Which one is better: Invest Engine or Vanguard?

Today I’m going to look at Vanguard Investor - so the investment platform I use for my main Financial Freedom fund - and, a new kid on the block, compared to Vanguard: Invest Engine. It’s not going to be a detailed comparison of the two, not a review, not a walkthrough - nothing like that. We’ll simply look at the main differences between the two platforms.

As long-term, mostly passive, investors, we share certain values and frustrations. So we have similar expectations when it comes to investment platforms. Usually we focus on three things:

• cost - so low fees, simplicity - be it keeping our investments in one or as few places as possible,

• the quality of the platform itself - nobody wants another pain in the neck to drain energy on but an easy to use thing, access to a variety of funds and so on,

• and finally… we focus on trust. If we don’t trust an investment platform, no matter how shiny it seems, it won’t get our money - full stop.

Once we find an investment platform that meets all of our criteria, our hopes, wishes and demands, we get comfortable. We are rather reluctant to make changes. We think - well, why fix something that isn’t broken? Why create all the stress? We know that moving house is one of the most stressful events in our lives and moving house for our investments seem equally painful.

Essentially, what holds us back is that we’re not entirely convinced that the hassle is actually worth it. But growth never happens in comfort. I’m a big fan of Vanguard - as many of you know - but I want to stay open to new possibilities. And so let’s take a look at 6 features of both investment platforms and explore those possibilities, ok?

We’re going to look at fees, ways to invest, types of accounts, usability, reputation and regulation.

Fees come first, fees come before everything else as they are usually the deciding factor when it comes to our platform choice. Also, we are with Vanguard for a reason. We know that this guy, Jack Bogle, one day, promised to us that investing would be accessible and affordable. So we take that promise of a low fee as our guarantee and a reason to trust the company, trust the platform. But you know what, that promise was made a while back and there have been quite a few other investment platforms coming on the scene ever since. Competition usually makes products cheaper. So let’s take a look at how Vanguard compares to Invest Engine when we talk about fees.

We’re only interested in the account fee as that’s where these two platforms differ. The remaining fees are pretty much the same. Funds costs are the same, spread is pretty much the same and there are no fees for withdrawing, transferring or switching your funds on both platforms. By the way, if you’re not familiar with the term spread - it’s Nutella of investing, imagine you have two pieces of bread. Bread is dough, dough is money, money is your investment, your fund. One is buy and the other is sell - because your fund will be traded at a certain point in time, and markets move fast, there will be a difference between the buy and the sell price - that difference is called spread, or Nutella, for ease.

Anyway, where were we? Ah yes, management fee - Vanguard first - 0.15% per year which is capped at £375 per year if your pot is worth more than £250k.
How does this compare to Invest Engine? Well, badly. Invest Engine will charge us zero, absolutely nothing as an account fee per year.

What does it mean in practical terms?

Imagine you invested £10k for ten years and it grew by 5% per year - you invested it with Vanguard and with Invest Engine. The account fees for those years will cost you £241 with Vanguard. And zero with Invest Engine.

You might say - come on, £24 quid per year, big deal! But that is with £10k, what if you invest £100k? It will be £2,410, almost 2 and a half grand and that, even in ten years, is likely to get you a week of holiday somewhere nice. Or, in my case, a pretty lounge chair.

Let’s talk about ways to invest now. With Vanguard Investor, the deal is clear - it’s Vanguard’s investment platform and all we get are Vanguard funds. With Invest Engine, on the other hand, we get access to over 400 funds - including Vanguard ones - and they keep adding new ones all the time. So when it comes to diversification - Invest Engine definitely win. What’s more, Invest Engine aim to a one-stop shop for investors. So they are offering 2 ways of investing - Do It Yourself and managed - where our portfolio is crafted with the help of a robot-advisor. Something that is available to Vanguard users in America, but not in the UK at the moment. If we decide to use the robot-advisor kind of portfolio, Invest Engine will ask us about the usual suspects - our risk tolerance, personal details, financial goals but first and foremost whether we want to focus on growth investing or income investing. So if we want some passive income - dividends - sent to our bank account every month, Invest Engine will make it very easy to achieve. Not for free, mind you, it will charge us 0.25% for a managed portfolio - which is still a very reasonable price.

