January 14, 2025 • 28 mins
Each week on the Merryn Talks Money podcast, we discuss strategies for investing with industry experts. But rarely do we talk about how to get started on that investment journey. On this episode, Holly Mackay, founder and chief executive of Boring Money, joins hosts Merryn Somerset Webb and John Stepek to do just that.
They chat about how to get started in choosing an investment platform, including answering a key question (what is an investment platform?) and looking at the main options available.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio News.
Speaker 2 (00:16):
Welcome to MEREN Talk to Your Money. The personal finance
edison of MEREN talks money. In these weekly episodes, we
talk about the best strategies for making the most of
your money. I'm MEREN sum Stweb and with me senior
reporter and Money Distilled author John Steppack.
Speaker 3 (00:29):
Hi, John, Hi Melton. It's not happy New Year anymore,
is it?
Speaker 4 (00:32):
We did that last week, so it's just measurable in
your year.
Speaker 2 (00:38):
I'm folding rather as we suspect it isn't it? Never mind,
More of that later. This is another one of those
episodes where we built but this is not God. This
is one of those episodes where we bring in an
expert voice to help us tackle the question of the
week as well. John and I know a lot. Amazingly,
we don't know everything. So with us today is Holly mackay,
(00:58):
Founder and see of Boring Money, a go to resource
to help normal people make smart investment decisions. Welcome Holly,
Thank you for joining us.
Speaker 1 (01:06):
Him aren good for you.
Speaker 2 (01:08):
Now we're asking a lot of you today. We've got
a lot of listener questions in on the same sort
of topics. Everyone wants to know how to get started
on investing. What do I do to kick the journey off?
So we want to talk about things like what platforms
you'd recommend for beginners, what is it reasonable.
Speaker 3 (01:24):
To pay, and how do you how do you choose?
Speaker 2 (01:26):
How do you get started with choosing a platform and
then choosing the investments to put into whatever wrapper is
it is that you've chosen on the platform. So I'm
going to start with something so basic that you're going
to think it's ridiculous, but it's still important. What Holly
is an investment platform?
Speaker 1 (01:43):
No, it's a good question, Baron. I mean, I think
of it like it's a combo between a department store
and a storage deposit unit. So it's somewhere you go
to buy your investments, and then once you've bought them,
is someone that actually keeps them for you and does
all all the admin, gives you that website you can
(02:04):
log onto. So really, the investment platform, it's just a
word right that says it's where you go and buy
and hold investments in twenty twenty five.
Speaker 2 (02:14):
Okay, so that's what you would do if you're doing
it DIY, And then if you were to use a
Wealth Manager or an IFA, etc. You would go through them,
but they would be using their own.
Speaker 1 (02:24):
Platform exactly exactly the sort of tech that they all use.
But I think what's really interesting, particularly for people not
using an advisor, is the massive growth we've seen of
these platforms. And I was looking today actually at some
stats they've grown seventy eight percent over the last five years.
Everyone's sort of holding their money and buying sort of
(02:45):
things this way. So it's really the go to for
DIY investors in particular.
Speaker 3 (02:50):
And most people will know the big names.
Speaker 2 (02:52):
They'll have heard of Huggridge, Landsdown, they'll have heard of
Interactive Investor, They'll have heard of Aja Bell.
Speaker 3 (02:58):
But there are many more.
Speaker 2 (02:59):
And if we're looking at the universe that an ordinary
person coming to this fresh might choose from, how many
are they choosing from? How many reputable, profitable brands are
there that you would say we could go to.
Speaker 1 (03:11):
So there are some reputable ones that probably aren't profitable today,
but kind of those that I think are worthy of
consideration is about sort of thirty five to forty in
the market. I've got test account. O.
Speaker 3 (03:22):
God, oh that's more than I thought of. It is terrible.
Speaker 1 (03:25):
Oh, my phone is like my sort of search unit.
I have about thirty two accounts. I think test accounts
sort of out there with with DIY investment platforms, which
makes my sort of annual tax return quite interesting.
Speaker 2 (03:40):
God, I bet I'd like to back off, by the way,
from saying it's terrible. It's not terrible. It's wonderful. We
love competition, We adore competition. The more competition the better,
but it does make it hard to.
Speaker 3 (03:49):
Choose, so it does.
Speaker 2 (03:50):
What are the criteria? So we're coming at this. We've
got we've we've we've done a bit of googling. We've
got a list of thirty five. What criteria are we
looking for?
Speaker 1 (03:58):
I think they're in. The very first thing people need
to be honest with themselves about is how confident are
they and how much choice do they actually want? Because
for many people, out of their choices a nightmare. It's
actually complicated. It does your head and you've got other
things you'd rather focus on. So I think really people
should answer initially, how interested in this am am? I?
(04:21):
Do I want to learn? Do I want to check in?
Do I want to choose? Or does that sound like
hell on earth to me? Because the answer to that
question will pretty much split the type of option you
have into two. If you're the sort of person that says, oh, no,
too much chores, I haven't got time. I've got other
fish to fry. You want someone that can pretty much
(04:44):
do it all for you and manage it for you,
and that might point you to something that we call
a robo advisor, so more on them later. If you're
someone that says, actually, no, you know, I am interested
in this stuff.
Speaker 3 (04:56):
I want to.
Speaker 1 (04:56):
Build a portfolio. I want to choose between some shares
and some whatever it might be, then you'll be in
the market for a more traditional type platform. So for me,
that's the very sort of first question. People should ask
how much choice door I want? How competent do I feel?
Speaker 2 (05:12):
Okay, well, why don't we start right there. Let's assume
that we are the person who wants to invest, knows
they should invest, but really doesn't want to get to involve.
Let's talk about robo advisors first. So these are platforms
that will effectively make the decisions for you. You input
your your information, input what you perceive is your risk
levels perhaps, and then it'll create a portfolio for you
(05:34):
and you don't need to do anything except for top
that portfolio up on a monthly or an annual basis,
whatever suits you use, is that.
