Things to consider

Some key issues to help you take your retirement planning in the right direction:

Is a SIPP right for me?

Because of their flexibility and choice, a SIPP is generally better suited to more experienced investors with larger sums to invest. If you are less experienced, you may be better off with another type of pension, such as a Stakeholder Pension. If you are not sure, speak to an independent financial adviser.

Risk

Generally, the longer the period you are investing over, the more risk you can take on, as your investments have time to recover from any setbacks in the short term. So you may be able to take on slightly more risk in a SIPP. Investment companies are primarily intended as long-term investments. You should be prepared to hold them for at least 5 years, and preferably 10 or more.

Saving on a regular basis, in addition to helping to spread the cost of saving for retirement, also helps to smooth out some of the ups and downs in the market. You should also think about moving into less risky assets as you approach retirement.

Costs

SIPPs vary in terms of their charges. The wider the range of investments they offer, the more expensive they tend to be. You should make sure you understand what the charges are, and that you are happy with them.

Building a balanced portfolio

You should aim to have a well-balanced portfolio, investing in a wide range of different assets and sectors. If you are just starting, you will probably want to start with more generalist funds with a UK or global mandate. Over time, when you have built up a solid ‘core’, you can think about adding some more specialist funds.

Steady approach

A balanced SIPP portfolio investing in a wide range of assets can help you navigate the ups and downs in investment markets

Key things to remember

A SIPP can be a very flexible way to save for retirement, but is generally for more experienced investors with larger sums to contribute.

Make sure you understand what investments you can hold in any SIPP you are considering, whether this includes investment companies and what the charges are.

Investment companies can help you to build capital for retirement, and have some unique advantages when it comes to delivering an income in retirement.

Investment companies are intended as long-term investments and you should therefore be prepared to hold them for at least 5 years, and preferably 10 or longer.

Your income, and capital, are at risk, and can fall as well as rise, and so they are not a substitute for deposit type investments and annuities.

You should not invest in investment companies if you need a guaranteed income or if you cannot afford to lose your capital.

If you are not sure whether a SIPP is suitable for you, and whether, or which, investment companies you should choose to put in one, speak to an independent financial adviser.

Don’t forget

Check to see if your chosen SIPP includes investment companies among its range of available investments

With a SIPP, careful planning is essential to make sure you have enough money in retirement

Visit the AIC website to learn more about investment companies, find and compare companies and create your own ‘Watchlist’

www.theaic.co.uk

This document is for information only and does not constitute investment advice or a personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment mentioned here. The Association of Investment Companies has taken all reasonable steps to verify the information contained in this document, but does not accept responsibility for any errors or omissions or for losses of any nature incurred by any person acting or refraining from action in reliance on such information. This document may not be printed, reproduced or further distributed to any other person or published, in whole or in part, for any purpose.

Please refer to www.theaic.co.uk/Important-information/ for further information regarding our disclaimer policy and the contents of this publication.

The AIC is a company registered in England and Wales, registered number 4818187.