Building a SIPPs investment portfolio

You’ve decided that SIPPs is for you, so what next?

Saving for your pension is a long-term exercise and you should approach it as you would any other investment. The first and most important part of this is to consider what your attitude to risk is – in order to choose the investments that best suit your needs.

How your SIPPs investment portfolio is put together will determine how well it performs. When you start to plan your investments, it’s best not to worry about which fashionable fund you want to invest in, or which are the best shares to buy. Rather, you should think about the variety of investments in your SIPPs portfolio.

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If your portfolio is suitably diverse, with a number of different shares, funds and investments, it should be safe from a fall in value in any individual investment, safeguarding your pension savings. By spreading the risk this way you are likely to have a much better return.

The keys to a successful portfolio are assets that will perform well while others are performing poorly.

A good place to start when planning your SIPPs investments is the stock market, which tends to outperform other investments in the long term.

However, it still makes sense to balance this with some other assets.

It is equally important to never judge a fund on its past performance. A fund that has performed well in the past is just as likely to take a tumble as an underperforming fund is to start doing well.

Don’t be overcautious. The safe investments won’t do all the work on their own. It’s important to balance them with riskier investments, which could really boost your SIPPs savings.

And finally, it’s important to keep revisiting your SIPPs portfolio, as your attitude to risk is likely to change the closer you get to retirement, when you’ll need to safeguard your savings by shifting them towards more cautious holdings.

Another question to consider is whether you feel savvy enough to handle these investments yourself, or whether you should entrust them to a professional?

If you choose to go with a financial adviser make sure they have specialist expertise in the field of SIPPs and savings.