Recently, I opened a Junior SIPP for my one-year-old daughter. I\u2019ve stuck \u00a3500 in it to start, with the intention of adding a few hundred pounds here and there when I have excess cash.<\/p>\n
The question is \u2013 where do I invest the money? Should I go with an index fund, a thematic ETF, or an individual stock?<\/p>\n
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A financial head start<\/p>\n
I\u2019m really excited about the potential here. With more than 50 years of compounding<\/a> ahead, just imagine what this pension account could be worth by the time my daughter gets to retirement age.<\/p>\n Let\u2019s say I put \u00a31,000 a year into the account for the next 10 years, picked up tax relief on this, and the investments grew by 9% a year after fees until she turned 60. I calculate that it would be worth nearly \u00a31.5m by age 60.<\/p>\n 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.<\/p>\n I\u2019m focusing on growth<\/p>\n In terms of the investments, I\u2019m going to take a higher-risk, growth-focused approach. Because, with a time horizon of over 50 years, my daughter can afford to take on risk in the pursuit of higher returns.<\/p>\n I\u2019m thinking I\u2019ll start with a diversified growth fund. Then, as the account grows, I\u2019ll look to add some individual growth stocks<\/a> in an effort to turbocharge returns further.<\/p>\n Where I\u2019ll start<\/p>\n Blue Whale Growth could be a good fund for me to start with. Its manager, Stephen Yiu, is very skilled at identifying growth opportunities.<\/p>\n I\u2019ve held this fund in my own SIPP for over five years now and it\u2019s been a brilliant performer \u2013 it\u2019s up about 70% over one year and 150% over three. It could help to propel my daughter\u2019s SIPP too.<\/p>\n Scottish Mortgage Investment Trust is another product I like and will probably allocate some capital to. It\u2019s run by Scottish investment firm Baillie Gifford, which also has a knack of identifying potential early (it has made a fortune on SpaceX).<\/p>\n This could complement Blue Whale nicely. It has a similar growth approach but has different holdings (and holds some private companies).<\/p>\n A growth stock for the long term<\/p>\n