Self-invested personal pension principles
How is a SIPP different to other pensions?
Choice is a good thing, right? The SIPP gives you more choice than you can shake a stick at. There are several different types of investment, alongside the normal range of funds that you might find with a personal pension. Being comfortable with making your own investment decisions is pretty important if you use a SIPP.
Amongst the investment options you could include with your SIPP are:
A SIPP can be used to borrow money, perhaps to raise a mortgage on a property. This is a popular option with company owners who might buy the building they use to run their business.
All that choice would be really something to think about, but it can come at a price. The SIPP providers and advisers often have higher charges than you might see with a personal pension due to the specialised nature of the SIPP investments. And, for the majority that is generally a step too far.
Is a SIPP right for me?
Now, there’s a question and it’s tricky. You should only consider a SIPP if you have some experience of investing and are comfortable with making your own decisions, possibly with the help of a financial adviser. If you can’t tick that box, then it’s probably best to choose a personal pension. If you do so then you’re in great company as the overwhelming majority of people find more than enough great choice of where to invest the money they save into their pension.