The following article is a guest post from our friends at Nutmeg, the UK’s largest digital wealth manager. Money Dashboard users get 9 months fee free investing when they open a Nutmeg account. More info here. Capital at risk.
So, if you’ve decided investing is right for you, how do you go about starting your investment journey? Traditionally there have been two options: do it yourself or pay someone to do it for you.
1. DIY investing
You can decide for yourself what sort of portfolio you want, then choose and buy funds using a platform. There may be both platform fees and fund fees to pay, there may also be transaction costs and additional charges for an ISA or pension.
You will need to keep an eye on your funds to check that they are doing well and that the balance of asset types remains right for you. This approach may be more suitable for more confident and experienced investors or those with a lot of time to oversee their investments.
Some platforms offer ready-made portfolios. You select the risk level and they will choose the funds. These may have an extra layer of fees as a management charge. You pay for their professional oversight of the portfolio.
Some investment companies allow you to buy their funds directly, although you will still need to choose the funds yourself. The advantage of this approach is that you do not have to pay a platform fee. The disadvantage is that you will have to monitor each fund separately, and you’ll receive paperwork for each fund. As with a platform you will need to keep an eye on your funds to check that they are doing well and that the balance of asset types remains right for you.
2. Get some help
A financial adviser will recommend a fund or set of funds for you, based on your circumstances, but costs and service levels can vary hugely. They should spend some time with you, discussing and agreeing the right risk strategy for your portfolio. You will perhaps pay on an hourly basis for their time and there may be an initial charge for setting up the funds and an ongoing charge as a percentage of your investment as well. Usually, this works best where you have a large amount of money to invest.
The traditional way to build a portfolio was through a stockbroker. This works best when you have sufficient money to buy a selection of shares and bonds. The stockbroker will recommend good buys and, with your agreement, will place the trades for you. There will be a small tax to pay on each share purchase and your stockbroker will charge you a commission as well, with varying charges per transaction.
Another more traditional long-term investment management approach is through a portfolio manager, who makes decisions on your behalf. Known as ‘discretionary management’, the practice involves the manager making investment decisions at their own discretion without asking you. The decision-making process requires a lot of experience in the industry alongside relevant qualifications. As a result, it can be expensive and often only available to very wealthy clients.
3. Nutmeg
Nutmeg is an online discretionary wealth manager. You will need to sign up and answer a few questions to enable us to suggest an investment portfolio for you.
The specific investment will depend on the amount of investment risk that you are willing to take and the investment style you choose.
You will pay us a percentage, from 0.25% to 0.75%, (incl. VAT where applicable) of your investments, and depending on the amount invested. Additionally, you will incur the underlying fund costs and the effect of market spread. For further information about the cost of investing, see our costs and charges.
Nutmeg aims to give clients the best levels of discretionary investment, without the high costs that bar most people from entry. Our award-winning service provides globally diversified investment portfolios for everyone, whether you have £100 (£500 for an ISA or pension) or £1 million.
Three investment styles. One great service.
We offer three investment styles for you to choose from for your investment pot with Nutmeg, and all of our portfolios are diversified across asset classes, countries and sectors.
Fixed allocation
Offers a diversified and regularly rebalanced portfolio, with a range of risk levels available.
Fully managed
Offers a diversified and regularly rebalanced portfolio, with a wide range of risk levels available. These funds are proactively managed by experts.
Socially responsible
Offers a diversified and regularly rebalanced portfolio, with a wide range of risk levels available. These funds are proactively managed by experts and have an SRI focus.
You can start today:
Once you’re ready, you can start investing with Nutmeg today. It’s simple, straightforward and we’ll be on hand to help you answer questions you might have.
Nutmeg is offering a special offer of no portfolio management fees for 9 months for Money Dashboard users. To take advantage of this offer start by entering your email address on our partner page. You’ll then be able to see the sorts of returns associated with each type of Nutmeg investment, with a sample portfolio.
As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Tax treatments apply. Learn what we mean by risk
