30 March 2015

Intelligent Investing with Nutmeg.

When I worked as a Broker in my previous life in the City, our days would be full of jargon and it took time to get to grips with it, but, in the end, everything comes down to lending and borrowing and how much risk is involved.

The corporations with whom we dealt would be graded according to how likely - or unlikely - they were to default on a loan.  Top name British Banks, were easy to lend to, but they didn't need to pay as much interest for their borrowing as smaller ones from Latin American countries did.  Less risk = less interest - and this works both ways - whether you are depositing or borrowing.

But why do Banks want to borrow money, you might ask and what does this have to do with any of us?  

Financial organizations take all the deposits of their zillions of customers - people like you and me - and club them together to make great big fat ones, that they then do lots of exciting and interesting things with, including lending on to other private customers or business, making a huge profit in between what they charge and what they pay out.

You only have to look at the rate of interest you earn in normal savings account and compare it with the the rate you would be charged if you'd like to borrow the same amount from the same organization and you'll see the difference.

Investing any funds we might have with a Bank gives us relatively little risk compared with putting our money into stocks and shares or bonds and commodities, but it, thereby gives us relatively little return.  And most of us wouldn't know where to start with any of the other exciting and interesting, options that the Banks use anyhow.

But I recently heard of a company called nutmeg.com that is bringing intelligent investing to individuals, taking the City stuff and bringing it down to earth, giving us the benefits of their expertise and making people what is called a portfolio - a collection of investments - where they take all our little deposits, make them into great big fat ones and spread them into better paying ventures than a plain old savings account. Obviously, there are risks involved, but with that, the chances of a better return are higher.  

You might find your funds in oil, gold or commerical property - things you'd never have the knowledge or confidence to go for yourself and, because they like to keep things transparent, you're able to look up on line exactly what's happening with your cash this month!

But the best bit?   They only charge a one off annual fee of 0.3-1% for managing it all, so you always know where you are.

This brilliant little video explains it all - completely jargon free - and you can find out more here too.   They'll deal with your desposits, your ISAs and your pensions for a start.  Happy intelligent investing!




Disclosure - This is a collaborative post but all words are my own obvs.

18 comments:

  1. That video is very useful, I've never invested money before but we are starting to plan for the future and looking at investments

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  2. Well first off - hello! I never knew you were a broker! Dark horse you.

    This is really interesting we're currently looking at investing some money and it's a minefield. Our broker is giving me questionnaires asking about my appetite for risk ... erm... no clue! This seems to make it all straightforward though.

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    1. Oh yes, am an expert on such matters ;) x

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  3. Looks comparatively simple compared to some of the investments I've looked into previously. I didn't realise you were a broker back in the day... how clever?!

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    1. It's straightforward because they take the decisions for you and yes, another life x

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  4. yes this really does sound a good and simple route through investing

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  5. That was an interesting lesson in economics. A really interesting article, I know nothing about investments so this was really useful

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    1. Like nutmeg, Nikki, I like to take it down to basics and keep it simple, away from the jargon - glad it helped x

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  6. Ooo now I'll have to show this to Papasaurus as it's his kind of thing. He's the finnancial-knower in our family :)

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  7. Really interesting, especially for someone like me who has no idea about investments - thanks for sharing ;-)

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  8. Ohh thanks Anya, nice and easy to understand. Mich x

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  9. What an interesting idea Anya. I will confess to being utterly clueless about investment, but I have been wondering about it recently. We have a little savings pot for DorkySon, but it's just sitting there in the bank making pennies of interest each year and we've been discussing whether to take it out of the bank and do something else with it. This sounds like a good middle ground.

    As an aside, I can't imagine you as a broker! It must have been a stressful lifestyle xx

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