worth pointing out that Novo is facing competition from Eli Lilly, which also has weight-loss drugs on the market today. It could also face competition in the years ahead from Amgen and AstraZeneca, both of which are developing their own products.

The good news is that the Schroders Global Healthcare fund has a large position in Eli Lilly (at the end of May it was the largest holding while Novo Nordisk was the fifth-largest). So all my eggs aren’t in one basket.

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 Novo Nordisk and the Scroders Global Healthcare fund. The Motley Fool UK has recommended AstraZeneca Plc, Barclays, and Novo Nordisk. 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 Retirement Articles

The words "what's your plan for retirement" written on chalkboard on pavement somewhere in London
Investing Articles

How much would someone need to invest in the stock market to retire and live off passive income?

Christopher Ruane explains some approaches and potential pitfalls of putting money in the stock market to try and retire early…

Read more »

Investing Articles

40 and no pension? Here’s what £400 a month in a Stocks and Shares ISA could become

It's never too late to start investing for retirement. Here's how regular contributions to a Stocks and Shares ISA could…

Read more »

Investing Articles

Looking to get ‘ISA rich’? Here’s one top strategy to target huge wealth

Buying a blend of shares, trusts, and funds could be the best way to consider targeting long-term wealth with an…

Read more »

A retired couple review their investing portfolio
Investing Articles

How much would I need in an ISA for a £2k monthly passive income?

Cash ISA, Lifetime ISA, or Stocks and Shares ISA? Royston Wild explains the potential impact of these products on one's…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

2 FTSE 100 and FTSE 250 shares to consider for a Stocks & Shares ISA!

Stocks and Shares ISA investors have a wealth of shares, funds and trusts to consider. Here are two I think…

Read more »

Investing Articles

A top investment trust to consider for a possible £17k+ second income EVERY YEAR!

Building a well diversified portfolio can, over time, deliver a monumental second income in retirement. Here's how.

Read more »

Investing Articles

3 ways to make a SIPP get bigger, quicker

Our writer runs through a trio of practical steps an investor could consider to try and boost the value of…

Read more »

A senior man and his wife holding hands walking up a hill on a footpath looking away from the camera at the view. The fishing village of Polperro is behind them.
Investing Articles

Here’s how an investor could find shares to buy for an early retirement

Our writer lays out some principles a retirement-focused investor could consider when scanning the market for possible shares to buy.

Read more »