Speaker 1 (05:40):
That's exactly right. My kind of thing of it, My
analogy is it's like someone that might say I want
to eat, but I'm rubbish at cooking as well, buy
a ready meal please, So for me, they're the ready
meal of the investment world. You can go, as you say,
to a website, you can answer some pretty straightforward questions
about your atta to money, your time frames, etc. And
(06:02):
they'll spit out a sort of suggestion view. You can
set it up and off you go. So you know
some of the biggest names in that space where we
have groups such as Nutmeg, there's money Box people might
have heard, or in the pensions world, you've got Pensions Be.
So there are I would say about ten sort of
to fifteen incredible players in this space now for people
(06:25):
to look at. I think what's great about these options
as well is that you can set them up to
accept direct debits as well, so you really can set
and forget and really only have to check in every
sort of six to twelve months and try and set
up these direct debits so you're chipping in little and
often you're not just buying everything at one point in
(06:47):
the market. You're kind of drip feeding into markets. So
there is and and the tech has got so much
better around these options too, and the apps are pretty good,
so people can can check in with their investments as
list or as often as they want.
Speaker 3 (07:02):
And what would you expect that to cost? What do
you pay for that?
Speaker 2 (07:05):
And is there a difference in how you might choose
based on how much money you have? I mean, let's
say you're starting with five hundred pounds and putting in
one hundred a month.
Speaker 3 (07:14):
Is there when you might.
Speaker 2 (07:15):
Choose that is different to when you would choose if
you were, for example, putting in ten thousand pounds and
then adding two thousand pounds a yew?
Speaker 3 (07:21):
How does it work? What would you expect to pay.
Speaker 1 (07:23):
In terms of this sort of first question? What should
people pay? Roughly? I think for this option which is
all in so it includes admin, includes all the investments,
it's anywhere between about zero point seventy five and one
percent a year. So to translate that into pound terms,
it's about seventy five pounds to one hundred pounds a
(07:44):
year for every ten thousand pounds you have to invest. Now,
one way they do differ is in investment performance, because
of course there's team sitting there running the money, and
we track at boring money. We track on a coarty
basis performance and we can see there is great difference
(08:05):
between these groups in how well they're doing based on
what they're picking and based on what they're doing under
the bonnet. So one thing people should look at is
the performance over time. Now, as you'll know, kind of
looking at this over a relatively short term can be misleading,
particularly if we look back at twenty twenty four, where
(08:28):
to be honest, anyone that through darted or board and
landed anywhere near the S and P five hundred will
have done pretty well. But people should look at performance,
and we do sort of track that and make that
available on our website.
Speaker 3 (08:44):
Okay, we're not going to let you just skip over that.
We want to know. We want to know who's doing
the best over the last five years or so. Who
are there? Who are the couple that stand out?
Speaker 1 (08:54):
Do you think, as I sort of said before, it
depends how spicy you want your your investments. So there's
different what they call risk profiles for those people that
were saying, look, this is long term money, I can
ride out some ups and downs. You'll typically put in something.
They've all got really silly names like Ambitious or a
grill or adventurers, but that just means you're all in
(09:16):
the sort of shares rather than anything more more cash.
Like now, if we look at that risk profile, actually
groups that have done well, and that'springked mind, are HSBC,
in Pact, money Box, aj BELL have done well because
they've typically common denominator tended to have more money allocated
(09:38):
to the US than to other markets, and that's typically
been mods driven returns. But also if we look back
over the last few years, you'll recall, you know, the
hiatus we had with Liz Truss is not so many
mini budget when the bond markets sort of behave really
(09:59):
abnormally and did weird things. What actually happened then is
that the so called low risk stuff did really badly
because bonds didn't behave as they were supposed to. They
weren't being the safe, goody goodies in the portfolios, so
they had a bit of a hiatus. And what that
(10:20):
meant is that some people who picked a low risk
option got a really nasty shock. And luckily some of
the banks and banks hate risk, so there's loads of
compliance people that are running around in banks going don't
do anything naughty, don't do anything risky, so they're lower
risk portfolios ten to sort of load up on the
(10:41):
things that went really nuts during Liz Trust's mini budget,
like government bonds and things. So you've actually had a
period where groups that were very, very cautious didn't do
particularly well. So some of the banks in particular have
had sort of bad performance periods over the last two years.
(11:03):
I mean, I hope that answers your question. There are
some groups that do better.
Speaker 4 (11:07):
Something you just said Erelow I think is also really interesting,
the point about the slightly I guess intellectually mechanical way
that the risk set up is put together so that
boinds are saying as low risk and shares are saying
as high risk, and that is historically a reasonable assumption,
(11:29):
but sometimes things do go pair shaped and at the
moment also we've also kind of left a forty year
bond bull market and actually now boinds are causing quite
a lot of trouble in markets generally. I know that
obviously this is a podcast for beginners. But I think
is that maybe a reason for people to also just
(11:50):
be a little bit cautious whenever and to understand that
these definitions are are don't necessarily mean you can't lose
money even if you are invested in the low risk
say the things.
Speaker 1 (12:01):
I might be a bit controversial here for DILI investors
who pick a low risk option, it is often because
people have just got the hebgb's about investing, rather than
people sort of taking a measured view on volatility. And actually,
(12:22):
I think for anyone with a timeframe of less than
three years, if you look at where interest rates are today,
I can't think why you'd invest in a low risk
sort of I SUP portfolio rather than in a really
decent pain cash kind of basis. You can still get
you four point seventy five percent istion the sort of
(12:42):
top paying easy access accounts. That's pretty good, right. So
for me, especially given the volatility of recent years, I
personally question why you're a beginner and you're looking to
make your money work hard, but you've got that time
frame of two to three years. Interest rates are so
(13:03):
high at the moment relatively speaking, and looking at the
hiatus that we've had in their bomb markets and sort
of inflation still uncertain for me. I think robo advisors
and these ready made options really come into their own
for people with time frames of five years or more,
in which case we should be looking at at least
(13:25):
you know, if there's five options, at least actions three,
four or five.
Speaker 4 (13:29):
Yeah, So basically it comes don't risk actually been in
a functioning time frame rather than your own level of
fear or not about investing.
