Five Ways To Profit From Your SIPP Or SSAS
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As stockmarket assets are found in the vast majority of SIPPs, it pays to invest in the best SIPP.
If You Want The Best SIPP For Stockmarket Assets, Here Are Five Questions To Ask
Bad News: There Isn’t ‘A Best SIPP For Stockmarket Assets’
That’s because we’re all different, with a myriad of aims and aspirations. The good news, however, is that with a little research, there’s definitely a SIPP out there that’ll allow you to invest in stockmarket assets that’s best for you.
This pre-supposes you’re going to choose the stockmarket assets yourself, as in SELF-INVESTED personal pension, rather than employ an independent financial adviser, a wealth manager or discretionary fund manager to do it for you. Specialists usually have their favourite SIPP so there’s nothing much for you to consider. Though if you’re going to outsource your SIPP choice and your investment decisions, it’s vital you have a full and detailed understanding of all the fees and charges that are being deducted to grow your money.
On the basis that every SIPP should allow you to invest in stockmarket assets, you have a wonderful choice of SIPP operators, as you can see from the SIPP industry website.
Here are five questions to which you need thorough answers to help establish the best SIPP for stockmarket assets, for you.
1. Do You Want To Invest Beyond Stockmarket Assets?
In addition to stockmarket assets, if you want to hold one or more other asset classes in your SIPP such as high interest property backed loans, crowdfunding or peer-to-peer lending, commercial property or perhaps you’d like to trade currency and various indexes, chances are you’ll need a full SIPP. We refer to this as Evolution SIPP.
If, however, you want to restrict your SIPP to stockmarket assets only, you could select one of the online investment platforms that runs a low cost SIPP administration service. These SIPPs are usually cheaper than full SIPPs, but if you have a large SIPP fund, you could end up paying a lot more (see question 3 below).
Here’s a comparison service that includes many of the platforms offering SIPPs for stockmarket assets. If you scroll through the comments below the tables, you'll find some valuable customer experiences to help your research. Some of these platforms will restrict their SIPP to their stockmarket assets only, while others will allow you to invest in their stockmarket assets with money coming from an external full SIPP.
2. What Stockmarket Assets Are On Offer?
Not every investment platform will feature all the stockmarket assets you may want. If your heart’s set on a particular stockmarket asset, then check your preferred platform features it before signing up.
Having obtained the ISIN code from the fund provider’s website, which is usually displayed on the fund factsheet, stick it into the platform’s search engine to check it’s available.
Occasionally, you’ll find you’ll be prohibited from investing in some stockmarket assets unless you’ve received financial advice from a suitably qualified adviser, who will place the investment for you.
3. How Much Are You Going To Invest In Stockmarket Assets?
If you’re a smaller stockmarket assets investor, typically with less £20,000 and you like to make regular contributions to your SIPP, it could pay you to choose a platform that charges a percentage fee and doesn’t charge dealing fees for funds.
But if your stockmarket assets exceed £20,000, then it’s often better to pay flat or fixed fees, for paying on a percentage basis could end up costing you a lot more money as your SIPP fund grows. In many cases, a restricted stockmarket-assets-only SIPP of £200,000 or more charged on a percentage basis can be more expensive than a full SIPP charged on a fixed fee basis, which allows you to diversify across a wide range of asset classes.
If you’re regularly buying and selling stockmarket assets, watch out for platforms that offer a batch of commission-free trades.
4. What Fees Are You Going To Be Charged?
The main point of difference between investment platforms is the fees they charge, which are in addition to any fees that are included within the stockmarket assets themselves. There seems to be no end of charges they can levy, which can include any or all of the following:
- SIPP administration charges
- Platform charges
- Dealing fees
- Dividend reinvestment fees
- Fund switching fees (moving out of one fund to another)
- Fund transfer fees (moving your funds to another platform)
- Inactivity fees (payable if you haven’t traded in a while)
- Any number of other fees
You should check your platform’s list of charges includes VAT, for some do and some don’t.
If you’re a passive investor, dealing fees are likely to apply to Exchange Traded Funds, but they are often avoided with Index Funds.
5. How Good Is The Service?
Whilst service is important, there’s often not much to choose between the different platforms, particularly if you’re a passive stockmarket assets investor. So unless you’re really going to make the most of the considerable choice of investment tools some platforms feature, there’s little sense in paying over the odds for them. After all, there’s no point in buying a Rolls Royce to drive to the shops when a much more economical car will do the same job, without the bells and whistles and the hefty price tag.
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AJ Bell Is Often The Best Value SIPP For Stockmarket Assets
Over time, charges can wipe out a huge part of your fund. We like AJ Bell because there are no set-up costs. If you hold passive funds, which is our preference, or shares, investment trusts, EFTs, gilts or bonds, you pay one small fixed fee no matter how large your fund. And when you come to draw your benefits either as occasional drawdown or UFPLS payments, there's a small charge for the whole year no matter how many times you access your money (many SIPP and SSAS providers charge more than this for each payment). However, you should always compare charges in detail, because AJ Bell could be more expensive than other providers, depending on the type of stockmarket assets you hold.
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As SIPPclub neither advises on, nor arranges, nor recommends specific investments or strategies, we're unable to say whether a SIPP or SSAS or any investment within it is right for you. Ultimately, it’s your money and your decision, and you should only proceed once you're satisfied you've undertaken sufficient due diligence. If you need advice, you should speak to your trusted adviser, or you could find a local adviser from Unbiased.co.uk. Alternatively, we'd be pleased to introduce to a suitably qualified independent financial adviser.
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