5 Major Types of UK SIPP Investments

While a SIPP provides you with a more flexible Do-It-Yourself approach to pensions, it is not unlimited. Yes, SIPPs permit more types of investments than other Personal Pensions do. However, the list of investment types that you can make into SIPPs is limited. Here is a list of some of the major types of investments that the UK government permits you to make into a SIPP:

1. Direct Property Investment

Commercial properties have become one of the most popular types of investments for SIPPs. One is permitted to borrow a maximum of half of their pension's value, in order to purchase a commercial property. When you invest your pension in your own property, remember:

• The company must pay a fair market rent to use the building

• Try to avoid placing your entire pension fund into a single asset

• Avoid being too witty regarding commercial property in a sipp

• Verify how much the SIPP provider will charge you

2. Equities:

Most Personal Pensions will limit the number of equity funds to which you have access. This is even true when your Pension Provider offers you "open-architecture." On the other hand, securing equities through a SIPP provider will significantly boost how many equity funds to which you have access. You should contact an Independent Financial Adviser (IFA) to locate an excellent SIPP provider. IFAs can provide you truly unbiased advice regarding UK pensions.

3. Exchange Traded Funds (ETF)

How do these work? Exchange Traded Funds track in index, similar to the process with a unit trust. However, shares are involved instead of units. ETFs can be quite a wise investment, as their annual management fees are significantly less than other types of investments. They provide investors with direct access to ETF commodities. ETFs make it possible to track commodities such as:

• Gold

• Oil

• Wheat

Contact an IFA to learn more about ETFs.

4. Fixed Interest

Adding some inflation-proofing to the SIPP is possible through the National Savings & Investments' index-linked savings. In fact, inflation-proofing can save you a significant amount of cash savings. Furthermore, because pension funds are unavailable until one becomes at least 55-years-old, you can avoid the typical downside of restricted access.

5. Properties

Conventional wisdom says that keeping a residential property in any pension fund would be unsound, as the UK would impose an extra charge. However, through a SIPP you can invest residential property in a collective vehicle. This could include a Real Estate Investment Trust (REIT) or an Offshore-Listed Property Trust.

Still, you should review the strict rules about making such investments into your SIPP, as the rules are stringent. For instance, if you stay in the property then you have to pay rent, since you technically do not own the property. Furthermore, some SIPP providers provide no access whatsoever to property funds. An IFA could certainly help you to discover which ones do provide it.

SIPPs provide you with several investment options. Consider the aforementioned five investment types to make your choice the right one!

SIPPs are a type of flexible Do-It-Yourself Pension. Here are some of the major types of SIPP investments that Britons can make.