Speaker 2 (13:38):
Is there is there one of the robo advisors in
your mind that stands out as having the correct mix
of low fees and good performance and not asking you
to actively recommend one in particular, But is there one
that over the last say, five to seven years, has
shown that that mix.
Speaker 1 (13:57):
Here's an interesting point. I think the row advisors got
all the press. It sort of came to sort of fame,
well fame in my world.
Speaker 5 (14:06):
We're all these, you know, for being the disruptors. They've
got better apps, they slicker, they're shiny, and they're better
to use. But if you're after a low cost there.
Speaker 1 (14:18):
Are other ways, and we can come on to talk
about this that will be lower costs. If you look
at the robo advisors, They are not the cheapest way
to get that ready meal. You're actually better off buying
what it's called a multi asset fund from a big
name like a Vanguard or a black Rock on one
of the traditional platforms and having it there. That will
(14:40):
cost you probably half or sort of two thirds of
what you would pay a robo advisor. So actually, a
really important point here is it comes down to what
do people value. Some people might say, actually, I like
the idea of an app, I like the idea of
getting good articles. I like the idea of being in touch.
Mind paying a wee bit more for that. But if
(15:03):
you're someone that wants rock bottom, listen to the next
bit of the podcast when we talk about the auditional platforms,
because they might be a bit less sexy, you know,
in their sort of tech and how they sort of
deliver stuff to you, but they will be cheaper than
a robo advisor. If we had to look at.
Speaker 3 (15:22):
The robo advisors.
Speaker 1 (15:23):
To your question, we're just in the middle of doing
our annual kind of best buys and sort of digging
around behind the scenes. If you bount with monso you know,
their ux and their sort of solution is pretty good,
not mega being around for the longest they remain competitive.
They remain good. If you have pensions you want to consolidate,
(15:46):
pension b are good. But they are not the cheapest
you know there, And so I think it's up to
people to be clear on what they want. How much
do they want the app and the service and all
of the bells and whistles, or how much do they
want them lowest cost?
Speaker 3 (16:01):
Okay, brilliant, thank you.
Speaker 2 (16:03):
Right, let's move on then to the traditional platforms or
the platforms that might be more more DIY.
Speaker 1 (16:09):
So I think with these platforms, cost is a really
sort of fundamental part of it. Comparing cost is not straightforward. Now,
some of your listeners will have heard of Hard Greaves Landsdown.
They're the biggest platform in the UK by some way.
They are renowned for being pretty expensive. They cost zero
(16:30):
point four five percent for funds that you hold on
that platform. However, and here's the cat if you only
hold shares or exchange traded funds or investment trusts, there's
a cap on an ISA there of forty five pounds
a year. So actually, this platform, which kind of has
(16:51):
a reputation for being expensive, if you only use exchange
traded funds and shares, for example, they are fantastic value.
So I think what, unfortunately I for your list as
they need to do is be quite specific when looking
at the costs about what sort of investments they've got
in this platform, how often they're likely to trade, because
(17:15):
some platforms will charge about ten quid a trade, others
might charge nearer a pound if you do it as
part of a regular investing program. So people need to
kind of be quite specific about what their portfolio looks
like and go and work out the fees. This is
of course a very boring headbanging exercise to do. Or
(17:37):
do have a price calculator on our website that we've
built for people which will give them you can put
in how much you've got and we'll sort of tell
you what the fees and charges will be.
Speaker 2 (17:49):
Do you need to pay to use that calculator, Harlie, No,
you don't do.
Speaker 4 (17:53):
Any of them stand out in terms of like I
suppose if you're it's that I can a base platform
for someone who actually does quite a lot of shit
trade and on this aide, but has a kind of
bored in portfolio setting there.
Speaker 1 (18:09):
Okay, I mean I think with this you can just
sort of throw scenarios at me because it is of course,
it depends what range of stuff you want to trade.
So if you want to read quite a broad range
of things and you want to include, say, for example,
international shares, then something like an interactive or an aj
(18:30):
bell are pretty good options. Also, Saxo have have some
new sort of starter deals with people who want to
trade sort of US equities, which is quite interesting. At
the other end of the spectrum, if you have people
sort of starting out with an ISA, don't particularly have
(18:50):
sort of large amounts, want to learn, want a decent
app Trading to one two doesn't charge people for holding
an ISO, so that can be interesting. As I mentioned,
if you have just exchange traded funds or shares or
investment trusts and you've got quite a large portfolio, I
(19:12):
actually think the hard Greaves landsdown are brilliant value. You know,
they are expensive if you have funds in your portfolio,
as I've sort of mentioned, but if you've just got
those what's called listed securities, they're fantastic value. And their service,
for example, is typically good. When you phone someone up,
(19:34):
you get through quite quickly and you speak to a
sort of you know, typically polite young growd from brittel
Uni who seems to know what they're on about, and
you know, so it's really worse. I think people being
clear on do I want the lowest charges, how much
do I want a human being to talk to, or
how much do I want to sort of a nice app?
(19:56):
Those are the things that I think will drive people's decisions.
Speaker 2 (20:00):
A lot of our listeners will be investment trust investors,
so higris Land would make sense for LAMB. The only
thing I find with their website is it can be
quite difficult to analyze your portfolio.
Speaker 1 (20:09):
I find not too bad for research. What I find
behind the scenes more and is it quite often will
break down. These platforms can look really shiny, can't they
When you go onto the public site and it all
looks lovely. Then sometimes you become a customer and you
get into their secure site and you feel that you've
stepped into a different world. I often there's a disconnect
(20:31):
between wanting to find out about stuff and research it
and do something I e.
Speaker 3 (20:37):
Buy it.
Speaker 1 (20:38):
I personally find har Grease relatively good there. I think
Aged Bell are also strong on that. I think interactive
investor have got a lot better, really interesting insights, not
just for investment trusts and shares, but also for funds.
(20:59):
So I still find those guys are typically better than
some of the newer.
Speaker 3 (21:05):
Kind of wanna be you.
Speaker 1 (21:06):
Know, a competitors, sort of a rising up through the
ranks in terms of research.
