Both the Stocks and Shares ISA and SIPP protect users from tax grabs. Investors can buy a wide range of assets, allowing them to capture multiple wealth-creating opportunities while simultaneously managing risk.

Want to know how much you’ll need in one of these for a £33,000 retirement income? Read on.

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.

Tax benefits

By shielding individuals from income tax on withdrawals, ISAs allow investors to earn a significant second income with a smaller portfolio than otherwise required. This can shorten the time they need to reach their income goals, as well as reduce the size of the contributions required over time.

What’s more, protection from capital gains and dividend taxes can speed up long-term portfolio growth. This works by giving investors more cash to invest, accelerating the compounding process and helping them hit their target more quickly.

SIPPs also help individuals sidestep capital gains and dividend taxes, although income tax is charged on withdrawals. Still, the tax relief on contributions can more than offset this tax liability (as I’ll soon demonstrate).

By boosting contributions, compounding acts on a larger capital base, which over a period of decades can significantly outweigh any withdrawal taxes.

So how much do you need?

With an ISA, calculating how much you’d need for a £33k annual passive income can be a simple one. If you’re looking to rotate your portfolio into 8%-yielding dividend shares upon retirement, you’d need a nest egg worth just under £413,000. Since withdrawals are tax-free, every penny goes straight into your pocket.

With a SIPP, the amount sits higher at around £485,000. This assumes the State Pension already uses up your tax-free Personal Allowance, meaning 75% of withdrawals are taxed at the basic rate (25% of each SIPP drawdown is tax-free). To walk away with that £33k net, you’d need an actual gross income of almost £39,000.

But here’s the thing: the cost to you of building the portfolio would be between roughly £78,000 and £104,000, as the tax relief (of 20% to 40%) ensures your net contributions are lower than those of an ISA investor. That’s based on an average annual stock market return of 9% over 25 years.

Building a SIPP

But how achievable is that 9% return for investors? The answer is ‘very’ in my opinion, assuming investors build a diversified portfolio of stocks.

The HSBC S&P 500 ETF (LSE:HSPX) is an exchange-traded fund I’ve bought for my own pension to target such returns. By effectively holding hundreds off IS shares, I have exposure to a variety of multinational companies in different industries. This provides a stable return by balancing growth and dividends across the economic cycle, and helps me to manage risk.

Focusing on US shares could lead the fund to underperform if broader appetite for Wall Street stocks weakens. However, this hasn’t stopped it delivering excellent returns yet — over the last decade, it’s delivered an average annual return of 15%. This is thanks to its large contingent of high-performing tech stocks, which make up a third of the fund.

On balance, it’s a top asset for ISA and SIPP investors to consider.

The post How much do you need in an ISA or SIPP for a £33k passive income? appeared first on The Motley Fool UK.

A tenner a day works out at roughly £304 a month. If put to work in a portfolio of global shares, it could — based on the stock market’s long-term performance — unlock a five-figure annual passive income for your later years.

Think that’s a load of baloney? Come take a look. It could change your life.

Building a £556k portfolio

We’re so focused on low-yielding savings accounts in the UK, that the thought of making life-changing wealth for retirement is often considered a pipe dream.

Nothing could be further from the truth. Just ask the thousands of Brits who’ve made millions with Stocks and Shares ISAs.

The long-term average return on stock market investing sits at around 9%. If this continues, a £304 monthly investment would — after 30 years — generate a portfolio worth £556,546.

If then invested in 7%-yielding dividend shares, an investor could target an annual passive income of just under £39k (£38,958 to be exact). Combined with the State Pension, they could enjoy a very comfortable lifestyle in retirement.

Moving up

Past performance isn’t a reliable guide to the future. And in the short term, stock markets can endure bouts of extreme volatility. In 2026, share prices could be impacted by fresh rounds of trade tariffs, for instance, or returning high inflation.

But over time, the stock market has proved time and again its ability to withstand challenges and deliver enormous returns. Take the FTSE 100, which this century alone has overcome numerous obstacles (like a global banking sector meltdown, a pandemic, and Brexit) and hit fresh records just last year.

