New tax year, new you? If you’ve never invested before, or are a real rookie, now could be a good time to get started. Hargreaves Lansdown, one of the UK’s largest investment shops, has launched a service especially for beginners. But is it any good?
Simply Invest is, as the name suggests, quite simple. It’s really just access to one super-cheap investment fund with a few bells and whistles tacked on for novices.
It’s an online facility so you have to visit http://www.hl.co.uk/simply-invest. I couldn’t find it through the main HL website which I thought was unhelpful. Also, I’d recommend you make your first visit via a desktop. There are some graphs which are a bit confusing to meet initially on the small screen of your phone.
The website is clean and well-spaced: you aren’t overwhelmed by numbers or huge amounts of data. Some of the information is very clear but some is much more complicated and I wonder how understandable it would be to an L-plate investor. Those who are struggling are pointed to the fee-charging HL advice service.
The real draw is the investment fund and it’s a pretty good deal. You get into the Legal & General UK Index fund, which just follows the gains (and losses) of the FTSE All Share stock market index. It’s cheap because it’s run by a computer, not a human. The annual charge is usually 0.1% but Simply Invest clients pay just 0.04%. This is one of the best bargains around right now.
The catch is that you will also have to pay the platform charge (for running your account via the HL online fund shop, called a platform) which is a further 0.45% a year. In all, you’ll be paying £4.90 for every £1,000 you invest.
There are cheaper ways to do the same thing. Vanguard, for example, has a similar UK index fund which is 0.08% a year. But its platform fee is much less at 0.15% a year, so overall you’d pay £2.30 for every £1,000 invested. The disadvantage is that you can only have Vanguard funds on your Vanguard platform, whereas at HL you can include funds from other companies. This is useful when you have more money to invest or want to house all your investments in the same place.
Platform fees are difficult because there are usually two levels of charges: per year and per transaction. When you win on one, you can lose on the other, especially if you are regularly moving money around. For chapter and verse, check out this handy comparison table from This is Money here.
To my mind, Simply Invest could be a little pricey on the platform front. However, I did like the idea that investments are followed up for a year with a monthly tutorial email and various other communications. This encourages you to stay engaged and keep your eye on how your money is faring - probably the best way for beginners to learn.
Finally, a note of warning. The fund follows the fortunes of theoretically UK companies, although lots of them sell abroad so they rely on foreign economies to do well. This gives your investment more of an international flavour than you might realise. This may or may not be helpful as Brexit approaches and the value of your money may be affected adversely. As with all shares, only invest what you can afford to lose and be prepared to stick it out for the long term.
See the SMM guides to investing in funds for beginners here and index funds here.