The growth of the online investment market is growing at a huge rate with DIY investors opting to invest their money in stocks and shares that they have researched.
There’s also a huge growth in the number of fund supermarkets which enable stocks and shares to be traded quickly and cheaply and also offer 24 hour access to an investor’s finances.
There’s no doubt that taking control of an investment portfolio by dealing directly online can be an exciting and rewarding experience for many people. However, as many of these investors will reveal it’s not always as easy as it seems.
Investors looking to deal directly online will need to set up an execution-only account with a stockbroker, this means that shares are sold and bought without any advice being given.
At the forefront of this surge in popularity are the fund supermarkets who allow investors to shop around online for funds from several different managers.
And because these fund supermarkets do not charge a fee for their advice the cost for setting up and running a fund is much cheaper for an investor.
DIY online investing – is it the best way?
For example, if an investor decided to take the DIY route they could plough £10,000 into a stocks and shares ISA (individual savings account) and save around £450 because some firms offer 0% on the initial commission.
Some firms who do offer face-to-face advice on how and where an investment should be made under a stocks and shares ISA, may charge as much as 4.5% for that initial advice.
Not only does the DIY online investor save money in trading and advice fees, they also get 24-hour access to see how their investments are performing. They can monitor their portfolio’s performance no matter what the time of day or night is and make any adjustments they deem suitable.
That means that they may find a particular stock or share is performing particularly well, it may be in an emerging market abroad for instance, and they start dealing in those shares.
They may make a lot of money and because they have set up a stocks and shares ISA, all of their dealing profits are exempt from capital gains tax.
The other big attraction for DIY online investors is the lack of paperwork that they need to keep; they simply have to produce one tax document every year which makes it easier to keep on top of their finances.
There are many potential investors who would love to participate in the trading of stocks and shares but they either do not have the knowledge of what stocks are successful or have the confidence to do so.
Find the best online investing provider
That’s why investment vehicles such as ETF’s (Exchange Traded funds) are growing in popularity since they are offering a share in a fund that has a basket of shares such as stocks, gilts, bonds and commodities.
The buying of ETF’s ensures that online DIY investors looking to diversify their investment portfolio minimise any risks they may be taking while at the same time looking to exploit any profit opportunities that come with having such diversification.
However, there is a much easier way of exploiting the potential of online investing and benefiting from a stocks and shares ISA at the same time; that is to use the services of a specialist online investment firm such as Nutmeg.
Nutmeg offers a range of portfolio risk levels to deliver the best results possible by using their expertise and experience in knowing what to buy, when to buy it and, more importantly, when to sell.
By doing so, an investor is not only enjoying the advantages of a tax-free investment allowance, but also enjoying the privilege of having somebody work for them in bringing the best returns possible.
Nutmeg really does offer the best online investment experience possible.