Think that investing isn't for you? That it's something only those with knowledge of stock markets or the super wealthy do? It might be time to think again.
Thanks to robo-investors, like Wealthify, investing can be as easy as deciding how much you want to invest and how much risk you want to take. This is because we'll do the hard work of choosing your investments and keeping an eye on how your portfolio is performing to make changes as and when they're needed.
And an Investment ISA (more commonly known as a Stocks and Shares ISA) could make starting even easier as you won't have think about tax. In fact, you can save or invest up to £20,000 in ISAs per tax year without having to pay tax on any gains your money makes.
So, here are four common Investment ISA myths debunked...
1. I need to pick my own investments
Well, you could if you wanted to, but this depends largely on which route you go down when choosing your Investment ISA.
If you're confident making your own decisions, there are platforms that let you pick and buy your own investments. Or, alternatively, you could choose to put money in a tracker fund that follows a market index (like the FTSE 100). This could be a convenient way to buy lots of investments at once, and may be more suitable for novice investors.
Sound scary? There are robo-investing services that will choose your investments for you, taking the worry out of your hands. At Wealthify, we have a team of investment experts who will build your Plan and manage it for you based on how much money you put in, and your appetite for risk. This involves keeping an eye on the markets and making changes to your Investment Plan to help keep it on track.
2. My money will be locked away
That's not the case. You can withdraw money from most Investment ISAs at any time, although some providers will charge you for each withdrawal, while others will include the cost within their annual management fee. So, check the small print before you sign up to a service.
At Wealthify, we do neither of these things. With our Stocks and Shares ISA (and General Investment Account, which is designed for investing outside of your allowance), you can withdraw your money at any time, and without penalty. However, just remember that because your money is invested in assets, we will need to sell your investments before releasing your funds to you.
3. You need to be loaded to invest
In the past, many professional investment managers only took on clients with more than £100,000 to invest, but technology has helped to change that.
There are now a number of platforms, like Wealthify, that make it possible to start investing with just a small amount. In fact, the minimum investment for our Stocks & Shares ISA, Junior ISA and General Investment Account is just £1, and £50 for our Personal Pension.
Another thing that may have been a barrier to investing in the past is high fees, but these days, there are affordable platforms out there. For example, we charge a simple and transparent management fee which is 0.60% of your Plan value each month. And although there are other charges associated with investing, we aim to keep these as low as possible. Check out our investment fees.
4. If I lose money, it won't come back
It’s true that all investing involves some risk, and you could get back less than you originally put in. This is because stock markets fluctuate for various reasons – like global political events, and market and economic trends – and the value of your investments can go up and down as a result.
But the important thing to remember is that a loss might not always be a loss. If you panic and take your money out while your investments are down, you'll be cementing your losses and making them real. However, if you stay invested for the long-term, you could give them the opportunity to go back up in future.
And although there isn't the risk of losing money with a Cash ISA (which is like a traditional savings account as you earn interest), if the rate of interest you're getting is lower than inflation, your money may be worth less in future. With investing, however, your gains won't be tied to fixed interest rates, so your money could have the potential to grow further.
Please remember that the value of your investments can go down as well as up and you can get back less than you invested.
The tax treatment depends on your individual circumstances and may be subject to change in future.
Wealthify does not provide financial advice. Seek financial advice if you are unsure about investing.