Speaker 2 (21:11):
And I suppose the other thing we should say about
these big platforms particularly relevant at the moment with and
again we'll have a podcast later in the week about
investment trusts and the saber activist intrusion into the gentle
world of UK investment trust But one of the interesting
things about the platforms is how they've worked very hard
to make it easy for you to vote on your shares,
and we think that's quite important.
Speaker 3 (21:33):
The easier it did, the better.
Speaker 1 (21:35):
It is, Merron. I mean, there's still a really long
way to go in terms of the tech, isn't there.
It's still now as easy and whereas it should be.
But I think that's a really good example of sometimes
how big and boring can be better. And I've talked
a lot about the apps and some of the sort
of shiny stuff that the newer guys have, but you know,
(21:58):
behind the scenes, I'll give you another really tiny which
definitely fills into sort of fits into the boring camp.
But just as an example with the thirty two test
accounts of God the bigger guys, if you need to
find something like so, for example, your tax certificate when
you're coming to do your self assessment, Oh my god,
(22:18):
it's January, and why haven't I done it?
Speaker 3 (22:20):
And I was supposed to do earlier today.
Speaker 2 (22:24):
Okay, this is a lovely opportunity for John to tell
me again that he finished his tax return in November.
Speaker 3 (22:30):
John, would you just like to tell me that again.
Speaker 4 (22:33):
I'd love to be able to tell you that, but
I haven't done it.
Speaker 2 (22:37):
Yeah, I remember, listen as well, remember you telling me
you've done your tax.
Speaker 3 (22:42):
For this was? This was last year?
Speaker 5 (22:48):
No.
Speaker 4 (22:49):
I got last years done in April, and I felt
so proude of myself. I was like, the new tax
should just started and that nued to get myself assessment
for men for the previous year. But no, I feel.
Speaker 1 (23:01):
John, Actually, I'm sorry, I seen doing it in April.
It's not organized. I think it's so that it's Actually
that's a bit boring, John, embarrassing John.
Speaker 4 (23:12):
It is, okay, it is, I mean, I didn't actually
have a very complicated texture to on that yet. I
don't have a complicated when.
Speaker 2 (23:19):
Any complicated years tell us more right, anyway, we're going
off topic again. Everybody, get going with your tax return.
I'll tell you what we will do next week. We'll
do a last minute tax return pod.
Speaker 3 (23:32):
How about that?
Speaker 2 (23:33):
John, Well, there were last minute things that things that
get it done quickly. I have no idea what those are,
but hopefully I'll find out over the next week.
Speaker 3 (23:38):
While I complete mind.
Speaker 4 (23:39):
We should do Earl's Live for the audience.
Speaker 3 (23:42):
It's not even funny.
Speaker 2 (23:46):
An American politicians, honestly, anyway, Reality off topic, Off topic, Holly,
is there anything else that we should talk about with that?
Speaker 1 (24:00):
For me, one of the things that people should look
at is a lot of the platforms have got better
at regular investing. So I think this is something that
people should have a look at. If you typically, if
you set it up to repeat something, to do a trade,
for example, every month, you'll pay lower trading fees. It's
about sort of setting up those good habits. It's January,
(24:21):
so you may as well sort of talk about that.
So I think that's something people should investigate. What I
would say as well, if people are listening who have
had a platform for a week while, do check out
the fees because things are moving, things are changing, and
there's constant sort of downward pressure. So a platform that
might have been competitive three or four years ago may
(24:43):
well not be competitive today, I think for people, particularly
as we move into twenty twenty five and what will
be I think a very uncertain sort of market for
investments difficult to call. Diversification for me remains the name
of the game, and interestingly, I think more people should
(25:04):
look at the ready made options or should consider these
multi asset funds at least as a core part of
their portfolio because that diversification and the avoiding all that
concentration risk, I think is something that's really key. So
little and often regular investing, check the fees and make
sure you've at least got a part of your portfolio
(25:25):
from my point of view, well diversified in an easy
sort of managed option.
Speaker 3 (25:31):
Brilliant Holly, Thank you so much, John. Is there anything
you think we've missed?
Speaker 4 (25:35):
The only one thing I would ask Coley's view is
how much people should think about FSCs protection when that
can sudden know wait to block at it choose and
if you've got a lot of money, who should you
think about maybe having more than one ale?
Speaker 1 (25:51):
Well, really the main thing people need to look at
is the custodium because if the platform and John the
majority of them do reputable what is called custodian in place,
your money is completely ring fenced from all platforms money.
So in the event that anything does go wrong, your
money is ring fenced and protected. So it's not about
(26:14):
looking for any upper monetary value. It's about saying, is
there a decent custodian There is my money kept separate
from the operating sort of fonds of the platform, And
if it is, you actually don't need to spread your
money around. So this is a sort of misconception we
see that actually means people have two or three platforms
(26:35):
sometimes when in fact they don't need to because their
money is separated and in the event that anything went wrong.
One thing I would say, though, is that that peace
of mind that many people is the most important. I
remember years ago John talking to Gorham who used to
(26:56):
run hard landsdown, and he said to me that the
number one concern our customers have is security as their assets,
like where are they where are they held and from
many people. We've talked Maren, You've asked me about fees,
We've talked about apps, we've talked about all of that.
For a lot of people, that peace of mind is
so fundamentally important that that will be the primary driver
(27:20):
of why they might pick a bank, or why they
might look for a footzy one hundred or whatever it
might be. So that's another thing I think people should
think about. But with a decent custodian in place, people's
money is ring fenced and should be safe.
Speaker 3 (27:36):
Brilliant.
Speaker 2 (27:37):
Thank you, Holly, Thanks for listening to this week's Maren
Talk to Your Money. If you like us a rink
review and subscribe wherever you listen to podcasts, or to
be sure of following me in John on X or Twitter,
I'm at Maren sw and John is John Underscore Stepec.
Speaker 3 (27:53):
Holly are you on Twitter for X?
Speaker 1 (27:55):
I'm afraid I've given up to it. I'm an Instagram
girl now, Maren when I can be bothered to brush
my hair.
Speaker 2 (28:01):
And you can find Holly on Instagram at Boring Money Holly.
