Learning how to invest in a SIPP could give you the financial freedom and control most traditional pensions simply don’t offer; in 2024, UK pension savers increased their average annual contributions by 19%, rising from £1,192 in 2023 to £1,477 in 2024, despite ongoing cost-of-living pressures.¹

A Self-Invested Personal Pension (SIPP) gives you more control over where your money goes and offers a wider range of investment, and in this article, the EveryInvestor team will equip you with the knowledge you need to make confident, informed decisions about investing in your pension.

Remember, SIPPs can go down as well as up in value—so always consider your appetite for risk.

Keep reading to start investing and get your SIPP going...

What 5 Steps Should I Follow to Invest in a SIPP?

To invest in a SIPP, you should first set clear retirement goals, then research and compare SIPP providers to find one that matches your needs.

Next, open a SIPP account, fund your SIPP through contributions or transfers, and review and adjust your investments regularly to ensure they remain aligned with your long-term retirement plans.

Here's what you need to know:

What's a SIPP?

A SIPP (Self-Invested Personal Pension) is a UK pension scheme that gives you full control over how your retirement savings are invested.

Unlike standard pensions, a SIPP allows you to choose from a broader range of investments—such as shares, funds, bonds, and commercial property—making it a flexible option for those who want to actively manage their pension portfolio.

What Are the 5 Steps for Investing in a SIPP?

As mentioned, the 5 steps for investing in a SIPP are: Set your retirement goals, research SIPP providers, open a SIPP account, fund your SIPP, and review and adjust regularly.

These steps help you define your financial objectives and establish your retirement journey.

Here's the importance of each step:

#1. Set Your Retirement Goals

Setting your retirement goals is the first step in building a successful SIPP strategy, helping you define when you want to retire, how much income you’ll need, and what lifestyle you aim to maintain.

Retirement planning is always the most important step, as it allows you to see the bigger picture.

#2. Research SIPP Providers

Researching SIPP providers involves comparing fees, available investments, online tools, and customer support to find a provider that suits your financial needs and long-term retirement goals.

#3. Open a SIPP Account

Opening a SIPP account typically requires choosing a provider, completing an online application, and submitting identification and financial information to comply with regulatory requirements.

#4. Fund Your SIPP

Funding your SIPP can be done through regular contributions, lump sums, or pension transfers, with each option offering different tax advantages and growth potential.

#5. Review & Adjust Regularly

Reviewing and adjusting regularly ensures your SIPP remains aligned with market changes, your personal circumstances, and your evolving retirement objectives.

What Are My Contribution Options if I Start a SIPP from Scratch?

When starting a SIPP from scratch, your contribution options could either be a lump sum payment or setting up regular contributions.

Some providers accept lump sums as low as £100 (£80 plus £20 in tax relief), and monthly Direct Debits can begin from £25 (£20 plus tax relief)—this makes it easy to begin building your pension, even with small, regular investments.²

How Do I Transfer My Pension Into a SIPP?

You can transfer existing pensions into a SIPP to simplify your retirement savings and access broader investment options, but before doing so, check for any exit fees or loss of valuable benefits from your current schemes.

It's also important to create a clear investment plan before transferring, ensuring your SIPP aligns with your long-term goals.

What Should You Know Before Getting Started With SIPP Investments?

Before getting started with SIPP investments, you should understand the level of control and responsibility involved, the range of investment options available, and the tax benefits and rules governing contributions and withdrawals.

As a beginner, it’s especially important to seek regulated financial advice to help you choose suitable investments and avoid costly mistakes.

Consider all these important aspects:

What Should I Know Before Investing in a SIPP?

Before investing in a SIPP, understand that it suits those confident in making their own investment decisions; you’ll need to assess your retirement goals, risk appetite, and investment knowledge.

A clear plan is essential, along with awareness of contribution limits, tax relief, and potential fees and costs.

Here are the steps you’ll need to take before putting money into a SIPP:

• Determine your investment objectives
• Assess your risk tolerance
• Evaluate your investment knowledge
• Understand the investment choices within SIPPs

Where Can Beginners Find Expert SIPP Investment Advice?

