Generally speaking, if you’re investing on a regular basis (monthly for example), it’s cheaper to have a product which doesn’t charge you transaction fees each time you invest more money than it is to use a platform or investment account which will charge you a transaction fee every time you trade, so if you use anything offering full brokerage facilities such as an investment platform, it works out to be crazy expensive if you’re adding relatively small amounts on a regular basis.
Some of the “modern” FinTech banks which allow you to invest in equities & ETF’s have very low fees, or in some cases no fees, which is great – we love them, and we use them ourselves. They are great options for some aspects of your financial planning, particularly if you are in a financial situation where you can’t yet commit to something over the long term, or are investing for a shorter duration, or may need to liquidate and withdraw your investments at a moment’s notice. Those type of products are great for “practicing”, for figuring our how much you can comfortably save each month, but are not great for holding larger assets over a longer duration in terms of investor protection.
It’s worth considering the safety and security of your assets – the reason that the new FinTech banks are able to offer their services for free is that in addition to scooping up all of your data, they combine all customers assets into one (that’s how they can offer fractional shares etc), and incidentally are then able to lend the combined assets out to other financial institutions, for either a fixed fee or at an agreed interest rate (check their terms and conditions if this surprises you). It’s the business model, it’s how they make a profit without you paying them.
To be clear, we are NOT saying this is bad, we use these type of things ourselves, and from an ease-of-use perspective for day-to-day banking facilities, it’s one giant leap for humanity compared to how “traditional” banks operate. And being able to invest into equities, indices, funds, commodities, and crypto from one app is superb. We wouldn’t (and don’t) hold high-value long-term assets at these institutions though – it’s simply not as safe as other options, and we’re of the opinion that if risk can be avoided and/or reduced, it should be avoided and/or reduced, whilst balancing that with ease-of-use. Don’t compromise your finances, optimise your finances.
For medium-to-long term financial planning, particularly something as important as your regular savings plan, it’s better to rely on something which has segregated portfolios to insulate and isolate your assets from others, and doesn’t charge you trading fees every time you add money on a regular basis. Having a 0% tax rate is also a benefit, which you don’t get with the majority of other options, whether traditional or modern. This pension plan has all of the above, is perfect for your retirement planning, and is a very cost-effective way of investing into a wide variety of world-class investment funds on a regular basis over a fixed duration.