Compare the cheapest (and best) investment ISA platforms
The Cheapest fund platforms for Stocks & Shares ISAs for most people
If you want a professional to invest the money in your Stocks and Shares ISA investment for you then Moneyfarm provides the cheapest discretionary investment service in the market for under £15,000. in fact they will manage £15,000 of your money free of charge for the 1st year and then £10,000 free after that. The only cost is the cost of the underlying exchange traded funds (ETFs) which they purchase and is typically only 0.25%. Think of it like enjoying the cost savings available to DIY investors without having to run the money yourself. No one else in the market offers this. You can read our full unbiased Moneyfarm review.
If instead you want to invest your money yourself (so called DIY investing) then the cheapest fund platform will depend on the size of your investment and how many trades you make on an annual basis. Below I have calculated the cheapest fund platforms for an ISA investment. So assuming that you plan to invest the full annual ISA allowance of £15,240 (2016/17) into funds and make 10 fund switches a year. The top 4 cheapest ISA providers platforms are:
Cheapest Stocks and Shares ISA providers - if you want to invest your own money
|Stocks and Shares ISA provider||Year 1 cost||Annual Cost|
|Charles Stanley Direct||£38||£67|
|TD Direct Investing||£46||£57|
|AJ Bell Youinvest||£53||£112|
Comparison of stocks and shares ISA & SIPP investment platforms
Of course, most investment platforms allow you to invest via a Stocks and Shares ISA as well as a SIPP. So there are cost and admin efficiencies from using the same fund platform for both. At this stage you may not know whether you want to invest your money via a SIPP or an ISA. Or you may plan to start saving into a pension (SIPP) in the future. So it may make sense to ensure that the platform you choose is the cheapest for investing in both an ISA and a pension. Below is a comparison showing the cheapest investment platform for both Stocks and Shares ISA and SIPP investments.
To produce the table I compared both the SIPP charges and the Stocks and Shares ISA charges across the market assuming an initial lump sum investment of £15,000 into a Stocks and Shares ISA and an initial investment of £5,000 into a SIPP. I have allowed for a maximum of 10 fund switches per year:
Cheapest combined SIPP & ISA providers
|SIPP & ISA provider||Year 1 cost||Annual Cost|
|AJ Bell Youinvest||£65||£134|
|Hargreaves Lansdown - (see best buys section below)||£90||£164|
|TD Direct Investing||£156||£117|
5 steps to find the cheapest Stocks & Shares ISA provider for you
To find the cheapest Stocks and Shares ISA provider for you personally use our purpose built Stocks and Shares ISA comparison tool. It quickly compares all 21 different Stocks and Shares ISA providers out there to find the cheapest ISA provider for your investment size and desired investments. Follow the steps below once you’ve loaded the comparison tool:
- Enter the size of your initial ISA investment you want to invest in funds and/or shares
- Choose how many times you will change your investments in a year. If you don’t have an idea then 10 is a good estimate. Below I’ve reproduced some examples alongside their results
- Select how long you plan to invest for
- If you click ‘the further details’ link you can enter details of any monthly payments you may wish to make
- Once you click ‘submit’ you will be presented with a list of the cheapest stocks and shares ISA providers for your needs
Best buys – Stocks and Share ISA providers
Of course it’s not all about costs as I explain later in the section the ‘things to consider when picking the best fund platform’. Below I provide a roundup of our best buys for ISA beginners and the best overall fund platform for your Stocks and Share ISA.
Overall best buy Stocks and Shares ISA
Hargreaves Lansdown Vantage ISA – provides the best combination of cost, investment fund choice, customer service, online functionality and tools of all the providers out there. Unsurprisingly its the most popular Stock and Shares ISA in the UK and has won numerous industry awards.
Best buy Managed Stocks and Shares ISA for beginners
Moneyfarm – provide the cheapest discretionary investment service (which means that they make the investment decisions for you) in the market for under £15,000. They will manage £15,000 of your money free of charge for a year and this then drops to £10,000 thereafter. If you are below these limits then the only cost you pay is the cost of the exchange traded funds (ETFs) which Moneyfarm invest in. Given that ETFs are the cheapest way to invest it’s unsurprising that they cost on average 0.25%.
Important things to consider when picking the best fund platform
With the rise in DIY investing many investors are now looking to maximise the return from their investments by using a fund platform (also known as an investment platform) to manage their investments themselves.
What is an investment platform?
An investment platform (also known as a fund platform or a fund supermarket) is an online shop where you can buy, sell and hold all your investments in a tax efficient wrapper such as a Stocks and Shares ISA or a SIPP (Self Invested Personal Pension). Fund platforms will have their own Stocks and Shares ISA (often called an Investment ISA) as well as SIPP product. Think of these like boxes into which you place your investments (funds). While the way these products work are the same across the various investment platforms there are distinct differences, such as the number of funds available and the charges that are applied.
Therefore when selecting the best stocks and shares ISA provider that suits your needs it is important to read the below list of the things to consider. The best investment platform for one investor is not the necessarily the best for another investor.
Two things to check to find the best Stocks and Shares ISA
Whether it is a wider choice of investment types, investment tools, research, model portfolios or ease of use on a smartphone every fund platform will offer something different. It makes sense, therefore, to do some research on a number of investment platform providers before you choose the right investment platform for your needs.
1 – Make sure the fund platform provides the investment choice you require
Many people will start looking for an investment platform when they want to invest in a stocks and shares ISA as they search for a better return on their investment. However over time the same person may want to invest beyond the limits of the annual ISA allowance and, say, start providing for their retirement by starting to invest in a SIPP or start a Junior stocks and shares ISA for their children. It makes sense, therefore, to use an investment platform which will be able to provide a service that can grow with your investment needs over time.
2- Always check out the range of charges
The aforementioned Stocks and Shares ISA comparison tool will calculate the cheapest ISA provider for you based on the assumptions you input. However, it is worth familiarising yourself with the full range of charges that an investment platform will apply for the administration of your investments. Some will only be applied if you decide to move your money elsewhere, which the tool won’t include.
This is the basic charge for use of the fund platform and will either be a flat fee or a percentage fee, which is dictated by the amount of investment.
These are fees charged every time you buy and sell funds. The more you switch your investments between funds the more these fees will mount up. Most fund platforms don’t charge for fund switches but make sure you check.
Fund manager charge
This is strictly speaking not a fee charged by the fund platform but one charged by the fund in which you invest. Some of the larger investment platforms (such as Hargreaves Lansdown) will negotiate a reduced fee with a fund manager due to the high level of business that is transacted in that fund. So it is worth comparing the fees charged on your desired funds across different platforms.
If you want to move your investments from one platform to another then the platform you are leaving may charge you a fee for doing this.