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.

What really matters

Most investors think of a SIPP as a retirement account. Somewhere to save for later life and eventually draw an income.

But that framing can miss the bigger picture.

A SIPP is not defined by the pension wrapper itself. What matters far more is what sits inside it — and how long those investments are allowed to compound.

Over long periods, time often becomes the most powerful force. Earlier gains begin generating returns of their own, gradually shifting wealth creation away from fresh contributions and towards growth created by the portfolio itself.

That is where the real power of a SIPP begins to emerge.

When money starts working harder

To explore this idea, I modelled an investor with a £30,000 starting SIPP alongside regular yearly contributions over a 20-year period.

What stands out in the chart is not simply the final value, but how wealth creation gradually changes shape.

During the early years, contributions remain the dominant driver. But as gains begin generating returns of their own, compounding contributes an increasingly large share of total wealth.

That is where long-term investing starts to look different. Over time, growth generated by the portfolio can rival — and eventually exceed — the impact of fresh money being added.

The lesson is simple: a SIPP is not merely a pension account. Given enough time, it can become a compounding machine.

Chart generated by author

Quiet compounder

Take Halma (LSE: HLMA) as an example. It may not generate the headlines of fast-growing technology stocks, but few FTSE 100 companies better illustrate the power of long-term compounding.

The group operates a decentralised model across safety, environmental, and healthcare technologies. That sounds broad, but the common thread is important: it focuses on specialist niches with resilient demand, high barriers to entry, and often regulation-driven growth.

What stands out to me is how management thinks. Rather than chasing short-term cycles, the business is built around what it calls a “Sustainable Growth Model”. This combines long-term thinking with enough flexibility for its individual businesses to adapt quickly as markets evolve.

That matters because many of Halma’s end markets are supported by trends unlikely to disappear anytime soon. Clean water, healthcare, industrial safety, and data infrastructure are not temporary themes. They are long-duration challenges that increasingly require specialist technology.

Its decentralised structure also gives individual businesses the freedom to innovate and respond quickly to changing customer demand, while the wider group provides financial discipline and acquisition expertise.

Of course, quality rarely comes cheaply. Today, Halma trades on a trailing price-to-earnings ratio of around 50, leaving little room for disappointment if growth slows. Its acquisition-led model also relies on disciplined execution, meaning poor integration or overpaying for deals could pressure future returns.

But for SIPP investors, that may not be the main point.

The earlier chart showed how powerful compounding becomes when given enough time. To me, Halma represents the same principle in stock form — a business designed to compound steadily over decades rather than chase short-term excitement.

Should you invest £5,000 in Halma Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Halma Plc made the list?

Andrew Mackie does not hold any positions in the companies mentioned.

The post The biggest mistake investors make with a SIPP appeared first on The Twelfth Magpie.

The stock is up 32.74% since the start of the year. But I’m not ruling out further gains when the company publishes its results.

What to look for?

Halma owns a collection of subsidiaries focused on life-saving technologies. These typically occupy leading positions in highly specialised industries. 

It operates in three divisions – Safety, Environment & Analysis, and Healthcare. And the Environment & Analysis unit has been doing extremely well recently. 

A big reason for that is high demand. Strong growth in defence spending and data centres is increasing demand for photonic components. 

Halma has subsidiaries in this area. And the mission-critical nature of their products means they’ve been benefiting from strong demand recently.

Earlier this month, investors saw Diploma report strong earnings driven by the same two themes. Halma is a different business, but I’m expecting similar results.

What should investors look for?

Halma grows through a combination of existing businesses increasing sales and the firm acquiring new ones. But the stock market sees these very differently.

In general, investors are wary about growth from acquisitions. These can’t be repeated and there’s always a risk of overpaying as part of a deal. 

As a result, the metric the stock market usually focuses on is organic revenue growth. This measures sales increases from existing subsidiaries. 

In March, Halma outlined its expectation of “mid-teens percentage constant currency revenue growth”. That would be the highest since the end of Covid-19. 

The stock is trading at a relatively high price-to-sales (P/S) ratio, so strong results are expected. But I think there’s still room for a positive surprise in June.

What about the long term?

For long-term investors, though, the next update isn’t a good enough reason to buy a stock. Fortunately, there’s a lot more to like about Halma. 

A focus on safety means the company often benefits from regulation. Its products are non-negotiable in terms of complying with mandatory standards.

Consistently high returns on equity also suggest the company’s acquisitions add value. And that’s another very encouraging sign.

