SIPP Investment Ideas

It is easy to get inadvertently caught up in the investment element of a SIPP and forget that it is one of, if not the most, important body of money you own. For most, it is the sole form of retirement income and thus needs to be managed and invested correctly. In most instances, those who own SIPPs will have investment experience, however even if this is the case, there will still be many questions unanswered about SIPPs and what to do with one. The questions at the top of any SIPP investors list will always be what assets to buy and when you should be buying them. Such questions can be complicated in nature. However, this guide gives you an overview of the three investment ideas you should be thinking about next time you look to create or diversify your SIPP portfolio.

Stocks and shares

Considered the bread and butter of SIPPs, it is seldom that you find an investor portfolio that doesn’t feature stocksSIPPsTradingGuide and shares in one form of another. The appeal of buying stocks and shares is that both long-term and short-term growth is possible, while any profit gained also qualifies for tax relief; dividends are also afforded such luxury. If you are a high rate taxpayer then your stock market acquisitions can qualify for up to 40% tax relief, making share and stock purchases via a SIPP advantageous.

When it comes to share and stock options growth can happen in two ways, via an annual dividend or the escalation in the price of the stock you’ve purchased. Overall, if you are building a diverse SIPP portfolio, stocks and shares will more than likely be a core element of it.

Property

Considered a traditional investment choice, but no matter whether you are buying property via a SIPP for occupation or solely as an investment, the processes involved can be complicated. Unlike stocks and shares, buying property requires input from several other parties and can’t be done at a canter. However, outside of the complex nature of a transaction, buying property as a SIPP investment continues to remain popular and it isn’t hard to see why. Brick and mortar investments give people the physical element they require, but also long term growth if managed appropriately around property market fluctuations.

“Exotic” items

On the now infamous A-Day back in 2006, HMRC changed the way people think about investing their SIPPs forever. In theory, SIPP investors can now hold pretty much anything as long as it is categorised as an investment. This opened the door to what has now been classed as “exotic investments”. Even though they are considered far less safe than common SIPP investment options, it is possible for you to acquire physical investments such as vintage cars, wine collections and even foreign properties. They may be deemed risky investments, but high risk can at times issue high rewards. If “exotic” investments are something that appeals to you, make sure that your SIPP provider covers them.

CFDs, spreadbetting and FX can result in losses exceeding your initial deposit. They are not suitable for everyone, so please ensure you understand the risks. Seek independent financial advice if necessary. Nothing in this article should be considered a personal recommendation. It does not account for your personal circumstances or appetite for risk.