This episode was produced by some Saudi production support and
sound designed by Moses and Questions and comments on This
show and all our shows are always welcome. Our show
email is merin Money at Bloomberg dot net
Bloomberg Audio Studios, podcasts, radio News.
Speaker 2 (00:16):
Welcome to MEREN Talk to Your Money. The personal finance
edison of MEREN talks money. In these weekly episodes, we
talk about the best strategies for making the most of
your money. I'm MEREN sum Stweb and with me senior
reporter and Money Distilled author John Steppack.
Speaker 3 (00:29):
Hi, John, Hi Melton. It's not happy New Year anymore,
is it?
Speaker 4 (00:32):
We did that last week, so it's just measurable in
your year.
Speaker 2 (00:38):
I'm folding rather as we suspect it isn't it? Never mind,
More of that later. This is another one of those
episodes where we built but this is not God. This
is one of those episodes where we bring in an
expert voice to help us tackle the question of the
week as well. John and I know a lot. Amazingly,
we don't know everything. So with us today is Holly mackay,
(00:58):
Founder and see of Boring Money, a go to resource
to help normal people make smart investment decisions. Welcome Holly,
Thank you for joining us.
Speaker 1 (01:06):
Him aren good for you.
Speaker 2 (01:08):
Now we're asking a lot of you today. We've got
a lot of listener questions in on the same sort
of topics. Everyone wants to know how to get started
on investing. What do I do to kick the journey off?
So we want to talk about things like what platforms
you'd recommend for beginners, what is it reasonable.
Speaker 3 (01:24):
To pay, and how do you how do you choose?
Speaker 2 (01:26):
How do you get started with choosing a platform and
then choosing the investments to put into whatever wrapper is
it is that you've chosen on the platform. So I'm
going to start with something so basic that you're going
to think it's ridiculous, but it's still important. What Holly
is an investment platform?
Speaker 1 (01:43):
No, it's a good question, Baron. I mean, I think
of it like it's a combo between a department store
and a storage deposit unit. So it's somewhere you go
to buy your investments, and then once you've bought them,
is someone that actually keeps them for you and does
all all the admin, gives you that website you can
(02:04):
log onto. So really, the investment platform, it's just a
word right that says it's where you go and buy
and hold investments in twenty twenty five.
Speaker 2 (02:14):
Okay, so that's what you would do if you're doing
it DIY, And then if you were to use a
Wealth Manager or an IFA, etc. You would go through them,
but they would be using their own.
Speaker 1 (02:24):
Platform exactly exactly the sort of tech that they all use.
But I think what's really interesting, particularly for people not
using an advisor, is the massive growth we've seen of
these platforms. And I was looking today actually at some
stats they've grown seventy eight percent over the last five years.
Everyone's sort of holding their money and buying sort of
(02:45):
things this way. So it's really the go to for
DIY investors in particular.
Speaker 3 (02:50):
And most people will know the big names.
Speaker 2 (02:52):
They'll have heard of Huggridge, Landsdown, they'll have heard of
Interactive Investor, They'll have heard of Aja Bell.
Speaker 3 (02:58):
But there are many more.
Speaker 2 (02:59):
And if we're looking at the universe that an ordinary
person coming to this fresh might choose from, how many
are they choosing from? How many reputable, profitable brands are
there that you would say we could go to.
Speaker 1 (03:11):
So there are some reputable ones that probably aren't profitable today,
but kind of those that I think are worthy of
consideration is about sort of thirty five to forty in
the market. I've got test account. O.
Speaker 3 (03:22):
God, oh that's more than I thought of. It is terrible.
Speaker 1 (03:25):
Oh, my phone is like my sort of search unit.
I have about thirty two accounts. I think test accounts
sort of out there with with DIY investment platforms, which
makes my sort of annual tax return quite interesting.
Speaker 2 (03:40):
God, I bet I'd like to back off, by the way,
from saying it's terrible. It's not terrible. It's wonderful. We
love competition, We adore competition. The more competition the better,
but it does make it hard to.
Speaker 3 (03:49):
Choose, so it does.
Speaker 2 (03:50):
What are the criteria? So we're coming at this. We've
got we've we've we've done a bit of googling. We've
got a list of thirty five. What criteria are we
looking for?
Speaker 1 (03:58):
I think they're in. The very first thing people need
to be honest with themselves about is how confident are
they and how much choice do they actually want? Because
for many people, out of their choices a nightmare. It's
actually complicated. It does your head and you've got other
things you'd rather focus on. So I think really people
should answer initially, how interested in this am am? I?
(04:21):
Do I want to learn? Do I want to check in?
Do I want to choose? Or does that sound like
hell on earth to me? Because the answer to that
question will pretty much split the type of option you
have into two. If you're the sort of person that says, oh, no,
too much chores, I haven't got time. I've got other
fish to fry. You want someone that can pretty much
(04:44):
do it all for you and manage it for you,
and that might point you to something that we call
a robo advisor, so more on them later. If you're
someone that says, actually, no, you know, I am interested
in this stuff.
Speaker 3 (04:56):
I want to.
Speaker 1 (04:56):
Build a portfolio. I want to choose between some shares
and some whatever it might be, then you'll be in
the market for a more traditional type platform. So for me,
that's the very sort of first question. People should ask
how much choice door I want? How competent do I feel?
Speaker 2 (05:12):
Okay, well, why don't we start right there. Let's assume
that we are the person who wants to invest, knows
they should invest, but really doesn't want to get to involve.
Let's talk about robo advisors first. So these are platforms
that will effectively make the decisions for you. You input
your your information, input what you perceive is your risk
levels perhaps, and then it'll create a portfolio for you
(05:34):
and you don't need to do anything except for top
that portfolio up on a monthly or an annual basis,
whatever suits you use, is that.
Speaker 1 (05:40):
That's exactly right. My kind of thing of it, My
analogy is it's like someone that might say I want
to eat, but I'm rubbish at cooking as well, buy
a ready meal please, So for me, they're the ready
meal of the investment world. You can go, as you say,
to a website, you can answer some pretty straightforward questions
about your atta to money, your time frames, etc. And
(06:02):
they'll spit out a sort of suggestion view. You can
set it up and off you go. So you know
some of the biggest names in that space where we
have groups such as Nutmeg, there's money Box people might
have heard, or in the pensions world, you've got Pensions Be.
