Being in the fortunate position of not having my income affected by Covd-19 has meant that I have been able to use lockdown as a “reset” for my finances. No spending on travel, new clothes or eating/drinking out has meant that my credit card bill has dropped to levels not seen since I first got it and a surplus in my current account each month. I’ve decided to use some of this surplus to increase how much I invest each month and hope to continue doing so once we are back to (a form of) normality.
Before investing, I made sure to have an emergency fund that I can easily access should I need it. If you haven’t already, be sure to read our guide on how to build an emergency fund and it’s use here.
Here I have put together a Beginners Guide to Investing and share the investing platforms that I use.
When opening an ISA with Moneybox, you are given three options: cautious, balanced and adventurous – your choice will affect the allocation of the money you invest across different funds. Moneybox also allow you to select a Socially Responsible global shares fund.
Once you have a Moneybox account set up, you can link your debit or credit cards to the app. When you spend on one of the linked cards, Moneybox automatically rounds up the spend and commits to saving the remainder. If for example you buy a coffee for £2.60, Moneybox will take 40p. You can also choose to double your roundups. In addition to the roundups, Moneybox allows you to set “payday boosts” to give your savings a boost on the day you’re least likely to have an excuse to save.
Another great feature is Moneybox+, which gives you investment rewards from their brand partners. These offers are constantly changing but examples include spending at John Lewis and getting 1.5% of your spend into your ISA or signing up for Gousto and getting a £15 reward.
I’ve been a Moneybox user since 2017 and was drawn to it by theroundup feature. I’ve historically been bad at paying myself first and found it difficult to set aside money to save; the roundup feature allowed me to gradually save in small increments.
I personally think that Moneybox is a great app for someone that has no experience in investing and/or finds it difficult to save. Once you have chosen your risk level your funds are chosen for you and if you’re disciplined you can easily find yourself saving fairly substantial amounts. The app has a great interface and gives investing more of a “fun” feel.
One of the downsides to Moneybox is that deposits are set to take place every Monday, with that figure being set the previous Wednesday. This means that you have to wait to deposit ad-hoc funds. The lack of flexibility around deposits and small number of investment options are the reasons why I decided to start using Nutmeg.
I was recommended Nutmeg by a friend that has been a long term user (but frustratingly didn’t use his referral code) due to its low fees and fully managed portfolios.
The sign up process involves picking a risk appetite between 1 and 10, which will help to decide the makeup of your portfolio. You are also able to opt in to invest in more Socially Responsible funds. For those that are unsure of what risk setting to choose, Nutmeg offers a risk appetite questionnaire, which helps to gauge where you would be best placed on the 1-10 scale. My responses placed me in the risky category but I decided to go slighty more conservative with my selection and picked number 7 on the scale, which has meant that my portfolio has a ~60% exposure to equities, which are riskier than bonds, commodities etc.
By opting in to the Socially Responsible investing option, I can see how my portfolio ranks in the Environmental, Social and Governance categories. Within each of these categories are breakdown scores for example, within Environmental, I can see an Environmental score, CO2 emission figure and water stress score. Nutmeg also provide an overall Social Responsibility score, showing me that my portfolio is 22.7% better than an equivalent portfolio without a Social Responsibility Screening. This is a fantastic feature and, to my knowledge, not one that is offered by many investment platforms. After reading Amy’s article on Ethical Banking, it was great to see a platform that allowed you to make considerations for your environmental conscience.
As well as showing info on the Social Responsibility score, the Nutmeg app has summaries of your portfolio performance and projected performance. Both of these can also be seen in more detail and provide some great insights into your returns over time, although I must admit that the app visual experience is much more bland and robotic than that of the vibrant Moneybox.
As with MoneyBox, Nutmeg is a great platform for beginners to investing, as the funds are fully managed, and you can open an ISA from just £1. If you would like to sign up to Nutmeg and have no fees for 6 months then use my referral code.
HL is one of the biggest UK-based stockbrokers and was around long before the time of Robo-advisors. As my ISA allowance for 20/21 has been committed to Nutmeg, I have opened a Fund and Share Account with them.
Whereas Moneybox and Nutmeg pick your funds for you, HL act as a broker, buying and selling funds and shares at your request. HL has a wide range of funds, shares, corporate and government bonds, ETFs and trusts to select from.
Buying shares and ETFs using HL can be costly for the average investor, costing between £5.95 and £11.95 per deal. For funds however, there are no charges and for this reason I plan to only use the platform for buying and holding funds.
As a newbie to investing, I used a combination of advice from friends and a read of HLs Wealth 50 list to select my holdings, making sure to diversify my portfolio. Similar to Nutmeg, the HL app provides great level of insight and functionality but lacks on the aesthetic aspect.
HL is better suited to those with some knowledge of investing and want to have more control over where there investments are going. If you think HL might be for you, you can use the following link to get a free consultation with an advisor. If the advice is taken you’ll get a free £100 when you create an account.
Due to the fees associated with dealing with individual shares, I created both a FreeTrade & Trading 212 account, as both of these platforms are fee free. For those wondering how they make money, I believe FreeTrade plan to offer a premium account in the future and Trading 212 currently have a paid Professional account.
Both platforms have great, easy to use interfaces that we have come to expect from FinTechs and have a range of stocks, commodities and Exchange Traded Funds (ETFs) to purchase. The two offer almost identical services, with both also allowing you to purchase fractional shares, meaning that you don’t have to stump out over £2k to buy into Amazon for example.
Trading 212 have a referral scheme that will gift you a free share, worth up to £100, by using the following link.
When investing, your capital is at risk.