Finance Uncategorized

What is SIPPs?

SIPPPeople talk about investing money in SIPPs. However, before putting your hard earned money in it, it is quite significant to understand what is SIPPs. SIPP stands for Self Invested Personal Pensions. The major advantage of having your money invested in this plan is no fund manager or an investment expert manages your plan, but you yourself do it.

Besides managing your own investment plan, you also get the liberty to decide how and when you will get the benefit of the invested amount. If you are invested in other pension plans, you can invest only in limited investment products. However, with SIPPs, the case is entirely different. You have a wide variety of choice. You can invest in various unit linked funds, foreign stocks, commercial properties, and so on.

Such diversified investment shares the risk in all the products, providing greater safety as compared to other pension funds. If, during your retirement, you want a steady flow of income, you can do it in SIPPs, instead of waiting till annuity.

What is SIPP

Although there are several advantages of having SIPPs, there are a few disadvantages as well. The charges associated with this type of plan are usually high. Apart from a high set up cost, you also have to pay annual charges on your Self invested Personal Pension amount. Your every transaction, whether it is buying or selling, is charged with a fee.

The freedom of investing where ever you wish to comes with a cost. You don’t have the expert knowledge that most fund managers having. A pension plan is mainly set up because having a fixed income every month during retirement is essential. However, due to lack of knowledge, your SIPP may incur loss, which might affect the quality of your retired life.

Hence, only if you have good capital and back-up plan, and only if you have good expert knowledge, you must consider investing in SIPP. Now that you know what is SIPP, and what are its advantages and disadvantages, you must also start looking for various providers, if you intend to invest in such a plan.

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