So there are I would say about ten sort of
to fifteen incredible players in this space now for people
(06:25):
to look at. I think what's great about these options
as well is that you can set them up to
accept direct debits as well, so you really can set
and forget and really only have to check in every
sort of six to twelve months and try and set
up these direct debits so you're chipping in little and
often you're not just buying everything at one point in
(06:47):
the market. You're kind of drip feeding into markets. So
there is and and the tech has got so much
better around these options too, and the apps are pretty good,
so people can can check in with their investments as
list or as often as they want.
Speaker 3 (07:02):
And what would you expect that to cost? What do
you pay for that?
Speaker 2 (07:05):
And is there a difference in how you might choose
based on how much money you have? I mean, let's
say you're starting with five hundred pounds and putting in
one hundred a month.
Speaker 3 (07:14):
Is there when you might.
Speaker 2 (07:15):
Choose that is different to when you would choose if
you were, for example, putting in ten thousand pounds and
then adding two thousand pounds a yew?
Speaker 3 (07:21):
How does it work? What would you expect to pay.
Speaker 1 (07:23):
In terms of this sort of first question? What should
people pay? Roughly? I think for this option which is
all in so it includes admin, includes all the investments,
it's anywhere between about zero point seventy five and one
percent a year. So to translate that into pound terms,
it's about seventy five pounds to one hundred pounds a
(07:44):
year for every ten thousand pounds you have to invest. Now,
one way they do differ is in investment performance, because
of course there's team sitting there running the money, and
we track at boring money. We track on a coarty
basis performance and we can see there is great difference
(08:05):
between these groups in how well they're doing based on
what they're picking and based on what they're doing under
the bonnet. So one thing people should look at is
the performance over time. Now, as you'll know, kind of
looking at this over a relatively short term can be misleading,
particularly if we look back at twenty twenty four, where
(08:28):
to be honest, anyone that through darted or board and
landed anywhere near the S and P five hundred will
have done pretty well. But people should look at performance,
and we do sort of track that and make that
available on our website.
Speaker 3 (08:44):
Okay, we're not going to let you just skip over that.
We want to know. We want to know who's doing
the best over the last five years or so. Who
are there? Who are the couple that stand out?
Speaker 1 (08:54):
Do you think, as I sort of said before, it
depends how spicy you want your your investments. So there's
different what they call risk profiles for those people that
were saying, look, this is long term money, I can
ride out some ups and downs. You'll typically put in something.
They've all got really silly names like Ambitious or a
grill or adventurers, but that just means you're all in
(09:16):
the sort of shares rather than anything more more cash.
Like now, if we look at that risk profile, actually
groups that have done well, and that'springked mind, are HSBC,
in Pact, money Box, aj BELL have done well because
they've typically common denominator tended to have more money allocated
(09:38):
to the US than to other markets, and that's typically
been mods driven returns. But also if we look back
over the last few years, you'll recall, you know, the
hiatus we had with Liz Truss is not so many
mini budget when the bond markets sort of behave really
(09:59):
abnormally and did weird things. What actually happened then is
that the so called low risk stuff did really badly
because bonds didn't behave as they were supposed to. They
weren't being the safe, goody goodies in the portfolios, so
they had a bit of a hiatus. And what that
(10:20):
meant is that some people who picked a low risk
option got a really nasty shock. And luckily some of
the banks and banks hate risk, so there's loads of
compliance people that are running around in banks going don't
do anything naughty, don't do anything risky, so they're lower
risk portfolios ten to sort of load up on the
(10:41):
things that went really nuts during Liz Trust's mini budget,
like government bonds and things. So you've actually had a
period where groups that were very, very cautious didn't do
particularly well. So some of the banks in particular have
had sort of bad performance periods over the last two years.
(11:03):
I mean, I hope that answers your question. There are
some groups that do better.
Speaker 4 (11:07):
Something you just said Erelow I think is also really interesting,
the point about the slightly I guess intellectually mechanical way
that the risk set up is put together so that
boinds are saying as low risk and shares are saying
as high risk, and that is historically a reasonable assumption,
(11:29):
but sometimes things do go pair shaped and at the
moment also we've also kind of left a forty year
bond bull market and actually now boinds are causing quite
a lot of trouble in markets generally. I know that
obviously this is a podcast for beginners. But I think
is that maybe a reason for people to also just
(11:50):
be a little bit cautious whenever and to understand that
these definitions are are don't necessarily mean you can't lose
money even if you are invested in the low risk
say the things.
Speaker 1 (12:01):
I might be a bit controversial here for DILI investors
who pick a low risk option, it is often because
people have just got the hebgb's about investing, rather than
people sort of taking a measured view on volatility. And actually,
(12:22):
I think for anyone with a timeframe of less than
three years, if you look at where interest rates are today,
I can't think why you'd invest in a low risk
sort of I SUP portfolio rather than in a really
decent pain cash kind of basis. You can still get
you four point seventy five percent istion the sort of
(12:42):
top paying easy access accounts. That's pretty good, right. So
for me, especially given the volatility of recent years, I
personally question why you're a beginner and you're looking to
make your money work hard, but you've got that time
frame of two to three years. Interest rates are so
(13:03):
high at the moment relatively speaking, and looking at the
hiatus that we've had in their bomb markets and sort
of inflation still uncertain for me. I think robo advisors
and these ready made options really come into their own
for people with time frames of five years or more,
in which case we should be looking at at least
(13:25):
you know, if there's five options, at least actions three,
four or five.
Speaker 4 (13:29):
Yeah, So basically it comes don't risk actually been in
a functioning time frame rather than your own level of
fear or not about investing.
Speaker 2 (13:38):
Is there is there one of the robo advisors in
your mind that stands out as having the correct mix
of low fees and good performance and not asking you
to actively recommend one in particular, But is there one
that over the last say, five to seven years, has
shown that that mix.
