My name is Frankie and I am the founder of Frankie’s, an exclusive membership community for women to connect, collaborate and engage with finance! Having been running the AllBright Investment Club for the past two and a half years, I am so excited to announce my partnership with AllBright and the start of my monthly column in the Bright Edit! Each month I will be using this space to answer some of the financial questions that you have submitted, so please send in yours via AllBright’s Instagram page!

How can you become an angel investor in the UK? What is the minimum investment? 

Before considering becoming an angel investor it is really important to have a plan, as investing in early-stage and scale-up businesses can be risky and also illiquid, meaning you cannot easily get your money out of the structures, with you needing to sell your shares on a secondary market. That said, SME businesses are a fundamental part of the UK economy, and supporting innovation and growth in this sector is not possible without angel investment. It can also provide tax relief for investors making it an attractive proposition to higher-rate tax-payers.

In many cases you are asked to self-declare that you understand the risks of investing in early-stage companies, you are high net worth and a sophisticated investor. Like all financial services businesses, they will be required to verify your identity.

Minimum Investment levels vary between companies, for example, Seedrs and Crowdcube allow investors access for a minimal sum of £10.00. However, in other cases, Angel Networks are looking for minimum levels of investment of circa £5,000-£10,000.

I would also suggest that the money you are investing is for the longer term and that you are comfortable with the fact that you might lose the capital. To become an angel investor, I would explore different options, whether that be online through accredited sites such as Seedrs and/or looking at networking groups. Early Stage Investing and Venture Capital, in my mind, is as much about people as it is the idea, so get to know the people in the network and those running the organisation. Once you have found your group, my main advice would be to make sure you understand the investment and how it works and start small initially, allowing yourself to experience the process- you can always dial up the levels of investment that you make once you have gained some experience and traction.

How do you find Global Angel Investors Network? 

There are many different angel networks all over the world, an angel investor network being a group of investors who come together to look at different investment opportunities into businesses. There are a number of really great Angel Networks, South East Angels, Female Founders Rise, SFC, Hive Founders, Sie Ventures, to name a few. Some of these networks operate regionally, others are exploring opportunities overseas and in the UK.

If you are looking to invest for tax purposes and are a UK tax-payer, I would suggest that you look at UK-based companies that are eligible for tax relief, whether that be SEIS (Seed Enterprise Investment Scheme) and/or EIS (Enterprise Investment Scheme). As an Investor in an SEIS company, you are awarded with a 50% income tax break on your investment (if you invested £10,000 you would get £5,000 tax relief against your income tax). For EIS, the relief is 30% (therefore on an investment of £10,000 you would get £3,000 tax relief against your income tax).

What is a ‘compound interest’ savings account, does it need to be stocks/shares? 

Compound Interest savings accounts are accounts that pay interest on both the principle interest earnt, plus the amount of interest that you have already earnt. This means that your savings are able to grow at a faster rate over time. The compound interest will have a period of time it uses to calculate the interest to be added, this could be daily, monthly or quarterly. When looking at the rate of compound interest you will usually have an Annual Percentage yield (APY) that indicates the effective annual rate of return.  

Compound interest on your savings may be available on an account that pays you interest, but will always apply to stocks and shares, subject to market volatility.  

What investing platforms are best to use?

There are a number of great platforms such as AJ Bell, Interactive Investor, Nutmeg, MoneyBox, Hargreaves Lansdown to name a few.

However, before considering any platform I would highly recommend ensuring that you understand the charges the platform is charging for you to utilise their services. This goes beyond just the ‘Platform Charge’, make sure you also consider any transaction charges, costs for withdrawing capital, any fixed fees or Annual Management Charges.

Also make sure you understand what their rate of trading is, if you have a platform that doesn’t trade every day then you need to ensure you understand the implications of this and the potential delays this could cause if you wanted to buy or sell a holding.

Are you feeling like you want to take stock of your finances and create a plan? Have a goal but not sure how to achieve it? As part of the Frankie’s membership you receive an Annual Financial Health Check, helping our members take stock of their finances, create a plan and regularly review their strategies. For more information visit our website: Frankie's (frankies.uk.net)

Frankie’s is a membership programme within Francesca Smith Associates, a consultancy business established for running educational financial events and workshop programmes by Frankie Smith. Company Registration Number: 14258001. All regulated Financial Planning advice undertaken by Francesca Smith is completed through Jarrovian Wealth Limited which is authorised and regulated by the Financial Conduct Authority (FCA) under FCA number is 770693. Jarrovian Wealth Ltd provide independent financial advice in respect of packaged products such as life contracts, pensions and regulated collective investment schemes.

Disclaimer

AllBright cannot guarantee that all of the information provided in this video or article is accurate. Use the information provided on our website at your own risk. If you wish to make an investment you should seek independent financial advice before doing so, and ensure that you have carried out your own research on the product or company that you are investing in. Any advice provided is not tailored to anyone’s individual situation, as each individual is in a different situation. AllBright does not accept any liability whatsoever for any action taken or losses incurred as a result of the information provided on our site.