Looking to get more from your money? Worried that the cash you have in your bank account won’t accumulate interest at the same rising rate as inflation, effectively meaning your savings are worth less over time?
InvestEngine might be the answer. It’s an investment platform that makes it easy to invest your money, potentially earning you a lot more than a typical bank account (although, at the same time, potentially risking losing money too).
And one thing that makes InvestEngine stand out from the crowd — while most platforms only allow personal users to join, InvestEngine welcomes personal and business customers.
So, is it right for you and your money? Read our review to find out.
At a Glance — Pros and Cons
Pros
✔️ Flexible investment options — potentially earn more than a bank or savings account.
✔️ Low cost, including a free option (though ETF trades always involve a fee).
✔️ Managed portfolios are ideal for less experienced investors.
✔️ Choose from personal accounts, ISAs and even business accounts.
Cons
❌️ Investment is a risk — you could lose money.
❌️ Free version requires a good level of knowledge.
❌️ Support hours are limited.
What is InvestEngine?
InvestEngine is a platform that makes it easy for you to start investing your money into ETFs — Exchange Traded Funds.
This means that instead of investing into one particular stock, an ETF may be made up of lots of different companies, helping to diversify your investment and better protect your funds. One company may have issues, but many at the same time? It’s a lot less likely.
The benefits of using an investment platform like InvestEngine are the chance at much better returns than a normal account with a bank. You can also choose between putting away a fund for long-term growth, or take the earned money as interest payments, as a way of adding to your income.
The major drawback? There’s more risk involved. Sticking your money in a bank account is pretty much safe unless the bank collapses. Investments rise and fall, and there’s no guarantee you won’t lose some of your money — potentially even all of it, if something catastrophic happens.
How does InvestEngine work?
If you want to get started with InvestEngine, you just need to visit the website and hit the ‘Get Started’ button, where you’ll then choose whether you’re joining as a personal or a business user. Once you’ve signed up with your email address and password, you’re in, and you can start browsing the different portfolio options available.
You’ll need to complete your registration with a few more steps before you can add cash to your balance, but you can get started with your investments right away. Just choose the individual ETFs that you want to invest in, or select your managed portfolio, pay in the funds and you’re good to go.
What features does InvestEngine have?
There aren’t a huge amount of features available with InvestEngine yet, but there are different account options and portfolios to choose from. We’ll cover those first, along with the reporting tools that you can use.
Account types
There are three different choices of account when you join InvestEngine. Two of them — personal accounts and ISAs — are available to individuals, while the third option is a business account.
An ISA (Individual Savings Account) is a type of savings account that offers the chance to earn interest without having to pay either income tax or capital gains tax. You can invest up to £20,000 per year in an ISA, and with InvestEngine there are no fees to set one up.
You’ll be investing in a Stocks & Shares ISA, which offers the opportunity of a higher return than the Cash ISA that some other banks may offer you. Of course, that will fluctuate, so it’s not guaranteed. And you don’t need the full £20,000 to start — that’s just the annual upper limit. You can get started with as little as £100.
You can also transfer your existing ISA to InvestEngine if you want to.
InvestEngine won’t charge a fee for this, although you’ll need to check with your old provider if they have any exit fees. It’s also worth noting that the £20,000 limit applies to all ISAs you own combined, and you can only open one stocks and shares ISA every year.
While the tax-free gains of an ISA are interesting, you need to consider whether you’re happy with not being able to access your funds as easily. You can withdraw at any time, but there might be a slight delay, and it can impact your ISA allowance — once you withdraw cash, if you add it again it will count as being re-invested and eat into the annual limit.
If you want to invest but you know you’re going to need access to your cash on occasion, then the second account type — a personal account — might be better. It isn’t tax-free, but you can withdraw with no fees at any time, and there are no exit fees at all if you withdrew everything.
And while the gains aren’t totally tax-free, there may be some potential savings that can be made using the £2,000 dividend allowance and £12,300 capital gains tax allowance that can reduce the tax to be paid.
Finally, if you’re a business owner with surplus cash, InvestEngine gives you the chance to invest it to either diversify your income options, or to grow that fund through more long-term returns. It’s potentially a better option than the low interest rates offered by business bank accounts, but it does mean you’d need to be willing to risk your business’ capital.
Business accounts work in much the same way as personal accounts — you can still access your funds whenever you need them, without any exit fees. The difference is that the tax you pay will vary, depending on the circumstances of your company.
ISA | Personal Account | Business Account | |
Maximum you can invest each year | £20,000 | Unlimited | Unlimited |
Tax on dividends | No tax to pay | Up to £2,000 tax-free | Depends on your business |
Tax on capital gains | No tax to pay | Up to £12,300 tax-free (across all investments you have) | Depends on your business |
Portfolio choices
When you’re ready to start investing and you’ve chosen your account type, you need to decide on how to build your portfolio.
