Investment Platform Documentation: Validity And Its Uses

Investment platforms are online tools that allow investors to buy and hold a range of investments in one place. They are designed for people who are making their own investment decisions, known as 'execution only'. These platforms often come with apps, making it possible to buy, sell and keep track of investments from a computer or smartphone.

When it comes to choosing an investment platform, there are several factors to consider, including charges, customer service, ease of use, and the range of investment options available.

This paragraph provides an introduction to the topic of investment platforms, explaining what they are, how they work, and what to consider when selecting one.

Investment platforms: online supermarkets for investors

Investment platforms are online supermarkets for investors, offering a range of investment options in one place. They are designed for people who want to make their own investment decisions, providing a platform to buy and hold investments such as funds, shares, bonds, and more. These platforms offer convenience and accessibility, allowing users to manage their investments from the comfort of their homes through websites or mobile apps.

When choosing an investment platform, investors should consider their needs and preferences. Some platforms cater to specific types of investors, offering different charges, customer service levels, ease of use, and access to research tools and guidance. The range of investment choices available also varies between platforms. Some platforms offer a wider variety of investments, while others focus on specific types such as shares or funds. It is important to compare costs and understand the fee structure, as charges can eat into investment returns. Most platforms charge a percentage fee based on the invested amount, while others have fixed fees.

Investment platforms provide various tools and resources to assist investors. These include investment news, research tools, smart lists of funds and shares, blended/portfolio funds, and recommended fund lists. It is important to note that while these platforms offer guidance, investors are wholly responsible for their investment decisions, a concept known as "execution only."

Before investing, individuals should assess their investment goals and risk appetite. Investment platforms often provide guides and data to help users make informed decisions. Additionally, some platforms offer "do-it-for-me" or robo-adviser services, which provide tailored portfolio recommendations based on the user's goals and risk tolerance. These automated services allocate a basket of investments suited to the user's preferences.

When seeking funding from investors, startups need to provide a range of documents, including administrative basics, historical monthly financials, success metrics, pipeline generation overviews, retention data, and headcount costs by department. These documents give investors insights into the company's performance, plans, and financial health, enabling them to make informed funding decisions.

Investment goals: what investors want to achieve

Investment goals are an important aspect of financial planning, providing structure and purpose to the allocation of money across various investment products such as stocks, bonds, and funds. These goals are deeply personal and depend on factors such as age, income, risk appetite, and future outlook. Here are some key considerations for investors when setting their investment goals:

Understanding Life Stages and Circumstances:

The intersection of life and investment goals is crucial. Age plays a significant role in investment strategies, with young adults just starting out, middle-aged individuals often focused on family planning, and older adults approaching retirement or self-directed investing. Income is a fundamental factor, as it determines the amount available for investing. It's important to consider career trajectories and earnings potential when setting investment goals.

Defining Investment Objectives:

Investors should be clear about their reasons for investing. Common objectives include making up an income shortfall, planning for retirement, paying off debts, or purchasing assets. Understanding these objectives helps determine the appropriate investment horizon, typically categorised as short-term (less than 5 years), mid-term (5 to 10 years), or long-term (over 10 years).

Assessing Risk Tolerance:

The value of investments can fluctuate, and investors need to consider their risk tolerance. It's important to assess where one can take risks and where they need to be more cautious, especially when nearing retirement or having other financial commitments.

Time Horizons and Commitment:

The time frame for investing plays a crucial role in achieving investment goals. Generally, longer investment durations provide more opportunities for growth. However, it's important to align investment horizons with specific objectives. Short-term goals typically relate to immediate financial needs, while mid-term and long-term goals may involve saving for significant purchases, education, or retirement.

Investment Strategies and Diversification:

Investors should create a well-thought-out investment plan based on their goals and risk tolerance. Starting with low-risk investments, such as cash ISAs, and gradually adding medium-risk options like unit trusts, before considering higher-risk opportunities is a common strategy. Diversification is key—spreading investments across different asset classes, sectors, and geographic regions helps protect against market volatility.

Tax Efficiency and Professional Advice:

Maximising tax efficiency is an important consideration when setting investment goals. Utilising tax-efficient accounts, such as pensions and Individual Savings Accounts (ISAs), can significantly enhance returns. Seeking guidance from financial advisors can help investors navigate the complex world of tax allowances and identify suitable tax-efficient investment opportunities.

Regular Review and Adjustments:

Markets are dynamic, and it's essential to review investment goals and performance periodically. Investors should reassess their financial goals, asset allocation, diversification strategies, and portfolio performance to ensure they stay on track. This may involve making small adjustments to their investment strategies or rebalancing their portfolios.

In conclusion, setting clear and realistic investment goals is a critical step towards achieving financial success. It requires introspection, discipline, and a comprehensive understanding of one's circumstances, risk tolerance, and future aspirations. By following these steps and seeking professional advice when needed, investors can make more informed decisions and work towards their desired financial milestones.

Investment types: funds, shares, bonds, etc

Investment platforms are online services that allow investors to purchase a range of funds, shares, and bonds from a single location, often within a tax-free account or a self-invested personal pension (SIPP). These platforms make it possible to buy, sell, and monitor investments from a computer or smartphone.

Funds

Mutual funds are investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. They are managed by professional money managers and provide individual investors with access to a diversified, professionally-managed portfolio. Mutual funds can be further categorised into stock, money market, bond, and target-date funds.

