Online investment platforms
1st July, 2018
I have already written about FundingCircle and Ratesetter, both online investment platforms. One more that I have been trying is Wealthsimple.
Important note these articles will focus on the websites and how they operate as described by the sites themselves, and won’t include discussions of their performance or returns. All of these sites are investment products and you may get back less money than you put in. You should familiarise yourself thoroughly with the websites before using them. No part of these articles constitutes financial advise, nor should they be taken as such.
Unlike FundingCircle and Ratesetter, which focus on peer-to-peer lending, WealthSimple is what’s known as a “robo-investor”. What this means is that they aim to cut out the complexity and overheads of traditional investments (the investment managers, primarily), and offer a “prix fixe” option for investors.
If you have less than £100,000 invested, that fee is 0.7%; for more than £100,000, the fee is 0.5%, which is low compared to traditional funds, but around the same ballpark as other robo-investors.
Because WealthSimple is investment in stocks, shares, funds and the like, your entire capital is at risk and while it is protected by the Financial Services Compensation Scheme (FSCS) it doesn’t have any built-in protections like rainy-day funds at other types of investment provider.
When you transfer your money to WealthSimple, it begins automatically investing it in a variety of funds. By default it picks quite a wide mix, and you can choose some alternatives, but your options are limited to “Conservative”, “Balanced” and “Growth” options - although the Growth option doesn’t seem particularly adventurous on first glance. You can see which funds it has invested in, as well as the yield of each in your portfolio so far, in your dashboard once it has got going.
The site itself is quite easy to use and contains decent information. As you would expect from a service which basic functionality is deposit, withdraw, see current balance, there isn’t a whole lot to do there. But it’s quick and easy to get in and find out how your investments are doing without a lot of fuss. They do a neat job of tracking it over time too with a useful chart, which clearly shows a bit of volatility from the markets as you would expect at the moment.