3 Reasons To Invest In A Sipp: An Introduction To Sipps

The Self-Invested Personal Pension (SIPP) has come a long way since its introduction over 20 years ago, in 1989

. When first introduced, SIPPS were a relatively niche concept, often notoriously associated with extremely high charges. As a result, they were considered to only really be a viable option for the elite super-rich investor. Most investors were better served by a personal pension, which offered the same tax advantages but with less flexibility.

However, the advent of low cost SIPP providers in 2000 changed this, finally making this flexible investment vehicle accessible to almost anyone. Initially only a small number of people took this option.

Unfortunately, many people still mistakenly believe that, in order to generate a sufficient return on investment, SIPPs are only suitable for those with large pension pots in excess of 100,000.

It is time to dispel such myths. Read on to find out more about the excellent benefits this versatile and accessible investment retirement vehicle can offer.

Wide Investment Choice:

A SIPP offers you access to a multitude of investments including (but not limited to) managed funds (unit trusts and OEICs), investment trusts, individual stocks and shares, exchange traded funds and commodities, gilts, corporate bonds and cash. An increased investment choice means increased investment potential. This can be very attractive to those people who want to take an active role in planning for their retirement by making decisions as to where their pension is invested.

Tax free growth and a 25% tax free lump sum:

As with all pensions, once inside a SIPP your money grows free of capital gains tax and there is no further tax to pay on income generated within your SIPP.

At any age between 55 and 75 you can normally take up to 25% of the value of your SIPP as a tax free lump sum and use the remainder to provide a taxable income for life. Please remember over time the government can change the rules and the rates of tax relief.

A tax efficient way of saving for retirement:

Providing your total income is less than 150,000 p.a. (and has been so for the previous two tax years) you should be able to contribute as much as you earn into a pension such as a SIPP and get tax relief of up to 40%. Even if you earn more than 150,000 you should still be able to contribute up to 20,000 into pensions for the next two tax years and get tax relief at your highest rate.

by: Laura Licata

POST COMMENT

4 Things to Know Before You Purchase a Down Comforter Set Control Your Debt With Christian Debt Counseling Same Day Loans Online: Conquer Urgent Demands Without Any Hectic Tips That Will Help Your Personal Finance Venture Solid Advice For Your Personal Finance Problems Advice You Can Trust For Your Personal Finances Expert Personal Finance Advice You Can Use Year After Year Implement These Vital Personal Finance Plans In Your Life Winning Successful College Scholarships By Maintaining Lists Learn What To Do To Lose Your Personal Finance Confusion Guaranteed Cash Advances-no Fax get Cash By Direct Deposit Guaranteed Online Personal Loans: Guaranteed Online Personal Loans Means Guaranteed Money Great Ways To Manage Your Personal Finances