In this article we'll look at Chip Investments. Everything you want to know, how they work; what funds we offer, if it's right for you, how it's different from savings, and more...
Please note: Chip can't provide financial advice so you may want to seek guidance from a qualified professional if you are unsure or have detailed questions around investing. Your capital is at risk.
What is Chip Investments/the Chip Investment Platform?
Chip Investments is an easy and low cost way to access investment funds, so you can grow your money and build a diversified investment portfolio in just a couple of taps.
We've built an investment platform on which you can buy and sell a range of investment funds.
We’re offering funds from the largest fund manager in the world, BlackRock, to bring you multi-asset investments that will put your money to work by investing in stocks and shares in global markets and bonds from around the world.
However, investing is different from savings, your capital is at risk and you might get back less than you put into an investment fund (read more on this below).
That said, investing in funds is generally less risky than trading individual shares, and offers something of a compromise between the low-risk/low-return safety of a savings account and the high-risk/high-return world of investing in individual shares.
In general terms, over the long term (by which we mean 5-10 years or longer) your returns should be higher than you’ll get from savings interest, although this is not guaranteed. By spreading your investment across a wide variety of equities and bonds your exposure to the market is much broader than if you were investing in a single company. All you need to get started is your National Insurance number.
Although not suitable for everyone, we believe that the benefits of investing should be available to all, not just the super wealthy. If all of this sounds like jargon to you, don’t worry, we’ve pulled together this comprehensive list of FAQs that should help you understand investing.
How are investment funds different from savings accounts?
See below for the full answer, but as a brief overview:
Savings accounts:
Your money is stored with a bank as cash
The bank may pay you interest
Depending on the account it shouldn’t take more than a day or so to deposit or withdraw your money
They are suitable for safety net funds as they are covered by the Financial Services Compensation Scheme (FSCS)
They are typically free to access, but accounts with a higher interest rates may require large minimum deposits and you may be required to lock away your money for a set period of time
Investment funds:
You can access funds through our ‘platform’
Your money is invested by a fund manager into a wide variety of assets
Investment funds typically offer higher returns over the long term than savings accounts
Investment funds offer the potential of returns ahead of inflation
The trade-off is your money is at risk
You buy and sell ‘units’ of the fund, instead of depositing/withdrawing cash
It takes longer to move money in and out (up to a week or even longer)
They are not suitable for safety-net funds, or money you need for essential spending
They are a place to grow for long term savings (think money you don’t want to withdraw for 5+ years)
Investment management and platform fees apply
FSCS covers investments too, but the limits differ
Savings accounts with Chip
The savings accounts listed in Chip store your money as cash in a UK authorised bank. Provided you are eligible for the FSCS guarantee this means your capital is not at risk up to the limits which apply to each banking licence, and other than the effects of inflation, you don’t need to worry about your money losing value.
Whilst the bank will typically lend your money to make a profit, and pass some of this back to you as interest, given the current level of UK interest rates, generally the value of your money will not increase. Once inflation is factored in, the value of your money is likely to fall in real terms.
Investment funds with Chip
The investment funds we offer are provided by a fund manager (BlackRock), you can buy ‘units’ of these funds (see more under ‘investments basics’ below).
A fund manager (in our case BlackRock) invests your money across multiple different assets, like stocks and shares, or government or corporate bonds, with the aim of earning returns.
This means when your money is in an investment fund your capital (money) is at risk, and there is always a chance you may get less money out than you put in. There are a number of measures investment fund managers take to mitigate this risk, but it is a risk of investing.
Are investment funds right for me?
Consider your financial position carefully before moving any money into investment funds from your savings.
Generally they are only something you should consider if you have savings that you do not need immediate access to. Especially as it can take a few days to get your money in or out of an investment fund by buying or selling your units (see more under ‘access’ below). You should consider investments as a longer term commitment (by which we mean 5-10 years or more).
In essence, it is unwise to put any money into an investment fund that you may need for necessary expenses. They are a place to put your long term savings: think your 5-10 year financial plans, not saving for a holiday. It’s important to understand that investment funds are not a get-rich quick scheme, and you will see times where your returns are low, stagnant, or even negative. However, over the long term it is more likely you will see a positive return on your money.
We provide an average annual return figure as well as the full past performance data covering the history of the fund, read more about these below under the ‘Returns’ section.
Can I deposit into an investment fund?
Yes you can! You can now deposit into an open investment fund of your choice. Please go to deposit in app. Please note that deposits into investments can take up to eight days to clear.
Can I autosave into an investment fund?
Yes you can! You can now autosave into an open BlackRock investment fund of your choice. Please go to your "Auto-save settings" on the profile tab and scroll down to select which fund you'd like to autosave into*
Can I directly move money from one of my cash accounts in Chip into an investment fund?
Yes you can! Currently, you are able to directly transfer funds into investments from the following accounts:
Chip Instant Access account
Prize Savings Account
Allica Easy Access account
Do I get regular statements? Can I request a statement?
You will see daily performance in the app for each fund and your portfolio.
We will provide you with quarterly valuation statements for your investment funds, where you will be able to see the entire portfolio value, as well as any growth and fees on your account. You can access these using your Chip app.
By turning on this feature you are agreeing to purchase units in your selected fund. You can cancel an autosave before 3pm in order to stop this going through, however after this time the buying process will begin and can not be stopped until complete. Only after this time will you be able to sell your units. Capital at risk