Source: Fiscal.ai

Selling into cyclical end markets can be risky. If aerospace goes through a downturn or data centre growth slows, this could impact Halma.

Overall, though, I think there’s a lot for long-term investors to like about the company. It’s no surprise to me that the stock has outperformed over the last 10 years.

The stock market in June

There’s going to be a lot going on in the stock market in June. Investors don’t seem to have sold in May and gone away this time. 

In the case of Halma, any fall in the share price could be an opportunity worth considering. I’m expecting strong results when the company reports.

Spending on defence and data centres isn’t showing signs of slowing. So I think the company looks like it’s in a pretty good position at the moment.

Stephen Wright does not have positions in any of the companies mentioned.

The post 1 FTSE 100 stock set to surge in June? appeared first on The Twelfth Magpie.

In fact, with the right strategy, putting aside £750 a month could be enough to grow a nest egg ranging from £591.5k all the way to over £4m!

Here’s how.

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.

Running the numbers

A 45-year-old aiming to retire at 68 has a 23-year runway to build wealth. Assuming the UK stock market continues to deliver an average 8% annualised return, investing £750 a month will compound into a nest egg of £591,548.34 by retirement. And thanks to the ISA, all of this can be enjoyed without HMRC knocking at the door.

That’s a serious sum, especially considering all it takes to earn it is time and consistency. But for investors willing to go further and pick individual stocks, the potential rewards can be drastically different. And looking at the FTSE 100, Halma‘s (LSE:HLMA) one of the most compelling examples over the last two decades.

Since May 2003, the safety, health, and environmental technology group has delivered an annualised return of 19.7%. At that rate, £750 a month doesn’t grow to £591k. It grows to a breathtaking £4,043,030.74.

So what made Halma so extraordinary? And, more importantly, can it continue?

What’s driven Halma’s remarkable track record?

Halma’s secret is deceptively simple: acquire niche, cash-generative businesses in regulatory-driven markets and give them autonomy to grow. Then just rinse and repeat.

Its portfolio of companies spans fire detection, water quality monitoring, medical devices, and industrial safety – all sectors where legislation and human safety needs create durable, recurring demand regardless of the economic cycle.

That model’s compounded quietly for decades. And management’s been disciplined enough to almost never overpay during an acquisition or lose focus on the long-term strategy to chase short-term gains.

Today, global safety regulation’s only tightening, the pool of potential acquisitions remains deep, and Halma’s decentralised operating model gives it a remarkable ability to scale without losing the entrepreneurial culture that drives performance in each subsidiary.

So what could go wrong?

Are there any risks worth watching?

Halma’s acquisition-driven model depends on a steady supply of quality targets at sensible prices. In an environment where private equity competition for niche industrial businesses has intensified sharply, deal pricing has become more challenging.

And overpaying for a string of acquisitions that fail to live up to performance expectations could meaningfully dent returns.

There is also the question of scale. The same compounding that produced those extraordinary returns becomes harder to sustain as the business gets larger. After all, growing a £17bn company at 20% a year is a fundamentally different challenge to growing a £1bn one.

With that in mind, investors expecting another two decades of near-20% growth may be left disappointed. But that doesn’t mean this is no longer an interesting business.

Halma’s track record of being a quality compounder speaks for itself. And for investors looking to build long-term wealth inside a Stocks and Shares ISA, this FTSE stock may still be worth a closer look, even if its future performance may not be as impressive as its past.

Should you invest £5,000 in Halma Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Halma Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.

The post If a 45 year-old puts £750 a month into a Stocks and Shares ISA, here’s what they could have by retirement appeared first on The Twelfth Magpie.

So, how does it work? And what’s the smartest way to get there?

From £60k to £1m

At the stock market’s long-run average annual return of 8%, a £60,000 SIPP left untouched would compound into approximately £1,058,689.41 in around 36 years.

That’s a long time. But for younger investors, it means millionaire status just as they start reaching retirement age, all without adding a single extra penny.

Of course, most investors won’t stop contributing. And every additional payment made along the way shortens that timeline further. The real point is that time and compounding are doing the heavy lifting.

However, for those willing to pick quality individual stocks directly rather than simply track the market, this timeline to becoming a millionaire can be significantly accelerated.

Boosting investment returns

Few companies in the FTSE 100 better embody the kind of long-term compounding quality that can dramatically shorten the wealth-building journey than Halma (LSE:HLMA).

