Question
I would like to invest £500 a month into a pension probably for the next 17years. What would you suggest would be the best pension to go for?Answer
If you're employed and your employer matches your contributions into its occupational pension scheme, then this would be a good place to start. As well as tax relief on your contributions you'll also get something for nothing thanks to the employer contributions. Even if they don't directly match your contributions, provided they pay in an extra amount to reflect your contributions it's well worth considering.
Otherwise your main options would be a stakeholder pension or self invested personal pension (SIPP). The only significant differences between the two are that SIPPs offer a much wider investment choice and stakeholder pensions tend to be cheaper.
Given you'll (hopefully) build up a sizeable pension fund by investing £500 per month over 17 years, a low cost SIPP is likely to be the more sensible route. The additional investment choice should prove its worth over time. Whereas stakeholder pensions tend to offer fewer than 50 funds from a limited range of managers, most low cost SIPPs provide access to over 1,000. And the ability to hold shares, including exchange traded funds and investment trusts, could be very useful and cost effective.
There are a number of low cost SIPPs on the market - some less 'low cost' than others. Take a look at our comparison here for full details, but in general the best value choice depends on whether you'll predominantly want to hold funds or shares.
If you want to largely hold funds then using a SIPP provider who rebates both fund commissions (typically c0.5% a year) and the fees they receive from fund managers to feature on their SIPP platform (generally c0.25% a year) should prove your cheapest option. Because you'll be investing monthly then low dealing fees should also be a pre-requisite. Interactive Investor and Alliance Trust both potentially fit the bill, using their £1.50 monthly dealing facility.
If you'd prefer to invest in shares then Sippdeal will likely offer a better deal. Monthly dealing is again £1.50 for shares (nil for funds) but, unlike Interactive Investor and Alliance Trust Savings, there are no annual SIPP fees. However, Sippdeal's fund rebates are far less generous than those two companies, so it could prove more expensive if you start holding funds too.
Hope this points you in the right direction.
P.S. Don't forget there are alternatives to pensions when saving towards retirement. For example, contributing some of the money into an ISA will offer greater flexibility.
I would like to invest £500 a month into a pension probably for the next 17years. What would you suggest would be the best pension to go for?Answer
If you're employed and your employer matches your contributions into its occupational pension scheme, then this would be a good place to start. As well as tax relief on your contributions you'll also get something for nothing thanks to the employer contributions. Even if they don't directly match your contributions, provided they pay in an extra amount to reflect your contributions it's well worth considering.
Otherwise your main options would be a stakeholder pension or self invested personal pension (SIPP). The only significant differences between the two are that SIPPs offer a much wider investment choice and stakeholder pensions tend to be cheaper.
Given you'll (hopefully) build up a sizeable pension fund by investing £500 per month over 17 years, a low cost SIPP is likely to be the more sensible route. The additional investment choice should prove its worth over time. Whereas stakeholder pensions tend to offer fewer than 50 funds from a limited range of managers, most low cost SIPPs provide access to over 1,000. And the ability to hold shares, including exchange traded funds and investment trusts, could be very useful and cost effective.
There are a number of low cost SIPPs on the market - some less 'low cost' than others. Take a look at our comparison here for full details, but in general the best value choice depends on whether you'll predominantly want to hold funds or shares.
If you want to largely hold funds then using a SIPP provider who rebates both fund commissions (typically c0.5% a year) and the fees they receive from fund managers to feature on their SIPP platform (generally c0.25% a year) should prove your cheapest option. Because you'll be investing monthly then low dealing fees should also be a pre-requisite. Interactive Investor and Alliance Trust both potentially fit the bill, using their £1.50 monthly dealing facility.
If you'd prefer to invest in shares then Sippdeal will likely offer a better deal. Monthly dealing is again £1.50 for shares (nil for funds) but, unlike Interactive Investor and Alliance Trust Savings, there are no annual SIPP fees. However, Sippdeal's fund rebates are far less generous than those two companies, so it could prove more expensive if you start holding funds too.
Hope this points you in the right direction.
P.S. Don't forget there are alternatives to pensions when saving towards retirement. For example, contributing some of the money into an ISA will offer greater flexibility.
Read this Q and A at http://www.candidmoney.com/questions/question721.aspx
No comments:
Post a Comment