20 min Read
27 Mar 2018

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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Interactive Investor Review – is it the best broker for your money in 2018?

Interactive Investor reviewInteractive Investor review

Interactive Investor is an award-winning comprehensive online investment platform with 7.4 million users each year. In this Interactive Investor review, you will about the services provided by Interactive Investor as well as their costs, fees and the tools and investment information they provide. In the last section of this article I also compare Interactive Investor vs Hargreaves Lansdown, the UK's biggest investment platform.

Who is Interactive Investor

Launched in 1995 Interactive Investor is an award-winning online investment service that provides the DIY investor with the tools and trading environment to help them make informed investment decisions. Its 7.4 million annual users, and the recent acquisition of rival TD Direct, makes Interactive Investor one of the most engaged and active investor communities in the UK, especially since Motley Fool closed its investment forums.

Interactive Investor does not offer investment advice so is an execution-only service but does provide a range of investment tools and some investment information to help the DIY investor which I discuss later.

The Interactive Investor Group also owns Moneywise Publishing Ltd. which publishes financial titles such as Moneywise, Money Observer and their websites.

In 2017 Interactive Investor received the following awards:

  • Investors Chronicle 2017 – Best Self-select ISA provider
  • ADVFN - Best Low Cost Stockbroker 2017 (TD Direct Investing)
  • ADVFN - Best SIPP Provider 2017 (TD Direct Investing)
  • ADVFN - Best Stockbroker for International Dealing 2017 (TD Direct Investing)
  • Shares Awards 2017 – Best International Share-Dealing Service

What services and products are offered by Interactive Investor?

Interactive Investor ISA

An Interactive Investor ISA allows an annual tax-free investment of £20,000 (for the 2017/18 tax year) in a variety of assets including funds, ETFs, investment trusts and shares. You can open an Interactive Investor ISA in less than 10 minutes and monitor your portfolio on a computer, tablet or mobile app. The minimum contribution to start an Interactive Investor ISA is a lump sum of £100 or £25 per month which is the same as Hargreaves Lansdown.

Interactive Investor Junior ISA

An Interactive Investor Junior ISA is a tax-efficient way of investing for a child's future. A person with parental responsibility can open an Interactive Investor Junior ISA and once open anyone can contribute to it, subject the current annual allowance of £4,128 (2017/18). The minimum contribution to start an Interactive Investor Junior ISA is £100 or £25 per month.  Again this is the same as Hargreaves Lansdown. However, there are other platforms that do offer lower minimum amounts to be paid into their Junior ISAs (read our roundup of the Best Stocks and Shares Junior ISAs). After the age of 18 the proceeds from an Interactive Investor Junior ISA become the property of the child who can withdraw or convert it to an adult ISA.

Interactive Investor SIPP

An Interactive Investor SIPP is a tax-efficient way of building up an income for retirement. All investments in a SIPP will qualify for tax relief up to a maximum of £40,000 per year (2017/18) or 100% of your annual income. Basic rate taxpayers will receive an uplift to any investment of 20%, so an investment of £8,000 will result in a sum of £10,000 being invested in a SIPP. Higher and Upper rate taxpayers can obtain additional tax relief through their annual tax return.

Interactive Investor Trading Account

An Interactive Investor Trading Account is a dealing account offering a wide range of investments including funds, investment trust, ETFS and shares. Interactive Investor also offers a comprehensive range of investment news, tools as well as an active investment forum.

Other products and services

Interactive Investor Company Account

An Interactive Investor Company Account allows trading in the name of a UK Limited Company which offers the same benefits as a standard Interactive Trading Account. This sort of account is not offered by most other investment platforms. Investments can be made in a wide of investments including funds, investment trusts and up to four nominated individuals can place trades and manage the account on behalf of the company. 

Interactive Investor Pension Trading Account

An Interactive Investor Pension Trading Account allows investment in assets such as property which are not available within the Interactive Investor SIPP. A pension trading account can be set up in association with a SIPP/SSAS administered by your preferred pension provider.

Interactive Investor Spread Betting & CFDs

Only for the most sophisticated of investors, trading Contracts For Differences (CFDs) and spread betting allows customers to speculate on whether an investment's price will rise or fall. Trading can be done with global currencies, shares, indices and commodities.

Trading on CFDs and spread betting is a high-risk investment and clients must understand fully the risks involved.

