Your capital is at risk. All investments carry a degree of risk and it is important you understand the nature of these. The value of your investments can go down as well as up and you may get back less than you put in.
Investment platforms are the gateway to managing your own money.
They enable you to open an Individual Savings Account (ISA) or Self-Invested Personal Pension (SIPP) wrappers and select the investments to go into them.
Once you have used these allowances you can continue buying individual shares, funds, investment trusts or exchange-traded funds (ETFs) in a general investment account, but this will be subject to tax on capital gains and any income received.
Some platforms also offer ready-made portfolios which select the investments for you based on your aims and risk appetite.
In this article we outline:
- What are the top five investment platforms?
- What is an investment platform?
- How do I choose the best platform for me?
- Investment platforms FAQs
If you’re new to investing you might want to read our beginner’s guide to investing first.
This article contains affiliate links that can earn us revenue.*
Our top five investment platforms for beginners
Below we’ve listed our top five investment platforms on the market.
Dodl is your gateway to hassle-free investing, with its low platform fee one of its main attractions. At the very least you’ll be charged £1 every month, with larger portfolios incurring a 0.15% annual charge.
On top of this if you have any money invested in funds, including ETFs, you’ll be charged a management and a transaction fee.
Dodl makes our list because its app is simple to use and effortlessly helps you maintain your portfolio.
Capital at risk. The tax treatment of your investment will depend on your individual circumstances and may change in the future.
Vanguard is a large American fund management group, which has made a name for itself as a discount online brokerage offering great value on both sides of the pond.
Like Dodl by AJ Bell, Vanguard charges a fee of 0.15% a year which is capped at £375 in fees for portfolios over £250,000.
If you’re planning on investing in a range of funds then you’ll be able to access many Vanguard branded options. Some invest in developing markets while others play it safe with government bonds. Each of these funds have their own added ongoing charges and transaction costs, so it’s best to weigh these up before diving in.
Best for a full-service platform
Fidelity is one of the largest investment providers in the world, and its UK investment platform offers access to the full range of mainstream investment funds (also known as mutual funds), as well as a trading platform to invest in shares, bonds and other assets.
If you are just getting started, you can use Fidelity’s “pathfinder” tool on the mobile app to help you choose from one of ten ready-made growth portfolios or six income-focused portfolios.
The tool lets you narrow down your choices by helping you decide on your risk level. It then gives you options from the lowest-cost to a more fully managed portfolio. It has an easy-to-use graph that helps you project your potential returns.
Fidelity’s platform fees start at 0.35% and reduce once your balances surpasses certain thresholds. On top of this, there are also dealing fees for shares, ETFs, and investment trusts of £7.50 each.
eToro offers a free online course of ten articles to help new investors learn the basics.
Every eToro account is also credited with $100,000 (£78,500) in a virtual portfolio so investors can practice trading on markets in real time. This makes it a good option for first time investors who aren’t quite confident in using their own money just yet.
eToro doesn’t charge any platform fees or commissions. Instead you will pay spread and overnight fees.
But watch out for its inactivity charge: if you do not use your account for 12 months then your account will be charged $10 (£8) per month.
You can choose from five different portfolio types on Nutmeg’s investment platform. These types include:
-Smart Alpha powered by JP Morgan Asset Management
The cheapest of these are its fixed-allocation portfolios, where the mix of investment assets are decided at the outset and reviewed annually. With this option, total costs are about 0.70% over 12 months based on returns of 0%. In comparison, its other three portfolios would likely incur these charges on the same premises:
-Fully Managed (1.01%)
-Thematic investing (1.1%)
-Smart Alpha powered by JP Morgan Asset Management (1.15%)
-Socially Responsible (1.1%)
If you want someone with more expertise to have immediate control over your portfolio, then consider Nutmeg’s Fully Managed style. This is one of several options where the investment team will make adjustments to your portfolio on your behalf.
Lightyear: Stocks, funds and up to 4.50% interest on uninvested cash
Some other great options include:
Founded in 2019 by an ex Ballie Gifford fund manager, Tillit is the new kid on the block. Its goal is to make long-term investing easier and accessible for the everyday investor. So, if you’re feeling disorientated by the thousands of funds offered by other platforms, then Tillit simplifies this by handpicking the ones with the best potential for growth.
The selection is made by its “Investment Committee”, a body made up of five members who all have experience working at established investment companies.
It charges a 0.40% for the first year, which is a standard across many platforms. However, it encourages you to invest for the long term by dropping this figure by 0.01 percentage point for every year you remain a customer. For example, if you keep your money with Tillit for 10 years, by the tenth year you’ll be paying a fee of 0.30%.
This is eventually capped at 0.25%.
What are investment platforms?
Investment platforms are online services that allow you to buy and hold shares, bonds and funds in one place.
These services can include making it easier to invest in stocks and shares ISAs or mutual funds.
Many of the platforms let investors choose a ready-made portfolio that matches their risk appetite.
Over the past decade, old-fashioned stockbrokers have started to face competition from a new generation of investment platforms. This is because platform focus on providing low-cost and straightforward access to investing for people who have little or no experience.
If you want to know more about investing, read our beginner’s guide to investing.
