Grow Your Wealth This Year: UK's Best Investment Platforms for 2024

When choosing an investment platform, it's important to understand the fees and costs. These expenses can greatly affect your returns and investment experience.

Some of the most common fees charged by investment platforms include:

• Platform fee – This is a recurring fee that investors pay for using the platform's services. It is also known as a subscription fee, custody fee, or maintenance fee, among other names. The fee includes platform access, account maintenance, and using features such as research tools and customer support.

• Trading fee – This is a direct cost associated with executing trades on the platform. It can take different forms such as commission, spread, bid-ask spread, etc.

• Foreign exchange fee – When you trade international assets or currencies, you may have to pay a foreign exchange fee. This fee is for converting one currency into another.

• Inactivity fee – Some brokers may charge you if your account remains dormant for an extended period. Inactivity fees serve as a penalty for infrequent or inactive trading or investing.

• Spread – This is the difference between buy and sell prices. It varies from one investment platform to another and can make purchases more costly and sales less profitable.

There are also other fees for specific situations and services that don't apply to regular investing and trading. Since there are simply too many fees to discuss in this article, it is best to research thoroughly when choosing a broker.

How Do Investment Platforms Compare on Fees?

Here’s an at-a-glance comparison of the most important fees associated with the platforms in our review.

Fee Structures

Investment platforms are infamous for their overly complex fee structures. They all have a different way of charging investors. Here are some of the most commonly used pricing models in the online brokerage industry:

• Flat fee – Also known as a fixed fee, this is a pricing model where investors pay a predetermined amount for a specific service.

• Percentage-based fee – In a percentage-based fee structure, the cost is determined as a percentage of the invested amount.

• Tiered fee – The tiered fee is similar to a percentage-based fee system. However, it offers discounts for larger amounts over a set threshold.

Generally, fixed or flat fees tend to be the better option for investors with larger portfolios. Tiered or percentage-based fees, meanwhile, are the better choice for smaller portfolios. But this is not always the case.

Many factors can affect how affordable a platform is. These include the size of flat and percentage fees, what tiers are used, and whether the platform offers free monthly trades. Not to mention the additional charges, like trading fees, and other charges that may influence the overall cost.

In addition to costs and charges, different platforms offer diverse types of assets for investment. Their availability on specific platforms plays a significant role in selecting the right one.

Stocks and Shares

Stocks and shares represent ownership in a company. People invest in them by purchasing these shares, essentially becoming partial owners of the company. The primary motivation for investing in stocks and shares is the potential for capital appreciation. In some cases, investors are also enticed by the prospect of receiving dividends.

This asset class offers the benefit of liquidity, meaning you can easily buy or sell shares. However, it also comes with risks, such as market volatility and the potential for loss.

Investing in stocks and shares is suitable for a range of individuals. Those with a higher risk tolerance and a long-term investment horizon find it appealing most often. When investing in stocks and shares, investors need to have some understanding of market dynamics. It's important to do their own research to make informed decisions.

Funds

Many people like to invest in funds because they can pool their money and invest in diverse assets. There are several types of funds, though mutual funds, ETFs, and index funds are the most popular.

• Mutual funds – These are professionally managed investment vehicles. They pool money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities.

• Exchange-traded funds – ETFs are like mutual funds, but they trade on stock exchanges and offer intra-day liquidity.

• Index funds – Index funds replicate the performance of a specific market index, such as the FTSE 100 or S&P 500. They provide exposure to a diverse portfolio of stocks.

Investing in mutual funds, ETFs, or index funds offers diversification and professional management. This makes it a convenient option for many. However, investors should be wary of their risks and management fees before deciding to invest in them.

Bonds

Bonds are debt securities issued by governments, corporations, or other entities to raise capital. When you invest in bonds, you essentially lend money to the issuer in exchange for periodic interest payments and the return of the principal amount at maturity.

Investors usually invest in bonds to secure a steady stream of interest income. Since they are generally considered less risky than stocks, bonds are considered a safe haven for capital preservation. They can add diversification to a portfolio, reduce its overall risk, and stabilize it during market downturns.

Like any other investment instrument, bonds have their own set of risks as well, including risk of inflation, risk of default, and liquidity risk.

REITs

Real Estate Investment Trusts (REITs) are investment vehicles that allow individuals to invest in income-generating real estate properties, without directly owning and managing them. They can be great for adding diversification to a portfolio and securing a stable income. And since REITs can be traded on stock exchanges through property investment platforms, they also provide liquidity.

On the other hand, investing in REITs carries the risk of potential losses due to interest rate sensitivity, real estate market fluctuations, legislative changes, and general market volatility.

