Ready-made portfolios are an excellent starting point for new investors. This beginners guide covers the following key points:

What is a ready-made portfolio?

Ready-made portfolios are an excellent starting point for new investors.

A ready-made portfolio is a mix of different investments that have been put together by a professional into one portfolio.

There are many ways to invest. You can build your own portfolio which takes time and knowledge. You can use a financial advisor to help you build a portfolio which can be costly.

Ready-made portfolios sit somewhere in-between. All the work has already been done for you without the extra costs.

It’s a bit like having lunch. You can either buy all the ingredients and cook for yourself (build your own portfolio), go out a restaurant and let someone cook for you (pay a financial advisor) or pop into a shop, grab a ready-made meal and be happily on your way.

The benefits of ready-made portfolios

  • Simplest way to start investing for beginners. You do not have to have a lot of financial knowledge or investment experience. You can get started simply and quickly –
  • Saves time. Everything is done for you, so you don’t have to spend time trying to pick the right investments or spend time managing them.
  • Low Cost. They are cheaper than many investment funds and you don’t have to pay large fees to a financial advisor.
  • Affordable. You can get start with as little as £1.

The drawbacks of ready-made portfolios

  • Limited Choice. Investment platforms only has a small number of ready-made portfolios to choose from.
  • No control over your investments. You can’t choose which investments are in the portfolio so you can’t add anything or take something out if you don’t like it.
  • There is no guarantee of success. Just because they have been designed by experts, they are not guaranteed to beat the market. Investing can be volatile and at times investments can go down and ready-made portfolios are no different.

The different types of ready-made portfolio

They are usually split into categories according to their level of risk. They are often referred to as conservative, balanced and growth, with conservative being the lowest risk.

Portfolios are also split by income or accumulation. So, investors can focus on either generating income or growing their portfolio.

What investments are in a ready-made portfolios?

The portfolios usually contain a mix of shares and bonds.

The balance changes according to risk profile. Conservative portfolios will contain a higher percentage of bonds than stocks. Historically bonds have proven less risky than stocks and shares.

How to choose the right ready-made portfolio?

Choosing the right portfolio depends on your investment goals, time horizon and attitude to risk.

How to find a ready-made portfolios?

Banks, Robo-advisors, investment and social copy trading platforms all offer ready-made portfolios.

I have collected the pertinent information regarding costs, deposit size and number of products in a spread sheet for the top 20 providers. Please contact me for more information and I will send it to you. The spread sheet contains links to each company so you can easily investigate them in more detail. The links do not contain any affiliate links.

3 things to look out for when investing in ready-made portfolios

  1. Costs. Always check and compare costs. Management fees and running costs differ from provider to provider. Costs do make a difference.
  2. Double check the investments. Have a quick look at the investments in the portfolio. Be sure you are not investing in anything you are not comfortable with. You may have an ethical view about some companies for example Tobacco companies.
  3. Check you have chosen the right type of portfolio. Make sure it matches your goals and risk profile. If you are not sure do not hesitate to contact a financial advisor.

Going back to the lunch analogy – when choosing your lunch, you want to make sure it fits your budget, has nothing you don’t like in it and matches your diet.

Ready-made Portfolios Beginners Guide Summary

Ready-made portfolios are an excellent way to start investing. They offer great value for the level of expertise and management.

Personally, I have invested in ready-made portfolio with Standard Life, Fidelity and Vanguard.

I also have a ready-made portfolio which you can copy at eToro. You can find me @harryemanuel. If you want to find out more about eToro you can see the review in the platforms section.