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Pension plan - How do you choose?!

(5 Posts)
TheWitchsCat Wed 06-Jan-16 09:10:45

I am self employed so don't have a work pension, how on earth do I choose a plan?

I am very new to the world of finance, I've just started realising that I need to get this stuff sorted asap (I'm 28) but have no idea what I'm looking for. I don't have large amounts to invest, don't want a high risk option or one that will require a great deal of managing (so I assume a SIPP is a bad idea?). I just want something I can pay into monthly and will quietly grow interest for me until I'm 60 odd

Diddlydokey Wed 06-Jan-16 09:29:52

There are some great cheap SIPP options such as the Hargreaves Lansdowne SIPP - at 0.45% AMC they're cheaper than a standard stakeholder which are usually 1% AMC.

Wuffleflump Wed 06-Jan-16 14:26:47

I realise you said you don't want high risk, but over the timescale you are looking to save, you stand to benefit much more from a higher-risk tracker (i.e. one that follows funds across the market, so that no one company or industry going tits up will hurt too much).

Over time, the market does tend to give the best return if you're in for long enough, and for retirement you're in for the long haul. If there's a market crash in, say, 5 years time, you have 30+ years to recover.

Additionally, investing money regularly means you can benefit from buying during market lows as well.

Many investment portfolios designed for pensions will track risk automatically, making higher risk investments when you are young, and shifting them to safer profiles as you reach retirement age and might want to draw on the money (a crash just before retirement would otherwise be disastrous). You don't need to manage them.

It does feel counter-intuitive, but the 'safe' option now will mean your investment is likely to grow less, risking having to work longer than you like, or having less money in retirement.

It is not, of course, guaranteed. But then laws around pensions can change suddenly just before you retire, screwing up your plans anyway. It doesn't mean it's a good idea not to plan at all.

Wuffleflump Wed 06-Jan-16 14:28:57

"the best return "

That should read, better than standard savings / low risk investments.

TheWitchsCat Wed 06-Jan-16 16:37:03

Thanks both. So would you suggest a high risk index tracker, Wuffleflump? With SIPPs can you invest in index trackers or do you need to choose shares yourself?

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