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Invest from as little as £1
Since the late 90s, the Internet has changed many aspects of our life, and particularly the way we manage our finances. Online banking services have multiplied and are now used by millions of people across the globe. Investment services have entered the digital arena too and online investing platforms, which allow people to become investors in a few simple steps, are now becoming even more popular.
What you need to know about investing
Emergence of online investment
Before the Internet era, people who wanted to invest often had to do it through a stockbroker, either in person or by telephone. And when their stockbroker would sell or buy investments (shares, bonds, property, commodities, cash), they would be notified with a phone call. Needless to say, this was time-consuming and expensive as you had to pay your stockbroker for the time spent analysing markets, building your portfolio, and communicating with you. Low-cost online investment services have been around since the late 90s and are now rising…
Online investment opportunities
With digital technology breaking down geographical barriers and enhancing communications across the globe, finding investment services online is easy. Investing online can give you access to a large range of assets coming from different places, such as individual stocks, bonds, or funds. And when you hold different types of investments, you diversify your portfolio, in other words, you spread your money across markets and assets, which help mitigate your risk of losing everything.
Online brokers vs online investing management services
There are different ways to invest online. You can either do it yourself via online brokers, which are digital trading platforms, or you can have your portfolio built and managed for you by a wealth manager or a robo-investing service. Online brokers are platforms which allow you to buy and sell assets at any time and on any digital device. Not only are you in charge of managing your own portfolio, you also have access to key tools to help you research and track your investments. When you opt for an online DIY investing platform, fees can quickly pile up, and you might be charged for using the platform, transferring money into your account, rebalancing your portfolio, and even withdrawing funds. Unlike online brokers, digital investment management services do the hard work for you. After you choose how much you want to invest, how long for, and the risk level you’re willing to take, online management platforms create and monitor your portfolio daily. Also, fees charged by these services are typically lower.
Traditional wealth management services vs online investing services
If you don’t want to invest on your own, you can either hire a wealth manager or join a robo-investing service to have your investments managed for you. Whilst traditional asset managers target wealthy people, online investing management services let people invest small sums, meaning almost everybody can join the world of investing. Also, the way these two types of services invest your money can greatly differ. On one hand, traditional asset managers, who are more likely to favour active investing, pick individual investments hoping they’ll outperform markets. This method is often associated with high fees as active investing requires thorough analysis of markets’ movements and asset research. Wealth managers can typically take 2.56%1 of your total investment per year (including all costs and charges). On the other hand, robo-investing services purchase passive funds, which contain different types of investments and track markets from one or several countries and charge low fees. At Wealthify, for example your annual management fee doesn’t exceed 0.7% and can be as low as 0.4% depending on the total value of your Plan. You’ll also pay a fund provider charge which is currently 0.21% and transaction costs of, on average, 0.12%. Finally, choosing an asset manager might mean you need to book appointments and/or make phone calls to check how your Investment Plan is doing, which can be tedious. Alternatively, if you opt for a digital investing service, you can access your Plan 24/7 on any digital device.
Here’s what you need to know about investment management services
‘It’s a robo world’
Robo-investing services have a misleading name as robots play a limited role when it comes to managing your investment plan. Whilst computers are used to process a large amount of data and information, there are real people who make the investing decisions, from allocating investments to adjusting your portfolio. The role of robots is to deliver enough data to investing experts, so they can invest your money efficiently. Also, robo-investing services often have a customer service department where all your questions can be answered. This means you can speak with a real person on the phone, via email or online chat.
Learn more about robo-investing services
‘I have no control’
Although online investing services create and manage your portfolio of investments, you still have control. With Wealthify, you’re the one choosing how much you invest and how long for, you have the possibility to access your portfolio at any time on your laptop, phone, or tablet, and you can withdraw your funds if you need to without penalty.
‘It’s riskier than other investment services’
Online investing services are relatively new, but the way digital platforms invest your money is designed to mitigate risk. Indeed, in addition to letting you select your own risk level, they diversify your portfolios. Put simply, they buy many different funds, containing typically hundreds of investments, often from different countries, so the risk is spread and the likelihood of losing all your money is reduced.
Here’s what you need to know about diversification
5 advantages of online-investing platforms
They make investing accessible to everybody
Unlike traditional investment managers who only target wealthy people, online investing platforms are for everybody as they let you invest small sums. At Wealthify, you can start with as little as £1 and top up whenever you like. So, people who couldn’t have access to investment services before because they didn’t meet the high investment thresholds, can now become investors.
They make investing simple
Investing via a robo service is easy and can be done at the push of a button. Whilst DIY investing requires you to keep up with markets’ performances every day and make your own decisions to buy or sell assets, new digital investment management services greatly reduce the workload. At Wealthify for example, all you need to do is choose how much you want to invest, how long for, and your risk level, ranging from cautious to adventurous. Then, our investment experts take care of the rest as they build and monitor your Investment Plan daily.
They make investing transparent
With online investing services, key information concerning your investments is easily and quickly accessible on any digital device. Not only can you check your portfolio’s performance 24/7, you can also see the transaction history of your Plan, including the fees which are deducted from your total investment.
They make investing flexible
Online investing services let you add or withdraw funds whenever you want to. And whilst such actions might incur costs when you invest via a DIY investing platform or a traditional wealth management service, Wealthify doesn’t charge you when you top up or withdraw money.
They make investing affordable
Fees charged by robos are typically low. At Wealthify, you pay an average fund charge of 0.21% at the moment, plus average transaction costs of 0.12%, and a management fee varying between 0.7% and 0.4% to enjoy a large array of services, such as adjustments made to your Plan and access to live chat, phone and email support.
How Wealthify works...
Please remember the value of your investments can go down as well as up, and you could get back less than invested.