Originally published at: How safe is your money when you invest? – InvestEngine Insights
When people are thinking about investing, the security of their money is often one of the first considerations they make. After all, it can be daunting to transfer significant sums from a bank account to an investment platform, or to move to a new one.
In this video, personal finance expert Chris Palmer explores how safe your money is when it’s invested. He explores the protections in place as well as exploring what most people get wrong when thinking about how secure their investments are.
Chris also details just how governing bodies and compensation schemes work. He also explains why he trusts InvestEngine, and he breaks down exactly what our platform does to ensure our client cash is secure.
FCA authorisation
One rule of thumb Chris explores is to be sure your investment platform of choice is authorised by the Financial Conduct Authority (FCA).
The biggest financial regulatory body in the UK, the FCA regulates the conduct of nearly 45,000 businesses in the UK and its ultimate goal is to protect consumers and ensure that companies are acting in their best interests.
InvestEngine is authorised and regulated by the FCA.
How FSCS cover works
The Financial Services Compensation Scheme (FSCS) covers investors for up to £85,000 per platform. So, if your money is lost by a platform going bust, you can be protected by the FSCS for up to this amount.
What most people are unaware of, Chris explains, is that the FSCS is a second fail-safe and is unlikely to be used by consumers even in the event of a company going bust.
The FCA stipulates that investment platforms must hold their clients’ funds separately to their own accounts, secured by a third party. Put simply, your money isn’t tied up with that of the platform you’re using.
There are some additional details that Chris covers in his video, but ultimately it’s important to invest with a platform that takes its regulations seriously.
You can find out more about how we keep our clients’ cash safe here.
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.