Investment platforms simplify the buying, holding, and selling process of investments and assets for investors. Providing an overview of all your assets, investors have quick and easy access to them all in one place. These platforms contain extensive information and eliminate the trouble of managing each part of your portfolio individually. Most importantly, if you are trying to figure out the investing journey by yourself, investment platforms can be exactly what you need to stay on track. Be careful not to confuse them for assets; these platforms provide services and are not investment options themself.
Investing platforms first gauge your needs and aspirations. Then, they tailor investments and assets for you to consider. Assets are also categorised in a particular portfolio, such as sustainable investments (ESG), pharmaceuticals, etc.
It is their extensive information and accessibility that allows investors to spread risk across avenues, without having to give up on diversity. Although the fund manager charges a fee, there are other costs to using an investment platform:
- These are a portion of your investments.
- Many platforms reduce this fee or eliminate it altogether as your portfolio grows.
- Such a fee is usually charged periodically (annually).
- You are paying to use the platform, so costs are associated with trading, withdrawals, and so on.
- Some platforms may charge you to move your investments to another platform.
- Many have gotten rid of this fee, and others offer to pay for it if you move to their platform.
Why you should consider investing through a platform
- All your investments are available in one place. Instead of browsing through piles of paperwork to manage each investment, you can pool it in one platform.
- The one-stop snapshot gives you an overview of your complete portfolio, thereby allowing you to tweak and adjust your positions for your goals.
You get to choose
- As we discussed, investment platforms are ideal for investors who do everything by themselves.
- You can select the assets, fund allocation, and risk spread based on what you deem is the best for you. The choice of the fund itself is in your control.
- Consulting your financial adviser can make it easier to strategise where and how much money you want to allocate to a particular investment.
- As a pool of knowledge and resources, you can get access to a wide range of investment options that you may otherwise not have known about.
- You can also avail specialists or wholesale funds because the entry threshold for them on investment platforms is usually lower.
- Apart from assets, investment platforms allow you to invest in tax-efficient options.
- Dividends earned on self-invested personal pensions (SIPPs) or the various types of individual savings accounts (ISAs) are not subject to tax even if the amount received surpasses your dividend allowance.
- Effectively, Capital Gains Tax is neither levied nor part of your tax-free capital gains allowance.
Investment platforms are steadily growing and are expected to continue. Investment platforms are much more than just a tool for retail investors to invest and track their assets; they are a way to make informed decisions to build wealth. At Hoxton Capital Management, we will always recommend consulting an adviser when using these platforms, as they can guide you on which one will best suit your needs.
If you would like to speak with an investment specialist about how to start investing or add to your current portfolio, get in touch today.