Top-tier investment platforms: A guide to select the most suitable account for your needs
In the rapidly evolving world of investing, several DIY platforms have emerged, offering a cost-effective and accessible way for individuals to manage their own portfolios. This article provides a detailed cost comparison of some of the most popular platforms in the UK, including AJ Bell, Hargreaves Lansdown, Interactive Investor, eToro, Trading 212, and others.
Platform/Annual Admin Charges
- AJ Bell: Charges an annual custody fee of 0.25%, capped at around £125 (typical for AJ Bell Youinvest).
- Hargreaves Lansdown: Annual fee around 0.45%, considered higher than AJ Bell (especially for funds) but offers extensive research and tools.
- Interactive Investor: Fixed monthly subscription fee starting around £9.99, with a flat platform fee up to about £143.88 annually, which can be cheaper for large portfolios.
- eToro: No platform/admin fees but charges may apply on withdrawals and inactivity.
- Trading 212: No platform fees or custody charges, attractive for small investors and share dealing, but more limited in fund availability.
- Fidelity: Charges 0.35% annual service fee for funds, lower (capped at £90/year) for stocks and ETFs. For large portfolios, fees can escalate, capped at £2,000 annually.
Fund Dealing Costs
- AJ Bell and Hargreaves Lansdown typically charge around £1.50 to £11.95 per fund trade; specifics can vary with the fund.
- Interactive Investor offers free fund dealing on some options, others priced; flat shareholder dealing fees are standard.
- Trading 212 usually offers commission-free dealing on stocks and ETFs; fund options are limited.
- eToro mainly focuses on shares and CFDs, with no fund dealing fees, but beware spread costs and overnight fees on CFD positions.
Standard Share, Trust, ETF Dealing Costs
- AJ Bell and Hargreaves Lansdown: Share dealing fees around £5.95 to £11.95 per trade; discount on regular investing.
- Interactive Investor: Flat £7.99 per trade but with free trades included in subscription tiers.
- Trading 212 and eToro: Commission-free share and ETF dealing but eToro has spreads and withdrawal fees.
- Fidelity: Share dealing capped at £90 annually, fees reduced for larger portfolios.
Regular Investing Costs
- Hargreaves Lansdown and AJ Bell offer discounted fees for regular monthly investments (around £1.50 to £5 per trade).
- Trading 212 and eToro provide free regular investing on shares and ETFs.
- Fidelity applies standard percentage fees; regular investing may reduce some costs.
Dividend Reinvestment Costs
- Most platforms (AJ Bell, Hargreaves Lansdown, Interactive Investor) offer Dividend Reinvestment Plans (DRIPs) generally free or for a small fee.
- Trading 212 supports free dividend reinvestment.
- eToro may pay dividends as cash; details depend on asset type.
Other Fees
- Transfer-out fees generally apply on AJ Bell, Hargreaves Lansdown, and Interactive Investor (around £25–£30 per fund or share block), but you can usually avoid by selling first (which may incur dealing fees).
- Inactivity fees may apply on some platforms like eToro.
- Currency conversion fees apply when investing internationally on almost all platforms, varying by provider.
Summary Highlights
- AJ Bell and Hargreaves Lansdown: Well-established with comprehensive tools but higher percentage fees, best for investors valuing service over just cost.
- Interactive Investor: Flat monthly fee can be cost-effective for mid to large portfolios, good range of assets.
- Trading 212: Commission-free with minimal fees, great for small pots and active trading of shares and ETFs but limited on funds.
- eToro: Zero commission shares and ETFs, but other costs such as spreads and currency fees; geared more toward active traders and CFDs.
- Fidelity: Competitive on funds for mid-sized to large portfolios; capped fees benefit higher balances.
Choosing the best platform depends on your investment size, trading frequency, and asset preference. For small, regular investments, commission-free platforms (Trading 212, eToro) can be appealing. For larger portfolios or fund-focused investing, flat fees (Interactive Investor) or tiered service fees (Fidelity) may work better. Hargreaves Lansdown remains popular for comprehensive support but at a premium cost.
Other platforms like Freetrade, Bestinvest, and Charles Stanley Direct offer their own unique features and fees, making it important to research and compare options before making a decision. The rise of online brokers and their investment accounts has slashed the cost of investing and made it much easier for individuals to manage their own portfolios. Keep in mind that the tax-free allowances for capital gains and dividends will be reduced starting from the new tax year on 6 April 2023.
- In the realm of personal-finance, both AJ Bell and Hargreaves Lansdown are well-established investing platforms, known for their comprehensive tools, but they come with higher percentage fees, making them more suitable for investors who prioritize service over cost minimization.
- For mid to large portfolios, Interactive Investor emerges as a viable choice due to its flat monthly fee structure, offering a cost-effective solution and a good variety of assets.
- Trading 212, on the other hand, appeals to small investors and those who engage in active trading, with commission-free share and ETF dealing but with limited fund options.
- eToro leans more towards active traders and those interested in CFDs, boasting zero commission on shares and ETFs, though other costs such as spreads and currency fees should be considered. The choice of the best platform for investing depends on the size of the investment, trading frequency, and preferred asset class.