You can either build your own from the ETFs available, or choose a managed portfolio. If you choose a managed portfolio, you just need to determine whether you want capital growth, or income.
DIY portfolios are easy — you can browse the full list of ETFs and buy or withdraw at any time. However, doing so wildly isn’t advised, you should try to understand what you’re investing in, as that’s the best way to maximise your potential returns.
You won’t be investing in individual companies, but in sectors, and so the fall of one company won’t see your funds wiped out. But be careful choosing what you invest in because whole sectors can rise or fall together.
A managed portfolio means you put your trust into the experts at InvestEngine, who will handle everything for you. All you need to do is establish whether you’re looking for long-term growth, or you want an income to be paid monthly to your bank account.
You also need to decide on your risk level. Low-risk funds offer more security but lower potential returns. High-risk investments, like equities, could yield much better results, but may also see your fund value drop more if things don’t go well. If you choose a managed income-generating portfolio, you can expect something in the region of 1.4%, 2.4% or 3.5% a year variable, depending on your risk.
Analytics and reports
One key feature offered by InvestEngine is the option to look at reports and analytics to determine how your investments are doing. If you know your way around investments, this is key, especially for anyone who has chosen a DIY portfolio.
These stats can be pretty heavy, and so novices might be overwhelmed. But the data can be really useful once you get used to it, as it can help you to make the best decisions to give yourself the optimum chance of growth.
How much does InvestEngine cost?
One of the best reasons to choose InvestEngine as an investment platform is the low costs involved.
No matter what type of account you choose, there are zero set-up fees, zero withdrawal fees, no ISA fees, and no dealing fees from InvestEngine.
And if you choose a DIY portfolio, then there are zero fees to pay for managing your portfolio either. It’s essentially free to run. However, ETFs tend to have charges for trading — buying and selling. So you need to take those into account. The average ETF has a charge between 0.15% and 0.25%, along with spread costs of 0.07%.
If you choose a managed portfolio, you’ll pay an annual fee of 0.25% for InvestEngine to run your portfolio for you. That’s lower than competitors such as Nutmeg (review), Moneyfarm (review) and Hargreaves Landsown (review).
What are the drawbacks of using InvestEngine?
There are two elements to this — what are the drawbacks of investing in general, and what are the drawbacks of InvestEngine in particular.
To deal with the first — investing is always a risk. You should never invest money that is essential to your personal finances or the future of your business because funds can be lost, or at least heavily reduced, if things don’t go to plan.
Choosing a low-risk portfolio can help to mitigate this, with the caveat that you’ll also be in line for lower rewards if your portfolio does well. Putting your money into a bank is generally safer, but the growth from interest may not be in line with inflation, effectively losing you money over the long term. There’s a balance to strike.
As for InvestEngine as a platform, the low fees and ease of use are real wins, so are there any drawbacks? Only one, and that’s the support availability.
At the moment, the support team is only available to answer questions from Monday to Friday, 9am to 5pm. If you work during the week, you’re going to struggle to speak to someone on the phone. You can email, but you’ll be waiting until they can get back to you, which if it’s Saturday morning is at least two days.
How safe is InvestEngine?
This is a separate question from how safe your investments are — that depends on the risk of the portfolio you choose. Instead, let’s look at how safe InvestEngine is as a platform to use.
First, it’s important to note that while the site is really simple to log onto and set up an account, that doesn’t mean security is taken lightly. The site uses advanced encryption to make sure your personal information is kept safe and secure, and the physical servers are kept in a secure facility to prevent data theft.
As for your funds, you can be confident that your money is safely ringfenced. Your money is held in pooled client bank accounts, while your investments are secured in a pooled client account at CREST.
This means all your money is separate from InvestEngine’s own investments and liabilities. InvestEngine cannot access your cash to pay for its own obligations, and if InvestEngine went bankrupt your money would be protected.
Finally, InvestEngine is regulated by the Financial Conduct Authority and protected by the Financial Services Compensation Scheme (FSCS). Investments that fail due to the collapse of a business or sector could be entitled to up to £85,000 in compensation.
InvestEngine — Verdict
InvestEngine offers a really solid investment platform with very low fees. If you’re considering making your money work harder than a standard savings account, it could be the perfect introduction to investing.
As with an investment, there’s risk involved, but the fact it has some easy options to make managing your portfolio effortless, and because it lets businesses invest their cash too, you can at the very least dip your toe into investing without risking a huge amount or needing a tonne of experience.
And more seasoned investors can still make great use of the reporting and analytical tools on the platform. If InvestEngine can grow enough to start offering longer customer support hours, it may be the complete platform.
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