If I’m lucky enough to live 20 years beyond retirement, being a SIPP millionaire would give me a healthy £50,000 a year to play with.
And while the older one gets, the fewer things one has to brag about – either on the golf course or in the pub – a million quid pension pot is certainly something to shout about. Except when it comes to paying for the next round.
It’s certainly no breeze to become a SIPP millionaire. But with dedication, patience, and the right kind of mindset, I believe anyone can do it. I’d use these three C’s to get there.
1. Confidence
I modelled a lot of my early business decisions on Jack Welch.
Jack was a titan of industry and the purest model you’ll find of a hard-headed, light-hearted CEO. When Jack retired from General Electric in 2001 he collected the largest-ever severance payment in history: more than $400m.
And while the company I ran didn’t quite reach such heady heights, one of his best pieces of advice was always at the back of my mind.
“Don’t overbrain things to the point of inaction.”
Yes, there can be hundreds of thousands of pounds at stake when investing to become a SIPP millionaire.
But if you never pull the trigger on an investment you will never reach your goal. And the longer you stay in cash, the more of your hard work is wasted.
2. Consistency
Of all the things needed to become a SIPP millionaire, this one is the hardest to acquire.
As Will Durant wrote: “We are what we repeatedly do. Excellence then, is not an act but a habit.”
Spending 15 minutes a day lifting weights, or meditating, or hovering by the biscuit tin instead of diving straight in. This is what gets us cumulative progress, or compound gains. It’s precisely the same for investing.
There is one simple trick you can use to automate your way to being a SIPP millionaire and bypass your human laziness. I’m amazed more people don’t do this.
Set up a regular investment to your SIPP, not just when you’ve got the money left over at the end of the month.
Do a quick calculation and you’ll find the rewards are huge.
Take a starting pot of £50,000. At a pretty conservative 6.5% a year, simple interest will get you all the way to £228,793.
But add £1,000 a month consistently? That’s SIPP millionaire territory. £1,077,009, to be exact.
Your invested capital over the three decades is £410,000. And your compound interest — basically free money — is £307,527!
3. Control
To have a chance at becoming a SIPP millionaire, you need a firm hand on the tiller. And knowing your £1m target before you start actually makes it easier.
Self-denial now to reap rewards later is something all of us should learn. And yet not doing it is a bad habit many can never overcome.
I’d add that this one is linked strongly to consistency. If spare cash is not in your account to spend, you can’t blow it on wine, or sports gear, or whatever little thing takes your fancy. Ask any SIPP millionaire his or her habits. You’ll find each answer remarkably similar.
I’ll defer to Jack Welch again to conclude: “Control your destiny, or someone else will.”