12:09 28 January 2013
More and more people are now planning for their retirementwith a self-invested personal pension or SIPP. If you’re one of them, know how it works and how you can get started as quickly as possible.
Understand what SIIP is
The first step is to of course, understand what self-invested pension plan is. How it is different with other pensions and how can you benefit from it?
SIPPs were launched more than 20 years ago. What sets SIIPs apart from standard pension plan is that it provides you with much wider choice of investment.
That means, you can choose where to put your money. However, this option usually comes with extra cost.
Where do you invest?
Some of the main assets that you can invest in through SIPP are stocks and shares, investment trusts listed on any stock exchange, UK government bonds and bonds issued by foreign governments, corporate bonds, authorised unit trusts which are resident in the UK, etc.
On the other hand, there are some things that you would not want to invest in through SIPP to avoid punitive fine. These include National Savings and Investment accounts, direct investment in overseas properties, derivatives, residential property, and personal effects like jewellery, antiques, and wines.
Generally, you can access your SIPP account through your provider’s website. It works like online banking. You’ll be able to check how much money is in your pot and where it is currently invested.
How much can you invest?
Each SIPP provider requires different amount but there are some, which will allow you to get started for as little as £50 per month. Keep in mind that there’s also a limit as to how much you can invest on your SIPP.
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