Plan & Invest and Ready-made Investments – What’s the difference?

What you’ll learn:

• The importance of diversification
  
• What are Ready-made Investments?
• What is Plan & Invest?

When it comes to investing, we recognise that we’re all different – some people want to take control and manage their own investments while others don’t have the time, confidence, or desire and would prefer to leave it to the experts.

If you fall into the latter camp, we offer two options that could help you get on the road to achieving your long-term financial goals without you having to worry about staying on top of your investment decisions – Ready-made Investments and Plan & Invest. So what are they and how do they differ? Here, we’ll take a look at them both to help you work out which might be the most suitable for you.

The importance of diversification

Before delving under the bonnet of Ready-made Investments and Plan & Invest it’s worth explaining the importance of diversifying, as it is central to both offerings.

Because stock markets can fall as well as rise there is always some risk involved with investing and a chance that you could lose money. However, by spreading your money around and investing in different types of companies, sectors and regions as well as different types of assets, such as shares, bonds and cash, you can reduce the overall risk you’re taking.

This is because even if some of your money is invested in a company or sector that is going down in value, you’ll hopefully have other money invested in other companies and sectors that are rising. So overall, the diversification helps smooth your investment returns and reduce your dependency on the performance of individual companies or stock markets.

Whether you decide to go for a Ready-made Investment or Plan & Invest, your money will be invested in a diversified way based on Barclays’ asset allocation models which reflect where our investment experts believe the best investment opportunities will be.

We use two approaches which our investment experts monitor and manage on an ongoing basis, and they form the basis of where and how your money is invested.

Our strategic decisions are based on how we believe global stock markets will perform over a 5 to 10-year cycle, which is a longer term outlook. Alongside that we make tactical decisions where our investment researchers also follow economic and political developments that can lead to shorter term opportunities and risks.

Ready-made Investments

There are five Ready-made Investment funds to choose from and they’re what’s known as a multi-asset fund. This means whichever you go for, your money will be invested in a mixture of shares and bonds from different markets around the world, as well as some cash because of the importance of diversification, as mentioned above.

However, the amount invested in each asset will depend on how much risk you want to take and this is the key thing about our Ready-made Investments – it’s up to you to decide which fund you think is most suitable based on how much risk you are willing to take.

To help you work it out, think about it like:

• Defensive Fund: riding a bike with the stabilisers on
• Cautious Fund: taking the stabilisers off your bike – you might wobble slightly, but it’s not too dangerous
• Balanced Fund: riding a bike in the road, but still in the cycle lane
• Growth Fund: riding a bike off-road – but you’re wearing a helmet and knee pads
• Adventurous Fund: riding down a mountain – you could suffer serious harm but the thrill could be worth it

You just need to decide whether you’re more comfortable with a lower risk approach or are happy to take a bit more risk in the hope of potentially higher returns. And once your money is invested in the fund of your choice, we’ll take care of things and make alterations to how it’s invested based on any changes to our strategic or tactical asset allocations.

Every quarter you’ll receive a statement so you can see how your investment is performing and some commentary explaining what changes have been made behind the scenes. You can also check this yourself online, or, if you’re a Barclays’ current account customer, via the Barclays app at any time.

To invest in a Ready-made Investment you just need to open a Smart Investor account and you can choose from an investment ISA, into which you can put up to £20,000 in the current tax year and any returns you make will be tax-free. If you’ve already paid into an investment ISA with another provider this tax year, you could open a general investment account instead. Smart Investor also offers a self-invested personal pension (SIPP), which is another option.

Plan & Invest

Unlike Ready-made Investments where you have to decide yourself which fund to go for, with Plan & Invest, this is all done for you and it’s a much more personalised service based on your individual circumstances.

It’s what’s known as a discretionary management service which means that once you’re ready to open your account, we will take care of everything for you. We select and manage your investments to make sure you are on track to meet your goals. And if your circumstances change, our experts will make the necessary adjustments to your investments.

The way Plan & Invest works is you tell us about yourself, your goals and once you’ve completed our online questionnaire, we’ll create an investment strategy just for you. We’ll work out how much you can afford to invest and create a personalised Investment Plan designed to help you reach your goals.

As with the Ready-made Investment funds, your plan will be well-diversified but a key differentiation with Plan & Invest is the level of personalisation. With our RMI funds you can choose to invest based on five investment approaches, whereas with Plan & Invest there are over 10,000 investment options and how we invest will depend on what you tell us about you and your investment goals. Our experts will choose and manage the investments for you and your plan adapts with your life, so we’ll check in with you once a year to see if anything has changed.

While you hand all the investment decision-making over to us, you are still in control. You can check your account online or via the Barclays app whenever you want and get in touch if your personal circumstances or goals have changed – you don’t have to wait for us to contact you. You can make one-off payments whenever you want and set up automatic monthly payments. You can also change the amount you pay in, stop monthly payments or sell your investments at any time. And as with the Ready-made Investments, you’ll receive a statement and update every quarter.

Why does Plan & Invest cost more?

• We select, manage, and monitor your investments: As mentioned, Plan & Invest offers a more personalised service than Ready-made Investments. We do it all for you. We’ll create your Investment Plan, we’ll set up the accounts you need, and initiate an ISA transfer (if that’s what you’d like to do). From there, we’ll make the investments we set out in your strategy and our team of investment experts will monitor their performance and make any adjustments they think are necessary.
• Keeping you on track to meet your goals: With Plan & Invest, as well as making sure your plan adapts and evolves to suit your circumstances and remains on track to achieve your objectives, we will also alter the investment mix at different stages of your journey. In the early years, if you’re new to investing and/or we think it might make you nervous, we’ll start you off with a lower-risk approach and then gradually adjust the strategy/plan to include a greater proportion of riskier investments as you get more comfortable. Similarly, as you near your investment goal and the point at which you want to access your money, we’ll increase your exposure to lower risk assets, such as bonds and cash, to protect against potential market falls.
• Plan & Invest uses active investments: We only use passive investments for our Ready-made Investment funds – these track the index they’re linked to, for example the FTSE 100 or S&P 500, and returns will be in line with how they perform. However, with Plan & Invest we also use active fund managers when our investment experts believe they can add value and produce better returns than the index. Active management is usually more expensive than passive because you are paying for the fund manager’s expertise in the hope you’ll be rewarded with higher returns. At Barclays, we work with who we believe are the best fund managers in the word. There’s more information available on how we select our fund managers, if you’d like to know more.

While both RMI and P&I offer investors a range of benefits, they may not be suitable for everyone.

These are our current opinions but the future, as ever, is uncertain and outcomes may differ. Past performance of the fund and its manager are not a reliable indicator of their future performance.

We don’t offer personal investment advice so if you’re unsure you should seek that independently.

Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.

Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.

The value of investments can fall. You may get back less than you invest. Tax rules can change, and individual effects vary.

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The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.