How about types of accounts? We all have different needs. Some of us want a pension, some a S&S ISA, others a Junior ISA for kids…

And we would all love to have all of them in one place but sometimes being idealistic is not being savvy with your finances. Invest Engine don’t offer pensions or Junior ISAs - so if we want either of those, we’re sticking with Vanguard. But what Invest Engine do offer is a business investment account. If you have a limited company, if you’re a limited company director and you have spare cash sitting in your account, you can actually invest it using Invest Engine business account. Of course it won’t be shield from tax as you will need to pay tax on any profits you make (after selling your investments) but it’s still a great option. Personally, I keep a sort of emergency fund for my business, in a business savings account and that makes me about £10 per month in interest. So right now I’m in the process of transferring this money to Invest Engine, to make it work for me a bit harder. If you’re a limited company director and have some funds to invest - I honestly suggest you do it, it’s a terrific option and not many platforms let you invest through your business so quite a unique offer too.

Usability! We know Vanguard is functional and pretty good at organising and displaying vast amounts of information. With Invest Engine it sometimes feels like going down a rabbit hole. I like Vanguard but it is buggy and I mention those bugs in the Vanguard portfolio updates on my YouTube channel. Plus some of my viewers tell me that it really needs a proper re-design. So neither of the platforms is ideal. Invest Engine apps do look modern and they do offer a mobile app - something Vanguard UK investors still can only dream of.

Another thing Invest Engine have is this cool feature called One Click Portfolio Rebalancing - so with one simple click you rebalance your portfolio back to your original, desired allocation that you had in mind when you started it. It’s just a simple click so you don’t need to think about it, create Excel spreadsheets and that is pretty fantastic.

Another impressive feature? An ability to automatically rebalance your portfolio when you add or withdraw money from your portfolio. So again - less thinking, less calculating. If you say, I want to add 1000 pounds now, Invest Engine will try to be clever about how you do it. It will process your request keeping in mind the structure of your portfolio. And these are things that Vanguard don’t offer.

The next on my list is reputation. Vanguard? Over forty years of reputation. No need to be introduced, getting more and more popular with British and European investors. Invest Engine? To be honest, they don’t make it too transparent who they are so it took some searching. They’ve been around since 2019, so not long, they’re based in London and, what they don’t say on their website - they were co-founded by brother and sister team Simon and Joanna Crookall. Simon is co-founder of Gumtree and Joanna is chief executive officer of independent investment management firm Ramsey Crookall, which provides the broker function. Fun fact: Ramsey Crookall are based on Isle Of Man.

Reputation is very closely connected with trust. Do we trust Vanguard? The company that proudly says: “we're built differently than other investment firms. Vanguard's unique investor-owned structure keeps us focused on investor needs first. So whatever you're saving for, you can trust we're on your side.” Well, I know I do. Do we trust Invest Engine? Yes, the fees are zero but will this always be the case? They started with 0.45% account fees and a minimum £2,000 initial investment only 3 years ago. Unlike Vanguard, they don’t make any promises. Call me a pessimist but I think that with time and a growing customer base they will get rid of the zero fee model. But, to stay competitive, they might offer the same pricing model as Vanguard. And that, combined with their so far so good TrustPilot reviews is maybe not a promise but does look promising.

And finally - regulation.
Both Vanguard and Invest Engine are fully regulated so there aren’t many differences here. The difference is in the way Vanguard are structured - which I mentioned earlier. Both platforms are regulated by the Financial Conduct Authority and your investments are protected in a way I spoke about here. So we’re also protected by the Financial Services Compensation Scheme.

Is it worth it?
There is no one answer and we all need to make up our minds, heh?
If you’re keen on moving your funds or starting your investing with Invest Engine, if you use my link - you will get £25 welcome bonus (£100 investment required). You will find all the necessary T&Cs here.

Vanguard are an old-timer with a solid, but in many ways limited offer. Invest Engine are the new kid, aiming to be a one-stop shop for DIY investors. Will they achieve it? Time will tell. For me personally, come next financial year, I’m opening my next S&S ISA with them and, like I said, am in the middle of sorting out my business investment account with them. If I’m happy with them and they keep their fees low, I might transfer my old ISA from Vanguard but, as always, we’ll see how it goes. Anyhow, expect to hear more about Invest Engine from me in the future.