Expatriate and International Investment Account

While most investment platforms won't allow expatriates to become customers Interactive Investor is one of the few investment platforms that accept customers from outside of the UK via their Expatriate and International Investment Account

What can you invest in using Interactive Investor?

With Interactive Investor investments can be made in shares, unit trusts, OEICs, investment trusts, retail bonds, ETFs, bonds, gilts, CFDs and currencies.

How does Interactive Investor platform work

Once a customer logs in to their account they will be presented with an overview of all their accounts. Click on view investments in the overview table to see investments in each account (ISA, SIPP etc.)

The document history section is where all the relevant investment documents are held relating to a client's investments (much like they are with Fidelity)

Portfolio > Transaction history shows details all transaction conducted on the account.

Trading > regular investments is where regular investments can be reviewed and edited.

The research section is where all the investment research and news can be found together with access to the Interactive Investor forum.

The Interactive Investment platform is easy to use with the ability to manage all your investments needs in one place via a desktop computer, tablet or the Interactive Investor dealing app.

Interactive Investor ISA review

The Interactive Investor ISA is suitable for all DIY investors from beginners to experts. The range of investment choices is one of the best among investment platforms and trading is quick and easy. The investment tools, research and investor forum add an extra dimension to Interactive Investor's offering. The downside is that there is a £10 standard dealing charge on switches, even for funds, which makes the platform expensive for those with smaller pots. The dealing charge can be discounted if you trade frequently as described in the next section. Overall, while the investment choice is impressive Interactive Investor only becomes cost effective if you have a portfolio of significant size. When we analysed all the investment ISA platforms in the market, based on cost, Interactive becomes cost-effective (and competitive) if you have an ISA portfolio worth over £100,000 or you want to invest in a range of assets beyond just unit trusts. If you don't plan to invest in more esoteric investments then for portfolios up to £100,000 Hargreaves Lansdown is cheaper yet still offers one of the wides range of investment funds. Hargreaves Lansdown also provides extensive tools and fund research reports which Interactive Investor does not. Hargreaves Lansdown does not charge for fund switches (Interactive Investor charges £10 per trade) but does charge for transacting other asset types such as shares and ETFs. But investors wanting to frequently trade in ETFs and shares can get the switching charge discounted to £5.95 with Hargreaves Lansdown, which is cheaper than Interactive Investor.

Another alternative is to consider is AJ Bell which while not the cheapest investment platform for ISAs it is among the best value across a range of portfolio sizes (from £15,000 to £200,000), negating the need to keep moving ISA providers as your portfolio grows. If you want to simply invest in tracker funds then one of the cheapest ways to do this is via the Vanguard Investor platform, although you can only buy Vanguard's own tracker funds and ETFs.

Interactive Investor ISA Fees

Quarterly charge  - a fixed quarterly management fee of £22.50  is charged which in return provides £22.50 of 'trading credits' which can be used to pay for commission charges on future trades.

Dealing charge - standard dealing rate of £10 per trade or a frequent trader rate of £6 per trade if the average number of monthly trades is 10 or more. New account holders will be put on the frequent trader rate automatically for the first 3 months.

Interactive Investor SIPP review

The Interactive Investor SIPP is suitable for all DIY investors from beginners to experts. As a platform Interactive Investor becomes more attractive for investors with larger sums due to its fixed fee charging structure, as opposed to charging a fee based on a percentage of your assets as most platforms do. That means Interactive Investor is ideal for those investors with large SIPP portfolios particularly if they are interested in investing in more esoteric investments. However, if they trade frequently the trading costs will slowly mount up, although discounts are available as described below. When we compared the charging structures of all the leading SIPP providers out there Interactive Investor is generally one of the cheapest options if your SIPP is worth over £250,000.

As for alternatives to the Interactive Investor SIPP, while Vanguard Investor is a viable alternative for Stocks and Shares ISA investors wanting to build a cheap passive portfolio Vanguard does not yet offer a SIPP product. However, if your SIPP is worth under £100,000 and you just want to invest in investment funds (unit trusts) then Charles Stanley is among the cheapest SIPP providers and also one the most popular based on customer feedback we've received.

Interactive Investor SIPP Fees

Quarterly charge - a fixed quarterly management fee of £22.50 is charged which in return provides £22.50 of 'trading credits' which can be used to pay for commission charges on future trades.

