Thanks to the wealth-building power of the stock market, even middle-aged investors with nothing at all in savings or investments can create a portfolio large enough to deliver a healthy passive income in later life.

Want to see how?

Beating the taxman

A key plank to building wealth is to reduce tax-related expenses as much as possible. For people starting later on and with zero in the bank, tax efficiency becomes even more important.

In the UK, tax is paid on capital gains above £3,000 at a rate of 18% to 24%, depending on one’s personal tax bracket. This can take an enormous bite out of one’s returns, and impact your ability to grow wealth through compounding.

To add insult to injury, dividend tax rates were hiked during the recent Budget, and will be 10.75% to 39.35% from next year. Dividend income above £500 is subject to this crushing levy.

Eliminating these tax expenses is therefore critical, and can be achieved with both the Stocks and Shares ISA and Self-Invested Personal Pension (SIPP).

With an ISA, no income tax is charged on withdrawals, either, leaving investors with more in their pocket.

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.

A £39k dividend income

Another important wealth-building trick is to stay patient and avoid rash decisions.

It sounds simple, but many investors panic when reviewing their pension pots and rush into high-risk assets, derailing their retirement plans.

The most successful investors use time as a tool to build their wealth. They put faith in the historical returns of the stock market, and hold onto the shares they buy for the long haul.

Stock investing delivers an average annual return of roughly 9% over time. That means even starting later in life, steady contributions can grow into a substantial nest egg.

Taking into account those returns, someone aged 45 with £0 in savings and investing £500 a month could build a portfolio of £560,560 by the time they reach 70.

If that portfolio were then invested in dividend stocks yielding 7%, our investor could enjoy a passive income of £39,239 per year. That’d be enough to make a real difference in retirement.

Building a portfolio

That said, past performance isn’t a guarantee of future returns. And investing in shares is still riskier than, say, locking one’s money up in a low-yielding cash account.

However, investors can reduce risk and effectively target a large and stable return with a diversified portfolio. Exchange-traded funds (ETFs) like the iShares S&P 500 (LSE:CSPX) are simple, cost-effective ways to achieve this.

By investing in hundreds of blue-chip US shares, this fund eliminates overdependence on particular sectors. It’s a strategy that not only reduces risk, it also unlocks a world of different investment opportunities. These range from high-growth tech shares (like Nvidia) and banks (JP Morgan), to rock-solid utilities (American Electric Power) and food producers (Kraft Heinz).

Being a stocks-based fund, it can fall sharply during broader market downturns. But over the long term it has the potential to deliver knockout returns. Annual returns have averaged 14.3% since late 2015.

As you can see, targeting a large retirement income with dividend stocks is perfectly achievable — if you follow the right plan.

The post No savings? Consider building a powerful income with dividend stocks appeared first on The Motley Fool UK.

Take the following funds, for instance: iShares Core S&P 500 ETF (LSE:CSPX), Franklin FTSE India UCITS ETF (LSE:FLXI), and VanEck Semiconductor ETF (NASDAQ:SMH). Between them, they’ve delivered an average annual return of 19.5% since November 2020%.

Want to know what makes them stock market winners?

Tapping US shares

The iShares Core S&P 500 fund proved one of the best ETFs out there for reliably high returns. There are are several good reasons behind its strong performance.

The US stock market has comfortably outperformed overseas shares for decades, and I’m confident it will continue doing so given the eternal appeal of Wall Street shares. With holdings in hundreds of multinational companies, it isn’t dependent on one sector or region to drive returns, either.

I also like the ETF’s enormous exposure to high-growth tech shares. Businesses like Nvidia, Apple, and Microsoft comprise roughly 36% of its stock holdings.

This can lead to extra volatility during downturns. Yet, as we’ve seen, it can also deliver outsized returns as the digital revolution rolls on. The fund has delivered an average yearly return of 17.3% since November 2015.

Looking to Asia

Investing in emerging market shares is another attractive wealth-building opportunity to consider. One I like is the Franklin FTSE India ETF, which — as the name implies — provides targeted exposure to Asia’s fastest-growing major economy.

