Are you looking at opening an investment account so you can finally see some returns for the money you put aside? Well, there are lots of providers to choose from. Today we’ll be taking a look at which is the best between Fidelity vs Nutmeg.
Savings accounts are dead, aren’t they? Unless you can earn interest over the rate of inflation, then you’re actually losing money. In the old days, I would have been tempted to put my cash into Premium Bonds, but that’s only worth around 1%.
Over the last few years, I have seen great returns from a couple of my investment accounts – Nutmeg and Fidelity. But if you’re considering opening one of these accounts, which one should you opt for?
What is Nutmeg?
Founded in 2011, Nutmeg was the first digital wealth manager in the UK and now boasts over 140,000 customers. In June 2021, they were acquired by J P Morgan. Your account can be managed online through the main site or the Nutmeg app.
What is Fidelity?
Fidelity was created in Boston, USA, back in 1946. Fidelity International (the organisation that operates in the UK) became independent from the US company in 1980. Again, you can manage your account either through their main site or using the Fidelity app.
Nutmeg vs Fidelity – products on offer
When it comes to investing, the market can be very confusing. But both of these companies try to make it as simple as possible and both offer very similar products. Nutmeg’s main products include:
- Pension
- Stocks and shares ISA
- General Investment
- Junior ISA
- Lifetime ISA
With Fidelity, you can invest in the following:
- Pension
- Stocks and shares ISA
- General Investment
- Junior ISA
- Junior SIPP
Investing with Nutmeg and Fidelity
Whichever product you choose for investing with either of these companies, you will have pay fees and consider which investment product is right for you.
With Fidelity, you have well over 3,000 funds to choose from. There’s a lot to sort through, but to help you decide you can see the top choices recommended by Fidelity’s experts. Or, if you fancy choosing for yourself, you can sort through the funds based on different options such as risk, charges or management style
Nutmeg is a little simpler. When you sign up, you complete a short questionnaire about your attitude to risk. You then have four investment styles to choose from.
- Fully Managed – your portfolio is managed by an experienced team and they regularly make adjustments
- Smart Alpha – J.P. Morgan Asset Management adapts your portfolio during changing market conditions with the aim of delivering better returns
- Socially Responsible – like Fully Managed, these portfolios are proactively managed but focus more on enviromentally friendly funds
- Fixed Allocation – these are designed to have little intervention and are invested in assets that match your risk level
But how much will investing cost you?
Fidelity fees
| Value of investments | Service fee |
| Less than £7,500 | 0.35% if you have a regular savings plan or £45 if you don’t |
| £7,500 or more but less than £250,000 | 0.35% |
| £250,000 or more but less than £1 million | 0.20% |
| £1 million+ | 0.20% a year for the first £1 million and no service fee for investments over £1 million. This means the maximum fee you will ever pay for all of your personal accounts is £2,000 a year. |
On top of the service charge, you will need to pay fees for whichever investment product you choose. This can be anything from 0.05% up to well over 2%.
Nutmeg fees
| Fund | Average cost |
| Fully Managed | 1.05% |
| Smart Alpha | 0.97% |
| Socially Responsible | 1.12% |
| Fixed Allocation | 0.72% |
Which account to choose?
Knowing the fees for each provider is all well and good, but which account should you look at opening? Below is a list of options available from either Nutmeg or Fidelity.
Pension
A pension is a tax-eficient way to save for your retirement, although funds cannot usually be accessed until you’re 55. Both Nutmeg and and Fidelity allow you to open a new pension or transfer in an existing product.
Fidelity gives you access to a SIPP (self-invested personal pension). You decide where your money is invested and can contribute regular sums or make one-off payments.
You can choose to place your money in unit trusts, shares, cash or open-ended investment companies.
Opting for a pension from Nutmeg is more of a hands-off approach compared to Fidelity, although you have fewer choices when it comes to investing.
A SIPP from Fidelity has the potential to be cheaper than one of the pension funds from Nutmeg. But it all depends on how involved you want to be in the process and your attitude to risk. A decent fund manager should be able to make changes if your funds are looking to fall, but it will cost you.
Stocks and shares ISA
Like a pension, an ISA is another tax-efficient way to save your money, although you aren’t usually restricted to when you can withdraw your cash. You can invest £20,000 per year and won’t have to pay tax on growth, returns and interest.
Both companies allow you to transfer over an existing ISA. However, you can only open one ISA per year.
General Investment
If you’ve maxed out your ISA for the year, but still want to invest, then you can use a General Investment account. it’s important to remember that these accounts are liable for tax.
Junior ISA
A Junior ISA (JISA or child ISA) is a tax-free account set up by a parent or guardian. You can either create a new account for your child or transfer in from an existing JISA or Child Trust Fund. At the moment, you can invest £9,000 into a JISA each year.
Control of the JISA passes to the child once they reach 18.
Junior SIPP
If you’re looking for something even longer-term for your child, then a Junior SIPP is a great option. Like an adult SIPP, this is a tax-efficient way to save, although the money cannot usually be withdrawn until you reach 55. Currently, you can contribute £3,600 each year into this account.
Lifetime ISA
The Lifetime ISA is available to open for anybody under the age of 40. For everything you save into this account, you’ll receive a 25% bonus from the government up to a maximum of £1,000 per year. This bonus continues until you reach 50.
Although you can withdraw the money at any time, if you do this before 60, you’ll be hit with a penalty of 25%.
Fidelity vs Nutmeg – which to choose?
I would like to say that there is a clear winner between the two accounts, but there isn’t.
Your first consideration should be which type of account you want. If it’s a Junior SIPP or Lifetime ISA, then your options are limited.
When it comes to fees, it’s far clearer to work out how much you have to pay with Nutmeg before you get started. But that’s because Fidelity has so many different funds you can invest in. And that’s great if you want more control over your investments.
But if you want a simpler approach, then Nutmeg is probably the better option for you.
For further information, you can see how my Nutmeg LISA has performed since I started investing. And here you can see how much my Fidelity stocks and shares ISA has returned.
Important to note
Remember, the value of your investments can go down as well as up and you could end up with less than you invest. Investing should only be done with the long-term in mind. This is not a get-rich-quick scheme.
If you’re not sure
If you don’t know which investment vehicle is right for you, then seek professional advice. By sharing your goals with a financial advisor, they can advise you of which products are right for you.
If you like the idea of investing from your phone, why not take a look at some of the best investment apps?
Or take a look at my comparison of two other platforms – Vanguard vs Hargreaves Lansdown.