Beginners can find expert SIPP investment advice through established providers like Hargreaves Lansdown and AJ Bell, which offer educational tools and guided support. Alternatively, consulting an independent financial adviser (IFA) can provide tailored, regulated advice based on your goals and risk profile, helping you start your SIPP journey with confidence.

Although there may be a cost involved, professional advice can be especially valuable in avoiding costly mistakes in SIPP investing.

How Should You Determine Your Investment Objectives?

Determining your investment objectives requires defining what your short and long-term financial goals are, as well as clarifying your retirement lifestyle aspirations and their associated costs.

Establishing Short-Term & Long-Term Financial Goals

Establishing short-term and long-term financial goals involves a careful assessment of your overall financial situation and your retirement plans. 

Here's a step-by-step guide:

• Assess your current financial situation.
• Set specific and measurable goals that are Specific, Measurable, Achievable, Relevant, and Time-Bound (SMART). 
• Identify short-term goals like paying off high-interest debts, establishing an emergency fund, or making specific contributions to your SIPP.
• Establish long-term goals like determining how much you want in your SIPP to achieve your desired retirement lifestyle.

Once you’ve ticked off these items on your planning list, consult a financial advisor who’ll be able to help you analyse your financial situation, identify potential roadblocks, and create a personalised SIPP investment strategy to meet your objectives.

Your Desired Retirement Lifestyle & Associated Costs

Your desired retirement lifestyle and associated costs are the blueprints on which you should build your savings goals.

Think about things like travel, pastimes, medical costs, and any other significant costs you anticipate during your retirement years.

Don’t forget

The cost of living will most likely be a major factor when it comes to your retirement budgeting, so make sure you take potential rises in inflation into account.

How Do You Assess Your Risk Tolerance?

Assessing your risk tolerance and comfort level with market fluctuations is a critical step in creating a portfolio that meets your financial objectives. 

Remember that risk tolerance is a personal assessment for which there’s no one-size-fits-all approach, and risk tolerance may change over time.

Learn More: Are SIPPs Risky?

How to Determine Your Investment Risk Profile

Determining your investment risk tolerance involves factors such as your age, financial situation, and risk preferences.

Here are some steps to help you:

• Educate yourself about different types of investment risk, including market risk, inflation risk, credit risk, and liquidity risk.
• Determine your investment timeframe, as a longer time in the market generally means you’ll be able to bear more risk and be able to recover from market downturns.
• Evaluate financial goals and timeframes, as your risk tolerance may be influenced by the urgency to reach those goals.
• Reflect on past experiences, as your reactions during past market downturns can provide insights into how you may handle similar situations in the future.
• Take a risk tolerance questionnaire or quiz (offered by many financial institutions) to help you find out how comfortable you’d be with different levels of investment risk. 
• Consider emotional factors: If you find yourself becoming anxious or stressed during market downturns, you may have a lower risk tolerance.

Don’t forget to consult a financial advisor who’ll be able to consider your financial goals, risk preferences, and overall financial situation to help you develop a suitable investment strategy.

Understanding How Risk Tolerance Guides Investment Decisions

Understanding how risk tolerance guides investment decisions will help you make a balanced investment plan that matches your risk appetite with what you end up investing in. 

This may help you limit possible losses while trying to maximise your returns.

What if my risk tolerance is high?

Investors with a high risk tolerance are typically more comfortable with investments that have higher potential returns but also higher potential losses, such as stocks or commodities. 

If your risk tolerance is high, you may opt for a SIPP heavily weighted in these asset types.

And if my risk tolerance is low?

Low-risk investors may favour more secure investments like bonds or cash that have a lower potential for high returns but also a lower risk of loss. 

If your risk appetite is low, your SIPP would likely be more balanced towards these safer assets.

In other words

Understanding your risk tolerance can help you make appropriate investment decisions within your SIPP, ensuring you are comfortable with the level of risk involved while striving towards your retirement goals.

Evaluating Your Investment Knowledge Before Setting Up a SIPP

Evaluating your investment knowledge is crucial before making any financial decisions. 

A sound understanding of investment principles and concepts empowers you to make informed choices, assess risks, and potentially maximise returns.

