Taking a SIPP: my (slightly painful) journey into personal pensions
OK, I admit it: if Steps to Investing’s goal is trying to encourage people to take their first step on their investing journey, I need to put my money where my mouth is and talk about how I leaped into the unknown.
Truth is I started my journey back in 2007 when I moved jobs, and my new employer insisted I open one of their Self Invested Personal Pensions (SIPP) so they could pay into it. I could also put money in, which would they would match, meaning that up to 17% of my salary would be going into the SIPP every month. Happy days.
The downside was, that for the first time in my employment career, I would have to choose my own investments and rely on those choices for my retirement. A huge decision, I concluded. So, I did what many of us do when faced with important financial decisions: I left the paperwork on my desk for 6 months whilst I ‘thought about it’.
In hindsight, this was a massive error. 17% is a huge amount and I had missed out on half a year’s contributions. In the end, I wasn’t with the firm for much more than a year, so I only got half of what I could have.
After the leaving that company, I went to work for media company and for a while fancied myself as a day trader. In the eye of the financial-crisis-storm share prices were up and down by large amounts on a daily basis, so I took some big (for me!) gambles. It pretty much paid off in those few short months, but the rollercoaster wasn’t really for me. I needed to get back to basics and find some good long-term investments.
Managing my SIPP today
Fast forward to 2020 and I found myself sitting on way more cash in my pension than I would like – in fact, about a third of it was just sitting there doing nowt, as they say in my neck of the woods.
So, what to buy next? Again, some weeks (probably actually months) of procrastination followed. At least I knew what I didn’t want, which was too much more of the same things I already had in my portfolio. One in particular was doing especially badly, and I couldn’t see it getting any better. Let’s just say I was running out of patience!
And then something came across my desk which I thought was interesting. It wasn’t going to solve the 30% cash problem, but might be worth a small investment.
What I’ve ended up buying is a small position in an investment trust that leases aeroplanes to three large carriers. Some will undoubtedly say I’m nuts, but it appealed to me for a few reasons. One, the way it delivers any performance is not going to be the same as something invested in ‘normal’ companies. Two, its share price has been coming down lately, perhaps presenting an opportunity. And thirdly, it pays a good income.All of this may prove to be totally misguided, but for the moment I’m happy. Now, what to do about that other 29%? Check out the Steps Minicast Episode 3 – where we talk about just that!