Investors can better weather market volatility and target enormous returns by building a diverse portfolio of shares. This can be done easily and cost effectively with investment trusts and exchange-traded funds (ETF) holding a range of stocks.

Targeting US shares

Take the HSBC S&P 500 ETF (LSE:HSPX) as an example. As its name indicates, this high-power fund tracks the entire S&P 500 US share index, giving it exposure to hundreds of stocks.

This doesn’t just spread risk — some of the many industries represented on the S&P include information technology, financial services, telecoms and consumer goods. It also provides direct exposure to the world’s largest economy, and a galaxy of market-leading companies like chipmaker Nvidia, online retailer Amazon, soft drinks manufacturer Coca-Cola and card operator Visa.

As with any equities-based fund, this leaves investors exposed to market downturns. But it also provides the opportunity to build significant wealth over time, as we’ve seen.

Over the past decade, the S&P’s delivered an average annual return of 14.6%. If this continues, someone investing £304 a month in a fund like this would make an even larger nestegg than the £556k one described above.

It’s why I own the HSBC S&P 500 ETF myself. I think it could help me supercharge my passive income in retirement.

The post Here’s how you could build a second income in 2026 with £10 a day! appeared first on The Motley Fool UK.

Based on past returns, I think it’s realistic to attain financial independence with jusy £5 a day. Let me illustrate how.

Thinking like Einstein

In almost all cases, the key to creating long-term wealth isn’t buying ‘Hail Mary’ assets like cryptocurrencies. Hugely volatile investments like these can produce uneven returns. They can also end up costing investors a lot more than they put in.

The most successful people tend to put their money in steady, reliable investments, and let time do the hard work for them. Albert Einstein is credited with describing compounding — which is where returns are rolled up over time to amplify total gains — as the eighth wonder of the world.

In this example, I’ll show you why.

A £318k-plus portfolio

What can you get for around £5 nowadays? A coffee, a Disney+ subscription, a peak-time trip on the London Underground.

Put into the stock market, and it could supercharge your chances of a comfortable retirement.

A fiver a day works out at £152.08 a month, on average. If used to buy equities, funds, and trusts in a Stocks and Shares ISA, that could build a beautiful £318,463 retirement pot after 30 years.

Sure, stock markets can be volatile at times. But over the long term they have proven an extremely effective way to generate capital. Since 2015, the typical Stocks and Shares ISA has delivered an average annual return of 9.64%.

At this level, it’s quite possible to eventually turn £5 into a portfolio worth more than £300,000.

A sensible approach

It’s important to remember that past performance isn’t a guarantee of future returns. However, spreading your investments across growth and dividend shares in multiple sectors and regions can improve your odds of hitting big targets

As well as buying individual shares, investors can effectively diversify with investment trusts and exchange-traded funds (ETFs). The HSBC S&P 500 (LSE:HSPX) is an ETF I’ve bought because of its stunning long-term returns.

Since November 2015, the fund’s delivered an average annual return of 14.4%. This is thanks in large part to the S&P 500‘s many high-performing technology stocks like Nvidia, Microsoft, and Amazon.

A blend of low US interest rates, the strong Stateside economy, and healthy foreign investment has also helped the fund deliver titanic returns. By tracking the entire S&P 500, it’s provided a diverse range of investing opportunities while still moderating individuals’ risk.

Though money is flowing out of Wall Street stocks and into other equities, I’m confident this HSBC ETF will remain an excellent wealth builder over time. It could turn even a modest £5 a day into a life-changing Stocks and Shares ISA.

The post Fancy building a £318,000 Stocks and Shares ISA with just £5 a day? Read this… appeared first on The Motley Fool UK.

It’s unfortunate, then, that annual allowances — that is, contribution limits — on these tax wrappers look like they might be slashed. Rumours have been swirling of rule changes as the government seeks to encourage Britons to invest rather than save. Current talk is that Cash ISA allowances will be halved to £10,000.

But as the saying goes, when life gives you lemons, make lemonade. My hope is — as a Stocks and Shares ISA investor — these changes will mean more people investing in the stock market where they can target better returns.

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.

Wealth gap

Don’t get me wrong. I use a Cash ISA myself, and I’m not especially keen on those rumoured allowance cuts. I think a carrot rather than a stick approach is the best way to encourage people to pursue better returns.

