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How to Start Your Investment Journey 

Published Jan 14, 2025, 5:00 AM

Each week on the Merryn Talks Money podcast, we discuss strategies for investing with industry experts. But rarely do we talk about how to get started on that investment journey. On this episode, Holly Mackay, founder and chief executive of Boring Money, joins hosts Merryn Somerset Webb and John Stepek to do just that.

They chat about how to get started in choosing an investment platform, including answering a key question (what is an investment platform?) and looking at the main options available.

Bloomberg Audio Studios, podcasts, radio News.

Welcome to MEREN Talk to Your Money. The personal finance edison of MEREN talks money. In these weekly episodes, we talk about the best strategies for making the most of your money. I'm MEREN sum Stweb and with me senior reporter and Money Distilled author John Steppack.

Hi, John, Hi Melton. It's not happy New Year anymore, is it?

We did that last week, so it's just measurable in your year.

I'm folding rather as we suspect it isn't it? Never mind, More of that later. This is another one of those episodes where we built but this is not God. This is one of those episodes where we bring in an expert voice to help us tackle the question of the week as well. John and I know a lot. Amazingly, we don't know everything. So with us today is Holly mackay, Founder and see of Boring Money, a go to resource to help normal people make smart investment decisions. Welcome Holly, Thank you for joining us.

Him aren good for you.

Now we're asking a lot of you today. We've got a lot of listener questions in on the same sort of topics. Everyone wants to know how to get started on investing. What do I do to kick the journey off? So we want to talk about things like what platforms you'd recommend for beginners, what is it reasonable.

To pay, and how do you how do you choose?

How do you get started with choosing a platform and then choosing the investments to put into whatever wrapper is it is that you've chosen on the platform. So I'm going to start with something so basic that you're going to think it's ridiculous, but it's still important. What Holly is an investment platform?

No, it's a good question, Baron. I mean, I think of it like it's a combo between a department store and a storage deposit unit. So it's somewhere you go to buy your investments, and then once you've bought them, is someone that actually keeps them for you and does all all the admin, gives you that website you can log onto. So really, the investment platform, it's just a word right that says it's where you go and buy and hold investments in twenty twenty five.

Okay, so that's what you would do if you're doing it DIY, And then if you were to use a Wealth Manager or an IFA, etc. You would go through them, but they would be using their own.

Platform exactly exactly the sort of tech that they all use. But I think what's really interesting, particularly for people not using an advisor, is the massive growth we've seen of these platforms. And I was looking today actually at some stats they've grown seventy eight percent over the last five years. Everyone's sort of holding their money and buying sort of things this way. So it's really the go to for DIY investors in particular.

And most people will know the big names.

They'll have heard of Huggridge, Landsdown, they'll have heard of Interactive Investor, They'll have heard of Aja Bell.

But there are many more.

And if we're looking at the universe that an ordinary person coming to this fresh might choose from, how many are they choosing from? How many reputable, profitable brands are there that you would say we could go to.

So there are some reputable ones that probably aren't profitable today, but kind of those that I think are worthy of consideration is about sort of thirty five to forty in the market. I've got test account. O.

God, oh that's more than I thought of. It is terrible.

Oh, my phone is like my sort of search unit. I have about thirty two accounts. I think test accounts sort of out there with with DIY investment platforms, which makes my sort of annual tax return quite interesting.

God, I bet I'd like to back off, by the way, from saying it's terrible. It's not terrible. It's wonderful. We love competition, We adore competition. The more competition the better, but it does make it hard to.

Choose, so it does.

What are the criteria? So we're coming at this. We've got we've we've we've done a bit of googling. We've got a list of thirty five. What criteria are we looking for?

I think they're in. The very first thing people need to be honest with themselves about is how confident are they and how much choice do they actually want? Because for many people, out of their choices a nightmare. It's actually complicated. It does your head and you've got other things you'd rather focus on. So I think really people should answer initially, how interested in this am am? I? Do I want to learn? Do I want to check in? Do I want to choose? Or does that sound like hell on earth to me? Because the answer to that question will pretty much split the type of option you have into two. If you're the sort of person that says, oh, no, too much chores, I haven't got time. I've got other fish to fry. You want someone that can pretty much do it all for you and manage it for you, and that might point you to something that we call a robo advisor, so more on them later. If you're someone that says, actually, no, you know, I am interested in this stuff.

