Considering these UK shares could help an investor on the road to a million-pound portfolio
Aiming for a million-pound portfolio isn’t a crazy, unrealistic goal. Sure, it’ll likely take many years to get there. But with a sound investment strategy, it’s achievable.
A large part of this is targeting the right sort of UK shares. Here are some growth stocks that could help boost portfolio returns.
Targeting specific sectors
One of the main ways to help increase a portfolio’s value is by investing most of the money in growth stocks. Typically, these are companies in rapidly-expanding sectors or firms that are innovating and becoming leaders in their fields.
For example, technology. We’re seeing this sector continue to push boundaries, particularly with artificial intelligence (AI). I think this theme hasn’t finished by any stretch, so anticipate long-term gains for the leaders in this area. Granted, most of these candidates are listed in the US. But there are plenty of UK stocks making use of AI, helping to drive efficiencies and boost overall profitability.
IT service and transformation providers Kainos and Softcat are both embedding AI into client solutions.
Another major area is healthcare, driven by an ageing population. I feel health tech adoption will sustain healthcare demand and innovation going forward, with several UK players well-positioned to take advantage. This includes Primary Health Properties and Smith & Nephew.
Heading for a million?
In theory, let’s assume an investor had a £10k lump sum to put to work, and could afford £1,000 a month to buy high-growth shares from promising sectors. Over time, the portfolio could grow to 10-20 companies. I’ll assume a long-term annualised growth rate of 10%. In this scenario, by year 22, the investment pot could be worth over £1m.
Of course, forecasting this far in advance is difficult. If my sectors underperform, or even if the particular stocks don’t rally as anticipated, it could take much longer and an investor could even lose money.
Another example to consider
Renewable energy, as part of the energy transition, is a key theme for the future. Although it’s gone cooler in previous years, I feel momentum’s starting to return. One stock that I think is well placed is SSE (LSE:SSE).
At the core of the investment case is the SSE Renewables division. This is one of the UK’s largest owners and developers of onshore wind, offshore wind and hydro assets. At the same time, I think investors underappreciate SSEâs exposure to electricity networks.
It has a large transmission and distribution business, providing steady revenue that’s only likely to grow with time. Earlier this month, the regulator Ofgem approved a £28bn funding package for the total network for the period between 2026 and 2031. This is another reason I think the stock could be a good long-term addition to a portfolio.
In terms of risks, it is subject to the regulator in other ways, including pricing power. This can be seen as a negative, and could restrict the potential for large profits in the future.
Even with this, I think it’s one of a number of stocks that could be used to turbocharge a strategy for a seven-figure portfolio.
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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Kainos Group Plc, Primary Health Properties Plc, Smith & Nephew Plc, and Softcat Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