We know this because the specialist technology group has already proven itself to be a millionaire maker, averaging a total annualised return of 19.1% over the last 20 years – enough to transform a £60,000 initial investment into a whopping £2,655,166!

The company operates across three high-growth sectors: Safety, Environmental & Analysis, and Medical through a network of subsidiaries. Rather than running its divisions centrally, it operates a decentralised model, acquiring niche market leaders in essential industries and giving their management teams the autonomy to grow.

The results have been extraordinary. Halma has delivered 22 consecutive years of record adjusted profit – a feat that almost no other FTSE 100 company has matched. And with more tailwinds (like ageing populations, infrastructure safety, and environmental regulation) on the horizon, many institutional analysts continue to be optimistic for what the future might hold, even at today’s premium valuation.

So, what could go wrong?

Where’s the risk?

Halma’s decentralised acquisition strategy is its greatest strength. But it’s also a double-edged sword. If leadership begins to lose discipline in its dealmaking, overpaying for acquisitions or buying businesses outside its circle of competence, the compounding engine could stall.

There’s also meaningful currency exposure to consider. With operations spread across North America, Europe, and Asia, a sustained strengthening of sterling could weigh on reported earnings even when the underlying businesses are performing well.

For long-term SIPP investors, however, these risks feel manageable given Halma’s exceptional track record and the quality of its management team.

The bottom line

A £60,000 SIPP has genuine millionaire potential. And for patient investors prepared to back quality compounders for the long run, I think that journey could arrive far sooner than the index fund alone would deliver.

Halma could be among these winning businesses. But as already highlighted, there are risks that must be considered carefully. Nevertheless, its long track record has certainly caught my interest. And I think it’s a business worth investigating further.

The post Here’s how to target retiring as a millionaire on a £60k SIPP appeared first on The Twelfth Magpie.

Alexandra Jackson, director of equities at Rathbones Asset Management, says if you want to build serious wealth rather than chase market trends, the answer may be to buy boring UK shares, then stick with them for years. “Some of the UK’s most successful long-term investments don’t sell excitement, disruption or bold visions. They sell unavoidable, regulated, repetitive, or mundane things like fire detectors, sausages, cables or road safety barriers. But they do it exceptionally well.”

How can stocks this boring be so beautiful?

Jackson highlighted seven “boring” UK shares that would have made investors millionaires if they’d put £5,000 into each 20 years ago. Obviously, this is a self-selected list of winners. And there’s no guarantee they’ll keep delivering. Yet it’s a fascinating exercise, and right there is a stock I’ve wanted to own for years.

She said a £5,000 investment in FTSE 100-listed health and safety technology specialist Halma (LSE: HLMA) 20 years ago would now be worth £170,000, with dividends reinvested. Halma sells products designed to meet growing safety regulations, including smoke alarms, gas sensors, water testing equipment and medical diagnostics. “You only notice them when they fail, which is precisely why demand keeps coming back.”

I’m itching to add Halma to my Stocks and Shares ISA. It’s increased dividends for 45 years in a row, which suggests a brilliantly run company that rarely puts a foot wrong. So what’s stopped me? It’s just too expensive, with a price-to-earnings ratio of 49. One bad acquisition, weaker growth or broader stock market sell-off could hit the shares hard.

Personally, I wouldn’t buy Halma today. But I’ll be watching it like a hawk because if we get a wider stock market crash and that P/E falls back to earth, I’ll swoop.

The other six ‘boring’ shares show the power of long-term compounding. Diploma distributes seals, cables and technical components inside mission-critical supply chains. Jackson said its relentless cash generation has turned £5k into a stunning £371,000 in 20 years.

What makes these companies winners?

Cranswick makes pork, poultry and prepared foods. Its vertically integrated ‘farm-to-fork’ model and dependable demand have delivered years of strong returns. IT reseller Computacenter generates steady earnings growth and strong cash flows.

Hill & Smith supplies road safety barriers, utility poles and the like, with a focus on niche regulated markets and disciplined acquisitions. Compass Group serves meals in schools, hospitals, offices and sports venues around the world. And 4imprint sells promotional merchandise such as branded pens, water bottles and polo shirts, an unglamorous but rewarding marketing activity.

Over 20 years these stocks have turned £5,000 into…

• Halma – £170,000
• Diploma – £371,000
• Cranswick – £72,000
• Computacenter – £106,000
• Hill & Smith – £85,000
• Compass – £71,000
• 4imprint – £124,000

Every stock has risk so investors should do their own research. Britain’s own Magnificent Seven may lack star power. But they show how building wealth doesn’t always need exciting tech or speculative growth stories. Now that I’ve been alerted to their charms, I’ll do some research of my own. Then watch and wait for a buying opportunity.

