What platform should you use for investing and what should you invest in?

Once you have decided on an investment strategy for yourself or for your children you need to decide where to invest and what to invest in.
 
WHICH PLATFORM TO USE FOR INVESTING
 
Choose a platform that has the lowest fees for the highest convenience. Fees change over time but when I was deciding on a platform I found these articles:

• Moneywise.co.uk - Our guide to the best investment platforms for beginners
• moneysavingexpert.com - Find the best ISA or investment platform
• investorschronicle.co.uk - The cheapest DIY platforms on which to hold your Isa
• comparefundplatforms

 
In the end, I chose iWeb for myself and Hargreaves Lansdown for the children’s investments.
 
Why iWeb?
 
I chose iWeb because annual fees are zero (after a £25 account opening fee) and you only pay £5 per transaction.
 
As I only transact once a month (on pay day), our annual household fees are £60 and if you consider that I only transact on either my account or my husband’s account in any given month, then we are only paying £30/year per account. More than fair.
 
The main problem with iWeb is that they don’t do junior ISA and you can’t automate investing. I don’t mind manually investing for my and my husband’s ISAs because we invest different amounts in different funds each month.
 
Why Hargreaves Lansdown?
 
They do junior ISAs, they have a good app and you can fully automate all your investing – their customer service is also pretty good; if you call you will get through to a human pretty quickly.
 
Ultimately, I don’t expect the children’s ISAs or pensions to have a value greater than £100,000 before they’re adults so a platform with a percentage fee will tend to be cheaper than one with a fixed fee.
 
When they’re older I’ll advise them to move to a cheaper platform.
 
Which platform will work best for you?
 
Unless you’re an investment buff that actually enjoys making monthly investment decisions, I recommend you choose a platform that allows automation, possibly Halifax share dealing or Cavendish; one of my friends recommends Fidelity.
 
For children, transact within a junior ISA. For yourself or partner, an adult ISA. If you can invest more than the annual limit then use the ISAs first before transacting via a taxable account.
 
WHAT SHOULD YOU INVEST IN?
 
Unless you have a lot of time to research different companies, I would only invest in low-cost (passive), well-diversified mutual funds such as an S&P500 tracker or a FTSE100 tracker. Passive means the fund is not actively managed, it just follows the stock market so your return is essentially the average market return.
 
Research suggests that actively managed funds (ones where a ‘clever’ manager stock picks) generally underperform the market in the long-run.
 
My long-run strategy is to have 70-80% of my money in (safe) passive funds and 20-30% in actively managed funds. ETFs? I don’t do ETFs – I think funds make more sense.
 
Over to you.
 
Have a question?
 
If you have any personal finance questions send them to [ME] – I will answer whatever piques my fancy via a blog post.

• Related blog post: How to save and invest for your children
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