'Robo-advisor' or a well established company with a 'ready made portfolio'?

Hi, I have around £5,000 I'm happy to invest in a Stocks & Shares ISA and leave for 5-10 years, drip feeding in £200/300 a month. I haven't got a clue about investing, so would prefer not to manage the cash myself. After research, I'm torn between using a 'robo-advisor', or a well establish company such as Hargreaves Lansdown and their 'ready made portfolio' option. I know people who use Aviva, who seem no frills, but a safe option. What would you recommended for someone in my position? Many thanks

Hello John

The first consideration is, have you put aside cash for emergency purposes? I would suggest having at least three to six months expenditure available in easily accessible funds so that you do not need to access the invested funds in the short term.

Have you established the objective for these funds and considered the level of risk you are willing to take?

If you have done this, I would be now thinking about comparing the cost and the performance to make a decision on which type of investment is more suitable. Both would provide an asset mix suitable for your attitude to risk so that you would not have to select or manage the funds.

The Hargreaves Lansdown ISA charges 0.45% of the investment for the platform charge plus the fund cost. The costs on the Hargreaves Lansdown ready made portfolio’s cost over 2% per annum whereas the Robo advisers charges tend to be under 1%.

The performance can usually be found by looking at the available factsheets and will give you an idea of how the funds have performed over a specific time frame. Although this is not a guarantee for future performance it can tell you if the investment has over or underperformed its benchmark during that time.

By necessity, this briefing can only provide a short overview and it is essential to seek professional financial advice before applying the contents of this article. This briefing does not constitute advice or a recommendation.