Firstly, when we speak about investing in this guide, we will simply be referring to stocks and shares investing handled by fund managers.
Investments can seem daunting for first-time investors, You will be left wondering where to invest your money, how to ensure your money is safe, how to compare different investment products, how to gauge the performance of your investment, which fund manager to choose and whether the financial crisis of 2008 can repeat itself. Whilst these are all fair questions, there are a few basics you must understand to be able to choose where and how to invest your money.
As a prospective first-time investor, the term “ISA” should be somewhat familiar to you. ISAs are essentially tax-free savings products where any interest or capital gain isn't taxed.
ISAs provide substantially more benefit than your typical savings account and can be used to put your savings in. ISAs can also be used as an investment vehicle. Even better all ISAs apart from the innovative ISAs are covered by the Financial services compensation scheme.This means that your money is protected up to £50,000.
So are ISAs the best way to invest? 😮
Well, that's up to you to decide but don't forget your investments can rise as well as fall and don't assume the FSCS will cover you for a fall in investments.You can read a detailed guide to ISAs here.
So what stock and shares ISA investment platforms are out there and how do you differentiate between them?
There are only three who we feel fit the purpose of this guide and have passed our 3 point test which includes:
- Ease of investing
- Ease of withdrawing investments
- management fees
**** These are Nutmeg, moneybox, and Moneyfarm.****
The team here at Huuti have used all three platforms and some of our team members still use all of them. An interesting way to further diversify the risk.
But maybe you prefer to have your money on one investment platform. Which should you choose and why?
Nutmeg is the first on our list. Their stocks and shares ISA have a £500 minimum investment and a £100/ month commitment.You can select your risk level and Nutmeg will then invest your money in a wide range of assets, from stocks to bonds and commodities.You can choose either a fixed allocation portfolio designed to align to your risk level and rebalance automatically or a fully managed portfolio where the Nutmeg team fully manage your investments and make changes to the investment strategy based on real-time economic and political situations.
Nutmeg is both accessible on the web and on their app.
What is the minimum investment amount for Nutmeg?🔔
The minimum from Nutmeg is £500 plus a £100/month commitment.
What Fees do Nutmeg charge?💧
Nutmeg has two fee structures based on if you choose the fixed allocation portfolios or fully managed portfolios.
For the fixed allocation portfolio, Nutmeg charge 0.45% up to £100k and 0.25% after that.
For the fully managed portfolio, Nutmeg charge 0.75% up to £100k and 0.35% after that.
Nutmeg also charge an average fund fee of 0.21%.
Moneybox is the latest platform out of the 3 and the ease of use for moneybox can easily be ranked as the highest as once you onboard and set things up it will continue automatically depositing funds into your investment pot. Something we are really keen on and a feature we are adding to our platform.You will be required to set up direct debits( which to be honest aren't hard to set up). The roundup feature means you invest when you spend and this really is a very good way to go about investing.If you can't curb your spending at least benefit from it? Yes! We certainly think so.
Moneybox is strictly app-based and the app works just as you would expect.
Moneybox is very safe. Your funds are kept in a segregated account away from Moneybox’s accounts and you are safeguarded by the financial services compensation scheme which covers you up to £50,000.
Moneybox also uses 256-bit TLS encryption when transmitting your data.
What is the minimum investment amount for Moneybox?🤑
You can literally invest £1.
What Fees does Moneybox charge?ℹ
Moneybox charges £1/month(free for first 3 months) as well as a 0.45% platform fee and a 0.23% funder fee per year. There is no cost of withdrawing your funds.
Moneyfarm, just like Nutmeg has been around for a while but maybe just a bit longer. The Moneyfarm stocks and ISA service is pretty straightforward. You are able to set up a direct debit to your Moneyfarm account and your investments are then managed going forward. This is unlike Nutmeg who give you the option to either have a fixed allocation or fully managed portfolio for a higher charge but then again the cost for managed portfolios for both Nutmeg and Moneyfarm are similar.
Transferring your ISA to Moneyfarm is just as easy, all you need to do is sign up, fill a quick form and let Moneyfarm do the rest.
Like the rest of the platforms on this list, Moneyfarm is very safe.Your funds are kept in a segregated account away from Moneyfarm’s accounts and you are safeguarded by the financial services compensation scheme which covers you up to £50,000.
Moneyfarm also uses a 256-bit encryption which is the safest in the business as of now.
What is the minimum investment amount for Moneyfarm?😮
£1. Yes, it really is £1.
What Fees does Moneyfarm charge?✔
Moneyfarm charge a 0.70% management fee on your first £20,000, 0.60% on anything between £20,000 and £100,000, and 0.50% on anything between £100,000 and £500,000. They then charge 0.40% for anything above £500,000.Moneyfarm also charge an average fund fee of 0.3%.
Pricing is of course subject to change so you must check for updated pricing with Moneyfarm before choosing to proceed. Their pricing simulator should give you an indication of costs.
As with all investing, past performance is not a reflection of future performance.
Investec’s Click and Invest
Click and Investment is an investec brand. Investec have been around for over 180 years and manage over £55bn for over 200,000 clients all over the world.
Click and invest will give you a choice of 5 different strategies on which basis they will invest your money.Unlike some platforms, Click and invest will actively manage your investments to ensure they outperform the market. As with most other platforms, click and invest will only advise you based on the amount of money you are investing with them and not take into consideration any assets or liabilities you have outside of that. This is called simplified advice.
When onboarding with click and invest, they do a good job at gauging your risk level, how much risk you are willing to take after reaching a financial goal and how much losses you are willing to take without having any impact on your lifestyle.
What is the minimum investment for investec’s Click and Invest?
The minimum investment for Investec’s click and invest is £10,000. This is comparably high to moneybox for example which you can start with as little as £1.
What fees does Investec’s click and invest charge?❄
Your Click & Invest fee will be 0.65% on your first £100k, 0.50% on the next £150k, and 0.35% on the remaining amount. The average underlying fund charge is 0.60%.
Click and invest does not charge any fee for closing, withdrawing, transferring or setting up your investment account.
Pricing is ofcourse subject to change so be sure to check for update prices with click and invest.
Remember, this is not financial advice, always seek independent financial advice. CAPITAL AT RISK.ISA RULES APPLY.