Sipps allow you free rein as to where your money is invested whereas standard personal pensions tend to have quite narrow choices.

The beauty of Sipps are that if your funds start to struggle, you can take full control and switch the investment to other areas to make your nest egg grow further.

Almost anything can be placed into a Sipp – from unquoted shares to your own commercial property. With contributions now as low as £50 per month or as a transfer of £5,000 from another pension plan, Sipps are now available to almost everyone.

So is a Self Invested Personal Pension for you? The Financial Services Authority (FSA) has warned that some people have been given the ‘hard sell’ when it comes to Sipps and some of these may have been better off with a simple stakeholder pension of personal pension. As with any financial investment, you really need to do your research to ensure you are getting the financial product that best suits your needs.

If you are considering a Sipp, you will need to ensure you have the time to fully research what you are planning to put into it.

A Sipp will allow an investor to control all aspects of their pension planning giving them flexibility and diversification, which can sometimes be limited in a more traditional pension plan. However this means that you will need to fully understand what you are investing in.

Sipps also tend to be quite cost effective – many insurance based products are percentage driven meaning that as the fund grows in size, so does the costs. Sipps, on the other hand, are typically fee-based so no matter how big the fund, the same fee is payable and therefore as the fund increase, the percentage paid actually becomes smaller.

Low-budget Sipps often don’t come with advice and this means you are really taking on a greater level of risk and you need to ensure you are really very financial savvy. There are many low-cost Sipps around and if you have £50,000 or less to invest, these are probably the Sipps for you.

At the other end of the scale, there are the high-end advice-drive Sipps, however these tend to be if you have a pot of £200,000+. High-end Sipps will be more expensive however they tend to come with advice and you do get what you pay for.

If you are planning to go down the Sipp route, there are eight questions you need to ask:

1. What is the Sipp set-up fee?
2. What is the Sipp annual management fee? Usually, this is a flat fee.
3. How much are the annual fees on the Sipp funds? There are usually ongoing charges of around 1.5%.
4. How much are the initial charges on the funds – Oeics and unit trusts?
5. How much are dealing charges on shares and investment funds?
6. How much are the transfer fees? Are there charges levied for moving money, funds or shares into the Sipp or to another pension provider?
7. What rate of interest will I get on any cash left in the Sipp?
8. Are there any other charges e.g. costs for buying an annuity, costs for paying out on death?

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The FTSE 100 index was pushed up 3.2 percent last week. This has followed a six month rally that has driven blue-chip shares up 50 percent over their March low.

Experts believe that both of these rallies are in part due to ordinary buyers, that is buyers who are not represented by big investment firms. Since June, the number of these buyers has risen to levels equal to the dotcom boom of 2000, and in the last three months, deals placed through execution-only stockbrokers has risen to over 4 million.

Experts have said that although the big firms still do the majority of share trades, at present it is all the small investors who are actually driving growth in the markets.

Many people have turned away from traditional savings accounts because of the very low interest rates currently on offer. With uncertainty in the property market, there is also wariness over investing in property. Thus, with many believing that shares and the FTSE can only go up in the next few years, ordinary householders are turning to the stock market to help make some money.

However some experts are concerned that many of these new investors may get their fingers burnt. Many are predicting an Autumn correction and some believe that the market is overpriced and dividends are under pressure and likely to fall. The issue with falling prices is that with a savings account, the capital is never lost whereas there is a risk with stocks and shares investments that the capital invested may be lost.

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Men fare slightly better with 59 percent of men saving the recommended 12 percent of income each month.

There are many factors why women can’t save more for their retirement with the most common reason being a large family. 25 percent who have three children or more said they were not saving any more for their retirement. Women over 50 also are unable to save with many reporting that the recession has made them less well off hence their inability to put money away in a savings account.

The news that many people are not saving for their retirement is worrying as two separate studies have recently showed that Britain’s state pension is one of the worst in the Western world. For those on final salary pension schemes, this is not so much of a worry however for those who have little or no savings, the report is a worry because it means they cannot rely on the state pension for a good lifestyle.

The research looked at over 5,000 people. The results showed that 26 percent of women have no long-term savings aimed at retirement. The figure for men is just 15 percent. The number of women not putting aside money for their retirement has risen by 5 percent since the same time last year.

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Scottish Widows surveyed a number of people and called the results ‘alarming’. The lack of savings is put down to a difficult economic climate culminating in unemployment and pay freezes.

75% of families have said that daily living costs were preventing them from saving, up from 67% last year. 42% of families said that debts prevented them from saving, up 10% from 2008.

Half of those surveyed said that they would be more encouraged to save more money if there was tax relief on all savings. This year’s Budget has gone some way to helping, announcing that the maximum amount allowed to be invested into will increase from October for the over 50s and April for all other savers.

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So how much money do you really need? Most people do not have personal income protection so if they were suddenly made unemployed, they could be in serious financial trouble pretty quickly. Personal income protection is definitely worth thinking about as it ensures you have an income should something unexpected happen and you have to stop working.

If you aren’t keen on having personal income protection, an emergency fund is a must – and the funds in it should be easily accessible. Particularly in today’s climate, having your money tied up in non-accessible funds such as in equity in your house is not a good idea. Having some money in an instant access is definitely a wise move.

If you have some money spare, it is worth looking at higher rated interest accounts. These may not be instant access – you may have to give 30 days notice, or the money may be tied in for a given amount of time – however the rates of interest are generally higher than those on the instant savings accounts. Also look out for ISA accounts which are tax-free.

Pensions are also something to consider, although the amount you pay in may vary according to your circumstances. You will need to estimate what sort of income you require for a comfortable standard of living – obviously this figure will vary in each individual case, for example if you own your own house with no mortgage outstanding you may require less of an income than someone who is still renting. Taking into account inflation, you will then need to work out the rate of return and from this, calculate how much you will need in your pension pot. The earlier you start your pension the better – the later you leave it, the more it will cost you.

Overall, it is wise to take a look at your finances at least once a year, regardless of your financial position. This will ensure that you have the best rates for all your accounts and that you make the most of your money.

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