The post How these 7 ‘boring’ UK shares could have made ISA investors millionaires! appeared first on The Twelfth Magpie.

But how big does a SIPP need to be to enjoy a decent retirement?

According to the Pensions and Lifetime Savings Association, those seeking a moderate lifestyle need £31,700 a year, or roughly £2,641 per month.

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.

Running the numbers

Under the 4% withdrawal rule, generating £31,700 annually in retirement requires a pot worth £792,500.

That might sound enormous. But for a 40-year-old contributing just £500 a month to a SIPP, it’s far more achievable than what most might think.

After 20% tax relief, that £500 becomes £625 of investable capital. And when drip-feeding this money, the stock market’s long-term average return of 8% per year, a portfolio would reach the target threshold within roughly 28 years.

But we’re ignoring one crucial factor here. Inflation. £31,700 might be enough for today, but 28 years from now, pensioners will likely need considerably more. And this is where stock picking offers a solution.

The power of compounding

Rather than investing in an index fund, investors can opt to buy shares in individual companies directly. And with some smart stock picks, the results can be truly game-changing.

Perhaps a perfect example of this over the last 20 years is Halma (LSE:HLMA). This is a FTSE 100 safety, health, and environmental technology group. And it’s also one of the most consistent compounders in the history of the London Stock Exchange.

To demonstrate, since April 2006, Halma shares have delivered a staggering 3,465% total return.

That’s the equivalent of earning 19.6% per year. And anyone who’s been investing the same £625 each month at this rate now has a SIPP worth £1,830,203.74, well over double the £792,500 target a full eight years ahead of schedule.

Still worth considering?

Even with immense growth under its belt, Halma’s outlook is still remarkably strong, in my opinion.

Its most recent half-year results were record-breaking. Revenue jumped 14.3% and adjusted profit before tax surged 29.3% to £270.5m. And if that wasn’t enough, management subsequently upgraded its full-year guidance comfortably ahead of analyst expectations.

What’s more, the business itself focuses on defensive and large recession-resistant niches like safety systems, water quality monitoring, and medical devices – something that could fit in nicely with a retirement-focused portfolio.

However, that doesn’t mean Halma is guaranteed to continue outperforming. A big part of the group’s growth strategy centres on executing bolt-on acquisitions, which come with significant execution and integration risks, especially if the company falls into the trap of overpaying.

The impact of a botched takeover could be even more profound given the stock’s premium valuation. Halma’s track record of excellence hasn’t gone unnoticed. And if growth disappoints, its share price could be vulnerable to a tumble.

Having said that, Halma has earned its hefty price tag through decades of consistent execution. That’s why, for investors looking to make the most of their SIPP, it remains one of the most compelling long-term compounders worth considering to my mind.

The post How much do you need in a SIPP to target a £2,641 monthly passive income? appeared first on The Twelfth Magpie.

Take these three shares: Sage Group (LSE:SGE), BAE Systems (LSE:BA.) and Halma (LSE:HLMA). Between them, they’ve an aggregated almost 90 years of consistent dividend growth.

Want to know what still makes them five-star dividend shares to consider?

Sage — 35 years of growth

Dividends are never guaranteed for any stock. With Sage, its long history of payout growth could falter if the global economy implodes, taking corporate tech spending with it.

But what’s made it resilient to such shocks in the past? Its accounting, human resources and payroll software is essential for any business. This provides high-quality recurring revenues and cash flow, and makes it more resilient than most other tech shares. What’s more, its software isn’t especially expensive, which helps support a ‘sticky’ customer base even in tough times.

I’m optimistic Sage can keep delivering healthy dividend growth, as businesses increasingly digitalise their operations. I’m also encouraged by the FTSE company’s steps to embrace artificial intelligence (AI). The forward dividend yield here is 2.5%.

BAE Systems — 22 years of growth

Defence stocks are among the most reliable dividend payers out there. Their earnings are practically immune to broader economic conditions, given the importance of national security spending.

BAE Systems isn’t totally without risk though. With sovereign debt levels in the West rising, could governments have to cool spending on weapons? It’s possible, but it’s unlikely, in my opinion, as geopolitical instability grows. In fact, global defence spending rose at its fastest pace since the Cold War in 2025.