Dealing charge - standard dealing rate of £10 per trade or a frequent trader rate of £6 per trade if the average number of monthly trades is 10 or more. New account holders will be put on the frequent trader rate automatically for the first 3 months.

Interactive Investor Trading Account review

The Interactive Investor Trading Account offers an everyday trading account with a wide range of investments. Trade online using a computer, tablet or mobile app by accessing the Interactive Investor Trading Account platform allowing full management of investments.

Interactive Investor Trading Account Fees

Quarterly charge - a fixed quarterly management fee of £22.50 is charged which in return provides £22.50 of 'trading credits' which can be used to pay for commission charges on future trades.

Dealing charge - standard dealing rate of £10 per trade or a frequent trader rate of £6 per trade if the average number of monthly trades is 10 or more. New account holders will be put on the frequent trader rate automatically for the first 3 months.

Free tools and investment advice offered by Interactive Investor

Free Research Account - opening a Free Research Account provides access to additional insights research tools plus you can set up watchlists and register for email updates.

Interactive Investor model portfolios

Interactive Investor did promote 12 model portfolios which were created by Money Observer editor Andrew Pitts and his team. These Interactive Investor model portfolios consist of 12 portfolios catering for medium and higher-risk investors wanting either income or growth. However, Interactive Investor seems to no longer promote these portfolios on their site yet they can be found on the Money Observer website. As such you don't have to be an Interactive Investor customer to look at them and it is no longer a benefit of being an Interactive investor customer.

How safe is Interactive Investor?

Under the Financial Services Compensation Scheme (FSCS), investor assets are protected up to a maximum of £50,000 per person. Any cash held is pooled with that of other customers and deposited with a number of financial institutions. In the event that one of these fails then cash deposits are protected up to a value of £85,000 per person, per institution.

Summary - Interactive Investor review?

Interactive Investor suits those DIY investors who want to manage their own investments, possibly invest in more esoteric investments beyond unit trusts, investment trusts and ETFs and who have a significant portfolio. That's because Interactive Investor has a fixed fee platform charge rather than charging a fee based on your portfolio size. That means that if you have an ISA portfolio worth over £100,000 or a SIPP worth over £250,000 Interactive Investor will be among the cheapest investment platforms out there. That is true even if you factor in their switch transaction charges. These transaction charges are even applied to unit trust switches, which many providers don't do.

While there are many positives to Interactive Investor's platform there are negatives. Their acquisition of rival platform TD Direct and the subsequent website upgrade has been met with quite a lot negative customer reviews online with some having difficulty trading. Some have ultimately switched platforms altogether. This is very reminiscent of the frustrations Fidelity customers experienced (see my Fidelity review) as a result of their recent website upgrade. It doesn't have to be this way as Hargreaves Lansdown recently rebranded their website without impacting customers.

Also for investors with ISA portfolios under £100,000 or SIPP portfolios under £250,000 there are other cheaper options especially if you only plan to invest in unit trust funds. For those looking for excellent customer service, investment research and excellent online functionality then Hargreaves Lansdown remains a popular option. Alternatively, the A J Bell Youinvest platform is among the cheapest platforms for most people who are looking to invest in unit trusts and want to hold both their Stocks and Shares ISA and a SIPP on the same platform (read our full AJ Bell review)

Interactive Investor vs Hargreaves Lansdown

Hargreaves Lansdown is the leading investment platform in the UK with Interactive Investor now the second largest by assets under management thanks to its acquisition of TD Direct. For a lot of investors when it comes to choosing the best platform for them it comes down to a choice between Hargreaves Lansdown vs Interactive Investor. For ease I've highlighted some of the key differences and similarities below:

  • Both have a wide range of investment choices and investment wrappers although Hargreaves also offers Junior SIPPs and annuities
  • Interactive Investor does accept ex-pat customers
  • Hargreaves Lansdown does not charge for unit trust fund switches
  • While both charge for switching other types of investment both offer discounts to customers making regular switches.
  • Hargreaves Lansdown offers more in the way of investment research, fund shortlists, research reports and suggested portfolios
  • Interactive Investor provides investment forums and an investment community
  • Interactive Investor is better value for investors with large ISA and SIPP portfolios over £100,000k+
  • Hargreaves Lansdown is usually more cost-effective for portfolios under £100,000
  • Hargreaves Lansdown has by far the best customer service, website interface and app

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