Over the last half a decade, the fund has delivered an average annual return of 13.4%. It’s done so by providing exposure to large- and mid-cap companies like HDFC Bank, Bharti Airtel, Hindustan Unilever, and Sun Pharmaceutical.

As this list shows, the fund is also well diversified by sector, protecting it from industry-specific weaknesses. A bright outlook for India’s economy suggests it could keep outperforming — latest data showed national GDP growth accelerate to 8.2% during Q3.

Be mindful, though, that confidence in emerging market equities can be volatile. This in turn can have an impact on funds like this from time to time.

A top tech fund

Thanks chiefly to the artificial intelligence (AI) boom, the VanEck Semiconductor ETF has delivered a staggering 27.9% average annual return over five years.

Companies like Nvidia, Taiwan Semiconductor Manufacturing Co, and Broadcom are enjoying rocketing sales as AI adoption takes off. Nvidia’s latest results showed data centre revenues leap 66% during Q3.

But the uses of their products are far and wide, from smartphones and robotics to cloud computing and electric vehicles. These markets are also all tipped for rapid growth during the next decade.

A focus on cyclical semiconductor shares leaves the fund vulnerable to economic downturns. But it still means less risk to investors’ cash than purchasing individual stocks. I think the ETF can keep delivering high double-digit returns.

The post 3 stunning ETFs to target a near-20% annual return! appeared first on The Motley Fool UK.

Holding shares in a General Investment Account (GIA) leaves investors vulnerable to capital gains tax and dividend tax. These can be up to 24% and 39.35% respectively, depending on one’s tax bracket. Over time, this can stack up to a colossal amount of cash.

With an ISA, investors are completely shielded from both of these taxes.

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.

Setting an ISA target

I think £30,000 is an attractive retirment income to target per year. That works out at £2,500 a month.

But how large would a retiree’s portfolio need to be to generate that sort of figure? Let’s assume they wish to draw down 4% of their nest egg each year. At this level, there’s a good chance their ISA will never run out, depending on the rate of portfolio growth.

Nothing is guaranteed, and stocks can be volatile. But the long-term average return on global stocks sits at 8% to 10%. Based on this, I think investors using the 4% strategy can realistically expect their ISA to at least remain intact.

Using this approach, someone chasing that £2.5k additional monthly income would need a £750,000 retirement fund.

Patience pays

I won’t deny it. That seems like a lot of money at first glance. However, an investor doesn’t need to max out their £20,000 Stocks and Shares ISA each year to reach that magic sum.

Time is the best friend of the patient and prepared investor. Through the miracle of compounding, where all past returns generate further returns, investors can watch their wealth snowball over the years and accelerate the longer they stay invested.

Even someone with a £500 monthly investment could hit that £750,000 retirement target, based on an average annual return of 9% over 28 years.

ISA investors have thousands of shares, funds, and investment trusts to choose from to reach their goal. I think an exchange-traded fund (ETF) that tracks the performance of large US shares could be one such asset to consider.

High-power US shares

The iShares S&P 500 ETF (LSE:CSPX) has — through a combination of capital gains and dividends — delivered an average annual return of 14.7% since October 2015.

That’s far ahead of the 9% average I mentioned, helped by its heavy exposure to fast-growing tech shares. Think the likes of Nvidia, Microsoft, Apple, and Amazon. As the digital economy has boomed, so have these companies’ earnings, driving their share prices through the roof and that of the ETFs that hold them.

An S&P fund like this is an effective way to balance risk and the potential for explosive rewards. It invests in 500 companies whose footprints cover different sectors and countries, which reduces the impact of localised pressures on overall returns.

So while tech shares can fall in value during sector downturns, the hundreds of other shares the fund holds can limit any temporary underperformance.

The post How much do you need in a Stocks & Shares ISA for a £2,500 monthly passive income? appeared first on The Motley Fool UK.

These funds offer a low-cost way for investors to diversify their holdings. And they provide exposure to a wide range of markets and themes. This means they can be tailored to each individual’s specific financial goals, risk appetite and investing style.

Yet while gaining in popularity, a report by the Investment Association (IA) shows that ETF investors “tend to be younger, higher-income and male, with a quarter living in London“.

