Hargreaves Lansdown review: Investing as a beginner
Throughout August I’ve been sharing reviews of my experiences around pensions and investing – first with PensionBee, and then with Nutmeg.
This week it’s Hargreaves Lansdown’s turn – it will also be the last in this mini series of reviews.
Before I begin, a little disclaimer.
Investing doesn’t guarantee returns – you could lose some or all of the money you put in.
Be prepared for the risks and don’t put more money in than you can afford. Don’t be that person who borrows to invest.
Also, do your own research – or get a qualified financial adviser to do it. What might work for me at a particular time might be a terrible choice for you.
What Hargreaves Lansdown offers
Hargreaves Lansdown actually calls itself a financial services company.
That’s because in addition to investing, you can use it to manage cash savings through its active savings account* and send money abroad*.
Arguably though, most people think of it as an investment platform for buying and selling funds and shares.
For buying and selling funds and shares (and bonds, gilts and investment trusts), you can go through one of these products:
- Fund & Share Account
- Stocks and shares ISA
- Lifetime ISA
- Junior ISA
- Cash ISA
- Self Invested Personal Pension (SIPP)
- Junior SIPP
Why I chose Hargreaves Lansdown
There are a lot of investment platforms and Hargreaves Lansdown is one of the better known ones.
Other options I considered were AJ Bell Youinvest, Interactive Investor*, Vanguard, Wealthify and MoneyBox (this last one is newer to investing).
Hargreaves Lansdown is actually not the cheapest in terms of fees (more below) but it has a few things going for it.
Big selection of funds
One of the things that appealed to me was the enormous selection of funds available through Hargreaves Lansdown.
Different platforms offer access to different funds, and some offer more than others. Hargreaves Lansdown offers one of the biggest selection on the market (over 3,000!).
I focus on funds because they tend to be less volatile than shares, which helps to spread risk; and they don’t need as much hand holding, which saves me time.
Easy for the time-poor
Hargreaves Lansdown compiles a Wealth Shortlist*, which is great for those short on time. It’s essentially a whittled-down list of funds that its analysts believe can deliver great returns over the long run.
It doesn’t mean all the other funds are duds, but it does present a good place to start.
You should still read the detailed analysis though, and look at what investments are in the fund.
If you’re looking to diversify your portfolio, it’s important to look not only at which companies the fund has invested in but also where in the world those companies are.
Free fund trades
On Hargreaves Lansdown, it’s also completely free to trade funds, which saves me money in the long run.
The funds themselves charge a management fee that’s separate to Hargreaves Lansdown, and varies from fund to fund.
But thanks to its size, Hargreaves Lansdown often offers a discount on these fees. It potentially means these funds are much cheaper to hold than elsewhere.
Lots of expert analysis
Hargreaves Lansdown has invested a lot of money into research as well.
It publishes and regularly updates analyses of funds that help investors decide whether or not to buy.
As someone still learning the ins and outs of investing, this was precisely what I needed.
A great app
And last but not least, it has a really great app that’s easy and straightforward to use.
It’s one of the things that originally attracted me to Nutmeg.
How much does Hargreaves Lansdown charge?
Hargreaves Lansdown charges an annual management fee of 0.45% for portfolios up to £250,000, which drops as the value of your portfolio increases.
Between £250,000 and £1million for example you’d pay just 0.25% a year. Those with between £1million and £2million saved are charged 0.1%. Those lucky enough to have over £2million won’t have to pay a fee at all.
It’s also known to offer lower fees to investors who have a larger portfolio before they reach those thresholds.
The management fee only applies to ISAs and SIPPs holding shares, ETFs, investment trusts, and bonds – the Hargreaves Lansdown Fund & Share Account is exempt from these fees.
There is a cap on the fees, which is £45 a year on any ISAs and £200 a year on the SIPPs.
While trading funds is free, you should be prepared to pay the fees charged by the funds themselves as mentioned earlier.
And if you plan to trade shares, there’s a hefty charge per deal, which starts from £5.95.
My Hargreaves Lansdown experience in context
My experience with Hargreaves Lansdown is a little bit different because unlike the other platforms I’ve tested so far, I’m the one picking out funds this time.
Hargreaves Lansdown actually offers a handful of ready-made portfolios* for those who prefer to leave it up to the experts. But I wanted to experiment and learn more about investing so I decided to choose my own.
Because of this, it doesn’t really make sense to talk about portfolio performance – at least not in the same way.
What happened when I dipped my toes into investing
When I opened my account with Hargreaves Lansdown last year, I went with a LISA first.
Unless it’s for a first home, you can only access the money in a LISA penalty free when you’re 60, which means plenty of time for me to experiment with this portfolio.
That means room to make mistakes, and hopefully time to correct those mistakes too.
It has certainly not been plain sailing. At one point my portfolio plummeted in value; it’s still trying to recover.
I quickly realised that my original investing strategy was completely wrong, and I’m still in the process of correcting that – so in some respects Hargreaves Lansdown gave me exactly what I needed to learn.
I think I’ve got things figured out now, or at least I have enough confidence to open a second account with Hargreaves Lansdown.
It’s a regular ISA this time, with a much shorter investing timeframe. So far, so good – but those may yet prove to be famous last words.
To be clear, the markets are currently very volatile and investing is designed to have a long term outlook.
The former is what’s slowing my readjustments, rather than anything that Hargreaves Lansdown is doing.
What Hargreaves Lansdown is doing is offering a platform where I can make my own decisions and take as much or as little advice as I want or need.
So if anything goes wrong, well, it’ll be down to me.
A verdict on Hargreaves Lansdown
You know when brands ask you whether you’d recommend them in surveys?
I would certainly tick yes for Hargreaves Lansdown.
I’ve enjoyed using it so much, I’m actually planning on moving my Nutmeg portfolio over at some point
It’s easy to open an account, the app and website are intuitive, and I love all the extra information Hargreaves Lansdown provides to help me come to a decision.
Of course I worry about how the funds I pick will perform in the long run.
So until I’m ready to move my Nutmeg portfolio over, it’ll make for a useful benchmark.
While my experience with Hargreaves Lansdown has been positive, there has been a lot of grumblings about Hargreaves Lansdown and this article from The Times gives a good overview of the background.
How safe is Hargreaves Lansdown?
If you’ve been keeping tabs on what’s happening in the investing world, you may have read about investors shorting Hargreaves Lansdown.
Basically they’re betting that the company will fall in value because the global downturn is shrinking its customers’ portfolio, and in turn the amount of money it can charge.
Sometimes a company’s shares being shorted is just something that happens and sometimes it precedes them going bust.
There’s no indication of that happening here of course – Hargreaves Lansdown says it’s “financially strong” – but it’s always worth knowing what happens if an investment platform goes bust.
Well, any money invested with Hargreaves Lansdown is protected by the Financial Services Compensation Scheme (FSCS).
If Hargreaves Lansdown goes bust, you should be able to get your money back up to £85,000 from the FSCS.
You can’t claim if you simply lost money because your investments fell in value though.
Hargreaves Lansdown has more details on what that means here.
It’s worth bearing in mind that if the worst comes to the worst, it might take you a while to get your money back – another reason why you need an emergency fund and shouldn’t see any investment portfolios as easy access.
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