NatWest is launching a simple investment service for customers called NatWest Invest. So, how does it compare to the competition?
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How NatWest Invest works
High-street bank NatWest is launching a new investment service this month.
From 20 February, customers will be able to invest from £500 a month into a range of five funds via NatWest Invest.
The funds can be held within an ISA, which offers tax-free returns.
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How to choose your funds
You choose your funds based on how much risk you want to take with your money.
All the funds invest in shares, bonds and cash but the allocation varies depending on the risk level.
None of the funds are risk-free as all invest in the stock market to an extent.
The lowest-risk fund is 70% invested in bonds while the highest risk is 90% invested in shares.
You don’t decide how the money is invested, you simply pick your funds then a management team decides the asset allocation and which geographic regions to invest in.
Explaining the launch, Les Matheson, chief executive of personal and business banking at NatWest, says customers are “increasingly choosing to bank with us digitally and we have responded to this change by launching an online investment service which customers can access through their existing online banking.”
What are the fees charged?
The costs will be kept low because the funds will only invest in passive investments such as tracker funds and ETFs.
NatWest customers will be able to access the new investment service via their online banking and can tie their investments to a savings goal, such as a house deposit, then track how they are progressing.
However, NatWest’s charges are far higher than competitors offering passive investments.
You’ll pay a 0.95% charge on portfolios worth under £500,000 and 0.7% on investments over that.
The charge is made up of a 0.6% fund fee and a 0.1% platform cost.
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How it compares to other investment platforms
As a point of comparison, if you invested up to £500,000 in Vanguard’s LifeStrategy funds, you would pay just 0.22% a year.
Nutmeg charges 0.45% a year if you invest up to £100,000 in its fixed allocation funds, and just 0.25% on investments above that level.
Read: how do the low-cost investment platforms compare?
Is NatWest Invest a good deal?
For the convenience of being able to monitor your investments via your online banking account you will pay a hefty price with NatWest Invest.
Someone investing next year’s ISA allowance of £20,000 would pay £190 a year, compared to £44 with Vanguard or £90 with Nutmeg.