Shares

Shares, also known as corporate stock or equity, represent partial ownership in a company. When an individual buys shares in a mutual fund, they gain part-ownership of the underlying assets owned by the fund. The value of the shares fluctuates depending on the performance of the companies in the fund's portfolio.

Bonds

Bonds are loans made by investors to a company or government. They are considered fixed-income investments, as they pay the investor a fixed interest rate over a set period, after which the principal amount is repaid. Bonds can be issued by governments, municipalities, or corporations and are generally considered lower-risk than shares.

When deciding which investment types to choose, it is important to consider your financial goals, risk tolerance, and investment horizon. Diversification across different investment types and asset classes is a common strategy to manage risk and optimise returns.

Investment costs: fees and charges

Investment platforms usually charge an annual ongoing fee for using their services. This is often referred to as the annual ongoing charge. The fee is typically calculated as a percentage of the value of the investments held on the platform, although some platforms charge a fixed fee instead. For example, an investor might be charged 0.5% on the first £100,000 of investments held, then 0.3% on the next £150,000. Some platforms also offer a threshold above which they stop charging fees.

In addition to the annual ongoing charge, investors may also be charged for executing certain transactions, such as buying or selling funds, shares, investment trusts or exchange-traded funds (ETFs). These transaction fees can either be charged as a fixed fee or as a percentage of the value of the trade. Some platforms may also offer discounted transaction fees for frequent traders or free trades in exchange for a higher annual fee.

It is important to note that investment platforms are not the only source of fees and charges. Common investing costs include expense ratios, market costs, custodian fees, advisory fees, commissions, and loads. Expense ratios, for example, are a type of fee charged by mutual funds to cover the cost of managing the fund. This fee is typically paid out of the fund's assets and can reduce the returns generated by the investment.

Another cost to consider is foreign exchange fees, which are incurred when investing in international shares and funds. These fees can vary significantly between platforms, so it is important to compare them before making any decisions.

Finally, investors should also be aware of any switching fees that may be charged when transferring investments from one platform to another. While some platforms have scrapped these fees, others may offer to cover them as an incentive for investors to join.

When considering investment costs, it is important to remember that fees and charges can significantly impact the returns generated by an investment. Therefore, investors should carefully research and compare the fees charged by different platforms and investment products to ensure they are getting the best value for their money.

Investment research: tools and resources

Investment research tools and resources are essential for making informed investment decisions. Here are some key tools and resources to consider:

Investment Platforms

Investment platforms, also known as fund supermarkets, are online services that allow investors to buy and manage a range of investments in one place. These platforms are designed for individuals who want to make their own investment decisions, known as "execution only". When choosing an investment platform, consider factors such as charges, customer service, ease of use, and the range of investment choices available. Some popular investment platforms include NerdWallet, Which?, and Robo-adviser platforms.

Research Tools

A variety of research tools are available to help investors make informed decisions:

• News and Market Updates: Investment platforms often provide daily news and updates on investments, including expert commentary, videos, and podcasts.
• Smart Lists and Ratings: Some platforms offer smart lists of funds and shares that can be filtered to suit your needs. Ratings from sources like Morningstar can provide additional insight.
• Blended/Portfolio Funds: These funds are made up of other funds and are useful if you know your risk appetite but don't want to pick individual funds.
• Recommended Fund Lists: Analysts employed by investment platforms often put together lists of recommended or favourite funds, but be cautious as these may not align with your specific risk appetite or goals.

Data and Analysis Tools

To make sense of the vast amount of data available, investors can utilise data and analysis tools:

• AlphaSense: Provides access to exclusive content sources, including transcripts, equity research, and industry reports. It also offers AI-powered search and monitoring capabilities, sentiment analysis, and easy data export.
• YCharts: Allows users to build and analyse portfolios using metrics visualisations, custom strategy comparison reports, and benchmarking.
• S&P Capital IQ: Offers comprehensive financial and business data, including insights into public and private company financials, ESG scores, supply chain intelligence, and real-time market prices.
• Bloomberg Terminal: Provides access to real-time financial market data, news, and analytics. While a legacy solution, it has recently incorporated AI capabilities.
• GuruFocus: Focuses on value investing, offering stock screening and assessment tools, financial data and ratios, and custom alerts.
• Finbox: Similar to GuruFocus but tailored for individual investors, offering stock screening, valuation models, and custom financial models.
• Koyfin: Provides advanced charting and visualisation tools, stock and ETF research, and customisable dashboards for real-time market monitoring.
• Stockopedia: Features a comprehensive stock screener, financial ratios and metrics, portfolio management tools, and a "StockRanks" system to rate stocks based on quality, value, and momentum.
• Business Quant: Provides financial statements, customisable dashboards, pre-built financial models, and screening and filtering tools.
• The Motley Fool: Offers stock recommendations and education, community forums, and stock screening and portfolio management tools.

Other Resources

In addition to investment platforms and research tools, there are other resources to support your investment journey:

• EarningsCast: A resource for listening to earnings calls and detecting the sentiment of management teams.
• Trefis: Helps analyse revenue streams and understand how a company's products impact its stock price.
• Estimize: A crowdsourced system for estimating earnings, showcasing the expectations of regular people over analysts.
• Mint: A personal finance site to help keep track of your finances and manage your money effectively.
• SEC Live and Rank and Filed: Tools to make reading SEC filings easier and more accessible.
• XBRL: A visualisation tool to show which companies and industries have filed with the SEC.

Frequently asked questions