Help SIPP Advice needed

perc

Hello

To very slightly lower my tax threshold, I would like to pay a small amount via DD into a pension each month and like the idea of a SIPP. I would like all of the funds transferred into the SIPP to purchase the same AIM share each month.

Could anyone here advise me would the various companies who offer a SIPP charge me each month for the trade purchase of the shares (as the £7.50 - £11.00 per trade seems high for a smallish investment), on top of an up to £100 annual fee?

Also would the charges come out of the funds within the SIPP?

Or is there a pension scheme which would better suit this?

Many thanks for any advice you may be able to give.

bowlhead99

perc wrote: »

Could anyone here advise me would the various companies who offer a SIPP charge me each month for the trade purchase of the shares (as the £7.50 - £11.00 per trade seems high for a smallish investment), on top of an up to £100 annual fee?

.
That sounds about right for the transaction fees, £10-£12.50 per trade isn't abnormal for stock market purchases on AIM inside most mainstream SIPP wrappers. Fees can be lower if you do loads of trades a month... or are using a dirt cheap no frills broker - but dirt cheap no frills brokers don't offer SIPP wrappers with all the complexity and HMRC compliance hassle it brings them.

The broker has to place an order on the stock exchange to buy you a specific parcel of shares. There is a minimum amount of work in doing that (and providing the infrastructure and customer service to do it) and it is not the broker's fault your instruction is for him to go and buy 5 shares instead of 5000. If the fees per trade are too high, simply do fewer trades, less frequently, at larger values.

Many brokers or platforms will offer a regular investment scheme where they let you invest in the most popular investments (eg FTSE350 shares or some ETFs or ITs) on a "bulk" basis with other customers by putting your order in in advance for the purchase that happens on a particular day a month. Then they can share the cost out and maybe only charge you £1.50 or £2 for the transaction - because they are buying 10000 shares to split between 10 customers and not booking 10 deals on the market for 100-5000 shares each.

However, they don't offer that for AIM shares because those shares have much lower demand and they won't find ten customers who want that AIM share on 10th May. But will easily find ten customers who want Lloyds or BP that day because millions of shares change hands daily on the 350 largest companies on the exchange.

Also would the charges come out of the funds within the SIPP?

Yes, so you are paying them out of your untaxed earnings (i.e. your net pay grossed up for tax relief) which is the cheapest possible way to do it.

Or is there a pension scheme which would better suit this?

If you want to select individual shares or bonds of individual companies yourself, rather than via a collective investment scheme with other people, then a SIPP ('Self Invested' personal pension) is the only type of scheme that allows you to do it.

If you just want to drip money into some sort of collective investment fund each month to "very slightly lower my tax threshold" and put money away for the future then you don't need a SIPP and a plain old personal pension or stakeholder will do the job, but with limited choice. SIPP allows you to search the whole market for the exact holdings you want.

You will find that depending on the fee structures at different places, for some types of investment that don't need to be individually bought and sold on a stock exchange in real time, (e.g. unit trusts or OEICs), many platforms will simply charge you an annual fee for platform access based on a percentage of your average asset values, rather than a fee for every individual transaction. That can be much more economic than buying very small parcels of shares in individual companies, monthly.

bigadaj

As with isas and unwrapped funds there are a range of charging structures that brokers/ Platforms adopt, from percentage to fixed fee with trading, discounts for regular investments etc as bowlhead has said.

If you state some sums then you might get some more suggestions, the monevator website has a list of charges and indications of which firms are better for different investors.

Bestinvest is a good option for low value sipps, low percentage charge on the funds held and no trading charges for funds, one of the best options for sipps below around £25000.

cash1948

Take a look at AJBell YouInvest web site - good value SIPP, with regular investment fee potentially as low as £1.50. Normally £4.95 for funds and £9.95 for equities. Fees at https://www.youinvest.co.uk/charges-and-rates/sipp

perc

Thanks guys that is just what I was looking for. Much appreciated

:T

atush

I would like all of the funds transferred into the SIPP to purchase the same AIM share each month.

pretty high risk strategy to put all the funds into one single Aim share.

hope you have a lot of other pensions, and investments to offset this risk

JoeCrystal

I am sure that perc is wise enough to ensure that all the new SIPP fund in a single AIM share is less than 1% of his retirement provision....

atush

I am glad you are sure, i am not

AnotherJoe

OP why don't you simply make one payment at the start of the year rather than monthly ? It's only a small amount you say you are paying, presumably you are quite confident about this share, so on that basis better all invested at the start of the year anyway.

perc

atush wrote: »

pretty high risk strategy to put all the funds into one single Aim share.

hope you have a lot of other pensions, and investments to offset this risk

Hi and thanks for your comment. I have a final salary pension pension as well, so this is really just to reduce my tax threshold this year.

perc

AnotherJoe wrote: »

OP why don't you simply make one payment at the start of the year rather than monthly ? It's only a small amount you say you are paying, presumably you are quite confident about this share, so on that basis better all invested at the start of the year anyway.

I had not thought of doing it this way, thank you very much. Will do this :A