Basic Investment Literacy

Make sure you have a grasp of core concepts such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), diversification, risk, return, and asset allocation. 

Tip

Consulting an online glossary of investment terms can be an easy way to familiarise yourself with these concepts. 

Exploring Opportunities for Enhancing Financial Education

Ongoing education in investment strategies and financial planning will empower you to navigate complex markets confidently.

You could:

• Stay updated with financial news.
• Read investment books and resources.
• Attend investment seminars or webinars.
• Engage in investment forums and discussions.
• Consider enrolling in courses: 
• Consult with financial advisors.
• Practise virtual trading.

By thoroughly evaluating your investment knowledge, you can identify areas for improvement and take the necessary steps to enhance your understanding. 

Strategies for Maximising Returns With Self-Invested Personal Pensions (SIPPs)

To maximise returns in a SIPP, consider diversifying across asset types such as equities, bonds, and property.

Spreading investments helps balance risk, as not all asset classes perform the same way in different market conditions.

Reviewing your portfolio regularly and rebalancing as needed can also improve outcomes, ensuring your asset allocation remains aligned with your investment goals.

Another effective strategy involves taking advantage of tax relief on contributions and carefully selecting low-fee funds.

Lower fees mean more of your money is working for you, which can make a substantial difference over time.

Additionally, consulting a financial adviser for guidance on fund selection and risk management can further enhance your SIPP’s growth potential.

How Do You Go About Researching Potential SIPP Providers?

Researching potential SIPP providers is one of the crucial steps on your journey. 

When reading up about all the different companies that offer SIPPs, keep in mind certain key factors and make sure you understand the fees and services they offer.

Key Factors to Consider

When selecting a SIPP provider, factors like fees, investment options, customer service, and reputation should be carefully researched to find the most suitable fit for your unique circumstances.

To compare these elements, consult provider websites, where you’ll be able to obtain the necessary data. 

Understanding the Fees Charged & Services Offered by Different Providers

Understanding the fees charged and services offered by different providers will help you as you try to optimise your pension savings.

Let’s take a closer look at some of the major names in the market.

AJ Bell 

AJ Bell has an app and a user-friendly platform with a diverse range of investment options, and it offers excellent educational resources for new investors.

The platform levies a 0,25% custody charge on shares and funds up to £250,000, £9,95 per share deal (or £4,95 if you’re a frequent dealer), and £1,50 per fund deal.⁵

Hargreaves Lansdown

Hargreaves Lansdown has an app that allows you to view your investments and make deals. 

The company employs a tiered fee structure when it comes to SIPP account fees, starting at 0,45% for portfolios up to £250,000 and gradually decreasing for larger portfolios. 

Share deals are also charged according to a tiered structure: Deals cost £11,95 if you made up to nine trades the previous month, £8,95 if you made between 10 and 19, and £5,95 if you made 20 or more.⁶ 

Vanguard 

Vanguard has an app and offers ready-made pension portfolios to take some of the stress out of investing.⁷ 

This provider charges a yearly fee of 0.15% on investments up to £250,000, while accounts exceeding this value are charged a flat rate of £375 per year.

Fund transaction costs range from 0,01% to 0,86%.⁸ 

Fidelity 

Fidelity has an app and offers Select 50, a basket of funds picked by experts that Fidelity members can choose to invest in.⁹

Online share deals are charged at £7,50, and Fidelity charges a platform fee of 0,35% that drops to 0,20% for portfolios between £250,000 and £1 million. 

After your first £1 million, you won’t be charged any further platform fees beyond the 0,20% levied on the first £1 million.¹⁰

How Do You Understand Investment Choices Within SIPPs?

Understanding investment choices within SIPPs requires a good overview of the range of available investments and how to diversify your portfolio for maximum growth.

Overview of the Range of Investments Available in a SIPP

To get an overview of the range of investments available in a SIPP, consult a variety of SIPP providers’ websites to find out what each firm offers.

SIPPs offer a vast array of investment options, including commercial property, stocks, bonds, mutual funds, and real estate investment trusts (REITs).¹³

Remember

Each type of investment carries its own risks, so make sure you understand the potential benefits and drawbacks of every product you invest in.

