13 min Read
16 Oct 2017

Compare the cheapest (and best) investment ISA platforms

See the cheapest investment ISA platform

See the cheapest investment ISA platform

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 one of 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. 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, what you invest in and how many trades you make on an annual basis. Below I have calculated the cheapest fund platforms for an ISA investment assuming that you plan to invest the full annual ISA allowance of £20,000 (2017/18) into funds and make 10 fund switches a year. The top 5 cheapest ISA providers are:

Cheapest Stocks and Shares ISA providers - if you invest in funds yourself

 

Stocks and Shares ISA provider Year 1 cost
Vanguard Investor* £30
Charles Stanley Direct £50
TD Direct Investing £60
Fidelity £70
A J Bell Youinvest £80

*Vanguard only offers its own tracker funds to invest in

Cheapest Stocks and Shares ISA providers - if you want to invest in investment trusts, ETFs & shares yourself

Stocks and Shares ISA provider Year 1 cost
iWeb £75
Fidelity* £70
IG £80

*Fidelity only allows you to invest in unit trusts, investment trusts and some exchange traded funds (ETFs) but not shares directly.


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 I compare investment platforms 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 (investing in funds)

 

SIPP & ISA provider Year 1 cost
AJ Bell Youinvest £67
Fidelity £70
Hargreaves Lansdown - (see best buys section below) £90
TD Direct Investing £156

5 steps to find the cheapest Stocks & Shares ISA provider for you

To find the cheapest Stocks and Shares ISA provider for your size of portfolio use our purpose built Stocks and Shares ISA comparison table. It quickly compares all 22 different Stocks and Shares ISA providers out there to find the cheapest ISA provider for your investment size. Follow the steps below:

  1. Decide the size of your initial ISA investment you want to invest
  2. Click on the ISA comparison heatmap table below to enlarge it
  3. Look down the column of the amount you wish to invest. The colour scale runs from red (expensive) to green (cheap) and assumes you plan to invest in funds and make around 10 fund switches a year, which is typical.
  4. Choose a platform
  5. Be sure to bear in mind how your chosen platform compares at higher portfolio values if you plan to add more money to the account later

Stocks and Share comparison table

red indicates expensive and green indicates low cost (click to enlarge)

Cheapest stocks and shares ISA comparison table - heatmap

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 one of 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. 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%. Moneyfarm’s investment performance to date has been strong too.

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 above Stocks and Shares ISA comparison heatmap calculates the cheapest ISA provider for you based on your ISA portfolio size as well as the assumption that you wish to invest in funds and make around 10 fund swithces a year. 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.

Administrative charge

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. Typically a flat fee approach is more cost effective if you have over £50,000 in your portfolio. However beware that most flat fee-based platforms charge dealing fees which can quickly negate the benefit of a flat fee over a percentage based fee.

Dealing fees

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 (although they are listed in the heatmap above).

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.

Transfer fees

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.

Article overview

Key points

  • The cheapest Stocks and Shares ISA for most people is Vanguard Investor if they just want to buy tracker funds otherwise it is Charles Stanley Direct
  • The cheapest fund platform for people wanting to invest in an ISA and a SIPP is AJ Bell Youinvest
  • To find the cheapest ISA platform for you then use our Stocks and Shares ISA comparison tool.
  • ISA best buys:
  • Things to check to find the best Stocks and Shares ISA
    • Make sure the fund platform provides the investment choice you require
    • Always check out the range of charges
      • Administrative charge
      • Dealing fees
      • Fund manager charge
      • Transfer fees

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Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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