COMMENT
If It's Complicated, It's Crap

One of the core approaches of The Motley Fool is to keep things simple. For far too long, we've suffered at the hands of over-complicated financial products. Products that make those who sell them wealthy, rather than ourselves.

Over-complication leads to many problems. First of all, it's hard to know what you're buying and whether it's what you actually need. Many products are bundled together and although you may only need one of them, you end up paying for them all. Secondly, it makes it far too easy to hide excessive charges. Long-term investment plans are particularly prone to this, with charges being 'hidden' in subsequent lower returns. Last of all, often even the people who are selling these products don't understand them, and they certainly don't understand the risks they are taking with your money.

Unfortunately, there are plenty of examples of this last point. There are with-profits bonds, which have trapped investors in low-growth funds due to heavy penalties for moving your money elsewhere. Then there was the precipice bond scandal, where risky, complex products were sold to people looking for safe investments. And let's not forget split-capital investment trusts. Apparently, a £200m settlement could soon be forthcoming as soon as this week, but a number of firms central to the fiasco will not be covered by it.

Here at the Fool, we favour simple products like instant access savings accounts and index trackers. These are low-cost products that don't need reams of small print. You can see where your money goes and you can see where income and gains are going to come from. Your money is kept separate from other savers and investors, avoiding many of the problems we've seen with 'pooled' investment products like with-profits bonds.

Not only are these products less risky than their more complicated cousins, their long-term returns are typically far better too. Their low charges means you end up with higher returns. You can find out more about index trackers here and compare savings accounts here.