I want to.

Build a portfolio. I want to choose between some shares and some whatever it might be, then you'll be in the market for a more traditional type platform. So for me, that's the very sort of first question. People should ask how much choice door I want? How competent do I feel?

Okay, well, why don't we start right there. Let's assume that we are the person who wants to invest, knows they should invest, but really doesn't want to get to involve. Let's talk about robo advisors first. So these are platforms that will effectively make the decisions for you. You input your your information, input what you perceive is your risk levels perhaps, and then it'll create a portfolio for you and you don't need to do anything except for top that portfolio up on a monthly or an annual basis, whatever suits you use, is that.

That's exactly right. My kind of thing of it, My analogy is it's like someone that might say I want to eat, but I'm rubbish at cooking as well, buy a ready meal please, So for me, they're the ready meal of the investment world. You can go, as you say, to a website, you can answer some pretty straightforward questions about your atta to money, your time frames, etc. And they'll spit out a sort of suggestion view. You can set it up and off you go. So you know some of the biggest names in that space where we have groups such as Nutmeg, there's money Box people might have heard, or in the pensions world, you've got Pensions Be. So there are I would say about ten sort of to fifteen incredible players in this space now for people to look at. I think what's great about these options as well is that you can set them up to accept direct debits as well, so you really can set and forget and really only have to check in every sort of six to twelve months and try and set up these direct debits so you're chipping in little and often you're not just buying everything at one point in the market. You're kind of drip feeding into markets. So there is and and the tech has got so much better around these options too, and the apps are pretty good, so people can can check in with their investments as list or as often as they want.

And what would you expect that to cost? What do you pay for that?

And is there a difference in how you might choose based on how much money you have? I mean, let's say you're starting with five hundred pounds and putting in one hundred a month.

Is there when you might.

Choose that is different to when you would choose if you were, for example, putting in ten thousand pounds and then adding two thousand pounds a yew?

How does it work? What would you expect to pay.

In terms of this sort of first question? What should people pay? Roughly? I think for this option which is all in so it includes admin, includes all the investments, it's anywhere between about zero point seventy five and one percent a year. So to translate that into pound terms, it's about seventy five pounds to one hundred pounds a year for every ten thousand pounds you have to invest. Now, one way they do differ is in investment performance, because of course there's team sitting there running the money, and we track at boring money. We track on a coarty basis performance and we can see there is great difference between these groups in how well they're doing based on what they're picking and based on what they're doing under the bonnet. So one thing people should look at is the performance over time. Now, as you'll know, kind of looking at this over a relatively short term can be misleading, particularly if we look back at twenty twenty four, where to be honest, anyone that through darted or board and landed anywhere near the S and P five hundred will have done pretty well. But people should look at performance, and we do sort of track that and make that available on our website.

Okay, we're not going to let you just skip over that. We want to know. We want to know who's doing the best over the last five years or so. Who are there? Who are the couple that stand out?

Do you think, as I sort of said before, it depends how spicy you want your your investments. So there's different what they call risk profiles for those people that were saying, look, this is long term money, I can ride out some ups and downs. You'll typically put in something. They've all got really silly names like Ambitious or a grill or adventurers, but that just means you're all in the sort of shares rather than anything more more cash. Like now, if we look at that risk profile, actually groups that have done well, and that'springked mind, are HSBC, in Pact, money Box, aj BELL have done well because they've typically common denominator tended to have more money allocated to the US than to other markets, and that's typically been mods driven returns. But also if we look back over the last few years, you'll recall, you know, the hiatus we had with Liz Truss is not so many mini budget when the bond markets sort of behave really abnormally and did weird things. What actually happened then is that the so called low risk stuff did really badly because bonds didn't behave as they were supposed to. They weren't being the safe, goody goodies in the portfolios, so they had a bit of a hiatus. And what that meant is that some people who picked a low risk option got a really nasty shock. And luckily some of the banks and banks hate risk, so there's loads of compliance people that are running around in banks going don't do anything naughty, don't do anything risky, so they're lower risk portfolios ten to sort of load up on the things that went really nuts during Liz Trust's mini budget, like government bonds and things. So you've actually had a period where groups that were very, very cautious didn't do particularly well. So some of the banks in particular have had sort of bad performance periods over the last two years. I mean, I hope that answers your question. There are some groups that do better.