Speaker 1 (13:57):
Here's an interesting point. I think the row advisors got
all the press. It sort of came to sort of fame,
well fame in my world.
Speaker 5 (14:06):
We're all these, you know, for being the disruptors. They've
got better apps, they slicker, they're shiny, and they're better
to use. But if you're after a low cost there.
Speaker 1 (14:18):
Are other ways, and we can come on to talk
about this that will be lower costs. If you look
at the robo advisors, They are not the cheapest way
to get that ready meal. You're actually better off buying
what it's called a multi asset fund from a big
name like a Vanguard or a black Rock on one
of the traditional platforms and having it there. That will
(14:40):
cost you probably half or sort of two thirds of
what you would pay a robo advisor. So actually, a
really important point here is it comes down to what
do people value. Some people might say, actually, I like
the idea of an app, I like the idea of
getting good articles. I like the idea of being in touch.
Mind paying a wee bit more for that. But if
(15:03):
you're someone that wants rock bottom, listen to the next
bit of the podcast when we talk about the auditional platforms,
because they might be a bit less sexy, you know,
in their sort of tech and how they sort of
deliver stuff to you, but they will be cheaper than
a robo advisor. If we had to look at.
Speaker 3 (15:22):
The robo advisors.
Speaker 1 (15:23):
To your question, we're just in the middle of doing
our annual kind of best buys and sort of digging
around behind the scenes. If you bount with monso you know,
their ux and their sort of solution is pretty good,
not mega being around for the longest they remain competitive.
They remain good. If you have pensions you want to consolidate,
(15:46):
pension b are good. But they are not the cheapest
you know there, And so I think it's up to
people to be clear on what they want. How much
do they want the app and the service and all
of the bells and whistles, or how much do they
want them lowest cost?
Speaker 3 (16:01):
Okay, brilliant, thank you.
Speaker 2 (16:03):
Right, let's move on then to the traditional platforms or
the platforms that might be more more DIY.
Speaker 1 (16:09):
So I think with these platforms, cost is a really
sort of fundamental part of it. Comparing cost is not straightforward. Now,
some of your listeners will have heard of Hard Greaves Landsdown.
They're the biggest platform in the UK by some way.
They are renowned for being pretty expensive. They cost zero
(16:30):
point four five percent for funds that you hold on
that platform. However, and here's the cat if you only
hold shares or exchange traded funds or investment trusts, there's
a cap on an ISA there of forty five pounds
a year. So actually, this platform, which kind of has
(16:51):
a reputation for being expensive, if you only use exchange
traded funds and shares, for example, they are fantastic value.
So I think what, unfortunately I for your list as
they need to do is be quite specific when looking
at the costs about what sort of investments they've got
in this platform, how often they're likely to trade, because
(17:15):
some platforms will charge about ten quid a trade, others
might charge nearer a pound if you do it as
part of a regular investing program. So people need to
kind of be quite specific about what their portfolio looks
like and go and work out the fees. This is
of course a very boring headbanging exercise to do. Or
(17:37):
do have a price calculator on our website that we've
built for people which will give them you can put
in how much you've got and we'll sort of tell
you what the fees and charges will be.
Speaker 2 (17:49):
Do you need to pay to use that calculator, Harlie, No,
you don't do.
Speaker 4 (17:53):
Any of them stand out in terms of like I
suppose if you're it's that I can a base platform
for someone who actually does quite a lot of shit
trade and on this aide, but has a kind of
bored in portfolio setting there.
Speaker 1 (18:09):
Okay, I mean I think with this you can just
sort of throw scenarios at me because it is of course,
it depends what range of stuff you want to trade.
So if you want to read quite a broad range
of things and you want to include, say, for example,
international shares, then something like an interactive or an aj
(18:30):
bell are pretty good options. Also, Saxo have have some
new sort of starter deals with people who want to
trade sort of US equities, which is quite interesting. At
the other end of the spectrum, if you have people
sort of starting out with an ISA, don't particularly have
(18:50):
sort of large amounts, want to learn, want a decent
app Trading to one two doesn't charge people for holding
an ISO, so that can be interesting. As I mentioned,
if you have just exchange traded funds or shares or
investment trusts and you've got quite a large portfolio, I
(19:12):
actually think the hard Greaves landsdown are brilliant value. You know,
they are expensive if you have funds in your portfolio,
as I've sort of mentioned, but if you've just got
those what's called listed securities, they're fantastic value. And their service,
for example, is typically good. When you phone someone up,
(19:34):
you get through quite quickly and you speak to a
sort of you know, typically polite young growd from brittel
Uni who seems to know what they're on about, and
you know, so it's really worse. I think people being
clear on do I want the lowest charges, how much
do I want a human being to talk to, or
how much do I want to sort of a nice app?
(19:56):
Those are the things that I think will drive people's decisions.
Speaker 2 (20:00):
A lot of our listeners will be investment trust investors,
so higris Land would make sense for LAMB. The only
thing I find with their website is it can be
quite difficult to analyze your portfolio.
Speaker 1 (20:09):
I find not too bad for research. What I find
behind the scenes more and is it quite often will
break down. These platforms can look really shiny, can't they
When you go onto the public site and it all
looks lovely. Then sometimes you become a customer and you
get into their secure site and you feel that you've
stepped into a different world. I often there's a disconnect
(20:31):
between wanting to find out about stuff and research it
and do something I e.
Speaker 3 (20:37):
Buy it.
Speaker 1 (20:38):
I personally find har Grease relatively good there. I think
Aged Bell are also strong on that. I think interactive
investor have got a lot better, really interesting insights, not
just for investment trusts and shares, but also for funds.
(20:59):
So I still find those guys are typically better than
some of the newer.
Speaker 3 (21:05):
Kind of wanna be you.
Speaker 1 (21:06):
Know, a competitors, sort of a rising up through the
ranks in terms of research.
Speaker 2 (21:11):
And I suppose the other thing we should say about
these big platforms particularly relevant at the moment with and
again we'll have a podcast later in the week about
investment trusts and the saber activist intrusion into the gentle
world of UK investment trust But one of the interesting
things about the platforms is how they've worked very hard
to make it easy for you to vote on your shares,
and we think that's quite important.