Indeed, roughly 41% of fund investors are aged between 18-34. That compares with just 17% for those aged 55 and above. The IA believes “a lack of awareness and understanding… is the single biggest barrier preventing many retail investors from considering ETFs“.

Targeting high returns

This is striking, in my opinion, given the huge versatility of these products and the potential they have to generate mammoth returns.

Take a simple tracker fund like the iShares S&P 500 ETF (LSE:CSPX), which mimics the performance of the US index of blue-chip shares. This spreads investors’ capital across hundreds of different companies spanning regions, industries and sub-sectors.

It’s delivered an average annual return of 14.4% over the last five years. And with a total expense ratio of 0.07%, it’s achieved this at extremely low cost to investors.

Past performance isn’t a guarantee of future returns. And in this case, investor profits could disappoint if the recent rotation from US equities into European shares continues.

But on balance I expect S&P funds like this to continue outperforming, thanks in large part to their large weighting of high-performing tech shares like Nvidia, Microsoft and Apple. It’s why I own an S&P 500 fund in my own portfolio.

Achieving a £572k retirement fund

This fund’s performance suggests even someone starting their investing journey late on can make a decent pile of cash for retirement.

Let’s say a 50-year-old invests £500 a month until they reach their State Pension age of 68 (between 2044 and 2046). Based on that S&P 500 fund’s past returns, they’d have a healthy £572,092 nest egg by retirement.

As I said though, there’s a vast range of thematic, sector and index funds that investors can choose from today in anticipation of high returns. The L&G Cyber Security ETF, another fund I hold, has delivered an average annual return of 9% since 2020.

I’ve also bought the Xtrackers MSCI World Momentum ETF for my portfolio, which holds “large and mid-cap companies from global developed markets with high momentum scores“. This fund’s provided an average yearly return of 12.8% during the last half a decade.

Regardless of an investor’s goals and experience, I think funds like this are worth serious consideration for building retirement wealth.

The post No savings at 50? Consider ETFs to target a £572k retirement fund appeared first on The Motley Fool UK.

I hold one of each of these tax efficient products, as well as a Lifetime ISA. This way, I can balance risk and reward, harnessing the long-term growth potential of the stock market while protecting myself from volatility.

Through a combination of these tax-efficient products, I’m confident investors like me can target a £1,000 monthly second income in retirement. Here’s how.

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.

Balancing risk and reward

There are plenty of ways to target four-figure second income to supplement the State Pension. Drawing down a percentage of a portfolio each year can provide a passive income for roughly 20 years before the pot runs dry.

Purchasing an annuity with some or all of an ISA’s proceeds is another popular route, which provides an income for life.

The path I’m planning is to buy dividend shares with my retirement pot, which allows for an income along with room for further portfolio growth. If I purchased high-yield stocks with dividend yields of 7%, I’d need exactly £171,429 across my ISAs to enjoy a £1,000 monthly passive income.

To reach that goal, investors like me will probably need to invest £100 each month in a Cash ISA over 20 years, and £200 in a Stocks and Shares ISA. That’s based on the long-term average return of 1.21% for the former wealth-building product — according to Moneyfacts data — and 9.64% for the latter.

Of course, the exact amounts chosen to save or invest each product will depend on individual investment goals and attitude to risk. This 33/67 split’s one just example of how it could work.

Cheat code?

Purchasing individual shares can be a great way to beat the market. But rapid growth in the exchange-traded fund (ETF) sector means investors can also do this by spreading risks across a basket of assets, based on an index or particular theme.

I consider some of the ETFs currently on offer as ‘cheat codes’ for modern investors. Take the iShares S&P 500 ETF (LSE:CSPX). This product — which tracks the performance of hundreds of the largest US shares — has delivered an average annual return of 13.4% over the past decade.

If this continues, a £200 monthly investment here would likely give me a passive income above £1,000 after 20 years.

What I especially like about it is the broad exposure it gives me to tech shares. Industry giants Nvidia, Microsoft, Apple, Meta and Alphabet shares make up 31.4% of the fund alone. But other sectors also feature prominently, like financial services, consumer goods and healthcare, providing attractive diversification.