Something you just said Erelow I think is also really interesting, the point about the slightly I guess intellectually mechanical way that the risk set up is put together so that boinds are saying as low risk and shares are saying as high risk, and that is historically a reasonable assumption, but sometimes things do go pair shaped and at the moment also we've also kind of left a forty year bond bull market and actually now boinds are causing quite a lot of trouble in markets generally. I know that obviously this is a podcast for beginners. But I think is that maybe a reason for people to also just be a little bit cautious whenever and to understand that these definitions are are don't necessarily mean you can't lose money even if you are invested in the low risk say the things.

I might be a bit controversial here for DILI investors who pick a low risk option, it is often because people have just got the hebgb's about investing, rather than people sort of taking a measured view on volatility. And actually, I think for anyone with a timeframe of less than three years, if you look at where interest rates are today, I can't think why you'd invest in a low risk sort of I SUP portfolio rather than in a really decent pain cash kind of basis. You can still get you four point seventy five percent istion the sort of top paying easy access accounts. That's pretty good, right. So for me, especially given the volatility of recent years, I personally question why you're a beginner and you're looking to make your money work hard, but you've got that time frame of two to three years. Interest rates are so high at the moment relatively speaking, and looking at the hiatus that we've had in their bomb markets and sort of inflation still uncertain for me. I think robo advisors and these ready made options really come into their own for people with time frames of five years or more, in which case we should be looking at at least you know, if there's five options, at least actions three, four or five.

Yeah, So basically it comes don't risk actually been in a functioning time frame rather than your own level of fear or not about investing.

Is there is there one of the robo advisors in your mind that stands out as having the correct mix of low fees and good performance and not asking you to actively recommend one in particular, But is there one that over the last say, five to seven years, has shown that that mix.

Here's an interesting point. I think the row advisors got all the press. It sort of came to sort of fame, well fame in my world.

We're all these, you know, for being the disruptors. They've got better apps, they slicker, they're shiny, and they're better to use. But if you're after a low cost there.

Are other ways, and we can come on to talk about this that will be lower costs. If you look at the robo advisors, They are not the cheapest way to get that ready meal. You're actually better off buying what it's called a multi asset fund from a big name like a Vanguard or a black Rock on one of the traditional platforms and having it there. That will cost you probably half or sort of two thirds of what you would pay a robo advisor. So actually, a really important point here is it comes down to what do people value. Some people might say, actually, I like the idea of an app, I like the idea of getting good articles. I like the idea of being in touch. Mind paying a wee bit more for that. But if you're someone that wants rock bottom, listen to the next bit of the podcast when we talk about the auditional platforms, because they might be a bit less sexy, you know, in their sort of tech and how they sort of deliver stuff to you, but they will be cheaper than a robo advisor. If we had to look at.

The robo advisors.

To your question, we're just in the middle of doing our annual kind of best buys and sort of digging around behind the scenes. If you bount with monso you know, their ux and their sort of solution is pretty good, not mega being around for the longest they remain competitive. They remain good. If you have pensions you want to consolidate, pension b are good. But they are not the cheapest you know there, And so I think it's up to people to be clear on what they want. How much do they want the app and the service and all of the bells and whistles, or how much do they want them lowest cost?

Okay, brilliant, thank you.

Right, let's move on then to the traditional platforms or the platforms that might be more more DIY.