Speaker 3 (21:33):
The easier it did, the better.
Speaker 1 (21:35):
It is, Merron. I mean, there's still a really long
way to go in terms of the tech, isn't there.
It's still now as easy and whereas it should be.
But I think that's a really good example of sometimes
how big and boring can be better. And I've talked
a lot about the apps and some of the sort
of shiny stuff that the newer guys have, but you know,
(21:58):
behind the scenes, I'll give you another really tiny which
definitely fills into sort of fits into the boring camp.
But just as an example with the thirty two test
accounts of God the bigger guys, if you need to
find something like so, for example, your tax certificate when
you're coming to do your self assessment, Oh my god,
(22:18):
it's January, and why haven't I done it?
Speaker 3 (22:20):
And I was supposed to do earlier today.
Speaker 2 (22:24):
Okay, this is a lovely opportunity for John to tell
me again that he finished his tax return in November.
Speaker 3 (22:30):
John, would you just like to tell me that again.
Speaker 4 (22:33):
I'd love to be able to tell you that, but
I haven't done it.
Speaker 2 (22:37):
Yeah, I remember, listen as well, remember you telling me
you've done your tax.
Speaker 3 (22:42):
For this was? This was last year?
Speaker 5 (22:48):
No.
Speaker 4 (22:49):
I got last years done in April, and I felt
so proude of myself. I was like, the new tax
should just started and that nued to get myself assessment
for men for the previous year. But no, I feel.
Speaker 1 (23:01):
John, Actually, I'm sorry, I seen doing it in April.
It's not organized. I think it's so that it's Actually
that's a bit boring, John, embarrassing John.
Speaker 4 (23:12):
It is, okay, it is, I mean, I didn't actually
have a very complicated texture to on that yet. I
don't have a complicated when.
Speaker 2 (23:19):
Any complicated years tell us more right, anyway, we're going
off topic again. Everybody, get going with your tax return.
I'll tell you what we will do next week. We'll
do a last minute tax return pod.
Speaker 3 (23:32):
How about that?
Speaker 2 (23:33):
John, Well, there were last minute things that things that
get it done quickly. I have no idea what those are,
but hopefully I'll find out over the next week.
Speaker 3 (23:38):
While I complete mind.
Speaker 4 (23:39):
We should do Earl's Live for the audience.
Speaker 3 (23:42):
It's not even funny.
Speaker 2 (23:46):
An American politicians, honestly, anyway, Reality off topic, Off topic, Holly,
is there anything else that we should talk about with that?
Speaker 1 (24:00):
For me, one of the things that people should look
at is a lot of the platforms have got better
at regular investing. So I think this is something that
people should have a look at. If you typically, if
you set it up to repeat something, to do a trade,
for example, every month, you'll pay lower trading fees. It's
about sort of setting up those good habits. It's January,
(24:21):
so you may as well sort of talk about that.
So I think that's something people should investigate. What I
would say as well, if people are listening who have
had a platform for a week while, do check out
the fees because things are moving, things are changing, and
there's constant sort of downward pressure. So a platform that
might have been competitive three or four years ago may
(24:43):
well not be competitive today, I think for people, particularly
as we move into twenty twenty five and what will
be I think a very uncertain sort of market for
investments difficult to call. Diversification for me remains the name
of the game, and interestingly, I think more people should
(25:04):
look at the ready made options or should consider these
multi asset funds at least as a core part of
their portfolio because that diversification and the avoiding all that
concentration risk, I think is something that's really key. So
little and often regular investing, check the fees and make
sure you've at least got a part of your portfolio
(25:25):
from my point of view, well diversified in an easy
sort of managed option.
Speaker 3 (25:31):
Brilliant Holly, Thank you so much, John. Is there anything
you think we've missed?
Speaker 4 (25:35):
The only one thing I would ask Coley's view is
how much people should think about FSCs protection when that
can sudden know wait to block at it choose and
if you've got a lot of money, who should you
think about maybe having more than one ale?
Speaker 1 (25:51):
Well, really the main thing people need to look at
is the custodium because if the platform and John the
majority of them do reputable what is called custodian in place,
your money is completely ring fenced from all platforms money.
So in the event that anything does go wrong, your
money is ring fenced and protected. So it's not about
(26:14):
looking for any upper monetary value. It's about saying, is
there a decent custodian There is my money kept separate
from the operating sort of fonds of the platform, And
if it is, you actually don't need to spread your
money around. So this is a sort of misconception we
see that actually means people have two or three platforms
(26:35):
sometimes when in fact they don't need to because their
money is separated and in the event that anything went wrong.
One thing I would say, though, is that that peace
of mind that many people is the most important. I
remember years ago John talking to Gorham who used to
(26:56):
run hard landsdown, and he said to me that the
number one concern our customers have is security as their assets,
like where are they where are they held and from
many people. We've talked Maren, You've asked me about fees,
We've talked about apps, we've talked about all of that.
For a lot of people, that peace of mind is
so fundamentally important that that will be the primary driver
(27:20):
of why they might pick a bank, or why they
might look for a footzy one hundred or whatever it
might be. So that's another thing I think people should
think about. But with a decent custodian in place, people's
money is ring fenced and should be safe.
Speaker 3 (27:36):
Brilliant.
Speaker 2 (27:37):
Thank you, Holly, Thanks for listening to this week's Maren
Talk to Your Money. If you like us a rink
review and subscribe wherever you listen to podcasts, or to
be sure of following me in John on X or Twitter,
I'm at Maren sw and John is John Underscore Stepec.
Speaker 3 (27:53):
Holly are you on Twitter for X?
Speaker 1 (27:55):
I'm afraid I've given up to it. I'm an Instagram
girl now, Maren when I can be bothered to brush
my hair.
Speaker 2 (28:01):
And you can find Holly on Instagram at Boring Money Holly.
This episode was produced by some Saudi production support and
sound designed by Moses and Questions and comments on This
show and all our shows are always welcome. Our show
email is merin Money at Bloomberg dot net
Host
Merryn Somerset Webb
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