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Retire in ease as you chose a SIPP and invest smartly with flexibility!

Overview

After years of grinding and sweating it out at your day job to earn and survive, you have finally planned to retire. If you are looking for one of the most tax-efficient ways of saving for retirement, then ‘Self-Invested Personal Pension’ is the way to go. SIPPs are a form of personal pension, and as the name suggests- gives you the complete authority over the type of investment plans you can choose. With such a wider range of options and enhanced flexibility, there are now 750,000 SIPPs in the UK, holding billions of euros in savings.

What kind of ‘Self-Invested Personal Pension’ plans can you look forward to?

1)Commercial land and property

2)Rents

3)Cash deposits

4)Stocks and bonds on UK stock exchange

5)Unlisted shares

6)Endowment policies

7)Government securities

How much will it cost?

There is no single value that can be given in this case, few charge yearly, others monthly, yet others will take a percentage of your investments. You need to be very careful when it comes to this because you are probably not young anymore, and if you decide to spend all your life’s pension savings on a single stock, which may come crashing down just as you plan to retire.

Sometimes there are additional charges like:

1)Changing your investments

2)Investing in property

3)Bank charges

4)Setting up your annuity

5)Set-up fee

6)Income drawdown charges

How do you get paid?

So once the pension collects over time, you can reap the benefits once you hit the age of 55. This is where you will be offered tax exemption on 25% of the amount. You can decide to take the entire amount at once or spread it across as a monthly income source. A lot of users tend to take it in lump sum amounts spread across the years.

How do you access/ choose a SIPP?

With over 150 companies operating SIPPs the number of options are immense, some of the SIPPs are run by experienced financial advisors and SIPP specialists. Most of these SIPPs can be chosen and monitored online, with a click of a button you can check the amount of money you have and where it is invested. Understand that each SIPP provider has different sets of guidelines with some starting with as little as 50 Euro.

 

What investments should you choose?

This depends on your risk taking attitude and age, it is a well known fact that investing lot of money into long-term equities provides the most effective way to provide a higher amount upon retirement. The one single rule of finance-”Do not put all your eggs into a single basket” should be implied here as well because when you buy a range of funds you reduce the risk associated with the fall down of a single stock/company.

Conclusion

If you are one of those who like to take things under your own control, then these plans are perfect for you. Plethora of options and ease in investing virtually has made this a very good option for pension related investments. It comes with a higher charge than the rest of the personal plans, but this one gives you the maximum buck for your money.