Cryptocurrencies

Cryptocurrencies are digital or virtual currencies that use cryptography for security and operate on decentralized blockchain technology. Their promise of high returns and the potential to disrupt traditional financial systems is what makes them attractive to many investors.

However, they come with the risks of extreme price volatility and regulatory uncertainties, making them best suited for more experienced investors with a higher risk tolerance and a willingness to navigate a complex and rapidly evolving market.

Ethical Investments

Ethical investments, also known as socially responsible investments (SRI), involve investing in companies and funds that align with one's ethical, environmental, or social values. Some investors prefer investing in SRIs as a way to contribute to positive change while potentially earning financial returns.

Since these investments carry a risk of underperformance compared to conventional investments, they are best suited for socially conscious investors who prioritize their values alongside financial returns and have a long-term investment perspective.

Alternative Investments

Alternative investments encompass a diverse range of assets beyond traditional stocks and bonds, including real estate, hedge funds, private equity, and more. Investors who opt for them often do so to diversify their portfolios, seek higher returns, and reduce correlation with the stock market.

The benefits of alternative investments include the potential for enhanced returns and risk mitigation, but their risks involve complexity, illiquidity, and lack of transparency. As such, these investments are most suitable for experienced investors with a higher risk tolerance and a long-term investment horizon.

Features and tools play a pivotal role when selecting an investment platform, as they significantly impact your ability to make informed decisions and manage your investments effectively. These offerings can vary across platforms, but they generally fall into several categories:

• Research tools – Investment platforms provide access to research tools like market news, company reports, and analyst recommendations for staying updated and assessing investment potential.

• Analysis features – Platforms offer in-depth analysis tools, including fundamental, technical analysis, and risk assessment, to understand financial health and growth prospects.

• Charting capabilities – Charting tools visualize price movements, helping identify trends and entry/exit points for investments.

Investment platforms offer various options for portfolio management, including:

• DIY – Investors make all the investment decisions, select assets, and rebalance their portfolios as needed.

• Ready-made portfolios – Or model portfolios, are pre-constructed by financial experts. They are diversified and designed to match specific risk profiles or investment goals.

• Robo-advisor – Automated investment platforms that use algorithms to create and manage portfolios based on your risk tolerance and financial goals.

It is crucial for an investment platform to have minimum downtime, as well as to be intuitive and easy to use. The best way to judge a platform’s stability and convenience is to test out all its features through a demo account – this is especially important for beginner investors: a steep learning curve is less than ideal when you start out investing.

The majority of investing platforms now come with both a web workstation and a mobile application. New generation outfits, most notably Trading 212 and eToro, embrace a mobile-first approach and provide a robust mobile product that is fully optimised and features almost every service offered on the web version.

If you prioritise investment portfolio management while on the go, it may be wise to thoroughly test out the mobile product along with the website and monitor the investing app from stores like App Store or Google Play to ensure it receives regular bug fixes and updates.

The Financial Conduct Authority in the UK authorises and regulates any outfit that engages in financial services. As per its regulations, each firm is obliged to segregate the accounts holding client funds from company assets – this means that in the event of the company going insolvent, the client monies are protected, and the company cannot use client monies for their own operational expenses.

Besides regulatory adherence, investors should seek a track record of success, client retention, and a substantial amount of assets under management. It’s also crucial for an investment platform to employ industry-standard security measures like 2-Factor Authentication across all their digital products.

Having accessible and informed customer support is significant for all investors, but even more so for beginners. For those who are uncertain about using different products, it's advisable to choose a platform that offers multiple support options, including live chat or phone line. We also recommend testing the support staff by asking several questions to gauge their response time and level of knowledge.

Finally, beyond what the platform can offer, the investor’s personal preferences can play a massive role in deciding what platform is best for their investing goals.

Experience Level

Experience level is a crucial factor in choosing the right platform, as beginners may prefer user-friendly options, while experienced investors might seek advanced tools and features.

Investment Goals and Strategy

Investment goals and strategy should align with the platform, whether it's for long-term growth, day trading, or other specific objectives.

Size of Investment

The size of the investment matters, as some platforms offer fee structures that make more sense for larger investments, while others cater to smaller portfolios with lower fees.

Additionally, some investment types are more suitable for investors with larger capitals, while others can be profitable even with smaller investment amounts.

Here’s a table of recommendations you can consider for your investing needs:

Both investors and traders purchase securities by participating in the financial markets to make a profit, but they differ in terms of time spent invested and the frequency of placing entry and exit positions. Depending on the strategy, traders usually seek smaller yet more frequent returns by taking advantage of price movements in the short term – like a day, a month, or possibly a year. Investors, on the other hand, focus on long-term gains and hold on to their assets for years or potentially decades.

There are various ways investors can use investment platforms, including the following.