It’s true that a high weighting of tech shares can cause underperformance during economic downturns. But as we’ve seen in recent decades, it also substantial long-term growth potential as the digital revolution rolls on.

With careful analysis, a diversified portfolio comprising funds like this can create significant ISA cash for retirement.

The post How much do you need in an ISA to aim for a £1,000 monthly passive income? appeared first on The Motley Fool UK.

But when I consider the cost of a hot and cold coffee over time, and the better ways I could be using that money to build wealth, suddenly my thirst for a tasty caffeine shot cools off.

Let me explain why.

Compound gains

It’s a common misconception that individuals need to invest large lump sums to create retirement wealth. Just the price of an expensive coffee saved over time can achieve this goal.

An iced caffe latte at my local Starbucks today will set a thirsty buyer back £4.78. That’s not going to alter an individual’s retirement plans, but skipping it daily and investing the savings could.

Let’s say an investor skips their Starbucks treat for an entire year. Over 365 days, that £4.78 works out at £1,744.70. If they decided to invested their savings quarterly, they would — after 30 years, and achieving an average annual return of 8% — have built a retirement fund of £215,247.67 (excluding trading fees).

Investing in an ISA can be an especially effective way for small regular savers to generate long-term wealth. This is because taxes on returns can significantly reduce the compounding power of more modest investments. An ISA protects against both capital gains tax and dividend tax, helping savings grow more efficiently over time.

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.

Smart investing

There’s more to investing than just beating tax. Just like skipping the daily iced coffee adds up, so do the costs of buying a range of different shares.

Imagine our investor uses their £436.18 quarterly Starbucks savings to buy five separate FTSE 100 shares. They could easily pay up to £10 per trade, plus a couple of pounds in stamp duty. Those charges would start to feel like paying for a couple of extra coffees each time they invest.

But here’s the good news: just like an ISA helps you dodge taxes, buying a single exchange-traded fund (ETF) that holds dozens of shares means only one transaction fee and zero stamp duty.

A top fund

The iShares Core S&P 500 ETF (LSE:CSPX) is one such fund I think could be an effective way to target a large ISA. As its name implies, this fund invests in hundreds of US blue-chip shares, from tech giants like Nvidia and Apple to retailers such as Walmart, banks such as JP Morgan, and consumer goods producers like Coca-Cola.

This broad exposure creates wealth over time by tapping into the growth of the world’s largest economy and some of its most successful and innovative companies. The proof is in the pudding: since 2015, it’s delivered an average annual return of 12.5%.

It’s true that the fund could still fall in value during broader stock market downturns. Yet, on the whole, diversified ETFs such as this are still a great way to generate long-term wealth. And all for the price of a daily coffee.

The post Forget that iced coffee and consider investing your pounds in an ISA instead! appeared first on The Motley Fool UK.

What is clear, however, is that the amount required for a good standard of living in retirement is rising steadily over time. It means that making the right financial decisions when planning for later life is becoming increasingly important.

The good news is that investors today have more opportunities than ever before to hit their retirement goals. Here’s how I’m confident of achieving a luxurious retirement.

The target

As I mentioned, the exact amount a person needs in later life will vary, depending on factors like their retirement goals, where they live, and their relationship status.

Yet it’s worth considering what the Pensions and Lifetime Savings Association (PLSA) says the average person needs for a comfortable retirement to get a rough ball park estimate.

Its latest research shows that the average one-person household requires a £43,900 yearly income for a comfortable lifestyle. This level of income would provide for essentials and extras like a a healthy budget for food and clothes, a replacement car every three years, and a two-week holiday in the Med and frequent trips away each year.

The figure for a two-person household is £60,600.

A £38k+ income

There are many paths individuals can take to hit that goal. They can invest in property, develop a side hustle, or put money in dividend- and capital gains-generating shares, for instance.

I’ve personally chosen to prioritise investing in global stocks to make a retirement income, with some money also put aside in cash accounts to manage risk. With an 80-20 split across these lines, I’m targeting an average annual return of at least 9% on my share investments and 4% on my cash over the period.

Let me show you how this works. With a monthly investment of £400 in shares and cash, I could — if everything goes to plan — have a £641,362 nest egg to retire on.