However, the vast majority of my extra money each month is used to buy shares, investment trusts and exchange-traded funds (ETFs). Given the superior returns on offer, it’s a no-brainer decision for me.

Moneyfacts data shows that the average Stocks and Shares ISA user made an average annual return of 9.64% over the last decade. Cash ISA savers, meanwhile, made a paltry 1.21%.

Based on these numbers, someone who put £500 every month in the latter would have roughly £63,700 to show for it today. The return on the investing ISA would have blown that out of the water, at around £100,300.

Stretched over a number of decades, the difference would be even starker, given the compounding effect where returns generate further returns over time.

A balanced approach

I love the advantages that a Cash ISA offers. It’s simple, and provides a guaranteed return. By comparison, stock ISAs are higher-risk and can go up and down.

But over a longer time horizon, the bumps that share investors experience tendsto be ironed out, allowing the full power of the stock market to shine through. What’s more, with a wide range of assets to choose from, Stocks and Shares ISA investors can significantly reduce the risks to their cash now and in the future.

I myself own a range of investment trusts and ETFs including the HSBC S&P 500 (LSE:HSPX) fund. This particular one diversifies across hundreds of US shares with footprints in different sectors and regions.

It’s an approach that’s paid off handsomely. Over the last decade, it’s delivered an average annual return of 15%.

These huge returns largely reflect the fund’s large contingent of high-growth tech shares. This tilt towards technology can result in volatility during economic downturns. However, it can also deliver blockbuster returns as digital trends like artificial intelligence (AI) and robotics take off.

Holdings here include Nvidia, which became the world’s first $4trn company this year.

I think a diversified portfolio of stocks, trusts and funds like this — balanced with some money held in savings — could be an effective way to target long-term wealth. It’s the path I’d consider taking if I was a Cash ISA saver today.

The post Here’s what I’d consider doing if ISA allowances plunge! appeared first on The Motley Fool UK.

I myself hold both a Stocks and Shares ISA and a SIPP. I also hold cash savings in a Lifetime ISA and a Cash ISA, with the former giving me a handy £1 government top-up for every £4 I myself deposit.

This mish-mash of products is subject to different rules on things like annual contribution allowances, withdrawal penalties, and tax treatment. This means I may be better prepared for whatever the future holds — whether that’s changes to the tax regime, a financial emergency that requires quick access to cash, or if I have a chance to retire before the State Pension age.

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 diversified portfolio

With these ISAs and SIPPs, I hold a mix of cash savings, alongside a broad collection of shares, investment trusts, and funds. The vast majority of my money is invested in the latter three categories, though. Despite the higher risk this strategy entails, the chance of me creating enough wealth for retirement is far greater.

By spreading my capital this way, I’m confident of achieving a long-term average annual return of 7%. That’s based on an 2% savings rate and an average return of 8% on stocks, funds, and trusts.

As I’ve brushed upon, there are no guarantees with this approach, as markets can be volatile and past performance is never a guide to future returns. But a diversified portfolio can smooth out any shocks and cut the risk of one poor performer derailing my investment goals.

Prioritising shares

I directly own about 20-25 stocks in my portfolio at any one time. These include a number of FTSE 100 heavyweights like Legal & General, Diageo, Games Workshop, and HSBC.

And the exchange-traded funds (ETFs) I own give me instant exposure to even more companies, sectors, and geographies, adding another layer of safety.

The HSBC S&P 500 ETF (LSE:HSPX) is currently my favourite such holding, and therefore my largest. It gives me exposure to hundreds of US shares, allowing me to harness powerful Wall Street companies in a lower-risk way.

Around 34% of the fund is tied up in cyclical technology shares, which creates danger during economic downturns. Still, the likes of Nvidia and Microsoft also have considerable growth potential as the digital revolution rolls on.

Besides, the fund’s significant exposure to non-cyclical shares helps balance this out. Other major holdings include healthcare business Eli Lilly and consumer staples retailer Walmart.

Since 2015, the S&P 500 has delivered an average annual return of 14%, illustrating its enormous growth credentials.

Building wealth isn’t easy and requires dedication and resolve. But I’m confident my strategy will eventually help me to retire in comfort.