Automated Investing

This refers to any kind of investing that happens automatically without the input of the user, whether through the use of algorithms, AI, or robo-advisors. This is ideal for those who prefer a hands-off approach. Beginners may opt for robo or AI investing if they don’t want to make their own investment decisions, while algorithmic investing is useful for more experienced investors who have a solid strategy but not enough time to implement it manually.

Smart Investment Portfolios

Smart portfolios bundle together a variety of assets, typically with a focus on a particular theme or investment goal. They’re ideal for hands-off investors looking for an easy way to gain exposure to particular industries or strategies.

Fractional and Micro-investing

Fractional investing is great for those who don’t want to purchase a whole number of shares. For example, if you wanted to invest in a stock with a price of £500 but you only had £100 available, you’d be able to buy a fifth of a share if your platform allows.

Micro-investment platforms facilitate investing small amounts by offering things such as fractional shares, penny stocks, 0% commission, and low minimum deposits and order sizes. They’re great for those who have limited investment capital or just want to invest their spare change.

Social and Copy Investing

Platforms that offer copy investing enable users to select other investors to copy. Whenever someone you copy places a trade, the same trade will automatically be placed in your account as well. This is perfect for investors who want to reap the same benefits as more experienced investors.

Dividend Investing

This strategy involves buying stocks that pay regular dividends, providing a steady income stream. Dividend-paying companies may be on a strong financial footing, and adding them to a portfolio can provide more stability, though they may not be the best stocks for growth.

Dividends are typically distributed in cash every month, quarter, or year. Your investment platform will likely add any dividends you receive to your account cash balance, where you can reinvest them if you wish. There are also dividend funds that bundle together a variety of stocks that pay dividends.

Trading

Many investment platforms also support trading. This involves buying and selling assets on a much shorter time scale than investing in order to profit from short-term price fluctuations. Trading typically carries more risk than investing so is better suited to more experienced users who have the time to take a hands-on approach.

The best trading platforms will offer advanced charts with features for technical analysis. They may also enable traders to speculate on the price of assets without actually owning them by trading derivative instruments such as CFDs.

Demo and Practice Accounts

A demo account typically looks the same as the real version of the platform with all the same features, but it is funded with virtual money. This is ideal for users who want to get familiar with platform features or test out new strategies before risking any real money.

Additionally, there are multiple types of retail investor accounts you can use for different purposes.

General Investment Accounts

A General Investment Account (GIA) is a versatile financial product that allows individuals to invest in a wide range of assets, such as stocks, bonds, and funds, without the tax advantages of ISAs or pensions.

GIAs are ideal for investors who have maximized their tax-advantaged accounts or want more flexibility. You can buy and sell investments at any time, making them highly liquid.

ISAs

Individual Savings Accounts (ISAs) are tax-advantaged accounts designed to help people save and invest. There are several types of ISAs, each with distinct features:

• Stocks & Shares ISA – This ISA allows individuals to invest in a wide range of assets, including stocks, bonds, and funds, with all gains and income being tax-free. Discover the best stocks and shares ISAs.

• Lifetime ISA (LISA) – LISA is geared toward first-time homebuyers and retirement savers. It offers a 25% government bonus on contributions, up to a certain limit, which can significantly boost savings for these goals. You can only withdraw money from your LISA when you reach 60 or buy your first home, otherwise you’ll pay a withdrawal charge. Find out which are the best LISA providers.

• Junior ISA – These are for children under 18, and they come in two varieties: Cash Junior ISAs and Stocks & Shares Junior ISAs. Parents or guardians can save on behalf of their children, and the money grows tax-free until the child turns 18. Here are the top Junior stocks and shares ISAs.

ISAs provide a tax-efficient way to save and invest, and they're well-suited for a variety of financial goals. Any returns generated within the ISA are not subject to capital gains tax or income tax, but contributions are subject to an annual limit. You can only save up to £20,000 in total across all your ISAs, and a maximum of £4,000 of this can be paid into your LISA.

SIPPs and Personal Pensions

A Self-Invested Personal Pension (SIPP) and a personal pension are retirement savings vehicles available in the UK.

A SIPP is a type of personal pension that offers more control over your investments. With a SIPP, you can choose from a wide range of investment options, including stocks, bonds, funds, and commercial property. They also offer tax benefits like tax relief on contributions and tax-free growth within the pension.

Personal pensions are more straightforward and are typically managed by a pension provider. They are ideal for those who prefer a more hands-off approach to retirement savings. Personal pensions also offer tax benefits, including tax relief on contributions.

While SIPPs are well-suited for individuals who are experienced investors and want to actively manage their retirement savings, personal pensions are better suited for those who prefer a simplified approach to retirement planning.