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What is online investing?

Are you interested in investing online, but not quite sure where to even start? No problem, here at Guarantor Loans we have put together a guide on everything you need to know about online investing. This includes the basics of online investing, some tips, as well as terminology you should get to grips with if you are serious about getting into investing online.

What is online investing?

Online investing is a process that generally takes time before you start to reap rewards. However online trading tends to be quick and easy to do, as you can simply decide to buy and sell stocks from one of the many online brokers that are on the internet offering low-cost trades. It is an excellent way to get started with trading if it is still fairly new to you.  However online trading doesn’t necessarily make deciding how you will invest any easier. This is why you should try to do as much research as you can before deciding to invest, in order to make sure that it is a wise investment to make.

Online investing tips

Now that we have explained exactly what online investing is, here are a few tips to help you get started:

  • It is important to remember that you do not need lots of money upfront in order to get started, especially if you are a beginner, it is probably wise to only start with a small amount. This could be as little as £50. Try to find an online broker that requires no minimum deposit upfront
  • It is also recommended to try an investing simulator centre first too online prior to making any binding investment. This means you can familiarise yourself with how trading and investing works without potentially losing money at the same time
  • Take time deciding which online broker is the right one for you. There are many available online, but it isn’t the case that one broker fits all as they all tend to offer different benefits. it is vital that you think you can trust them, as they will be dealing with your investments

Digital investment apps

In the last couple of the years, a number of fintech startups have been developing new digital investment apps. The idea behind them is to change preconceived ideas that investing is a preserve of just the very rich. The intention behind these apps is to make online investing easier to do, and much more accessible to the average consumer. We take a look at some of the UK leaders in the market at the moment.

Nutmeg

Nutmeg is the nifty little investment app that is the brainchild of former CEO Nick Hungerford. Acting as an online wealth manager the app helps to make online investing easily accessible. With this app, you need a minimum capital of £500 and charges an incredibly low management fee of just 0.3%.

One of the great things about this app is that it makes the investment decisions on your behalf based on the expertise of its workforce. You also have the opportunity to withdraw your money at any time with no exit fees involved for doing so, and you can check your portfolio at any time.

Moneyfarm

This app charges no management fees on any portfolios less than £10,000 or over the £1 million mark, whilst those in between this amount are charged a rate varying between 0.4% and 0.6%.  There is also no minimum amount required to sign up for Moneyfarm but they do recommend to try and start with £1500 if you can.

To understand your investing needs you are asked to complete an online questionnaire. Moneyfarm asks you questions such as your financial history, your investing goals and how much risk you are willing to take with these investments. The company then processes your results through algorithms and wealth fund managers in order to determine the best investment options for you in ETFs (exchange-traded funds) which are then managed regularly by Moneyfarm.

It is also worth noting that Moneyfarm is regulated by the Financial Conduct Authority (FCA) as is Nutmeg and Wealthify. This means that should something go wrong with the company your first £50,000 remains safe through the FCA compensation scheme.

Wealthify

With this online investing app, Wealthify asks its customers to select how much risk they are willing to take, then money is invested through the help of algorithms in different assets classes such as ETFs, which help to determine what is best for investment returns. There is a management fee of between 0.5% and 0.7% depending on the value of your investments.

 

Microbox

Perhaps you aren’t sure if you want to fully commit to online investing. However, what about micro-investing? Startup Moneybox can help you with exactly that through their app. Moneybox helps you to get into the habit of saving without you having to lift a finger. The app works by rounding up your purchases, saves any remaining which is then invested into an ISA for stocks and shares. For this service, there is a £1 a month subscription fee after the first three months, after this it a fee of 0.45% based on the value of your investments annually.

CrowdCube

Another way to invest online is through crowdfunding. One of the most popular on the market is one run by CrowdCube with nearly 250,000 registered users on the website. People on their platform are able to invest in startups, early-stage business and receive investment fund, debt and equity options in return for their investments.

eToro

With this app, users of eTOro can invest in the stock markets, indices, currencies and commodities. It also gives users the option of having a ‘practice portfolio’ (the trial run we spoke about in an earlier section of the article) meaning you can get to grips with how online investing works prior to investing actual money. You also have the opportunity to ‘follow’ traders on the eToro network which is a huge advantage, particularly if you are new to online investing. Why? you can see what successful traders on the site are investing in, and you can then decide to follow suit.

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