The best UK investment platforms for beginners

Many new investors will be searching for somewhere to open and manage their Individual Savings Account (ISA) now the new tax year has begun.

Some investment platforms are offering cashback incentives and tools to attract new users. But not all providers are the same – and with so many to choose from, which UK investment platforms are the best for beginners?

Investment platforms, also known as fund supermarkets, let you choose from a range of investments, including funds, shares and bonds.

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Some investment platforms are aimed at investors who have financial advisers and others cater for investors who are ‘self-directed’, or prepared to make the decisions on their own.

If you have a financial adviser, they will choose a platform for you. But self-directed “DIY” investors will find there are more than 30 investment platforms to choose from.

These firms all offer slightly different investment choices, product ranges, apps and fee structures. To help you make the choice, MoneyWeek picks six to consider.

Best investment platforms for beginners in the UK

1. Moneybox – Best platform if you need motivation

If you want to start investing with very small amounts and think you’ll need some motivational support, consider Moneybox, which comes with an excellent app and keeps investing simple.

Moneybox’s main differentiator is an engaging round-up feature on the app that rounds all spending to the nearest pound and puts the difference into investments. You can start with just £1 and only need to choose between three diversified starting options – Cautious, Balanced and Adventurous. These options are made up of a range of diversified tracker funds, with different risk levels and asset allocations for each option.

A downside is the platform fee of 0.45% (£45 on an investment of £10,000), which is more expensive than some competitors.

2. Moneyfarm – if you want human help

If you need some help with investing, Moneyfarm is hard to beat. After you spend a few minutes filling out an online risk questionnaire, it matches you to suitable investment portfolios that it builds and manages in-house.

The Moneyfarm questionnaire is detailed, so new investors might find it a bit complicated. However, customers also have the option to speak to one of the firm’s investment consultants to get free guidance on making investment choices.

The downsides are that Moneyfarm doesn’t offer a Lifetime ISA and its fees, starting at 0.75% on investments for the first £10,000 invested, are very pricey.

3. AJ Bell Dodl – best platform for low fees

For beginners, AJ Bell attempts to “take the fear out of investing” with an investment app called Dodl that charges an attractive 0.15%, less than the AJ Bell’s main investment platform. On portfolios under £40,000, 0.15% is hard to beat.

Dodl is a pared-down offering compared to AJ Bell’s main investment platform, but its investment choice still includes eight ready-made investment portfolios, 29 themed investments and 75 popular UK and US shares.

4. Vanguard – best platform for simplicity and low costs

This is a simple service that used to be one of the cheapest offerings on the market for almost all investors. However, its fee structure changed recently, meaning you now need to do the maths based on how much you have in your account.

If you are a small DIY investor, it probably isn’t the right option for you anymore.

Vanguard now charges £4-a-month fee on amounts under £32,000, up to a maximum of £48 per year. If you have £1,000 in your account, a £48 annual fee is equivalent to 4.8% – which is very high. Previously, this investor would only have had to pay 0.15% (or £1.50 per year).

The account fee for sums above £32,000 is 0.15%, up to a maximum of £375 per year, meaning Vanguard is still a competitive option in terms of price for those with larger sums to invest.

By only offering investments in 86 Vanguard funds, it’s a reduced product offering compared to other platforms, but Vanguard’s LifeStrategy and Target Retirement Fund ranges are essentially ready-made portfolios and popular with investors on other platforms too.

There’s a tool to help you choose funds, which starts by asking six questions to help the platform understand your attitude to risk. If you need extra help, Vanguard also offers a Managed ISA and pension with ‘guidance from real human experts’ which charges 0.15% a year.

The £4 monthly fee does not apply to Vanguard’s Managed ISA and pension accounts, making them a good option for those with smaller account balances.

5. Interactive Investor – flat fees champion

The firm is best known for flat fees in pounds and pence. For investors with up to £50,000, its Investor Essentials plan costs £4.99 a month, while its Pension Essentials charges £5.99 a month. On a portfolio of up to £50,000, these would be £59.88 and £71.88 a year, respectively.

Again, this means the plan can work out very expensive for smaller investors. An ISA investor with £1,000 would find themselves paying an effective annual fee of almost 6%. However, flat fees can offer good value for money for those with significant sums. Someone with £40,000 would find themselves paying just 0.15%.

Once you go above £50,000, you move to the Investor Plan, at £11.99 a month, and the Pension Builder plan, which is £12.99 monthly. The big advantage is these fees stay the same as your portfolio grows, making it great value for bigger portfolios. The platform does charge extra for trading (buying and selling) investments, but you can make free regular monthly investments.

For beginner investors, Interactive Investor recommends six low-cost ‘Quick-Start’ funds with different risk levels and sustainable options and has recently launched its Managed ISA portfolios. But if you’re ready to start learning beyond this, there’s an enormous amount of educational content and ideas and a good app.

6. Trading 212 – the wild card

This platform has a popular and highly-rated investing app that offers commission-free trading. The company makes its money through risky CFD (contracts for difference) trading and foreign exchange fees on overseas shares, allowing it to charge no fees or low fees for other investing activities.

Although you can only invest in shares and Exchange Traded Funds (ETFs), it offers a wide range with access to over 13,000 investments. It has a free ISA but no pension.

How do investment platforms work?

Investment platforms allow you to hold a collection of investments all in one place online, including shares, bonds and investment funds. This cuts down on the hassle and administration time involved in holding investments with different firms. They also give you the means and flexibility to change the mix of your investments at the touch of a button, often via a mobile app.

In most cases, the platforms provide options to not only hold your investments in a general taxable investment account but also in tax-efficient wrappers such as ISAs and Self-Invested Personal Pensions (SIPPs). These tax wrappers are important because they allow your investments to grow free of the taxes on income and growth that they might otherwise incur. In the case of pension accounts, your investments benefit from upfront income tax relief.

There’s usually lots of educational content provided for free. So it’s perfectly possible to visit one platform to get some investment ideas, and then use another platform to buy and sell your chosen investments.

What to look for in an investment platform

Product and investment range

You should consider the product and investment range, alongside the cost of investing. Some people might feel a good app is essential. Others might focus on customer service rankings too. If that's you, then Trustpilot is a good place to check these out.

Tax wrappers

Although you might not need all the tax wrappers when you’re starting out, it could be important to have them available as you progress with your investments.

It’s important that an investing platform offers an ISA and SIPP wrapper. If you’re under 40, the Lifetime ISA may be important to you. Parents might want the option of Junior ISAs too.

Our stocks and shares ISA guide looks at tax-free benefits in more detail.

Type of investing platform

Platform suitability also depends on your level of confidence. Are you a “do it for me” customer, who would like guidance to make your choice? Do you want to learn to do your investing by yourself? Or do you think you can quickly learn?

Investing fees

Most investment platforms operate on a “percentage fees” charging model, where the platform charges a certain percentage of your investments held on the platform each year, usually broken down into monthly payments. A minority of platforms charge fixed fees, specified in pounds and pence. On top of this, there may be transaction charges for buying and selling certain investments.

Don’t underestimate the importance of charges. Even small differences in fees can make a big difference to the outcome over a 25-year investment career due to the compounding effect.

For example, imagine you invest a lump sum of £20,000 and plan to add £200 a month to this. If your platform charges 0.25%, over 25 years, with average investment growth of 6% a year, the fund would be worth £211,970 (per the financial education website CandidMoney.com). But with a platform that charges 0.45%, your fund would be worth £204,487. That’s a difference of £7,483.

On larger investment sums, the effect is magnified and could be the difference between you retiring in comfort or not.