Our guide to the best investment platforms for beginners
If you want to get investing, one of the first and biggest choices you’ll need to make is which platform to use.
Whether you’re looking to start investing with £50 a month, or want to put away a £50,000 windfall, picking the right investment platform for you can either take the hassle out of investing or massively increase the information and support available to you.
- Make sure to read Moneywise's First 50 funds for beginners.
At their simplest, investment platforms are websites or apps where you can buy and sell investments, such as funds, investment trusts or stocks and shares. But these platforms, also known as fund supermarkets, get more sophisticated every year, and there are plenty of tools to check how your portfolio is doing and which funds you should be considering. If you’re feeling lazy, plenty of sites even do the hard work of picking funds for you.
We’ve shortlisted six of the best platforms for first-time investors investing in funds, by looking at lowest charges and the most suitable tools.
Here are the main points you need to consider when picking an investment platform.
How much does it charge?
While the right platform isn’t just about the lowest costs, you don’t want to pay more than you need to. An investor with a £30,000 portfolio could save £230 a year by switching to the cheapest platform, according to research by personal finance expert Andrew Hagger.
The table below shows the cost of investing a lump sum, using research by The Lang Cat, and the cost of investing a fixed monthly amount of either £50, £500 or £1,270, which equates to the annual limit to an individual savings account (Isa) subscription, with data courtesy of Comparefundplatforms.com. We’ve assumed an investor buys and sells five funds five times a year.
We haven’t factored in the underlying charges that you’ll pay for each fund that you hold. These vary depending on the fund and which platform you use.
(Click the table below to enlarge)
** Update: AJ Bell has announced it will change its pricing in October. Read our story on this here. **
The table doesn’t show exit charges. If you later want to switch your Isa to another provider, bear in mind that most platforms will charge you for each fund you switch. These are typically between £15 and £35 per fund, but Fidelity notably doesn’t charge people to leave.
If at a later stage you decide to move your Isa investments elsewhere, it’s worth knowing that many investment platforms periodically run offers to get you to sign up, either as a cash bonus or by offering to pay your transfer costs.
You’re only allowed to open one stocks and shares Isa in any given year, so if you’re moving you’ll need to transfer any money you have put in old Isas in full.
Finally, if you’re looking for a platform where you also hold a self-invested personal pension (Sipp), bear in mind platform charges can be higher for these, particularly if you’re taking money from your pension in retirement through a drawdown scheme.
If you’d like a personalised estimate of the platform charges you’ll pay, Comparefundplatforms. com, run by independent financial adviser Justin Modray, can provide more a more accurate forecast based on the number of funds you’ll hold, how frequently you’ll trade and whether you’re investing as a one-off lump sum or adding to your investments month by month.
What guidance do platforms offer?
Different platforms offer different levels of support for novice investors. If you want to get really involved in fund research, fund supermarkets for more experienced or advanced investors, such as Interactive Investor or AJ Bell Youinvest, offer detailed research notes and lots of information on funds.
First-time investors could do better with a site that’s got lots of information on the basics – what to think about when investing, explanations of the key concepts and shortlists of recommended funds to simplify the choices you have to make.
If you don’t want to get too involved, most platforms nowadays can accommodate that through model portfolios, which are essentially ready-made investment portfolios that you pick based on how much risk you’d like to take.
If this appeals to you, you might also want to consider services such as Nutmeg or Wealthify for your Isa. These sites aren’t strictly platforms, as they don’t let you pick funds – instead, they offer ready- made solutions.
Can you invest on the go?
These won’t appeal to everyone, but if you’re a smartphone addict, or someone who wants to check and switch investments on the move, you’ll want a platform with good mobile functionality.
Investment platform apps are still in the relatively early stages and services vary from platform to platform. Hargreaves Lansdown and Interactive Investor, for example, both let you buy and sell on the move, while others either have no mobile app at all, or only let you monitor your investments, rather than change them.
Similarly, if you’re looking for an app- based investment platform and you’re not an Apple user, do check that Android devices are supported.
Do you have other investment pots?
We’re assuming you’re investing in your Isa here. Anything you invest grows tax free, and you can put away up to £15,240 a year. However, if you also have a Sipp you’ll want to pick a platform that lets you put all your investments in one place.
It will be easier to manage, with fewer passwords to remember, and you’ll spend less time getting used to two different platforms. There may also be a cost benefit, as some of these platforms charge a sliding percentage, depending on the size of your portfolio. All the platforms in this guide also accommodate Sipps.
BEST FOR: People looking to get closely involved with their investments.
AJ Bell Youinvest is one of the bigger players in the UK. It holds more than £26 billion assets for around 120,000 investors. We have included it in our shortlist as it’s one of the cheaper fund platforms for both small and large portfolios, though it’s aimed less at the first-time investor.
The site does have plenty of investment information, but it assumes more knowledge on the part of the reader.
Similarly, support for picking investments is limited, with no select funds lists or pre-made model portfolios.
AJ Bell has one of the better apps if you’re an Apple user, with fingerprint recognition used to keep it secure. It also scores highly for customer service, according to Platforum.
** Update: AJ Bell has announced it will change its pricing in October. The changes are broadly more generous for smaller investors, but more expensive for the wealthiest investors in funds. We'll be explaining what these charges mean shortly. **
BEST FOR: Low cost all-rounder
Charles Stanley has had a relatively recent overhaul, and its website is in tip-top condition as a result, according to Platforum. It’s “well-conceived and well executed”, and was the joint winner for its customer service levels.
There are recommended fund lists to help you pick what to invest in, and it’s low cost, particularly for smaller portfolios. It charges just 0.25%, which is hard to beat for investors with a £5,000 portfolio. Even for larger amounts, at £50,000 it’s second cheapest only to Interactive Investor.