So I think with these platforms, cost is a really sort of fundamental part of it. Comparing cost is not straightforward. Now, some of your listeners will have heard of Hard Greaves Landsdown. They're the biggest platform in the UK by some way. They are renowned for being pretty expensive. They cost zero point four five percent for funds that you hold on that platform. However, and here's the cat if you only hold shares or exchange traded funds or investment trusts, there's a cap on an ISA there of forty five pounds a year. So actually, this platform, which kind of has a reputation for being expensive, if you only use exchange traded funds and shares, for example, they are fantastic value. So I think what, unfortunately I for your list as they need to do is be quite specific when looking at the costs about what sort of investments they've got in this platform, how often they're likely to trade, because some platforms will charge about ten quid a trade, others might charge nearer a pound if you do it as part of a regular investing program. So people need to kind of be quite specific about what their portfolio looks like and go and work out the fees. This is of course a very boring headbanging exercise to do. Or do have a price calculator on our website that we've built for people which will give them you can put in how much you've got and we'll sort of tell you what the fees and charges will be.

Do you need to pay to use that calculator, Harlie, No, you don't do.

Any of them stand out in terms of like I suppose if you're it's that I can a base platform for someone who actually does quite a lot of shit trade and on this aide, but has a kind of bored in portfolio setting there.

Okay, I mean I think with this you can just sort of throw scenarios at me because it is of course, it depends what range of stuff you want to trade. So if you want to read quite a broad range of things and you want to include, say, for example, international shares, then something like an interactive or an aj bell are pretty good options. Also, Saxo have have some new sort of starter deals with people who want to trade sort of US equities, which is quite interesting. At the other end of the spectrum, if you have people sort of starting out with an ISA, don't particularly have sort of large amounts, want to learn, want a decent app Trading to one two doesn't charge people for holding an ISO, so that can be interesting. As I mentioned, if you have just exchange traded funds or shares or investment trusts and you've got quite a large portfolio, I actually think the hard Greaves landsdown are brilliant value. You know, they are expensive if you have funds in your portfolio, as I've sort of mentioned, but if you've just got those what's called listed securities, they're fantastic value. And their service, for example, is typically good. When you phone someone up, you get through quite quickly and you speak to a sort of you know, typically polite young growd from brittel Uni who seems to know what they're on about, and you know, so it's really worse. I think people being clear on do I want the lowest charges, how much do I want a human being to talk to, or how much do I want to sort of a nice app? Those are the things that I think will drive people's decisions.

A lot of our listeners will be investment trust investors, so higris Land would make sense for LAMB. The only thing I find with their website is it can be quite difficult to analyze your portfolio.

I find not too bad for research. What I find behind the scenes more and is it quite often will break down. These platforms can look really shiny, can't they When you go onto the public site and it all looks lovely. Then sometimes you become a customer and you get into their secure site and you feel that you've stepped into a different world. I often there's a disconnect between wanting to find out about stuff and research it and do something I e.

Buy it.

I personally find har Grease relatively good there. I think Aged Bell are also strong on that. I think interactive investor have got a lot better, really interesting insights, not just for investment trusts and shares, but also for funds. So I still find those guys are typically better than some of the newer.

Kind of wanna be you.

Know, a competitors, sort of a rising up through the ranks in terms of research.

And I suppose the other thing we should say about these big platforms particularly relevant at the moment with and again we'll have a podcast later in the week about investment trusts and the saber activist intrusion into the gentle world of UK investment trust But one of the interesting things about the platforms is how they've worked very hard to make it easy for you to vote on your shares, and we think that's quite important.

The easier it did, the better.

It is, Merron. I mean, there's still a really long way to go in terms of the tech, isn't there. It's still now as easy and whereas it should be. But I think that's a really good example of sometimes how big and boring can be better. And I've talked a lot about the apps and some of the sort of shiny stuff that the newer guys have, but you know, behind the scenes, I'll give you another really tiny which definitely fills into sort of fits into the boring camp. But just as an example with the thirty two test accounts of God the bigger guys, if you need to find something like so, for example, your tax certificate when you're coming to do your self assessment, Oh my god, it's January, and why haven't I done it?

And I was supposed to do earlier today.

Okay, this is a lovely opportunity for John to tell me again that he finished his tax return in November.

