The 7 best investments to hold in a Self-Invested Personal Pension (SIPP) for a well-diversified and potentially rewarding retirement portfolio.

What investments can be held in a SIPP?

Here are the 7 most common SIPP investments:

  1. Stocks and shares
  2. Funds
  3. Investment trusts
  4. ETFs and index funds
  5. Ready-made SIPP portfolios
  6. Managed SIPP portfolios
  7. Property

We’ll dive into each of these options in more detail, so you can make informed decisions and tailor your investment strategy to suit your needs.

Firstly, here’s a table giving a brief overview of each investment type and their pros and cons:

Investment TypeWhat is it?ProsCons
Stocks and SharesOwnership in individual companiesPotential for high returns, growthRisk of losing money, market ups and downs
FundsCollection of stocks, bonds, or other investmentsSpreads risk, professional managementFees, performance depends on fund manager
Investment TrustsClosed-ended funds that invest in various assetsSpreads risk, potential for income/growthFees, price can be above or below asset value
ETFs and Index FundsFunds that track a market indexLow fees, spreads risk, easy to buy/sellTied to overall market performance
Ready-made SIPP PortfoliosPre-selected mix of investments for your SIPPEasy to start, diversified, low effortLess control, performance depends on selection
Managed SIPP PortfoliosInvestments chosen by a professional managerExpert management, tailored to your goalsHigher fees, depends on manager’s performance
PropertyReal estate investments, e.g., commercial propertySpreads risk, potential income, inflation hedgeLess liquidity, tied to property market
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Stocks and shares

Stocks and shares represent ownership in a company. When you buy a share, you’re buying a small piece of the company, and you’ll share in its profits and losses. They can be:

  • Individual stocks: You can choose to invest in individual companies, picking the ones you believe will perform well. However, this approach requires research and an understanding of the company’s financials, industry trends, and market conditions.
  • Stock market indices: Alternatively, you can invest in the whole stock market or a specific sector by tracking an index, such as the FTSE 100 or S&P 500. This provides broad exposure to many companies, offering greater diversification and reducing the impact of individual stock fluctuations.
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Funds pool together money from multiple investors and use it to buy a diversified range of assets, like stocks, bonds, or property. There are different types of funds, including:

  • Open-ended investment companies (OEICs): These funds continuously issue new shares, so you can buy or sell at any time.
  • Unit trusts: Similar to OEICs, but with a fixed number of units instead of shares.

Investment Trusts

Investment trusts are a type of closed-ended fund that trades on stock exchanges. They issue a fixed number of shares, and their value is determined by market demand. Like other funds, they invest in a diversified range of assets, providing exposure to different sectors and asset classes.

ETFs and Index Funds

Exchange-Traded Funds (ETFs) and index funds are types of passive investments that aim to replicate the performance of a specific market index, such as the FTSE 100 or S&P 500. They offer:

  • Low costs: They usually have lower fees than actively managed funds, making them cost-effective options for your SIPP.
  • Diversification: By tracking an index, they provide exposure to a wide range of stocks, helping to spread risk across various companies and sectors.

Ready-made SIPP Portfolios

Ready-made SIPP portfolios are pre-constructed portfolios designed by investment professionals. They usually include a mix of assets, such as stocks, bonds, and property, and cater to different risk profiles and investment objectives.

These portfolios offer a convenient way for investors who prefer not to make individual investment decisions or lack the time and expertise to build and manage their own portfolios.

Managed SIPP Portfolios

Managed SIPP portfolios are investment portfolios managed by a professional investment manager. They make decisions on your behalf, such as choosing assets and rebalancing the portfolio.

Managed portfolios can be a suitable option for investors who want a more hands-off approach and are willing to pay higher fees for professional management, while still benefiting from the flexibility of a SIPP.

What kind of property can I hold in a SIPP?

You can hold commercial property in a SIPP, such as offices, retail units, and industrial premises. However, residential property is not allowed, with some exceptions for certain types of property, like student accommodations or care homes.

How many funds or shares should I invest in my SIPP?

Diversification is key to managing risk in your SIPP. It’s generally recommended to hold a mix of different assets and investments. The exact number will depend on your risk tolerance, investment goals, and time horizon.

A financial advisor can help you determine the appropriate level of diversification for your circumstances if you’re unsure.

What should I do with cash in my SIPP?

Holding cash in your SIPP can be a short-term strategy or a temporary measure while you research investment options.

However, over the long term, cash may not provide the growth needed for a comfortable retirement. Consider investing your cash in a diversified mix of assets to potentially grow your retirement savings.

How to buy and trade investments in your SIPP

Once you’ve opened a SIPP and chosen an online platform, it’s time to start buying investments.

