Investment platforms have opened up investing to the masses where anyone looking to invest can do without the need to hire a pricey stock broker or an adviser to buy funds or pick a pension for you.
It can be a great way to start, build and manage your own stocks and shares ISA.
For most of us, investment platforms provide a direct, easy and accessible way to invest.
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Some may even offer cashback incentives to open a new ISA or SIPP account.
But, since no one platform is the same and there certainly is no such thing as one size fits all when it comes to choosing an investment platform, how do you select one that suits your needs? Should we be thinking of them in the same way as we do when choosing a current account for our day to day banking?
If you’re looking to pick a platform to build your portfolio with, then using the right one could not only help you achieve your goals, but it can also save you money when it comes to forking out fees. Picking one that comes with a good customer rating is also important, after all, who wants to deal with glitchy apps, poor customer service or IT meltdowns when growing wealth.
Choosing an investment platform - how will you invest?
Before you pick your fund supermarket, have a clear understanding of what you want to invest in. Not all platform offerings are the same, with some regions or sectors excluded and others offer streamlined options. So if you want to cast the net far and wide, be sure to pick a platform that allows you to do that.
If, say, all you want is to invest in cheap tracker funds - a common move among investors at the moment amid the market volatility- then pick a platform that comes with low fees. After all, you’re not looking to pay for the expertise of a stock picker.
If you think you want to invest in various funds, both passive and active, some trusts and maybe a few stocks too, then you should check whichever platform you choose offers what you want.
And if you’re looking to buy individual stocks, then make sure the provider you choose enables that.
Not all platforms offer everything. Vanguard for example, only offers Vanguard funds and no shares, and if you pick a robo-adviser then you will often be subject to limited number of investments or just ready-made portfolio options.
Investment platform fees
With most of us more cost-conscious than ever before, it makes perfect sense that keeping fees as low as possible is most likely your ultimate goal - after all, we all know high fees eat into returns, leaving you with less money in your pot.
The good news, it is easy to compare fees using comparison sites like comparetheplaform.com, boringmoney.co.uk or comparefundplatforms.com.
But, just like when you buy insurance products, although fees are one of the factors, it's important to take into account things like customer service ratings, the availability of research and tools, plus what investment options are available.
According to investment comparison website Boring Money, for someone investing a lump sum of £20,000, looking to create their own portfolio from a wide range of investments, these are some of the cheapest platforms, based in order of customer rating.
- Vanguard (£30)
- AJ Bell (£53)
- interactive investor (£119)
- Fidelity (£70)
- Hargreaves Lansdown (£90)
Fees noted here are annual administration fees, but you will also pay fund fees., which depends on what you pick and the total value of your investments.
It is also worth noting that when you invest via these platforms, you will also pay performance fees for active funds and trading fees when buying or selling stocks.
As a general rule of thumb, a percentage fee platform tends to be more cost-effective if you are investing £50,000 or less. But, anything more, then a fixed fee could make more sense. It could also make sense if you plan to trade a lot, buying and selling shares.
Interactive investor, for example, charges a flat fee starting at £4.99 a month for its Investor Essential Plans, but UK and US trades will cost £3.99. Its most popular plan is the Investor Plan, at £11.99 monthly with one free trade per month.
If you just want the widest choice of investments possible, then Hargreaves Lansdown could work for you, and if you’re after a good all rounder, then Fidelity is a popular choice.
It’s also worth noting that some platforms may charge exit fees if you decide to move your investments to another platform.
Picking the best robo-advisers
Investment platforms certainly make investing easy, but if you want to be totally hands off, then letting a robot take care of your investments makes sense.
The so-called robo-adviser platforms are perfect for beginners or investors who really want minimum interaction with their portfolio and are happy for a robo to take care of the investing for them.
Robo Investment platforms have grown in popularity, for the very reason that they require little input from you once you open an account and even those with little or no knowledge can grow their wealth.
But they also open the door to innovation and targeted investment opportunities, via ready made portfolios adjusted to your risk appetite. They also come at a low cost, making their proposition even more attractive.
Robo platforms are usually app-based and use artificial intelligence and risk questionnaires to determine the best investment for you based on your risk attitude.
This takes some of the administrative hassle out of building a portfolio and helps build a strategy that reflects your attitude to risk.
The portfolios are regularly monitored and rebalanced by the platform but, unlike with a DIY platform, you have no control on where or how your money is invested.
These are some of the most popular robo advisers platforms, which all offer something a little different, so again - understanding how you want to invest and your goals is vital.
- Nutmeg - this is one of the oldest robo-advisers around that offer ISAs, general investment accounts, and pensions. It costs around £35 a year for £5,000 invested using a ready made portfolio.
