Having your own personal pension (SIPP) can be a lucrative way to prepare for a pension.

For many of us, pension may still seem far. But every day is approaching-taking a long-term approach to the necessary financial planning can lend a hand in obtaining significant benefits.

However, some movements may rather destroy, and not create value in SIPP. Here are three traps that investors should beware of.

1. Small costs may soon be added up

Account management fees, commissions, transfer fees, paper fees … Costs and SIPP fee may soon add up.

This happens before considering the alternative costs of some elections. For example, one supplier may offer lower interest on cash balances than another.

In insulation, each of these things may seem compact. Remember, however, that SIPP can extend for decades before the owner even retires – and can last for decades later.

It is a very long -term investment project. Over time, even compact apparent fees and costs can consume refunds.

Choosing the right SIPP supplier is a basic but crucial move for the investor.

2. Without paying attention

Another way people lose money – even when making good investments – is to pay enough attention to how their portfolio occurs.

As an investor, not a speculator, I am usually not a fan of regular trade.

But this does not mean that when buying an action, you should simply hide it in SIPP and forget about it.

The investment case may change for many reasons, from geopolitical risk to technological progress.

Regardless of how good the investment may seem during its creation, it makes sense to observe it from time to time and considering whether something fundamental has changed, which may mean that it no longer deserves a place in SIPP (or, vice versa, deserves a larger place than before).

3. Paying too much attention to dividends

Another mistake that SIPP investors can make is to pay too much attention to dividends.

Dividends are great – but it never guarantees that they will last. Profit or loss of capital should also be considered.

This helps to explain why I do not have shares in the operator of gas wells Varied energy (LSE: Dec).

Its capacity of 10.3% of dividend certainly attracts attention. Amazing (but appointing), it is actually modest in relation to some of his historical profitability!

But guess what?

Within five years, the varied price of energy shares has collapsed 64%. So the investor who bought it for his IPP in March 2020 would now be on a huge pile of dividends – but also a shareholder much less than she paid for it.

The Diversified business model has a risk. Buying many aged wells from other companies flattened balance loans. This also ensures the risk that high cleaning costs, and wells end their productive life that can consume profits.

The business model is novel and has produced many juicy dividends for shareholders, despite the fact that the company reduces its payment.

But dividends are always only one part of history. An experienced SIPP investor focuses on total Return from any participation.