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What are the top 5 SIPP stocks for investors?

What are the top 5 SIPP stocks for investors?
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Choosing your own pension investments is an exciting prospect. Using a self-invested personal pension (SIPP) to take control of your retirement opens a lot of possibilities. But it’s not a task to be taken lightly.

In this article, I take a look at the most popular pension investment choices on Freetrade. Then, I delve into some strategies and tips that you can use to supercharge your investing habits and give you more direction.

What is a SIPP?

A self-invested personal pension, or SIPP, allows you to have complete control of your retirement savings. The funds in a SIPP account are locked away, and you can’t access them until you’re at least 55. 

If you’re self-employed, it’s more likely that you’ll be familiar with this type of account. Even if you’re not a business owner, you can still have one, and there are many benefits to doing so.

A SIPP comes with some excellent tax benefits. But even if you don’t have one, you can use other accounts like a stocks and shares ISA to protect your investment returns from tax.

Which SIPP stocks are popular?

According to Freetrade, the investments that have been popular with people saving into their pensions last month include:

1. AMC Entertainment (AMC)

As an original meme stock, this inclusion at number one is slightly worrying. The fact that it was a struggling business just a few months ago, coupled with the crazy volatility, makes this a strange pick to put in your SIPP.

2. Vanguard FTSE All-World UCITS ETF USD Acc. (VWRP)

This investment makes a lot more sense. It’s a global equity fund that tracks the performance of companies from across the globe. By investing in a fund like this, you’re basically betting on the fact that by the time you retire, there will be more money in the world than there is today.

3. Vanguard FTSE 100 UCITS ETF Dist. (VUKE)

This is another Vanguard fund that’s popular with investors because of its low fees. This pick focuses on the top hundred businesses in the UK. So it’s less diverse than a global fund but still provides a decent range of investments.

4. Amazon (AMZN)

I’m sure you’re familiar with Amazon. You probably have a package arriving from them sometime in the near future! It’s a company that’s seen immense growth over the last 20 years. So it’s no surprise that this is a popular pick for SIPP investors. 

5. iShares Core MSCI World UCITS ETF GBP Hedged Dist. (IWDG)

This is another global fund. It’s similar to the Vanguard fund except that it pays out any income rather than reinvesting it.

How do I choose a pension investing strategy?

If you have a SIPP, you should think carefully about your goals and how you want to invest that money. After all, it’s your retirement at stake.

Two strategies to consider are growth and income. Of course, you can use a combination of styles to suit your personal preferences. Doing some sort of combo will also ensure you have a healthy amount of diversification.

Growth

Growth shares offer good returns, but prices can be volatile. Having a long investing road ahead of you will allow you to ride out any short-term volatility. Choosing investments that are likely to grow can help you build a decent retirement pot. This tactic will also give your investments a good chance to outpace inflation.

However, it’s important to understand that this style of investing usually means more risk, and continuing growth is not guaranteed. So make sure you’re aware of that and realise that the value of your investments can fall as well as rise. 

Income

For those who prefer a slow and steady approach, income investing might be a safer path. This can mean lower but more stable returns, which isn’t a bad thing. With time on your side, even small gains will grow significantly using the power of compound interest.

This strategy can also be more helpful as you get closer to retirement when you may plan to preserve or use your wealth.

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.

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