Investing in a Self-Invested Personal Pension (SIPP) is a terrific way to build medium-to-long-term wealth. Even in the last five years, with all the volatility investors have endured, the stock market has delivered some fairly robust returns. So with that in mind, let’s take a look at how a £5,000 portfolio has performed since April 2020.
Transformative gains
The level of returns enjoyed by investors ultimately depends on where the money has been invested over the last five years. Here in the UK, large-cap stocks have been outpacing small- and mid-caps by a significant margin when looking at the FTSE 100 and FTSE 250. Meanwhile, across the pond, the S&P 500 and Nasdaq 100 are reaping the rewards of stronger economic growth.
| Index | 5-Year Total Return | Annualised Return | Portfolio Value |
| FTSE 100 | 55.6% | 9.2% | £7,780 |
| FTSE 250 | 27.6% | 5.0% | £6,380 |
| S&P 500 | 96.4% | 14.5% | £9,820 |
| Nasdaq 100 | 119.8% | 17.1% | £10,990 |
Clearly, the US tech sector’s been the star of the show. But what’s interesting is that, when excluding the FTSE 250, each index notably outperformed its historical average return. For reference, the FTSE 100 typically generates an 8% annual gain, while the S&P 500 and Nasdaq 100 stand at 10% and 13% respectively.
There are a lot of different factors at work here. However, one of the biggest is the fact that five years ago today, the stock market had just gone through the 2020 Covid Crash.
This goes to show that buying proven high-quality businesses at a time of fear, uncertainty, and doubt can lead to market-beating returns. So could investing another £5,000 today achieve similar market-beating returns over the next five years?
Looking for opportunities
It’s impossible to know for certain what’s going to happen over the next five years. The tariff situation will undoubtedly cause chaos in the short term. However, I remain optimistic for the long run as quality companies adapt to the new landscape.
As such, looking at proven industry leaders with healthy balance sheets might be a prudent move to consider right now. And one business I’ve had my eye on for a while is Nvidia (NASDAQ:NVDA).
The chip designer has already seen almost a third of its market-cap wiped out since the start of 2025. However, as a result, the stock’s finally trading at a far more reasonable valuation of just 21 times forward earnings. And given semiconductors have been excluded from the recent tariffs, is Nvidia a no-brainer buy?
Well, not quite. While semiconductors have indeed been given an exemption, a 25% tariff has been put on steel and aluminium. Nvidia relies significantly on these two commodities for its data centre products.
In terms of impact, Nvidia’s margins are likely going to take a hit since the AI accelerator chip landscape is becoming increasingly competitive. And subsequently, earnings could fail to meet analyst expectations, pushing the forward P/E higher than it seems right now.
However, with $43bn of cash on its balance sheet right now, Nvidia appears to have more than enough financial flexibility to weather this storm. That’s why I think it might be a great long-term addition to my SIPP while its shares tumble to a discounted price.
This post was originally published on Motley Fool
