Wealth 8 launches stocks and shares Isa to bridge ethnicity wealth gap: how does it compare?

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New digital investment platform Wealth 8 has launched a stocks and shares Isa, aimed at the Black, Asian and minority ethnic community, to help bridge the ethnicity wealth gap.

The launch follows findings in last year’s ‘Colour of Money’ report by race equality think tank Runnymede Trust, which found that Black African and Bangladeshi households typically have 10 times less wealth than white British households.

Wealth 8 says these communities are lagging behind in successful wealth creation due to a lack of financial education and it plans to tackle that by providing the tools and knowledge needed to save and invest for the future.

Here, Which? looks at what the Wealth 8 stocks and shares Isa offers and how it compares with other providers.

What does the Wealth 8 stocks and shares Isa offer?

Like other stocks and shares Isas – which allow tax-free savings on up to £20,000 – Wealth 8 allows you to put money into a range of different investments, such as corporate and government bonds, and equities.

Investors can select an investment solution that aligns with their goals and their risk profile from a suite of funds from Blackrock, one of the largest asset managers in the world.

There are four different Blackrock funds to choose from, depending on your appetite for risk, which are outlined below.

Wealth 8 offers a web-based service and its mobile app service is currently in development.

If you’ve used up your Isa allowance, you can open a General Investment Account with Wealth 8. General Investment Accounts allow you to hold your investments outside of tax wrappers and have no limits on how much you can invest. They don’t offer tax relief, but you only pay tax on gains above £12,300 under the capital gains tax allowance.

How much does it cost to invest with Wealth 8?

Like other investment platforms, Wealth 8 charges a fee on your investments.

This is based on a percentage of your portfolio value. You will be charged an all-inclusive 1% annual fee which will be deducted from your portfolio on a pro-rated monthly basis.

Wealth 8 accepts initial investments from £100. If your initial deposit exceeds £50,000, the annual fee will be reduced to 0.8%.

How does Wealth 8 compare with other providers?

If you’re considering investing with Wealth 8, it’s really important to do your research and compare it to other platforms to determine if it suits your needs.

There are a few key ways to do this, which we outline below.

Charges

Investment platforms have different ways of charging people. Some offer a fixed fee, and others offer a percentage fee, like Wealth 8.

The fees applied by your platform will be charged whether or not your investments are doing well. Over time, this could make a huge difference. Ultimately, the cheapest platform for you will depend on your investment style and the size of your portfolio.

If you have a small portfolio (say, less than £50,000), a low-percentage based annual fee may be better suited to you, such as Wealth 8. If you have a larger portfolio, particularly more than £100,000, a fixed-fee option could work out cheaper, such as those used by Halifax Share Dealing.

But don’t ignore percentage-fee platforms completely, as some stop charging for amounts over certain thresholds. Which? Recommended Provider Vanguard charges a very low account fee of just 0.15%, and caps costs at £375 a year for accounts over £250,000.

Another thing to consider is dealing charges (buying and selling funds or shares), which can eat away at the size of your pot. Wealth 8 doesn’t have any additional charges so if you’re a frequent trader, this could be a good option. For example, Which? Recommended Provider AJ Bell charges £1.50 for buying and selling funds and £9.95 for shares.

If you’re already investing via a platform, you could consider switching to boost your savings.

But watch out for exit fees, as some charge you for closing your account. Some will charge based on the number of your investments, some charge a flat fee per product and some charge both by product and investment.

You can compare platform charges in our comprehensive guide.

Investment choice

Wealth 8 has a  fairly limited range of funds compared with some other platforms, with just four Blackrock funds to choose from.

If you’re relatively new to investing, platforms like Wealth 8 do most of the heavy lifting for you with ready-made portfolios – you just have to choose the one that best suits your appetite for risk.

If you want to take more of a DIY investor approach, having a wider range of investments to choose from may be beneficial to you.

For example, AJ Bell has a much wider choice of investments: 2,000 funds and shares across 24 stock markets in the UK, US and Europe.

Tools

Remember choosing a platform isn’t all about the cost and investment choice.

For example, you may want live investment news and calculators, something that larger platforms such as AJ Bell and Hargreaves Lansdown tend to offer.

It could be worth speaking to different investment platforms to see which one you feel most comfortable with.

If you need more help making a decision, we’ve asked thousands of real users of major investment platforms to rate their services across a range of aspects, from customer service and online functionality to the clarity of charges and value for money.

We’ve also got more detailed reviews of individual platforms that can help you decide where to park your cash.

New to investing? Check out our guides

Investing your money for the first time is a big step.

We’ve got lots of guides that can help you on your journey:

If you can afford to, it could be worth getting a financial adviser so you don’t end up with something unsuitable.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms & conditions of a provider before committing to any financial products.