One of the key benefits of a Sipp is that you have a far greater
choice of investments than * that offered by a traditional
‘off-the-shelf’ pension from one of the big pension companies.
Whether you are starting your pension with a Sipp, or are
transferring your assets from an existing pension - you will have
access to a large number of funds, fund managers and different
types of investments.
For example:
Cash
As a Sipp has its* own bank account,* you
can hold cash and earn interest with the benefit of no tax
deductions and little risk.
Some people like to keep a proportion of
their Sipp fund in cash, to earn tax-free interest, to cover the
cost of managing the Sipp and to make mortgage repayments if the
Sipp contains a mortgaged commercial property.
Equities
Traditionally, equities (shares) have been
the mainstay * of pension fund investment * as they have been
considered a major source of consistent long-term growth.
Within a Sipp, you may trade shares, either
yourself or via a broker, or buy into collective funds such as unit
trusts or investment trusts.
Bonds and gilts
Bonds and gilts offer you fixed interest
returns and are considered an ideal source of regular income with
less risk than direct investment in equities.
Other investments
A ‘full’ Sipp will enable you to invest in
the full range of Sipp permitted investments including offshore
funds, insured funds, unlisted shares, commercial property,
residential property funds, hedge funds and private equity.
It is still possible to invest in personal
chattels such as antiques, stamps, race horses, gemstones, fine
wines and yachts, but such investments will be taxed at up to 70
per cent.
It is advisable to seek independent
financial advice about which investments are appropriate for your
pension plan.