As we see more and more individuals taking control of their finances and looking to invest, let’s take a look at the importance of keeping things tidy.
We get it, you’re busy. You need an extra day in the week to get through your to do list as it is and transferring investment accounts between providers feels like too large of a job to warrant the time. It might not even be on your radar at all. However, investment consolidation is one of the key pillars of financial planning - here’s why it matters.
The two key stages of financial planning are to first, understand what you currently have, and second, to understand what you want to achieve. If you identify that you need to have an investment portfolio of £X by the time you retire, you need to know how much you have invested today before you can decide the right next steps towards bridging the gap.
One of the best ways to get a handle on what have you could be to keep all of your investments in one place (where possible). One log-in to remember, one valuation to check, one set of performance data to monitor.
It may sound counterintuitive but having your investments split across multiple investment platforms can be detrimental to achieving diversification. Whilst yes, you are spreading your provider risk, having accounts on too many platforms can make it more challenging to keep track of your underlying investments.
Without realising, you could hold the same fund across several platforms, and you may be more concentrated in underlying stocks or sectors than you realise at first glance.
Where possible, consolidating your investments to a single investment platform will allow you to see clearly what you are invested in.
Unruly investment charges may seem like a minor problem, a few basis points here, half a percent there, but without a careful eye your investment charges can have a material impact on your long-term net return.
Having multiple investment accounts with different platforms can be very cost inefficient as you may pay multiple versions of the same fee (such as wrapper charges) as well as different transaction costs for potentially the same thing (see earlier point about investment diversification).
Keeping track of your charges is really important and one of the simplest ways to do so is to use a single platform with one set of fees to remember. At TILLIT we charge a flat percentage fee for exactly that reason; it’s clear, simple and easy to understand. (Please note, the TILLIT fee does not include individual fund fees).
Consolidating your investments can seem like a lot of work, however many providers (including TILLIT!) now offer digital transfers. The long-term benefits and clarity can often be worth the short-term effort.
Date of publication: 30 August 2022
The information in this post is not financial advice, it is provided solely to help you make your own investment decisions. If you are unsure about whether an investment is appropriate for you, please seek professional financial advice. You can find more information here.
When you invest you should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return.