Step 1: Research potential investments

Before buying any investment, it’s crucial to conduct thorough research. This may involve analysing the financial health of a company, understanding the risks and potential returns of a fund, or evaluating the performance of an index or ETF. Financial news, company reports, and independent research tools can help you make informed decisions.

Step 2: Access your online platform

Log in to your online platform using your username and password. Your platform should provide access to various investment options, market data, and research tools to help you make informed decisions. Familiarise yourself with the platform’s layout and features to ensure a smooth investment process.

Step 3: Place an order

To buy a stock, share, or fund within your SIPP, you’ll need to place an order. This typically involves:

Searching for the investment: Use the platform’s search function to find the stock, share, or fund you want to buy. You may need to enter the investment’s name or ticker symbol (a unique identifier for stocks and funds).

Entering the order details: Specify the number of shares or units you want to buy or the amount you want to invest. You may also need to choose the order type, such as a market order (executed at the current market price) or a limit order (executed only at a specified price or better).

Reviewing your order: Double-check the order details, including the investment name, quantity, and price. Make sure you have sufficient funds in your SIPP to cover the purchase, including any fees or charges.

Submitting your order: Confirm and submit your order. The platform will process the order and execute the trade according to your instructions.

Step 4: Monitor your investments

After purchasing investments in your SIPP, it’s essential to monitor their performance regularly. Keep track of market news and developments that could impact your investments, and review your portfolio periodically to ensure it remains aligned with your goals and risk tolerance.

Step 5: Rebalancing your portfolio

Over time, your portfolio’s asset allocation may drift away from your target allocation due to market fluctuations.

Rebalancing your portfolio involves adjusting your investments to align your asset allocation with your investment strategy. This usually involves selling some investments and buying others.

Do I have to declare my SIPP on my tax return?

No, you don’t need to declare your SIPP on your tax return. The investments within a SIPP grow tax-free, and you don’t need to pay capital gains tax or income tax on them.

However, when you start withdrawing from your SIPP, you may need to pay tax on the income you receive, depending on your personal circumstances.

When you start taking money from your SIPP, usually after the age of 55, you can withdraw up to 25% of your pension pot as a tax-free lump sum. The remaining 75% is subject to income tax at your marginal rate.

How should I invest for retirement?

Investing for retirement involves considering factors like your age, risk tolerance, investment goals, and time horizon. Here are some tips to help you invest for retirement:

  • Start early: The sooner you start investing, the more time your money has to grow.
  • Diversify your investments: Spread your money across various assets and sectors to reduce risk.
  • Review your portfolio regularly: Monitor your investments and rebalance your portfolio as needed to stay aligned with your goals.
  • Seek professional advice: If you’re unsure about your investment choices, consider consulting a financial advisor.

SIPP Financial Advisors

If you’re unsure about which investments to choose or how to manage your SIPP, it’s a good idea to consult a financial advisor.

They can help you assess your risk tolerance, set investment goals, and create a personalised investment strategy that aligns with your retirement planning objectives.


Is a SIPP better than an ISA?

A SIPP and an ISA serve different purposes and have different tax implications. A SIPP is a tax-efficient way to save for retirement, while an ISA is a tax-efficient savings or investment account for shorter-term goals.

Depending on your circumstances, it may be beneficial to use both to maximise tax efficiency and diversify your savings strategy.

How much does the government add to a SIPP?

The government adds tax relief to your SIPP contributions. For basic rate taxpayers, this amounts to a 25% top-up. For example, if you contribute £80, the government adds £20, resulting in a total of £100 in your SIPP.

Higher-rate and additional-rate taxpayers can claim further tax relief through their tax returns.

What is the maximum I can pay into my SIPP?

The annual allowance for pension contributions, including your SIPP, is £60,000 or 100% of your relevant UK earnings, whichever is lower. However, if you have a high income (above £240,000), your annual allowance may be tapered down to a minimum of £4,000.

Which SIPP provider is best?

The best SIPP provider depends on your individual needs, investment preferences, and budget. Factors to consider when choosing a provider include:

– Investment options
– Fees and charges
– Platform usability
– Customer service

It’s essential to compare different providers and read reviews before making a decision.

Is a SIPP a good investment?

A SIPP can be a good investment for those who want greater control and flexibility in their retirement savings. It offers tax advantages and a wide range of investment options.

However, a SIPP may not be suitable for everyone, and it’s essential to consider your individual circumstances, investment knowledge, and risk tolerance before deciding if a SIPP is right for you.

A SIPP offers numerous investment options to help you grow your retirement savings.

From stocks and shares to managed portfolios and commercial property, you have the flexibility to choose investments that align with your goals and risk appetite.

Remember to diversify your investments, review your portfolio regularly, and seek professional advice if needed. By doing so, you can make the most of your SIPP and work towards a more financially secure retirement.