Some platforms offer automated guidance on which options might be most suitable for you, which is sometimes called robo-advice. This does not actually count as financial advice – it’s just support to help you make the best decision for your needs.
However, some of these platforms do also offer access to personal financial advisers* in return for an extra fee.
If you’re interested in financial advice, read: How much does financial advice cost – and is it worth it?
Traditional investment platforms allow you to choose what you invest in yourself. They are also known as DIY platforms or share trading investment platforms. However, most of these now offer ready-made portfolio options as well.
You also use these platforms to invest for retirement: see our guide to pensions for more.
How to choose an investment platform
If you’re looking for an investment platform that does all the heavy lifting for you, you’re likely to be best off with the newer generation of firms.
When choosing a platform, you should consider:
- Does the platform have a slick mobile app? This makes online trading easier. Find out which platforms have the best investment apps.
- How do the costs compare? While no one knows how different investment portfolios are going to perform, you can be certain about the expense.
- Does the management fee for the ready-made portfolio include transaction costs that the fund incurs for trading?
- What range of investments does the platform have? Some offer access to both shares and funds while others don’t. Some don’t offer ethical funds, so check what’s on offer before you sign up.
- Does the platform offer a tax-free wrapper like a lifetime ISA? Not all platforms will offer these products so it might be a deal-breaker.
Investment platforms FAQs
What are the main types of investments?
The main types are:
- Actively managed funds
- Index tracking funds
- Investment trusts
Find out: How to choose investment funds.
How can I invest sensibly?
There are some important things to consider if you want to invest sensibly. These are:
- Take a long-term view. You may want to avoid investing for any less than five years – and it’s more sensible if you’re looking at a time horizon of at least 10 years.
That way, you can ride out any downturns in the stock markets and boost the growth potential of your money.
- Invest in a pension. It can make sense to invest money in a pension because you’ll benefit from tax relief.
Plus, if it’s a workplace pension scheme, you get a contribution from your employer too. Find out more in our pensions guide.
- Attitude to risk. The other key point is to assess your risk appetite realistically. If you invest in an aggressive portfolio, bear in mind that you could lose money – even over the long run. While all investments carry a varying degree of risk, and you may get back less than you put in , this is even more so with an aggressive portfolio.
It’s important to understand what the worst-case scenario could look like – and to be sure you would be comfortable with that outcome in the context of your personal finances.
- Think about your goals. For example, if you’re putting money aside for a house deposit and plan to buy in more than five years, you might want to open a stocks and shares. If it’s less than five years, using a savings account might be a better option.
We have more on investing wisely in our beginner’s guide to investing.
How much should I invest?
If you’re investing for a pension, a good rule of thumb is to consider halving your age and pay this much as a percentage of your salary each month.
For example, if you start saving into your pension at 40, you would be looking to put 20% of your salary away each month.
If you’re investing for shorter-term goals, then think about how much you’re aiming to save, and work back from there. You can add in some assumptions about investment growth, such as 3% or 5% a year, but don’t forget to deduct fees.
If you end up saving more than you need – it’s a nice problem to have – but be mindful of the pension tax rules which may apply.
Before you start an investment portfolio, make sure you consider having a decent amount of cash in an easy access account – say, three months’ worth of salary – that can be used for any emergencies such as your car or boiler breaking down.
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As an experienced financial professional with a deep understanding of investment platforms, I can confidently share insights and provide valuable information related to the concepts discussed in the article.
Investment platforms serve as crucial tools for managing personal finances, offering individuals the ability to open various accounts such as Individual Savings Accounts (ISA) or Self-Invested Personal Pension (SIPP) wrappers. These platforms empower users to select and manage their investments, including individual shares, funds, investment trusts, and exchange-traded funds (ETFs). It's important to note that once the allocated allowances are used, further investments may be subject to tax on capital gains and income.
The article highlights the top five investment platforms in the market, each with its unique features:
- Low platform fee with a minimum monthly charge.
- User-friendly app for easy portfolio management.
- Large American fund management group known for discount online brokerage.
- Charges a fee of 0.15% annually, capped at £375 for portfolios over £250,000.
- One of the world's largest investment providers.
- Offers a full range of mainstream investment funds and a trading platform.
- Provides a "pathfinder" tool for beginners to choose ready-made portfolios.
- Offers a free online course for new investors.
- Provides a virtual portfolio with $100,000 for practice.
- No platform fees or commissions; charges spread and overnight fees.
- Offers five different portfolio types, including fixed allocation and fully managed.
- Varies in costs depending on the chosen portfolio type.
The article also mentions honorable mentions such as Tillit, a platform focused on simplifying long-term investing.
Furthermore, the article delves into the concept of investment platforms, defining them as online services facilitating the purchase and holding of shares, bonds, and funds in one place. These platforms often offer ready-made portfolios tailored to investors' risk appetites, and some even provide automated guidance, commonly known as robo-advice.
When choosing an investment platform, considerations include the quality of the mobile app, cost comparison, available range of investments, and the presence of tax-free wrappers like lifetime ISAs.
The article concludes with frequently asked questions (FAQs) covering main types of investments, sensible investment strategies, risk assessment, financial goals, and guidelines on how much to invest based on individual circumstances.
This comprehensive information equips individuals with valuable insights into investment platforms, aiding them in making informed decisions about their financial portfolios.