Returns are based on the level of risk and fluctuation you are willing to take in pursuit of financial gain. For this reason, it is wise to alter your asset allocation over time by lowering your risk levels as you draw closer to retirement. This could be done by turning to either cash or fixed interests, such as gilts, Independent Financial Advice can help you with your risk assessment.
If you are investing in a collective investment scheme, every time you contribute to your pension pot, your money is pooled into an overall pension fund of which you own certain units or shares. You can think of it as a huge layer cake with hundreds of different assets stacked on top of each other and each time you invest, you are buying a small slice of it.
If you want to be a little more selective over which slice you buy and exercise some personal control over the investments in your personal pension can choose to invest in a self-invested personal pension (Sipp).
Sipps provide wide access to most funds and assets, as well as access to buying individual shares, commercial property and many other investment opportunities.
There are two key differences you will need to consider before choosing the additional option of self-investment for your personal pension; to utilise a wider and more flexible investment choice, you will pay higher charges for a Sipp than an investor who simply wants access to a cheaper index tracker or an insurance company managed fund in a stakeholder plan.
Most schemes allow full flexibility to stop contributions or move accumulated savings or future contributions to another fund, and there should not typically be any penalties for this. However, before you change your pension, you should always check the details in advance with an IFA.
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