For larger, six-figure balances a flat-fee model, which Charles Stanley doesn’t offer, will almost certainly be cheaper, even though its fees drop to 0.15% for people with half a million pounds or more.
BEST FOR: Ultra-cheap funds and investment guidance.
Rodolfo Crespo, quantitative researcher at Platforum, says: “This is one of the most stablished direct platforms in the UK and US, and it’s improved in recent years. It stays the second best [in our annual review]. It’s the best platform for guidance.”
In terms of information for investors, the site ranges right from videos for beginners explaining the fundamentals to daily investment ideas and market commentary. As the information ranges from absolute beginner levels through to expert, this could become overbearing, but a well-thought-out structure makes navigating the content reasonably straightforward. It has powerful tools for evaluating your portfolio, uniquely showing how your portfolio has performed on an annual basis, and a good app for tracking your investments.
There are select funds lists for people who want to whittle down their options to a manageable amount, and investors who want to take a more hands-off approach can pick model portfolios based on how much risk they’re willing to take.
On the downside, the app only lets you monitor and research ideas, so if you want to buy and sell on the move you’ll need to try somewhere else.
Fidelity’s Personal Investing service only offers funds and investment trusts. Investors who want to buy individual stocks for their portfolio will need to look elsewhere, though that can be risky. If you’re investing for the first time, it’s generally seen as safer to stick to funds.
BEST FOR: Customer service.
Hargreaves Lansdown is one of the most expensive providers on our list for larger portfolios, but it’s also highly regarded by investors and industry alike. The company offers extra discounts on some funds, so you might find you can claw back some of your costs in reduced fund costs.
Growing from a bedroom operation to a FTSE 100 company, it now holds almost £60 billion investments for around 780,000 clients.
Hargreaves Lansdown was recognised as the UK’s best all-round direct platform winner by platform analyst Platforum in 2015, due to the strength of its brand, investment proposition and customer service.
Mr Crespo explains: “The customer service is consistently excellent, and it also won our award for best service. The staff are always well informed, and they share information with each other so you don’t need to have the same conversation again and again.”
Investors who want a bit more guidance with their fund choices can benefit from recommended funds, multi-manager funds that let you diversify across a range of asset classes through a single investment (though it can be expensive) and its high-quality app.
On the downside, it can be expensive for some investors, and Hargreaves’ marketing team is relentless. If you do sign up, expect a lot of post.
BEST FOR: Frequent fund dealers or big portfolios.
Interactive Investor, Moneywise’s parent company, is “by far the most cost competitive for larger portfolios”, according to Platforum, meaning people who have investments of £50,000 or more. Unlike most fund supermarkets, it charges a fixed £80 a year, which includes two free trades every three months. Others will mostly charge a percentage of the value of your portfolio.
Conversely, this pricing structure works against smaller portfolios and it’s the most expensive for a £5,000 portfolio by some margin, costing £30 more than the next best option in year one.
Interactive Investor categorises its funds by the countries they invest in and the nature of what they’re investing in. Most other platforms will group funds by risk, which might be helpful if you’re still earning your investment stripes. It hasn’t performed as well as some for customer service, but it’s taking measures to improve.
BEST FOR: Friendly introductory tone.
The Share Centre is a good all-rounder, though its standard pricing structure can be expensive for frequent traders. It charges a fixed £4 a month to use the platform, but takes 1% of every fund transaction.
It provides lots of very well written, accessible information and it’s all categorised into sections for new or experienced investors.
The support for picking your investments is also strong. There are guides to help you pick the right account, select fund lists and the option to buy multi-asset funds.
It includes a section on retirement, which is useful for anyone looking to start taking money from a Sipp. But the level of information available on funds is a little superficial, and there is currently no app available for investors on the move.InPlatforum’s customer service tests, The Share Centre also didn’t perform particularly well.
The term is interchangeable with stock exchange, and is a market that deals in securities where market forces determine the price of securities traded. Stockmarket can refer to a specific exchange in a specific country (such as the London Stock Exchange) or the combined global stockmarkets as a single entity. The first stockmarket was established in Amsterdam in 1602 and the first British stock exchange was founded in 1698.
Also known as index funds, tracker funds replicate the performance of a stockmarket index (such as the FTSE All Share Index) so they go up when the index goes up and down when it goes down. They can never return more than the index they track, but nor will they lose more than the index. Also, with no fund manager or expansive research and analysis to pay, tracker funds benefit from having lower charges than actively managed funds, with no initial charge and an annual charge of 0.5%.
An unexpected one-off financial gain in cash or shares, generally when mutual building societies convert to stock market-quoted banks. Also windfall tax, a one-off tax imposed by government. The UK government applied such a measure in the Budget of July 1997 on the profits of privatised utilities companies.
Like a self-select ISA but for pensions, self-invested personal pension is a registered pension plan that gives you a flexible and tax-efficient method of preparing for your retirement. It gives you all sorts of options on how you put money in, how you invest it and how it’s paid out and offers a greater number of investment opportunities than if the fund was managed by a pension company. SIPPs are very flexible and allow investments such as quoted and unquoted shares, investment funds, cash deposits, commercial property and intangible property (i.e. copyrights, royalties, patents or carbon offsets). Not permitted are loans to members or people or companies connected to the SIPP holder, tangible moveable property (with the exception of tradable gold) and residential property.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
Investment funds that invest in other investment funds from a wide range of asset managers and are often referred to as funds of funds. Some multi-manager funds only invest in the funds of the investment house providing the fund of funds and these are known as “fettered”. An “unfettered” multi-manager fund is free to invest in what the fund manager believes are the top performing funds from across different markets and industries. Investing in multi-manager funds means your risks are spread across geographical regions and industry sectors but it also adds another layer of charges and some multi-managers also levy an out-performance fee.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.