In today’s Exponential Investor…
- The hardest step
- What are the options?
- Good for the goose
I remember the first time I ever set up an online stock broking account.
It was in Australia and it was a fairly basic set-up. It was a broking account with one of the “Big Four” Aussie banks and it gave great and instant access to the Aussie stockmarket.
I still have that trading account, albeit I don’t use it any more. But one day I might. The good thing is it doesn’t cost me anything to have it there dormant.
The thing is back then in the early days of online broking accounts, setting one up wasn’t that easy.
However, the problem still exists that it’s still not that easy to do today either. Compared to the 2000s it’s a world apart. But to most people the idea of setting up a stock broking account and investment account, an ISA or SIPP, is one of the most daunting things you’ll ever encounter.
It doesn’t have to be.
It’s also not just the world of stocks and shares that people find daunting. Time and time again I get mail saying the sole reason why people don’t begin their journey into crypto asset investing is because it’s “too hard” to set up an account with an exchange to buy and sell them.
What I find most interesting about that is it’s not any harder – in fact, I’ve found it easier in my experience in setting up a crypto exchange account compared to a stocks and shares account.
I’m not convinced the actual barrier to investing lies at the door of these “gatekeepers” between you and the world of investing.
I believe the real barrier is fear.
You say this but do you mean it?
These aren’t difficult things to set up – not today, not compared to a couple decades ago.
There are a number of applications now that you can set up on your smartphone, and you never have to deal with a piece of paper, a person or a website ever again.
Setting up your own account really just requires one simple thing – you and mere moments of your time.
The same is said for anyone that’s younger than you that’s wanting to get into investing, but hasn’t yet taken that first step in opening a brokerage account.
There is no reason at all why every single person in the UK shouldn’t have some kind of investment account they have access and control of.
I genuinely mean that.
If you’ve got a child, why don’t they have a junior investment account, with you, their parent, as the beneficial owner until they reach the age of managing it themselves?
If you’re over 18, why haven’t you bothered to open a stocks and share ISA or a crypto exchange account?
To be fair, I think it’s insane that you have to be over 18 to open a stocks and shares ISA. You can drive on the road at 16, but you can’t control your own investments? Ridiculous.
Nonetheless, if you’re reading this and you, your spouse, your kids or grandkids don’t have any kind of investment account there ready to invest, then you need to sort that out pronto.
I’ve said for some time that a personal mission of mine is to empower people to invest younger and learn more about personal finance at the ages they should be, primary school age. Taking that onus on yourself to learn, to understand and then to action from a very young age will only ever put you in better stead in life.
There is no disadvantage to learning about personal finance and investments at an early age. There is no disadvantage to having more knowledge about how the real world works.
And if you’re not young, that’s okay too, you might already know a lot about all this. But how much of it have you passed down yet? Some, any? Hopefully you will already be on a course of education and experience with your family.
But with that said, where to start? There are so many different types of investment accounts, exchanges, brokerage firms, apps, ISAs, SIPPs, where on earth do you start?
Well before I say anything more, know this: I have zero affiliations with any of them. And up until seven years ago, I had zero accounts in the UK – I had to learn about them all myself, some that were good, some that were not, moving from some to others, and opening accounts just to see what they’re like.
In that sense, I’ve got a lot of accounts and apps. But it does give you some insight as well into a rule that I’ve applied since I start investing and managing my own finances in my teens.
Never be loyal to any provider.
None of them do everything well. Some do some things well. Others do other things well. Use them for their strengths and not for everything.
If you use the services of just one provider for everything then you should do a full review of the accounts you use, and what other options might be out there.
Here’s what I have…
Now, I use a lot of accounts and apps. Some have nothing in them, some have some in them, some have a lot in them. They all serve different purposes for different things. But if I can set up accounts with these providers, then so can you.
Here we go…
In terms of banks and bank accounts, I’ve had accounts with,
- Yorkshire Bank (I found useless)
- Lloyds Bank (quite good for day to day “traditional” accounts and not a bad online banking app)
- Starling Bank (great app, great card management, probably the best day-to-day bank I’ve found yet).
For currency exchange I’ve used CurrencyFair and TransferWise – I prefer CurrencyFair, but others will prefer TransferWise. They’re both great.
Investment accounts, I’ve used online brokers in Australia from Commsec to eTrade to ANZ Online Investment. Here in the UK,
- Hargreaves Lansdown (great app, decent selection of shares and stocks from all over the world, ISAs and SIPPs, very easy to set up)
- Interactive Investor (not as good an app, but exceptional selection of overseas investments)
- Freetrade (the best app, the easiest way to get started investing. Not as good a selection of investments and the premium stuff, like the others, you still have to pay for).
Cryptocurrency exchanges (I’ve used more but here are the main three I use most regularly):
- Coinbase (the easiest to set up and easiest to on ramp and off ramp to fiat currency, not a huge selection of crypto, but covers the main ones, and a great app)
- Binance (nothing comes close for selection of choices; easy to set up, complicated to use; clunky on ramps and off ramps to fiat-money, but great for crypto to crypto exchange)
- Bitpanda (almost like a mid-point between Coinbase and Binance).
Crypto cards are debit cards that can be linked with a cryptocurrency account to spend crypto at merchants through normal payment terminals. Again, I’ve used more but these are my preferred ones:
- Coinbase Card (easy to link to Coinbase account, easy to use, straightforward, converts your balance on the spot, not requiring pre-paid loading)
- Wirex (easy to start and set up, app not as friendly, an emerging company and possibly a future staple of banking in the UK).
Yep that’s a lot. And it’s not everything. My “Finances” folder on my phone has more apps than anything else. But they all have advantages and disadvantages. And you’ll never find me beholden to one provider.
The good thing is it’s relatively easy to change as well now. And with so much competition coming I’ll probably change these again in another 12 months or 18 months, or whenever something better comes along.
The thing is, you’ve got to be prepared to be proactive, to take control and to use what’s available to you to best manage your investments. It might appear hard, but it’s really not and there’s no reason why you can’t do it all yourself with the right attitude and approach.
Editor, Exponential Investor