A Self-Invested Personal Pension (SIPP) can be a great way to boost a retirement pot. These DIY pension accounts offer a wide range of investing options, including exchange-traded funds (ETFs), investment trusts, and stocks.
But is it best to buy UK or US stocks? Here’s what I think.
New York
Put simply, there’s no right or wrong answer. But a lot will depend on what age someone is. I still have a couple of decades left before retirement age, so my own SIPP’s still largely oriented towards growth stocks, many of which are in the US.
Why not UK growth stocks? Because there are just not as many options for growth-focused investors this side of the pond. Most of the world’s best growth companies — those changing the world around us — are listed in New York.
Having said that, I do have a small handful of UK growth stocks in my SIPP, including subsea rental firm Ashtead Technology and DP Poland (the owner of the Domino’s Pizza brand in Poland). But these are small holdings compared with the rest.
A stock example
One of my largest SIPP holdings is Axon Enterprise (NASDAQ: AXON). This stock’s done really well for me over the past eight years or so. It’s up nearly 150% in the past two years alone!
What attracted me to Axon was the strength of its competitive position. It sells Tasers to law enforcement agencies around the world, as well as body cameras and various software solutions.
The newer Taser models can activate the body-worn cameras when fired by officers, directly sending the footage to Axon’s cloud-based evidence management platform. Needless to say, this creates a powerful ecosystem, making Axon’s products mission-critical to thousands of law enforcement and public safety agencies worldwide.
In 2024, the company’s revenue jumped 33% year on year to $2.1bn, while total future contracted bookings surged to $10.1bn. For context, Axon now puts its total addressable market at $129bn.
Even if that proves overly optimistic, it shows the magnitude of the opportunity ahead of the firm over the next couple of decades. Its rapid entry into artificial intelligence (AI) is also exciting, as it has mountains of real-world data with which to build AI products and solutions.
Of course, the stock’s not risk free. It’s trading at 85 times forward earnings. At this rich valuation, a lot of future growth is baked in. This means Axon will have to deliver on that growth or the valuation could pull back sharply.
However, this is exactly the type of high-growth company I want in my retirement portfolio over the long term.
Leaning into London
As I get older though, I’ve started to add more dividend stocks to the mix. This is the UK market’s strong point, as it’s packed full of income shares.
My FTSE 100 holdings include Legal & General, Aviva, and British American Tobacco. These yield 9.3%, 7.2% and 7.7% respectively.
According to AJ Bell, FTSE 100 companies are expected to dish out a whopping £83bn in dividends this year, up 5% from 2024. This puts the blue-chip index on a forward dividend yield of 3.7%.
Obviously I can’t spend the dividends I receive in my SIPP. So I put the cash back to work by reinvesting it into more stocks.