If I then invested this in 6%-yielding dividend shares, I’d have an annual passive income of £38,482. Added to the State Pension (currently at £11,975), I could easily achieve what I’ll need to retire in comfort.

Taking the US route

Of course, investing in shares is riskier than putting all my money in a simple savings account. However, funds and trusts like the iShares Core S&P 500 UCITS ETF (LSE:CSPX) can substantially reduce my risk while still letting me target the strong long-term returns the US stock market can provide.

Remember, though, that performance could be bumpy during broader share market downturns.

This exchange-traded fund (ETF) has holdings in all the businesses listed on the S&P 500 index. As well as providing me with excellent diversification by sector and region, it gives me exposure to world-class companies with market-leading positions and strong balance sheets (like Nvidia and Apple).

Since 2015, this iShares fund has provided an average annual return of 12.5%. If this continues, a regular investment here could put me well on course for a healthy passive income in retirement. It’s why I already hold it in my portfolio.

The post How much passive income will I need to retire comfortably? appeared first on The Motley Fool UK.

If an investor parked £20,000 in one of these ISAs today, here’s how they could eventually enjoy a roughly £1,000 tax-free cash payment every month.

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.

Targeting £1k

There are multiple ways that individuals can target passive income in retirement.

They can draw down a set percentage from their portfolio, or switch into dividend shares that pay a regular income. They can also buy an annuity that provides a guaranteed sum for life. Or they can select a combination of some or all of the above.

I like the idea of buying dividend shares, as — over time — it can deliver a second income while still allowing scope for portfolio growth. It’s the path I plan to go down. So how large would my ISA need to be for an approximate £1,000 monthly income?

If I targeted dividend stocks with 6% yields, I’d need to have £218,715 sitting in my portfolio when I retire. That would provide me with £1,094 each month.

To achieve this with £20,000 in my ISA, I’d have to target an average annual return of 8% over 30 years.

But how realistic is this sort of return? ‘Very’ is the answer, if the long-term performance of the stock market’s anything to go by.

Robust returns

As you can see, someone who invested in UK and US blue-chip shares would have enjoyed a near-9% annual average return over the last decade.

History isn’t always a reliable guide to future investment gains. But the broader stock market has, time and again, proved its ability to rebound from crises and deliver powerful returns over time.

An investor today could target a large income by investing in individual shares and buying an exchange-traded fund (ETF). The iShares S&P 500 ETF (LSE:CSPX), for instance, is worth considering as a direct way to harness the S&P 500’s brilliant long-term returns.

This is a fund I hold in my own portfolio. By spreading my cash across hundreds of US shares, I can capture the enormous growth potential of tech shares (like Nvidia and Apple) while also diversifying to mitigate risk.

Just under a third (31.6%) of the fund is dedicated to information technology companies. The remainder is spread across multiple sectors including financial services, consumer goods, communications and healthcare.

By reinvesting dividends, this fund uses the power of compounding — earning a return on all my past returns — to supercharge long-term growth as well.

Funds like this can deliver poor returns during economic downturns. But over time, they’ve been great ways to unlock a healthy income for retirement.

The post £20k for a Stocks and Shares ISA? Here’s how it could deliver a £1k monthly passive income! appeared first on The Motley Fool UK.

However, in recent weeks, we’ve seen a massive rebound as trade deals have been ironed out. Here’s a look at how much £10,000 invested in an S&P 500 ETF near the post-Liberation day market lows would be worth now.

An explosive rebound

One of the most popular S&P 500 ETFs in the UK is the iShares Core S&P 500 UCITS ETF USD (Acc) (LSE: CSPX). So, I’m going to use this product (which reinvests all dividends) as a proxy for these index funds.

On 7 April – when stocks were extremely volatile – the price of this ETF fell to around $520 (it also fell to this price on 9 April so investors had two opportunities to buy at this price). Given that the GBP/USD exchange rate was approximately 1.27 on 7 April, an investor could have snapped up 24 units in the ETF for £10,000 at that price (and had a little bit of cash left over after trading commissions).