The post Here’s how I’m looking to build retirement wealth with ISAs and SIPPs appeared first on The Motley Fool UK.

I also get to enjoy a generous annual allowance that towers above that of the Stocks and Shares ISA. This variable figure is equivalent to an individual’s yearly income, up to a maximum of £60,000.

Big benefits

The main advantages of using a SIPP to build long-term wealth are twofold. Like a Stocks and Shares ISA, investors don’t pay a penny in tax on capital gains and dividend income. This frees up more cash for investment, enhancing the compounding effect and building wealth faster.

In addition to this, individuals receive extra money to invest in the form of tax relief. This is a luxury that ISA investors don’t get to enjoy, and is set at the following rates:

• 20% for basic-rate taxpayers.
• 40% for higher-rate taxpayers.
• 45% for additional rate taxpayers.

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 a £1m+ portfolio

Let’s see how this works in practice. We’ll use the example of Steve, a higher-rate taxpayer who has £500 of his own cash to invest each month in a portfolio of UK and international shares.

He receives 20% basic-rate tax relief at source, which automatically increases his monthly contribution to £625. Steve can also claim another 20% through his tax return, adding another £125 and taking his total monthly contribution to £750.

Now let’s say Steve invests for 30 years and achieves an average annual return of 8%. At this rate he’d grow his retirement pot to more than £1.1m.

Without this tax relief, Steve’s retirement fund would be far lower, at £745,179.

On the downside, SIPP investors do have to pay tax when they draw down cash, unlike ISA users. However, they can take up to 25% of their pot tax-free at retirement. Combined with that generous tax relief, this can still leave investors in a stronger position overall.

Harnessing US shares

Another advantage is that investors can choose from a wide variety of UK and overseas stocks, investment trusts and funds in their SIPP to grow their wealth.

The HSBC S&P 500 ETF (LSE:HSPX) is one such asset I hold in my own portfolio. Over the last decade it’s delivered an average annual return of 13.3%. This is thanks in part to its large contingent of high-growth tech stocks like Nvidia, Microsoft, Apple and Amazon:

As you can see, though, it also provides wide exposure to a variety of different industries, allowing investors to harness the wealth-growing power of the US stock market. Such diversification also allows investors to effectively spread risk and enjoy a smoother return across the economic cycle.

Rotation out of US shares has impacted the fund’s performance more recently. While still a risk, I believe that on balance it will — along with my other SIPP holdings — significantly boost my chances of making a large retirement income. It’s one to consider.

The post Here’s how you could target a second income for retirement with a SIPP! appeared first on The Motley Fool UK.

I’ve been loading my own Self-Invested Personal Pension (SIPP) with ETFs recently. The following three have allowed me to spread risk, and if their past performances turn out to be an accurate guide, they could give me an average 26.8% annual return over the next decade.

Low-cost US share exposure

The HSBC S&P 500 ETF (LSE:HSPX) is about as straightforward as these funds come. It tracks the performance of the US leading index of 500 shares, of which there are currently many on the market.

What attracted me to this one is that has one of the lowest ongoing charges out there, at 0.09%.

Why invest in the S&P 500 though? Well, it provides exposure to some of the largest and best companies on the planet, ones with strong records of innovation, deep pockets, and loyal customer bases across the globe. We’re talking about microchip manufacturer Nvidia, for example, which just made history as the world’s first $4trn company.

Since its launch in June 2022, this fund’s delivered an average annual return of 19.5%. Future returns could be compromised if the recent investor rotation away from US shares and into global equities continues. But I remain confident.

Riding the digital defence boom

The L&G Cyber Security ETF (LSE:ISPY) is a thematic fund rather than a bog-standard index tracker. Its goal is to harness the growth potential of tech shares “that generate a material proportion of their revenues from the cyber security industry“.

These range from hardware and software creators that protect files, websites, and networks from online attacks, to service providers that deliver consulting and other security-related services.

This fund has room for considerable growth as the digital revolution rolls on and the number of online threats increases. Allied Market Research thinks the world’s cybersecurity sector will expand at an annualised rate of 10.4% in the decade to 2033.