With strong government relationships, a diverse client base and market-leading technologies, BAE Systems looks in great shape to keep growing shareholder payouts. One final thing, its customer contracts tend to last for years, giving it excellent cash flow visibility for dividends. For this year, the forward yield is 1.8%.

Halma — 46 years of growth

Of this selection of FTSE 100 shares, Halma has the longest unbroken record of yearly dividend growth. Spirax is the only UK blue-chip stock with a better record (41 years of growth).

This is down to decades of consistent earnings progress, provided by a mix of healthy organic growth and contributions from bolt-on acquisitions. This has underpinned 22 straight years of record profit growth. That’s not all — with ultra high margins, Halma turns a huge share of these profits into cash it can then distribute to investors.

It’s also important to consider how Halma’s end markets have contributed to its resilience. The business sells safety, environmental and healthcare equipment which are often mission critical. The demand outlook for these technologies is strong, as safety and environmental regulations tighten across the globe, which bodes well for future dividends.

But remember that regulations could change later down the line, hurting sales. Halma’s forward dividend yield is 0.7%.

The post 93 years of dividend growth! 3 FTSE 100 shares to target income appeared first on The Twelfth Magpie.

I think the best way to go is to break the project down into three stages. And the first is figuring out the numbers.

Step 1: work out the numbers

Targeting a second income involves building wealth and then turning that into income. But before that, the first step is to work out what the numbers look like.

In the first phase, a 9% return is enough to turn £10,000 into £132,676 after 30 years. Is that realistic?

I think it might be. Over the last five years, the FTSE 100 has returned an average of 11.99% a year.

In the second phase, the FTSE 100 currently has an average dividend yield of 3.3%. But in this case, I think you can realistically aim higher.

In my view, a 7% yield might be sensible. And that’s enough to earn £9,287 a year in dividend income from a £132,676 portfolio.

With an idea of what you’re aiming for in hand, it’s time to start thinking about how to get there. Specifically, what shares to consider buying.

Step 2: grow the initial capital

The first phase involves turning that £10,000 into as much as possible. And that means looking for companies that can grow.

I think Halma (LSE:HLMA) is one of the FTSE 100’s finest in this regard. The firm retains the vast majority of its cash and reinvests it for growth. 

Acquisitions are a big part of the company’s growth strategy. And this inevitably brings a risk of paying too much in a deal.

Halma’s returns on equity are above 15%, which is strong. Most importantly, though, they’ve consistently been above this level.

Source: Fiscal.ai

That shows the company isn’t just growing revenues at any cost. It’s doing so with smart investments that generate good returns.

It doesn’t jump out as a cheap stock. But it’s certainly the kind of firm investors trying to build wealth should be looking at.

Step 3: income investing

The second phase involves converting the accumulated capital into passive income. And there are a few ways of doing this. 

High yields can be risky. But I think there are stocks with dividend yields above 7% that are likely to be worth considering 30 years from now. 

In general, the real estate investment trust (REIT) sector is one that I think is interesting. Especially from a passive income perspective. These are companies that own and lease various different properties. And they distribute 90% of their rental income as dividends to shareholders.

In other words, they’re the opposite of companies like Halma. They don’t retain their cash and this limits growth opportunities. 

As a result, however, they often have much higher dividend yields. And this is where I think investors targeting a 7% yield should look.

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.

Three steps

Turning excess cash into a second income involves two phases. The first is trying to grow the initial capital as much as possible. 

The second involves looking for dividend opportunities. But before either of these, the first step is to figure out what might be achievable.

This will vary as different investors have different timeframes. But with 30 years, I think turning £10,000 into a £9,287 second income is a realistic possibility.

The post £10,000 in savings? Here’s a 3-step plan to target a £9,287 second income appeared first on The Twelfth Magpie.

After the initial Iran war correction, which saw the FTSE 100 fall around 10%, investors have held firm. It was the same story after the early Covid, Ukraine and US tariff shocks. Investors who panicked and sold quickly regretted it. This triggered a new narrative. That global markets are so strong, they can shrug off geopolitical shocks.

Investor confidence was rattled last week, with the FTSE 100 falling 2.71% in the five trading days to Friday (24 April).Yet the S&P 500 held firm, amid a strong earnings season. But I’m worried.

Is the FTSE 100 starting to crack?

Before the war, 20m barrels of oil and petroleum products passed through Hormuz every single day. Not now. Up to a billion barrels are in limbo. Even if the war ended tomorrow, it would take months to restore lost supply. Possibly longer.

