We get asked this question all the time – What is the best investment platform? But sadly, there isn’t a clear-cut winner. It all depends on the service or functionality that you want and the amount of money that you have invested and your investment style.
Previously we’ve praised Interactive Investor for those that have a decent amount invested. But from the 1st June 2019 they’ve introduced new charges. So, does Interactive Investor still cut the mustard?
Here we review Interactive Investor and see if it’s still the best investment platform for UK investors. Let’s check it out…
YouTube Video > > >
What Accounts do they offer?
Interactive Investor offer a wide range of accounts including ISA, SIPP, Junior ISA and General Trading Accounts. We expect these as standard but it’s not uncommon for other platforms to only offer a general account, which means you could be liable to pay taxes on your gains and dividend tax.
So called “free” platforms such as Freetrade do offer an ISA but have additional charges for these. So, Interactive Investor including all these accounts as standard is great but note there wasn’t a Lifetime ISA option, which might be a disappointment for some of you.
Of course, those that watch our YouTube channel on a regular basis will know we strive for financial freedom today, so the standard Investment ISA is our weapon of choice.
What is the Right Fee Structure? – Percentage Fee vs. Flat Fee
Generally, there are 2 type of fee structures for investment platforms: –
- Percentage fee, which will see the total charge increase as your investment pot increases.
- And a Flat fee, which stays the same as your investment pot grows
As you can imagine you don’t want to be paying a percentage fee if you have a lot of money.
For example, AJ Bell offer a low percentage fee of just 0.25% but if you’ve managed to build up a large investment pot of say £200,000, that 0.25% would be an annual charge of £500.
If you have built up a pot £500,000, which you might do if you’re serious about financial freedom then it would be a charge £1,250.
This is simply getting ridiculous on the larger pot sizes.
This is where the white knight Interactive Investor comes riding in to save us with their friendly flat fee pricing. No matter how much your pot size grows Interactive Investor are going to charge you the same amount.
What are the charges?
They used to offer what we thought was a very good price at £90 per year (£22.50 per quarter). But sadly, they just increased this to £10 per month, so £120 per year.
Despite the disappointment with the cost increase it doesn’t really change too much, albeit you need a little more money to make Interactive Investor the lowest cost platform.
In fact, Interactive investor don’t just charge £10 a month. They’ve introduced 3 service plans at different prices with the £10 plan being the cheapest. Whilst this does make things more complicated to compare, it does benefit those that trade frequently, as you will get lower trading costs on the more expensive plans.
Here at Money Unshackled we encourage you to trade less frequently and hold for the long term, so we don’t really see the need to be on the more expensive service plans. Those that trade frequently tend to underperform due to clocking up lots of trading fees. Because of this we’ll be basing the rest of the review on the cheapest ‘Investor Plan’.
A positive change they’ve made is the reduction of trading fees from £10 to £8, which is a very welcome change indeed.
The great thing about Interactive Investor is they actually give you the equivalent of 1 free trade per month. This is £8 credit to spend on whatever trades you like, so really can make Interactive Investor a cheap platform even for those without a huge amount of money.
Unfortunately, those credits expire after 90 days, which isn’t long. We think under the old prices, they used to last 12 months.
Other Services
Interactive Investor isn’t just a 1 trick pony. They have 1 of the best service offerings out there. And in their words, you “Get access to more investment opportunities than any other provider in the market”
This includes access to 40,000 shares across 17 global exchanges, over 3,000 funds, investment trusts, ETF’s and more. This superb range just isn’t provided by cheaper alternatives.
One of the features we like is Regular Investing, which allows you to invest on a monthly basis for just £0.99 per trade. We both feel that regular investing is one of the best ways to build significant wealth.
They also provide a dividend reinvestment service for just £0.99. Another service that many cheaper platforms don’t offer.
They also have a contact phone number…Wow! Don’t underestimate this. When you have a lot of money invested and you need help you may want to speak to a person. Not all investment platforms make it so easy.
Summary
To summarise, we feel Interactive investor is ideal for those with larger pot sizes, or even those that will have a large pot size in the near future.
The monthly free credit is also great, which depending on your frequency of trading can make Interactive Investor one of the cheapest platforms even for smaller pots.
What do you look for in an investment platform? Let us know in the comments section.
