SIPP Pension Mistakes to Avoid

SIPP stands for a self-invested personal pension. This type of pension features higher charges, compared to most personal pensions, but it allows you to select and manage your own investments.

Because of this, SIPPs are recommended for people with some investment experience. A more suitable option for the first time investor is a basic SIPP instead of the kind that offers complete investment choices.

The basic type of SIPP can still offer many options in terms of shares and choice of funds, giving you more control over balancing your portfolio. However, basic SIPPs are commonly low-cost and managed online.

Assets You Can Utilise WIth SIPPs​

With this type of pension, you can choose from a wide range of assets including:

  • investment trusts
  • government securities
  • traded endowment policies
  • insurance company funds
  • commercial property
  • deposit accounts
  • individual shares and stocks.

The fees you can expect to pay for a SIPP will vary by provider. Some providers will take a percentage of your investment value while others will charge a fixed yearly fee. You can also be charged for transferring your pension to another provider. Most financial experts recommend choosing a provider that charges a fixed annual fee.

Choosing SIPP Investments

The type of investments you choose will depend on the amount of risk you’re willing to take and how close or far you are from retiring. If you have more than ten years to go before retirement, it’s worth it to take more risk.

Those new to investing should avoid buying individuals shares and instead choose share-based funds because this type of investment is less risky. As your retirement draws nearer, you’ll want to focus on making low-risk investments.​

​A SIPP is both portable and flexible. Which means, if you change employers or lose your job, you can still contribute to the scheme. If you get a new job, your new employer can choose to contribute to your SIPP, however, they’re not obligated to.

While there are no restrictions on the number of pension schemes you can belong to, there is a limit on the total amount that can be contributed to each scheme during the year.​

Common SIPP Mistakes to Avoid


Mistakes happen, especially when it comes to making the right pension choices.

Taking control of your pension gives you more confidence that you’ll enjoy a comfortable retirement, but if you’re new to investing it can be hard to know when to let go of a poor investment or when to time the market just right.

People often feel like failures if they’re unable to manage their SIPP without the help of a financial advisor. However, in the beginning, an advisor can help you to get a handle on how to choose investments, how to monitor your funds and when it’s time to let go. Making a pension mistake can mean you’ll be paying more than you should over a longer period of time.

Anchoring is a common term used to describe an investor’s reluctance to let go of a poorly performing investment. If you’re new to investing it can be difficult to let go of an investment that’s not performing well because you still have hope that a break is just around the corner. If you’re unsure about an investment and whether you should cut your losses, ask yourself whether or not you would choose that particular investment again. If the answer is no, it’s time to let go.

A new investor typically decides on a tracker fund because they think beating the market simply isn’t possible. A tracker fund is a basic type of investment that imitates stock market performance. While not easy, it is possible to outperform the market, you just may need to be educated by a professional on how to make high or low-risk investments that show potential.

If you’re unable to take emotion out of choosing investments, hire a professional.

Making investment choices based on emotion is a common mistake that can really cost you in the end. While incredibly difficult, timing the market is possible. An amateur investor will usually time the market based on emotion or intuition, instead of market history or market cycles. An investor needs to do their homework and use technical analysis when buying a fund.​

Educate Yourself on Pension Performance

Are you saving enough?

Are you ten to fifteen years away from retirement, but don’t even have a pension?

Do you have a pension, but you’re not sure you’re setting enough funds aside for retirement?

Even if you don’t feel like you need the ongoing support of a financial advisor, at the very least have your retirement plan reviewed.

The closer you are to retirement the scarier it gets, especially if you’re unsure of how your portfolio is performing or what you can expect in terms of pension income.

The key to a successful retirement is having a plan in place that you can depend on.

Learn more about your retirement income and find out if your pension is on track. A SIPP will give you more control over your investment options but if you don’t nurture it and monitor your investments, you’re putting your retirement in danger.

Another common mistake when it comes to SIPPs is focusing too much on charges. The first aspect you should look at is investment flexibility. Avoid SIPPs that don’t feature investment flexibility and then focus on associated charges.

One of the biggest SIPP investing mistakes you can make is using a buy and hold strategy. In order to win with this type of investment, you need to be active, which means closely monitoring the state of your SIPP and making judgment calls when it’s time to take risks or let go of a poor performing investment. The buy and hold method is an outdated strategy and a common mistake made by many beginners. Instead, pay attention to the overall trend of the market and use your SIPP to invest when the trend is up or switch out when the trend is down. Use an active hands-on approach instead of waiting to see if your investment will take a turn for the better.



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