Returns may disappoint during economic downturns when tech firms tend to cut spending. But the long-term potential is considerable — it’s delivered an average annual return of 12.1% since its launch in September 2015.

48.7% returns

The HANetf Future of Defence (LSE:NATP) was launched in July 2023 to capitalise on booming demand for defence shares. So far it’s delivered beyond all reasonable expectations, providing an average annual return of 48.7% since then.

Since Russia’s invasion of Ukraine in 2022, countries have turbocharged weapons spending amid rising geopolitical and military threats. Defence sector profits have swelled, a trend that I’m expecting to continue.

Like most thematic defence funds, this product includes the usual blue-chip suspects like BAE Systems, Palantir, and Safran. But it also contains cybersecurity stocks including Palo Alto and CrowdStrike, reflecting the changing nature of warfare.

Future returns could disappoint if geopolitical tensions ease. But given the current direction of travel, this looks an unlikely scenario in my book.

The post Stunning 26.8% annual returns! Here are 3 ETFs I’ve bought to supercharge my SIPP appeared first on The Motley Fool UK.

Here’s how an investor could target a million pound ISA.

1) Diversify for strength and opportunity

The first rule every investor should consider is to diversify their holdings.

No one gets all of their stock picks right — even legendary investor Warren Buffett has made several bad calls down the years. Putting all the eggs in a single basket can destroy an investor’s ISA targets if the bet doesn’t pay off.

Here at The Motley Fool, we believe a portfolio of 25 stocks should be the minimum. Spreading investment across sectors and regions not only helps to reduce risk. It also provides a large range of opportunities to make capital gains and passive income.

In my own portfolio, I hold shares as diverse as financial services businesses Aviva and HSBC, drinks manufacturer Diageo, miner Rio Tinto, housebuilder Persimmon, and tabletop gaming specialist Games Workshop.

2) Buy US shares

Building that diversified portfolio by including US shares could be the next block in our wealth-building plan. Over time, the returns on Stateside stocks have clobbered those generated in every other major market.

Exchange-traded funds (ETFs) like the HSBC S&P 500 ETF (LSE:HSPX) are great ways to consider getting such exposure. This fund owns many of the world’s biggest and brightest companies. And with several hundred different holdings, it more than delivers the diversification benefits described above.

Major holdings include microchip maker Nvidia, smartphone maker Apple, card operator Visa, and drug manufacturer Eli Lilly. We’re talking about global market leaders here, and ultra-rich companies with long track records of innovation.

Past performance is no guarantee of future profits, of course. And rapidly changing political policy in the US could impact future returns, from the introduction of trade tariffs to tighter immigration rules.

However, there are also strong reasons to expect US shares to continue outperforming on the global stage. These include the resilience and size of the US economy, robust consumer spending, access to deep capital markets, and a business-friendly tax environment.

Turning £262 into a £1.3m ISA

Our S&P 500 ETF has delivered an average annual return of 13.7% since its creation in 2010. If this continues, a £262 monthly investment here over 30 years would turn into £1,343,521.

This would then generate an annual passive income of £80,611, if invested in 6%-yielding dividend shares. I hold this fund in my own portfolio, and plan to increase my holdings when I next have cash to invest.

The post £262 to invest a month? Here’s 1 way to target a £1m Stocks and Shares ISA appeared first on The Motley Fool UK.

But how much would someone need to invest each month in a Stocks and Shares ISA to retire comfortably? Let’s take a look.

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.

Compund returns

The first thing to say is the earlier someone gets started on their investment journey, the better. Time in the market allows for exponential growth through the power of compounding, which can turn even modest long-term contributions into a substantial retirement fund.

Let’s say someone has £100 to invest each month in their Stocks and Shares ISA. If they can achieve a 6% average annual return, here’s what their nest egg could look like by the State Pension age of 68, according to the date at which they began investing:

As you can see, the differences are vast, illustrating the enormous effect of compound gains. Starting at 25 instead of 30 leads to nearly £68,000 more by retirement, just for beginning five years earlier.

The difference is even more striking when comparing a start age of 25 to 40. That’s a gap of around £155,000, despite contributing the same £100 each month.

Yet this isn’t to say that someone who starts investing later on can’t build a decent retirement fund. Even someone in middle age could conceivably retire in comfort with the right investment strategy.

