Hello Bulletproof Community, welcome back to my blog. I get a lot of questions asking me how to access the stock market, how to invest in the stock market, how to buy shares, how to buy mutual funds.
So today, I will be teaching you how to access the stock market and invest.
As you probably know already, I love talking about budgeting, saving, becoming debt-free and investing your way to wealth. So, let’s get right into it. I promise not to make it boring (which is another complaint I have heard many times about investing)
The best and easiest way to invest in the stock market is through investment platforms.
Investment platforms exist and can be accessed in many countries such as the UK, Canada, the US, Ireland and most of Europe; they make investing easy and convenient.
Some of these platforms are apps rather than websites, but they exist, and you can access them to invest.
A few of the well known investing platforms are:
- Hargreaves Lansdown (HL): which is great for investing and also provides analysis and information to support your decision making,
- Vanguard: This is one of my favourites platforms simply because they have such low fees and the website is easy to navigate,
- AJ Bell You invest: Similarly to Hargreaves Lansdown, they provide a lot of analytical information to support you in choosing your investments.
Now, maybe you are someone who really doesn’t want to choose stocks and mutual funds and all that jazz. You don’t want to think about it, you don’t want to weigh their potential or review their historical performance, you are too busy for that, or you simply are not fascinated by it. Don’t panic; you are not alone. There are many other people like you, and that is why Robo-advisors exist (doing a small happy dance on your behalf now).
Robo-advisors are investment platforms that use Artificial Intelligence to choose your investments for you!
Yes, you read that right. When you register on Robo-advisor platforms, you simply answer a few questions (to help the AI determine your risk appetite and goals); and it chooses your stocks and funds for you. You only need to transfer your money.
Examples of Robo-advisors that you can invest through are:
- Nutmeg: which is quite renowned in the UK. They have built a track record over the years, and they deliver on what they promise,
- Moneyfarm: which has quite a diversified portfolio,
- Etoro: which has been gaining a lot of traction on social media space, and they have no management fee,
- Trading 212: which is also becoming quite popular, particularly with personal finance experts on Youtube, and
The best way to decide which one of these amazingly convenient platforms you want to use is to visit their websites and explore their features and offerings.
While most of them offer the same kind of services, they will defer on a few bits and bobs that might be important to you.
If you are in the UK, there are a few requirements before you can register on these platforms (Robo-advisors and other investment platforms), namely:
- A UK bank account
- Your National Insurance (NI) number
- Address to which they can send your documentation
Once these three details are provided, you can register on an investment platform within 10 minutes.
It is easy. However, if you need help doing it, I’m happy to guide you through the journey.
Once you have registered on an investment platform, you will find that they offer different kinds of accounts, and you will need to open an account before you can invest.
This is usually another point where many people get confused and abandon the journey because they are thinking, “Which account should I go for? I don’t want to get it wrong”.
Well you won’t, because I’m going to tell you about each one now.
Stocks & Shares Account
This allows you to buy stocks and shares within a certain kind of tax wrapper that saves you from paying tax on your dividends and earnings.
General Investment Account
This is an investment account that doesn’t take advantage of your ISA allowance. It’s just an investment account where you can put your money in and buy stocks or shares, mutual funds, ETFs etc.
This lifetime ISA account allows you to get on the property ladder by saving your money and getting 25% on top of it from the government. You can put in a maximum of 4000 pounds, and the government adds on an additional thousand pounds for you (this is the part where you do a happy dance)
This is the Self Invested Personal Pension account, and it allows you to make pension investments. It is particularly suitable for self-employed people who wish to invest more in their pension than the state allowance.
As the name suggests, the SIPP allows you to make your own pension investments by yourself. It also means that any money that goes into your SIPP account is not coming out until you get to age 55 at least (57 for younger people now as the cash-out date has been extended). So you must bear this in mind as you invest with this account.
Junior Stocks & Shares ISA
These are accounts that allow you to buy stocks and shares for your children. Because it is a junior account, you or your child cannot access the money until the child is 18. However, you can move your investment from one provider to the other. You can also sell, switch or increase your investment within the same account, but you cannot withdraw it until your child turns 18. When your child is 16, they will gain ownership of the investment account; and when they are 18, they will be able to take money out of it.
Junior Cash ISAs
This is an account that you can use to save for your children. Each child is expected to have individual accounts. Like the Junior Stocks and Shares ISA, you cannot withdraw money from the Junior Cash ISA account. Your child can only withdraw the savings when they turn 18.
Some investment platforms like Hargreaves Lansdown also offer high-interest savings account if you find the Junior Cash ISAs too restrictive.
What can you buy on investment platforms?
- Company shares
- Mutual funds
- Exchange-traded funds (ETFs) and exchange-traded commodities (ETCs)
- Real exchange investment trusts (REITs) and other investment trusts.
Additionally, there are two kinds of fees you can expect to pay while using any investment platform
- A fee for using the platform, and
- A fee for the type of investment you make.
So if you’re buying mutual funds, you pay a fee for the fund and for using the investment platform. However, some investment platforms are popular because of the subsided or no management fee.
For instance, Etoro does not charge management fees, while Vanguard has low management fees.
I hope I have brought some clarity to you on how to invest in the stock market. Remember, the best time to start investing was 10 years ago, and the next best time is today.
So go ahead and explore those investment platforms. I am rooting for you.
With all my love,