Do investment platform fees matter?
In a nutshell, yes.
The fees applied by your investment platform apply, whether or not your investments are doing well. Over time, this can make a huge difference.
Here’s how £1,000 in a platform costing 0.1% and a platform costing 1% would perform in three different investment performance scenarios, ranging from poor (5% loss), to neutral (0% growth) to good (5% growth):
Note: example for illustration only. Assumes consistent loss or growth each year.
Ultimately the cheapest platform for you will depend on your investment style and the size of your portfolio.
- Find out more: read our guide to the best and worst investment platforms
Small portfolios (less than £50,000)
Look for platforms with a low-percentage based annual fee and no fixed fees.
A small portfolio shouldn't mean you receive inferior customer service: many top-rated platforms now allow you to invest from just £100 a month.
Large portfolios (more than £50,000)
Fixed-fee platforms are likely to work out cheaper, particularly above £100,000, where differences in fees can add up to the thousands.
Don't ignore percentage-fee platforms completely, however, as some stop charging for amounts over certain thresholds.
Bear in mind that the Financial Services Compensation Scheme only protects sums up to £85,000 in the event of platform failure, so you may wish to divide large pots between platforms.
- Find out more: what is investment risk?
If you frequently buy or sell investments - particularly shares - than pay close attention to the cost per trade.
Some platforms will include a certain number of 'free' trades per month.
If you trade funds, than some platforms now allow you to buy and sell these for free - just don't forget the platform's annual management charges.
Compare investment platform fees and charges
Which? members can exclusively read our detailed comparison of leading investment platform costs, with suitability ratings for eight different sizes of portfolio.
Don't just look at fees
Investment platforms aren't just divided by price however, but also by customer service, investment choice and ease of access.