Investment platform fees compared: are you over-paying?

Your choice of investment platform could cost you hundreds of pounds per year - whether or not your investments perform well.

If you understand the level of risk you want to take on, and have the time to research investments, do-it-yourself investment platforms should be a cheaper way to invest than using a financial adviser.

Yet at a time when fund managers are competing to slash fees, significant cost gaps remain between the most and least expensive DIY platforms.

Investors with less to invest are disproportionately affected, with fixed fees on some platforms putting them at a huge disadvantage.

Here we reveal our findings, why reducing fees can improve your returns, and how to do so.

How much could you save?

Cost gaps (and thus savings) can add up over time.

funds

If you reinvest that money and stay in the market for five years, you could end up with an extra £574 in your pocket - assuming 5% growth.

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Are beginner investors paying over-the-odds?

Investors with smaller amounts in their portfolios are disproportionately disadvantaged if they stick with a pricey platform.

For a £5,000 portfolio, the money saved would be 2% of the amount invested, while portfolios from £25,000 to £500,000 vary from 0.37% to 0.46%.

Investors with larger portfolios shouldn't ignore cost however, as they can save the most.

If you have more than £250,000 invested, you could save £1,049 in a single year investing in funds or £1,077 investing in shares. Again assuming 5% growth over five years, these savings could leave you with a whopping extra £5,796 or £5,951 for funds and shares, respectively.

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Which investment platform is best for you?

Percentage vs flat fee

To keep platform charges from eating into your returns, you'll need to work out whether a percentage or a flat fee would suit you better.

Back to basics vs bells and whistles

Ethical investing

For many investors, the bottom line isn’t the only thing that matters - but also how your money is used along the way.

If you aren’t comfortable investing with a platform that encourages investors towards ‘sin sectors’ like fossil fuels and weapons, The Big Exchange could be a good fit.

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'Free' platforms

Freetrade charge a monthly fee to users who want additional features. For example, a stocks and shares Isa is part of their Standard plan at £60 a year or £5.99 per month.

InvestEngine is currently free with full access to all of its features, with the exception of its managed portfolios which charge a fee of 0.25% of the value of your portfolio.

Should you invest?

While investments can be a valuable way to save towards a goal, now might not be the time to start for everyone.

You'll need an emergency savings pot in place - between three and six months worth of living expenses saved in an account you can easily access - and no high interest debt, like credit card, before you start investing. 

To give your investments a decent chance of riding out market dips, you'll want to leave your money untouched for at least five years. If you're likely to use it before then, it's better to keep it in savings accounts.

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How to pick a stocks and shares Isa

Think about what you want to invest in.Consider the added charges.Check our customer scores.

source https://www.which.co.uk/news/article/investment-platform-fees-compared-are-you-over-paying-aO9Wd4x2FJaj
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