We haven’t seen fuel shortages in the West. But the Philippines, Vietnam and South Korea are all implementing emergency measures, including rationing. It could be our turn soon enough. Mentally, I don’t think we’re prepared. The war also threatens global supplies of aluminium, plastics, rubber, feedstock, fertiliser and microchips.

I think there’s a serious danger that markets may turn nasty in the days ahead. So far, that’s been a losing bet. But I won’t be selling any of my shares. Instead, I’m building up my cash and lining up my targets, just in case.

I’d love to buy Halma at a discount

I’ve been itching to buy FTSE 100-listed global health and safety technology specialist Halma (LSE: HLMA) for yonks. It has a brilliant track record of increasing dividends for 45 years in a row. That suggests a well-run company that’s on top of its game. The Halma share price has done well too, up 60% in the last year.

The trailing yield is a modest 0.52%, but that’s down to its high-flying share price. Over the last 15 years, the board has increased shareholder payouts at an average rate almost 7% a year. The total return on this stock, with dividends reinvested, has averaged 17.8% annually for the last decade. That would have turned a £10,000 lump sum into £51,458.

Halma isn’t cheap. Today, it has a trailing price-to-earnings ratio of 42.5. That compares to just over 16 across the FTSE 100. Over the last five years, its P/E has averaged 39.4. No stock is without risk. One bad acquisition could undermine the company. Profits could get knocked by currency fluctuations and tariffs. But if we get a broader stock market crash, and Halma is swept up in it, I’ll swoop to bag it at a discounted price. Even if markets don’t crash, I can see plenty of FTSE 100 bargains I’d love to buy today. Let’s see what next week brings.

The post Will the stock market finally crash next week? appeared first on The Twelfth Magpie.

So for investors starting from scratch today, how much money could they make over the next few years following in Buffett’s footsteps? And what exactly are his golden rules?

What’s the secret sauce?

Over the years, Buffett’s shared quite a few important nuggets of investing wisdom. But perhaps the five most important rules are:

1. Only invest in businesses you understand.
2. Invest in quality businesses at fair prices.
3. Be greedy when others are fearful.
4. Reinvest any dividends earned.
5. Stay invested through volatility.

Looking at Buffett’s own investing track record, it’s clear he’s been rigorously sticking to this framework.

His early investing style may have focused on dirt cheap ‘cigar butt’ value stocks. But that strategy evolved to instead find and invest in businesses with durable competitive advantages, even if they’re not trading in deep-value territory.

He notoriously avoided the technology sector until more recently due to fear of not fully understanding the industry, and has continuously invested heavily during stock market crashes and corrections. All the while reinvesting dividends received, and staying invested during times of crisis instead of panic selling like everyone else.

There’s no denying this style of investing requires immense discipline and patience. But as one of the world’s richest people, it’s a strategy that holds a lot of weight.

Which UK stocks follow Buffett’s principles?

The Oracle of Omaha’s style means he often invests in slow-and-steady compounders that rarely make it into the headlines. And here in the UK, we have a long list of such businesses, including Halma (LSE:HLMA).

The safety, environmental analysis, and healthcare instrument enterprise operates with a radically decentralised business model.

With 50 independent subsidiaries, each with its own niche monopoly of supplying mission-critical components and services, Halma’s dug out a vast and diversified moat. And while growth often isn’t explosive, it’s been remarkably consistent, leading to 22 years of uninterrupted record-breaking profits.

Even in just the last 10 years, shareholders have earned a chunky 17.8% average annualised return. That means a 50-year-old drip feeding £500 a month since April 2016 is now sitting on £163,579 at age 60.

So is Halma still a top stock?

What’s the verdict?

Even in 2026, Halma remains a top-notch business. Demand for its products is strongly tied to structural megatrends, not cyclical ones. And even though expansion through acquisition can be a risky growth strategy, management’s proven its ability to identify, execute, and integrate bolt-on businesses.

Of course,  that doesn’t guarantee future buyouts will prove as successful. And if the firm makes a series of bad investments, it could damage the balance sheet and harm shareholder returns. There’s also a valid anti-Buffett-like argument to be made about its valuation.

At a forward price-to-earnings ratio of 35, Halma shares are far from cheap. And that does open the door to volatility if the firm makes even a small misstep. Nevertheless, it’s a premium that’s well earned, in my opinion, making it potentially fall within Buffett’s ‘fair price’ category. That’s why I think Halma shares indeed deserve a closer look.

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