A £51k passive income

It’s important to say that there’s no guaranteed return by investing in shares, trusts and funds. But history shows us that stock markets can be extremely effective way to target long-term wealth.

For instance, despite bouts of recent volatility, the average annual return of the FTSE 100 and S&P 500 indices over the last decade are 6.4% and 12.9% respectively.

Based on these figures, a 40-year-old who can invest £500 each month equally in these indices stands a good chance of achieving a Stocks and Shares ISA worth £854,877 by the time they reach 68.

If they then invested this in 6%-yielding dividend shares, they’d have a healthy £51,293 passive income to live off.

A top fund

There are many ways that investors can seek to build retirement capital, of which this is just one example. But a fund like the HSBC S&P 500 (LSE:HSPX) could be a good option to consider given the excellent long-term returns of US stocks that I’ve described.

Index funds like these provide excellent diversification across hundreds of companies, helping investors capture a multitude of opportunities while also allowing them to spread risk.

This particular fund holds high-growth shares like semiconductor maker Nvidia, online retailer Amazon and social media specialist Meta. Defensive shares such as telecoms provider Verizon, drinks manufacturer Coca-Cola and healthcare company Johnson & Johnson also provide steel.

It’s a combination that could deliver a blend of healthy capital gains, dividend income and long-term resilience.

A ramping up of global trade tariffs could well impact future returns. But US shares have a proven record of bouncing back from economic crises, which makes an S&P 500 fund a solid opportunity to think about.

The post How much would a Stocks & Shares ISA investor need to invest each month to retire comfortably? appeared first on The Motley Fool UK.

This is thanks to the mathematical miracle of compounding. Making a return on past returns can, over decades, result in transformational wealth.

Let me show you how.

Sage words

Investing in shares, trust and funds can be a bumpy ride. As we’ve seen in recent days, stock markets can sharply reverse depending on geopolitical and maroeconomic conditions.

In this case, share prices have dropped amid fears of growth-crushing trade tariffs between the US and its major trading partners, and the potential impact of these import taxes in fuelling inflation.

Yet it’s also important to remember that, over the long term, share prices tend to recover and grow, rewarding patient investors who stay the course.

I’m reminded of billionaire investor Warren Buffett‘s wise words on the stock market’s remarkable bouncebackability. The so-called ‘Sage of Omaha’ once pointed out that:

In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

Today, the Dow Jones sits around 41,453 points.

A £1.6m pension pot

This is a perfect example of how investing with a long-term approach can pay off.

Since its inception in 1957, the S&P 500 has also delivered mighty shareholder profits. Its average annual return is an impressive 10.2%. If this continues, a 30-year-old regularly investing in the index in a Stocks and Shares ISA could build a life-changing retirement fund.

Let’s say they invest £300 each month between now and their State Pension age of 68. Thanks to the wealth-building power of compounding — and the tax-saving qualities of the ISA — they’d have generated a whopping £1,639,317 to retire on (excluding broker fees).

Remember though, that 10.2% return I’ve described isn’t guaranteed.

Taking the simple route

By creating a diversified portfolio, our investor could stand a much better chance of retiring with a substantial nestegg. Purchasing shares across a variety of industries, sub-sectors and geographies can help them mitigate risk and capitalise on many different investment opportunities.

To target that 10.2% average annual return simply, our 30-year-old could choose to buy an exchange-traded fund (ETF) that tracks the performance of the S&P. The HSBC S&P 500 (LSE:HSPX) is the one I hold in my own portfolio.

With its ongoing charge of 0.09%, it’s one of the most cost-effective index-tracking funds out there.

As you can see from the breakdown, the fund allows investors to effectively diversify across a range of sectors. And with tech shares like Nvidia, Microsoft and Apple making up a large portion of the fund, it also has significant long-term growth potential as the digital revolution rolls on.

The fund could face headwinds if sentiment towards US shares as a whole weakens. But overall, I think it’s a great one to consider as a way for investors to aim for a large retirement pot.

The post If a 30-year-old puts £300 a month into a Stocks & Shares ISA, here’s what they could have by retirement appeared first on The Motley Fool UK.