DIY investors set to take charge over next five years – will you be one of them?
By Mike Narouei, Content Producer at Boring Money
16 July, 2018
If you’ve ever thought about trying out a bit of online investing, you’re certainly not alone. In our July 2018 Digital Wealth Report we’ve predicted that ‘self-directed’ online investors – those who go it alone to research their investment options – are set to invest a further £100 billion over the next five years. That’s an almost 50% increase on the £209 billion currently invested in this sector of the industry – a fair chunk of change! So, why should you sign up?
First, let’s decode the jargon. By ‘self-directed’ we mean digital DIY investment platforms like BestInvest or Hargreaves, as well as ‘robo advisers’ like Nutmeg and Wealthify. The people taking the plunge into digital wealth tend to be male (sigh) and in their forties. Only 37% of DIY investors are female, and this actually drops to 26% for robo advice products. Yet this is still a great way to dip a toe into investing without having to commit a lot of money.
Still, because of this shift, less confident investors are becoming more of a priority for online investing platforms. With new easy to use and single choice options, (some) providers are now trying harder to keep investing simple for new customers. Ethical options are also on the agenda, as investors increasingly want greener, cleaner portfolios. Robo adviser Moo.la recently launched ethical portfolio options, for example, and Wealthsimple built it in from the beginning.
At the end of March 2018 there was £2.3 billion invested through UK robo advisers. If you’re the kind of person who likes to stick with the market leader, trailblazer Nutmeg currently owns around half of the robo universe. They’ve also been around longer, which means you can look at their track record for the past 5 years.
So, how much will opening an online investment account cost you? Well, it looks like a percentage-based fee is here to stay for the foreseeable, despite many predictions of lower costs in the future. All-in, fees should be no higher than 1% of what you’ve invested. The percentage method often be better for investors who have smaller portfolios – like first-time investors for example! The average robo adviser balance at the moment is £21,200, but you can get started from as little as £25.
Think it might be time to try it? Have a look at our Best Buys and filter by ‘low cost’ to see which have the lowest fees for different portfolio sizes and which provider offers what.
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