Eggs in one basket or many?

stud26

Hi I've got a few investment savings with multiple apps like tickr, moneybox, wealthsimple, freetrade and trading 212. This is mainly due to receiving referral incentives.

Am I best off putting my money into just one of these for are keeping spreading across many? I guess in one will get me a bigger pot but many might be less risky.

Any thoughts are greatly appreciated.

grumiofoundation

Whether your investments are in one pot or many little ones will not affect the risk - what you are invested in is important.

Most people would say having say £1000 invested with a established vanguard, legal and general, HL and others) is far less risky than having 10 x £100 invested with a number of companies (most if not all I would expect have never turned a profit).

If you look at each investment would you invest that amount of money in that now? 

if you are still in investing smallish amounts and looking for cashback have a look at referral schemes/cashback sites - for example we invested in nutmeg and legal and general this year using cashback sites/referrals (total I think about £350 cashback for ~£4500 invested between Nutmeg and L and G) - once the minimum term is up we will be unlikely to leave investments with these as more expensive than others but cashback more than covers for 12-24 months.

Key however is to determine what you want to invest in first.

stud26

Thanks. None of them are invested in individual companies it's all ETFs, commodities and bonds. Specifically what they invest in differs. Will the effects of compound investing be greater in just one of these or can I achieve the same keeping them separate?

Albermarle

Usually the problem with multiple accounts , is that small trades cost relatively more than one big trade usually.
However I think with some of these sites trades are free anyway ?

stud26

Yeah there's no transaction fees with any of these.

bowlhead99

stud26 said:

Thanks. None of them are invested in individual companies it's all ETFs, commodities and bonds. Specifically what they invest in differs. Will the effects of compound investing be greater in just one of these or can I achieve the same keeping them separate?

The 'compounding' is no greater by sticking it all in one place.  For example if you have £100 growing at 4% a year, £400 growing at 10% a year and £500 growing at 1% a year, it doesn't matter if they are all in one account containing £1000 split the same three ways, or you hold them in three accounts. The investments still return what they return.

 If the investments are the type to pay income, if they were in one place you could more efficiently deploy the income that arises into whatever investment you planned to buy next; for example if you had them all in separate silos and you get a tenner dividend from your shares in Unilever or Vanguard All-World ETF which are the only things held in that bucket, then your options with the £10 of proceeds are:   try to buy a tenner's worth of extra ULVR or VWRL shares (which you can't as the Unilever shares cost £47 each and VWRL costs £73 each); buy a random £10-worth of something else you didn't previously hold in that account;  sit on the cash doing nothing; or withdraw the money from the account and then have to load it into another account.  All of those things seem a bit inefficient.

Whereas if the money is all under one roof it could be more efficient as you just have a general pot of money and a small pool of cash from time to time.  As you will have different things in your portfolios, you probably have an idea of what proportions you are trying to invest (e.g. 10% gold, 25% bonds, 65% equities) and if they are all under one roof it is easier to re-balance the allocations back to your plan from time to time without needing to shuffle money between platforms.

One reason to use more than one provider is that if (e.g.) tickr or trading 212 or freetrade or wealthsimple go out of business it will take a while - perhaps months, or even over a year (see recent SVS Securities thread) - to get access to your assets again. If it was all your assets, it would be very frustrating. You can perhaps reduce the risk of that by using bigger profitable names in the industry who have more billions of assets under administration - as the ones which do not charge you a fee for their services (so don't make much or any money from you) might have more problems with financial stability or be overreliant on subsidising your service with the fee income they get from other services from other customers.

stud26

Brilliant makes complete sense. Thanks for your wisdom!