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I have recently managed to secure a graduate job and I started think about investing part of my income.

I am at the start of my career so I would probably be able to invest around 600/month. I thought of putting 10% in a savings account, 80% in an ETF tracking either an aggregated index like SP500 or FTSE100 (I was much more interested in getting an ETF tracking the technology sector or a mixture of tech stocks and financial stocks) and 10% in high risk investment (same an ETF tracking a basket of some cryptocurrencies maybe even with some leverage).

My question is how should I pick my investment account? Should I stick with the investment account offered by my bank or should I pick a different one like the one offered by IG?

Also, any other advice is beneficial.

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    Since you mention the FTSE100, please add a country (or Europe, if relevant) tag. – RonJohn Nov 6 '17 at 1:07
  • What are your goals and how risk averse are you? – davidjwest Nov 6 '17 at 15:03
  • Capital growth (no particular timeframe) and I am ok with high risk investments. I am in my prime 20s so I can afford to lose money. I am also knowledgeable about finance/investments but I am new to the practical side and I want to see other people opinions and recommendations. – Alex Nov 6 '17 at 15:36
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As you seem pretty knowledgeable you could manage it all yourself via one of the investment platforms available, for example BestInvest or Vanguard. I think Vanguard may even be free if you buy their funds. Money saving expert has some information on which ones have the lowest fees. You could create a self-invested personal pension (SIPP), and/or an ISA, and/or a personal investment fund, all managed from this one platform.

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All other things being equal you should choose the one with the lowest fees, however, all other things being equal my cat is my dog.

As well as looking at the fee structure you need to look at the company itself and its offerings. The cheapest firms may not offer all of the funds that you want to invest in or may charge more for some of the funds so you may need multiple brokers to get the cheapest deal on all of your funds. You also need to bear in mind how much you trust the company with your money and personal details. This may or may not be a big thing for you but I deal with brokers all day every day and there are some that I would not use through reputation.

You should also consider how many extras the broker has; if you are investing through a tax privileged account, such as an ISA in the UK, do they report the required information to the tax authorities or do they expect you to do it. Do they even offer tax advantaged accounts? Some brokers will also offer free advice and analysis with their accounts so that may be a reason to choose a more expensive broker (you're effectively paying for the research and advice).

Finally if you are looking to trade or read research through your broker a lot it is worth looking at the UI and thinking whether you could stand to look at it for prolonged periods and how easy it is for you to complete your common tasks.

  • 1) Tax advantaged accounts as mentioned here – do it. ISA for long term savings. SIPP for retirement at 57+ (you get tax relief when you pay into a SIPP so you are investing gross earnings, not net). 2) Strong point too about fund range. Some cheap brokers are bad at this. 3) Under 'extras', file Customer Service. Cheap platforms are terrible at this and will leave you frustrated. Some e.g. HL are excellent. My tip: go for better customer service at beginning of your investing life. Fees are %-based – you can always switch to low-fee when your portfolio is bigger & you have more experience. – marktristan Nov 6 '17 at 14:58
  • And in case it isn’t obvious… Almost certainly not the account offered by your bank. It is extremely unlikely to shape up under any of the above criteria. – marktristan Nov 6 '17 at 15:00
  • @marktristan thanks for the comments. I haven't used customer services in a long time so I forget about that. You also reminded me to get some info off my parents' broker! – MD-Tech Nov 6 '17 at 15:01
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You should read the fees you will pay per transaction. Your bank's fees are most probably high compared to a discount broker.

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Three classic things to consider:

  1. Fees, as others have noted. These vary widely. My bank charges a minimum of $60 per transaction. Discounts brokers charge about $10 per transaction.

  2. Risk. Typically, some funds have wide variations in returns year to year: this year they may make 20% while last year they lost 15%. Other funds are more stable, giving about the same return every year. How much risk are you willing to take. Someone who's 65 and about to retire usually wants less risk than someone who is 21 is willing to assume.

  3. Past performance. A prospectus will always say, "past results are not a guarantee of future performance". True it's not a GUARANTEE, but if you were betting even odds on a race between two men, one of whom had won his last ten races and the other who had lost his last ten races, which would you bet on?

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Some banks have self-directed accounts that can hold index mutual funds with low MER. Considering your amounts are low, in the beginning it may be beneficial to start with the bank that have accounts where there's no annual fee and the transaction fee for mutual funds are zero.

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