John, would you just like to tell me that again.

I'd love to be able to tell you that, but I haven't done it.

Yeah, I remember, listen as well, remember you telling me you've done your tax.

For this was? This was last year?

No.

I got last years done in April, and I felt so proude of myself. I was like, the new tax should just started and that nued to get myself assessment for men for the previous year. But no, I feel.

John, Actually, I'm sorry, I seen doing it in April. It's not organized. I think it's so that it's Actually that's a bit boring, John, embarrassing John.

It is, okay, it is, I mean, I didn't actually have a very complicated texture to on that yet. I don't have a complicated when.

Any complicated years tell us more right, anyway, we're going off topic again. Everybody, get going with your tax return. I'll tell you what we will do next week. We'll do a last minute tax return pod.

How about that?

John, Well, there were last minute things that things that get it done quickly. I have no idea what those are, but hopefully I'll find out over the next week.

While I complete mind.

We should do Earl's Live for the audience.

It's not even funny.

An American politicians, honestly, anyway, Reality off topic, Off topic, Holly, is there anything else that we should talk about with that?

For me, one of the things that people should look at is a lot of the platforms have got better at regular investing. So I think this is something that people should have a look at. If you typically, if you set it up to repeat something, to do a trade, for example, every month, you'll pay lower trading fees. It's about sort of setting up those good habits. It's January, so you may as well sort of talk about that. So I think that's something people should investigate. What I would say as well, if people are listening who have had a platform for a week while, do check out the fees because things are moving, things are changing, and there's constant sort of downward pressure. So a platform that might have been competitive three or four years ago may well not be competitive today, I think for people, particularly as we move into twenty twenty five and what will be I think a very uncertain sort of market for investments difficult to call. Diversification for me remains the name of the game, and interestingly, I think more people should look at the ready made options or should consider these multi asset funds at least as a core part of their portfolio because that diversification and the avoiding all that concentration risk, I think is something that's really key. So little and often regular investing, check the fees and make sure you've at least got a part of your portfolio from my point of view, well diversified in an easy sort of managed option.

Brilliant Holly, Thank you so much, John. Is there anything you think we've missed?

The only one thing I would ask Coley's view is how much people should think about FSCs protection when that can sudden know wait to block at it choose and if you've got a lot of money, who should you think about maybe having more than one ale?

Well, really the main thing people need to look at is the custodium because if the platform and John the majority of them do reputable what is called custodian in place, your money is completely ring fenced from all platforms money. So in the event that anything does go wrong, your money is ring fenced and protected. So it's not about looking for any upper monetary value. It's about saying, is there a decent custodian There is my money kept separate from the operating sort of fonds of the platform, And if it is, you actually don't need to spread your money around. So this is a sort of misconception we see that actually means people have two or three platforms sometimes when in fact they don't need to because their money is separated and in the event that anything went wrong. One thing I would say, though, is that that peace of mind that many people is the most important. I remember years ago John talking to Gorham who used to run hard landsdown, and he said to me that the number one concern our customers have is security as their assets, like where are they where are they held and from many people. We've talked Maren, You've asked me about fees, We've talked about apps, we've talked about all of that. For a lot of people, that peace of mind is so fundamentally important that that will be the primary driver of why they might pick a bank, or why they might look for a footzy one hundred or whatever it might be. So that's another thing I think people should think about. But with a decent custodian in place, people's money is ring fenced and should be safe.

Brilliant.

Thank you, Holly, Thanks for listening to this week's Maren Talk to Your Money. If you like us a rink review and subscribe wherever you listen to podcasts, or to be sure of following me in John on X or Twitter, I'm at Maren sw and John is John Underscore Stepec.

Holly are you on Twitter for X?

I'm afraid I've given up to it. I'm an Instagram girl now, Maren when I can be bothered to brush my hair.

And you can find Holly on Instagram at Boring Money Holly. This episode was produced by some Saudi production support and sound designed by Moses and Questions and comments on This show and all our shows are always welcome. Our show email is merin Money at Bloomberg dot net