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Taking the pain out of first-time investment

Understanding, access and engagement are key to simplifying the investment process.

First-time investors find it difficult to start to invest for a number of reasons: they don’t know where to start in terms of knowing what to invest in; they never seem to have enough money to invest in the sometimes-expensive companies they would want to hold; and the process seems expensive and complicated.

Scott Cooper, CEO of digital investment portal CybiWealth, says these issues are being addressed by CybiWealth in three ways.

The first is ensuring that investors can overcome investment anxiety, connect with their investments, and understand what investing is actually about: buying a percentage ownership in a company and sharing in its growth and profits over time. 

CybiWealth’s answer to the problem of what investments to choose is to offer investors a managed share portfolio of high quality companies with established history and reliable dividends and returns. These include companies like Coca-Cola, Colgate, Nestlé and Johnson & Johnson, which are market leaders and sell their products globally.

Buy-and-hold strategy

CybiWealth selects about 20 of these and has a buy-and-hold strategy where possible. This strategy differs from exchange-traded funds (ETFs) and collective investment schemes, which tend to have many more companies in their portfolios and a high turnover of investments.

“The number of companies, and the fact that they may have up to 100% turnover, leaves investors with little idea about what they are invested in,” says Cooper. “Our clients know exactly what their portfolio looks like. They are also the direct beneficial owners of the companies instead of owning a fraction of a collective investment scheme or mutual fund.”

The second way to address investors’ concerns is to ensure proper accessibility. “As an industry, we often focus too heavily on returns and do not spend enough time worrying about access and the barriers to an individual building their wealth over time,” he says.

“We put a lot of focus on access. This includes making it easy to sign up, offering low minimum investment amounts and giving investors the ability to invest via bank transfer, credit or debit cards through our app. Keeping costs transparent and low [at a management fee of 0.75%] makes accessibility so much easier.”

The third is keeping investors informed regarding their portfolio’s progress and ensuring that they always understand what is happening in their portfolio.

Simple and transparent

It is important for there to be simplicity and transparency in the lead-up to becoming an investor, and this is something many fund managers do, says Cooper.

“Where we differ is that once they become an investor, our mobile app and website give them portfolio updates, market commentary, notification of dividends received, notification of share purchases and sales, and any other news on their companies. We keep the information flowing.”

Clients get continual feedback, which connects them to their investments, he says. “We believe this represents a shift away from what could be a scary and grudge purchase to something that is simple to understand and perhaps even enjoyable.

“The industry should make investing simple to understand and make it easy to get started. It is up to us to enable people to invest in an easy and cost-effective way.”

Brought to you by CybiWealth.

CybiWealth is provided by FIM Capital Limited licensed by the Isle of Man Financial Services Authority and authorised and regulated by the Financial Conduct Authority. CybiWealth is distributed by Marriott Asset Management, a licensed Financial Services Provider.

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