- Wealthify - similar to Nutmeg, offers ISAs, pensions and genre investment accounts. Its attraction is that you can open an account with as little as £1, so it’s a great way to kick start investing for those who do not feel they have a lot of money to start or even for young adults just starting out with an ISA perhaps. It costs around £38 a year for £5,000 invested on the platform, using a ready-made portfolio.
- Moneybox - this platform has become popular for those who struggle to have enough left over each month to shift into investing. The app rounds up your loose change and shifts it into an investment product for you. So, if you spend £4.25 on lunch, it will shift 75p into investments for you by rounding up your spend to the nearest pound. The small amounts can really add up, but it’s worth noting that investing small fees can come with a hefty price tag, costing around £50 a year for a total of £5,000 invested on the app, according to Boring Money. Investment options are also very limited. So, the app is a great starting point to help build confidence but it would make sense to move on once you feel you are in the swing of investing.
- One of the new players worth mentioning is Dodl from AJ Bell. You won’t have missed the big cuddly monster on billboards. Dodl claims to be a fuss-free investing app aimed to make investing simple. It offers streamlined investing options with low costs.
Investment platforms that also give advice
If you’re looking for some advice, then Claro and BestInvest both offer access to financial coach to help you achieve your goals or even learn new ways to help you manage your money - something we may all be thinking about right now as inflation remains high.
Taking a green or feminist approach to investing
Another consideration you may want to give to your investments this year is to make your portfolio go greener.
While we all want to do our bit for the planet or society, your money holds the greatest power and you can choose a platform to help you invest in funds that help.
While most providers offer an ‘ethical’ option, the likes of Clim8 (clim8.com) claim to focus on climate solutions and its investing themes are around green energy, clean mobility, sustainable food, water systems, climate technology, and circular economy.
Another popular platform is The Big Exchange. Launched in 2020, it was co-founded by The Big Issue and its investment focus on positive impact on society or the environment.
And if one of your concerns is making sure you invest in funds run by women, then The Big Exchange also allows you to apply a filter to pick funds by women to give your portfolio a feminist touch.
So, ultimately, when picking a platform, it's worth a good look at what your values are and making sure the platforms and its offering are aligned with what matters to you.
The choice of investment ISA will depend on how you want to invest, , the service you require and in some cases the size of your portfolio.
We have outlined the cost of an investment ISA across the main DIY investment platforms below:
AJ Bell
Annual platform fee
Shares: 0.25% (max £3.50 per month
Funds: 0.25% up to £250,000, 0.10% on between £250,000 and £500,000, no charge on amount above £500,000.
Trading fees
Share dealing: £5, reduced to £3.50 for 10 or more deals per month.
Fund dealing: £1.50
Bestinvest
Annual platform fee
Fund and share portfolio: 0.4% on first £250,000, 0.2% on £250,000 to £500,000, 0.1% on £500,000 to £1m, zero above £1m.
US shares: 0.2% up to £250,000, 0.2% on £250,000 to £500,000, 0.1% on £500m000 to £1m, zero above £1m.
Trading fees
£4.95 to buy or sell UK shares and exchange traded funds.
Charles Stanley
Annual platform fee
Shares: 0.35% (minimum £2 per month, maximum £20 per month).
Funds: 0.35% on the first £250,000; 0.2% on next £250,000; 0.15% on next £500,000, 0.05% on next £1m and no additional charge on anything above £2m.
Trading fees
Shares trading: £11.50
Fidelity
Annual platform fee
0.35% on the first £25,000 if you have a regular savings plan or £90 (£7.50 a month) if you don't; 0.35% on between £25,000 and £250,000; 0.20% on anything between £250,000 to £1 million; No charge for amounts above £1 million.
Trading fees
£1.50 for deals as part of a regular savings or withdrawal plan, or for a reinvestment of income or a dividend.
Simple charge of £7.50 for each deal placed online.
Hargreaves Lansdown
Annual platform fee
Funds: 0.45% on first £250,000; 0.25% on £250,000 to £1 million; 0.1% on £1 million to £2 million; no charge above £2 million.
Shares: 0.45% charge for shares, investment trusts, exchange-traded funds (ETFs), gilts and bonds capped at £45 a year.
Trading fees
0 - 9 deals per month: £11.95
10 - 19 deals per month: £8.95
20 or more deals per month: £5.95
Interactive investor
Annual platform fee
Investor Essentials: £4.99 per month for up to £50,000. UK and US fund and share trades are £3.99.
Investor plan: £11.99 a month. First trade free every month. Additional UK and US trades are £3.99.
Super Investor plan: £19.99 a month. First two trades free each month. UK and US trades only £3.99.
Nutmeg
Annual fee: Fixed allocation account: 0.45% on first £100,000, 0.25% on anything above £100,000
Wealthify
Annual fee: 0.60% on any size
Moneyfarm
Annual fee: 0.45% up to £100,000
0.35% between £100,000 and £250,000
0.30% from £250,000 to £500,00
0.25% above £500,000
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