292. Trends, risks, and opportunities in global bonds
This episode covers the interesting dynamics of the past year, including varying economic forecasts,...
Once you’ve established your investment goal and attitude to risk, decided your ideal asset allocation and picked a fund or trust to invest in, all that’s left to do is make that purchase. But what steps do you need to take?
Here we explain how to buy funds, and introduce you to investment platforms, as well as comparing some of the main players in this field.
There are three main ways to buy a fund. The first is directly from the fund management group itself. This involves opening an account, choosing the fund, and investing on an agreed basis.
The second option is through a financial adviser. This is preferable for those wanting more help in making fund choices. Of course, you’ll be paying for this assistance. You can find a financial adviser using sites such as www.unbiased.co.uk.
Finally, there are investment platforms. This route is usually cheaper than going direct to a fund house, and enables you to hold a variety of funds from different providers all in one place. There’s also plenty of competition in this space so shop around.
An investment platform is an online service that enables you to buy and hold a variety of assets in one place – and manage them easily.
It will also offer access to investment news and historical performance data, as well as an array of analysis and useful information.
These platforms are a great way to buy investment funds that put their money into shares, bonds, property, and other interesting areas.
You’ll need to set up an investment account with your chosen platform. This is really easy and can be completed in a matter of minutes.
Most providers have a choice of accounts. These will often include a Stocks & Shares ISA and a personal pension (SIPP), as well as general investment accounts.
It’s worth visiting the websites of these platforms to find out what they offer.
Once the account is up and running, you can choose the funds that best meet your needs. There will be loads of information on the site to guide you through the process.
So, where do you start? Which investment platform will best meet your needs? Unsurprisingly, this isn’t a completely straightforward task.
Your final decision needs to consider the level of charges that you’ll pay, the customer service that is on offer, and the reviews of previous clients. Remember, as with individual funds, cheapest isn’t always best – it’s value for money that counts.
To get you started, we have looked at what’s on offer from six popular investment platforms. While we’ve made every effort to ensure the accuracy of this information, it’s important to carry out your own research before committing your money. Links to each company are provided so you can get up to date information.
The AJ Bell Youinvest Dealing account offers a range of shares and funds, along with Shares magazine online for those with a balance of at least £4,000 in their accounts.
The firm’s regular investment service allows you to start from as little as £25-per-month, while online dealing charges are £1.50 for funds and £9.95 for shares.
There is also a fee of 0.25% on the first £250,000 of funds. The website has an online calculator to help you work out the relevant charges that will apply.
This is a decent low-cost option from the company that is listed on the London Stock Exchange and manages billions of pounds on behalf of investors.
As with the other providers, there are a number of accounts from which to choose. Bestinvest also has tiered annual management charges with lower percentages paid for larger investments.
According to the platform’s website, an investment value of up to £500,000 will pay 0.2%, while anything higher sees the fee reduced to 0.1%. Over £1m there’s no charge.
You don’t pay fees for buying and selling funds as these are covered by the ongoing service feel. For shares, however, trades are charged at £4.95 each.
Users of the DIY platform can also benefit from a strong, independent research team when making their investment decisions.
Chelsea Financial Services pioneered discount broking more than three decades ago. A platform fee of 0.15% is charged by Aegon, the underlying platform, which pays for access to more than 4,000 funds, the platform administration and custodianship of your money.
Chelsea then charges a service fee to Chelsea of 0.4%, which covers things like quality client service, online tools, a highly acclaimed Viewpoint magazine twice a year and an annual fund review.
Unlike some providers, there are no additional charges with Chelsea, just simple predictable pricing. There are also no extra – and in some cases expensive and confusing – charges for anyone preferring to use the telephone or who prefers paper to the internet.
Fidelity charges an annual service fee that is payable monthly. The amount is calculated based on the total value of your investments.
For example, it’s 0.35% if you have a regular savings plan and the value of your investments is less than £7,500. Without a plan it’s £45.
It’s the same 0.35% rate for those with up to £250,000, while anything higher than this amount sees the charge reduced to 0.2%.
Fidelity provides access to more than 4,000 funds and you can manage your investments at any time, either online or via an app.
Another well-established name in this area. Hargreaves Lansdown’s HL Fund and Share Account is designed to help investors build their own portfolios.
You can choose from more than 3,000 funds, along with UK and overseas shares, corporate and government bonds, Exchange Traded Funds, and investment trusts.
An account can be opened in minutes with a debit card and National Insurance number. You can then deal with your investments 24/7 online or via the HL app.
It’s free to open an account and there are no charges for buying or selling funds. However, you will pay 0.45% on the first £250,000 of funds.
The Interactive Investor platform allows you to choose one of three accounts: SIPP for your pension; an Individual Savings Account; or a general trading.
The trading account has a flat fee structure of £9.99-a-month charge. Your first trade each month is free, with additional trades usually costing £5.99.
The platform, which has more than 400,000 customers, enables you to choose from a wide range of shares, funds, trusts, and Exchange Traded Funds (ETFs).
The fixed free arrangement makes it particularly attractive for those with larger portfolios.