One can achieve a lot in five years when investing within an ISA or SIPP. Pick the right investments, and it’s possible to double, triple, or quadruple one’s money (with no Capital Gains Tax to pay).
Of course, the key challenge is working out where to invest as there are a lot of options today. With that in mind, here’s how I’d invest £20k for the next five years.
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.
Looking to the future
I watch a lot of US financial TV shows.
And one thing I often hear US money managers stress is that investors should “skate to where the puck is going to be, not where it has been.”
What they’re saying with this ice hockey analogy is that investors should look towards the future.
Focus on the present or past – where the puck has been – when investing and one may see underwhelming results.
Focus on the future and we can set ourselves up for success. I think it’s a great concept to keep in mind when investing money.
The world is becoming more digital
So, what does the future look like? Well, one thing’s for sure: it’s going to involve more technology.
Looking ahead, we’re likely to be using our smartphones more, streaming music and videos more, and shopping online more.
Meanwhile, businesses are going to be using cloud computing, data centres, and artificial intelligence (AI) more.
So, I’d put a lot of focus on technology if I was investing £20k in an ISA or SIPP for the next half-decade.
Tech ideas
One company I’d definitely want to invest in is Microsoft. It’s one of the biggest players in the AI space, thanks to its ‘copilot’ features. It’s also one of the biggest players in cloud computing.
Another company I’d want exposure to is Alphabet, the owner of Google and YouTube. With exposure to streaming, cloud computing, AI, digital healthcare, and self-driving cars, it’s very well positioned for the future.
Of course, it’s hard to talk about the future and not mention Nvidia. The biggest player in the AI chip market (by a mile), it’s a ‘picks-and-shovels’ play on the technology growth story.
The mega-cap tech stocks aren’t the only way to get exposure to the tech sector, however. Here in the UK, there are plenty of stocks that offer exposure to the theme.
Take London Stock Exchange, for example. It’s now one of the largest financial data companies in the world. And after recently signing a partnership with Microsoft, it’s going to be introducing some really exciting new AI features in 2024.
Another great example is Volex. It’s a small British company that makes cables and power cords for data centres and electric vehicles. For the six months to 1 October, data centre revenues were up around 30% year on year.
So, these are the kinds of companies I’d be directing capital towards if I was investing £20k in an ISA or SIPP for the next five years.
Of course, I wouldn’t want to have all my money in the tech sector. These stocks can be volatile at times.
I’d also invest in other sectors such as Healthcare, Consumer Goods, and Financials.
Technology would certainly be my main area of focus, however.