How to Diversify Your Portfolio to Minimise Risk

A well-diversified portfolio reduces risk exposure by spreading investments across various asset classes, safeguarding against market volatility.

Here are a few ideas: 

• Do not just stick to one type of asset, but rather invest in a mix of stocks, bonds, ETFs, and even commercial real estate.
• Invest in both domestic and international markets to spread your risk across different economies.
• Spread your investments across different sectors such as technology, healthcare, manufacturing, and more.
• Include a mix of small-cap, mid-cap, and large-cap stocks in your portfolio. (‘Cap size’ refers to the total value of a company as perceived by the stock market.)  

Remember, the goal of diversification is not to maximise returns but to limit risk while maintaining the potential for a reasonable return.

How Many Funds Should You Hold in a SIPP for Optimal Diversification?

The number of funds you hold in a SIPP should strike a balance between effective diversification and manageable oversight.

For most investors, a portfolio with 5 to 10 funds can provide sufficient exposure across different asset classes, industries, or geographical regions.

This approach helps reduce the impact of poor performance in any single fund while keeping your investments easy to monitor.

Holding too many funds can lead to overlap, where similar assets appear in multiple funds, diluting diversification benefits.

Furthermore, managing a high number of funds may incur additional fees and complexity, which could eat into returns.

Regularly reviewing your funds can ensure your portfolio stays diversified while aligned with your risk tolerance and financial goals.

What Should You Do Once You’ve Done Your SIPP Research?

Once you’ve done your SIPP research and determined your own risk tolerance and investment objectives, you can select a provider and start setting up your SIPP.

Setting Up a SIPP: Getting Started

Setting up a SIPP involves completing the necessary paperwork or online application and choosing the desired investments according to your established financial objectives.

Once you’ve opened a SIPP, you’ll be able to fund it by doing a bank transfer or debit card payment or by transferring an existing pension into it. 

Remember

Transferring an existing pension may attract early-exit fees, and you may end up losing certain benefits. 

Once you’ve set up your SIPP, you’ll have to manage it.

Managing & Reviewing Your SIPP

Regularly monitoring your SIPP portfolio ensures it remains aligned with your investment goals, and adjustments can be made as needed.

Ongoing SIPP management involves several key activities:

• Regularly reviewing the performance of your investments in relation to your retirement goals.
• Changing the contents of your portfolio from time to time to stay at the risk level for your needs.
• Ensuring you are contributing enough to meet your retirement goals and making the most of your annual tax-free allowances.
• Keeping up-to-date with changes to pension rules and tax legislation that could affect your SIPP.
• As retirement nears, planning how to draw down your pension in the most tax-efficient manner.
• Regularly reviewing and managing the costs associated with your SIPP, including platform and transaction fees.

Each of these steps requires a certain level of financial knowledge and commitment, highlighting the importance of staying informed or seeking professional advice when necessary.

Can You Manage Your Own SIPP? A Guide to Self-Directed SIPPs

Yes, you can manage your own SIPP, known as a self-directed SIPP.

This approach gives you full control over investment choices, allowing you to decide where your funds are allocated across various asset types.

Self-management may appeal to experienced investors who prefer a hands-on approach to managing their retirement funds.

However, self-managing a SIPP requires time, investment knowledge, and a clear understanding of risk.

With no advisor to guide decisions, the responsibility for monitoring performance and making timely adjustments falls on you.

Regularly reviewing your portfolio and staying informed about market trends are essential to successfully managing a self-directed SIPP.

Common Questions on SIPP Investment Options

Final Thoughts on Investing in a SIPP

Investing in a SIPP offers a potentially robust and flexible path towards securing your financial future. 

By following the steps outlined in this guide, from selecting the right provider to diversifying your investments and managing contributions, you can create a well-balanced and personalised pension portfolio. 

Remember to assess your risk tolerance, set clear investment goals, and regularly review your SIPP to adapt to changing circumstances. 

With a clear understanding of how to invest in a SIPP, you can embark on your journey to build a stable and prosperous retirement.

Learn More: What Can a SIPP Invest In?