{"id":374066,"date":"2026-04-11T04:58:09","date_gmt":"2026-04-11T04:58:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/374066\/"},"modified":"2026-04-11T04:58:09","modified_gmt":"2026-04-11T04:58:09","slug":"a-sipp-opened-at-birth-could-be-worth-10m-in-55-years","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/374066\/","title":{"rendered":"A SIPP opened at birth could be worth \u00a310m in 55 years"},"content":{"rendered":"

\"Black<\/p>\n

Image source: Getty Images<\/p>\n

Parents can pay just \u00a32,880 a year into a child\u2019s SIPP (Self-Invested Personal Pension) \u2014 the government tops it up to \u00a33,600. Given enough time, the results are extraordinary.<\/p>\n

The mechanics are simple but powerful. Parents and grandparents can pay up to \u00a32,880 per year into a child\u2019s SIPP \u2014 and even though the child pays no tax, the government adds 20% relief, bringing the total annual contribution to \u00a33,600. That\u2019s it. That\u2019s the whole strategy.<\/p>\n

Let\u2019s assume that the parents, and then the child, maintain those contribution for the next 55 years. Admittedly, by the end of the period \u2014 50-odd years from now \u2014 the contributions would actually be quite small relative to the value of money. <\/p>\n

\"\"Created with Claude<\/p>\n

Time does the heavy lifting<\/p>\n

Assuming the money is invested in global stocks returning 11% annually \u2014 broadly in line with the S&P 500\u2018s performance over the past 55 years \u2014 those modest contributions compound<\/a> into something remarkable. After 20 years the pot sits at around \u00a3230,000. After 35 years, \u00a31.2m. By year 55, just over \u00a310m.<\/p>\n

\"\"Created with Claude<\/p>\n

The really striking thing is how much of that growth happens at the end. The final decade alone adds more than \u00a36m \u2014 more than the preceding 45 years combined. This is what compounding actually means in practice: the longer it runs, the faster it accelerates. The total amount paid in over 55 years is just \u00a3198,000. The rest \u2014 more than \u00a39.9m \u2014 is pure growth.<\/p>\n

There are caveats, of course. The money is locked away until at least age 57 under rules coming into force in 2028. Returns of 11% are not guaranteed \u2014 markets can disappoint for years at a time. <\/p>\n

And many families simply cannot commit \u00a32,880 per year from birth. But it\u2019s worth playing around with the numbers. Even tiny contributions \u2014 say \u00a320 per month \u2014 can make a huge difference over time.<\/p>\n

Where to invest?<\/p>\n

For long-term SIPP investors, few investment trusts make a stronger case than Scottish Mortgage Investment Trust (LSE:SMT<\/a>).<\/p>\n

Run by Baillie Gifford, the investment trust<\/a> does something most retail investors cannot: access exceptional private companies before they list. <\/p>\n

This is clear from its larger holding \u2014 SpaceX. The company is valued at \u00a3800bn on Scottish Mortgage\u2019s balance sheet, but that figure could double if SpaceX moves forward with its listing this year \u2014 it already represents around 16% of the portfolio. <\/p>\n

The company also provides investors with instant diversification, owing a host of household names and companies you\u2019ve never heard of. <\/p>\n

The philosophy is patient \u2014 positions held for years, sometimes decades, ignoring short-term noise. That comes with real risk: the trust fell more than 50% in 2022 as growth stocks re-rated sharply. What\u2019s more, concentrated private holdings can be illiquid and hard to value accurately.<\/p>\n

However, it\u2019s certainly an interesting proposition, and well worth considering.<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Parents can pay just \u00a32,880 a year into a child\u2019s SIPP (Self-Invested Personal Pension)…\n","protected":false},"author":2,"featured_media":374067,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":{"0":"post-374066","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz","13":"tag-personal-finance","14":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/374066","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=374066"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/374066\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/374067"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=374066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=374066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=374066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}