Today, the price of this ETF is $627. Meanwhile, the GBP/USD exchange rate is about 1.33 (the rise in the pound would have been a drag on returns). This means that those 24 units would now be worth about £11,315. So, the investor would be sitting on a decent profit.

Overall, they’d be up a little over 13%, despite the fact that currency movements would have hurt returns (a risk when investing in USD-based products). Not a bad return in just over a month!

The best time to invest

Now, I have to admit that I wasn’t expecting this kind of quick rebound when stocks dropped after Liberation Day. Given the high level of economic uncertainty, I thought share prices may remain depressed for a while.

But I was investing in a few different index funds myself at the time. And it has paid off.

It has also reinforced my view that the best time to buy stocks is when major indexes are in freefall and investing feels really hard. Generally speaking, if we buy stocks when investing feels awful (you know, sickening), we’re usually rewarded sooner or later.

Worth it now?

Is the iShares Core S&P 500 UCITS ETF USD (Acc) worth considering today after such a fast rebound? I think so, assuming one has a long-term investment horizon.

That said, I wouldn’t go ‘all in’ on it today. Looking ahead, I wouldn’t be surprised to see further market weakness in the near term. In the coming months, economic data could be weak (due to the recent uncertainty), leading to volatility in the stock market at times.

Given the potential for volatility, I’d recommend drip feeding capital into the ETF bit by bit to manage risk. I also think it could be worth looking at individual stocks within the index (or other indexes), as there could be better investment opportunities within the market….

The post £10,000 invested in an S&P 500 ETF near the post-‘Liberation Day’ lows is now worth… appeared first on The Motley Fool UK.

WIth this in mind, are three steps for investors targeting a seven-figure portfolio to consider.

1. Try to eliminate tax

The first thing to think about is opening an investment account that can reduce or eliminate one’s tax liabilities. In the UK, we’re talking about the Individual Savings Account (ISA) and the Self-Invested Personal Pension (SIPP).

The beauty of these tax wrappers is twofold. Not only can they save investors a boatload of cash from the clutches of HMRC. The money that’s shielded can also be reinvested, giving individuals a chance to supercharge portfolio growth through the miracle of compounding.

Stocks and Shares ISA investors can invest £20k a year, while SIPP users can deposit a sum equal to their annual salary (up to a maximum of £60k).

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.

2. Invest as early as possible

‘Time in the market beats timing the market’, as the old saying goes. Rather than waiting for the best opportunity to buy, investing as soon as possible — and then keeping one’s money locked up in the markets — is proven the most effective way to build long-term wealth.

Fresh evidence from Hargreaves Lansdown underlines the effectiveness of such a strategy. It says that more than a third (34%) of the Stocks and Shares ISA millionaires on its books topped up their portfolio in the first two weeks of the 2024/25 tax year.

By comparison, just 2% of its millionaires invested in the final two weeks of the period.

3. Build a diversified portfolio

The final thing to consider is creating an ISA and SIPP that’s well diversified across a number of lines (such as sector and geography). This provides investors with exposure to multiple investing opportunities, as well as risk mitigation that limits the impact of one or two underperforming assets.

This can be achieved by buying a range of individual shares. Investing in trusts or funds that hold a variety of assets works, too. I personally use a mix of both strategies, and the iShares S&P 500 ETF (LSE:CSPX) is an exchange-traded fund (ETF) I currently own.

In fact, it’s currently one of my largest holdings. With an stunning average annual return of 13.2% since 2010, I don’t think it’s difficult to see why.

Past performance isn’t always a reliable guide to future returns. But if this ETF’s strong record continues, someone who invested £500 here a month would — after 25 years — have built an ISA or SIPP portfolio of £1.16m (excluding trading fees).

With holdings in approximately 500 large-cap companies, this one fund could facilitate a well diversified portfolio just on its own. With multinationals like Nvidia, Visa, Coca-Cola, and Amazon in its ranks, it achieves broad exposure by geography. And as that list shows, it’s also effectively diversified by industry.

Its performance more recently has been dented by the threat of growth-sapping trade wars. While this remains a threat going forwards, I believe S&P 500-based funds like this should remain powerful long-term investments.

The post 3 steps to consider to target a million pound UK shares portfolio! appeared first on The Motley Fool UK.