One of the first steps to start investing is to pick an investment platform that would best suit you.
There are a few fundamentals that you need to consider when deciding what platform is best for you such as fees, accessibility (app / website), product type (ISA, pension, General Investment Account) and the minimum you can invest.
What is an Investment Platform?
An investment platform allows you to purchase and store a range of investment products such as funds and single stocks.
Each platform will vary in terms of costs, the range of investments provided and the customer service provided. Hence it is crucial you fully understand your investment platform before signing up to it.
There are a whole range of investment platforms for you to chose from – examples include Vanguard, Nutmeg, AJ Bell, HSBC, Hargreaves Lansdown and Freetrade. The wide range available has advantages, but can often be overwhelming for new investors.
What to look for when choosing an Investment Platform:
Range of Investments Available
Does the platform have a wide choice of fund, single stocks, bonds or Exchange Traded Funds (ETFs)? Have an idea of what you want to invest in before looking into, but through researching into platforms you may gain a better picture.
A single platform may not be able to offer all the the single stocks, bonds, funds etc, making researching investment platforms crucial. The fewer the accounts you have will mean it is a lot easier to manage your portfolios however you may want to have two portfolios to cover your investment wants.
Some platforms allow you to set up monthly standing orders which allows money to be automatically taken out of your linked account and to be invested. This is all done automatically which saves you time and aside from the initial set up means you can forget about investing continuously.
Does the investment platform offer an easy to use website, do they also offer an app that you can invest through? Is it easy to buy and sell your investments, is the money invested immediately? Platforms such as Nutmeg, Freetrade, Trading 212 and Moneybox have apps which you can buy/sell and look at your investments on.
Do note some investing apps have made investing incredibly easy too and could lead you to checking upon your portfolio on an almost daily basis. This is not a good thing! You should be investing for the long run and not distracted by the daily fluctuations of the stock market.
One of the main reason people go ahead with a specific platform is depending on the platform fee. Whilst fees for using an investment platform are often unavoidable, the rise of low cost investment platforms provide competitive low cost options.
Charges differ for each platform, for example some charges you an quarterly charge which is taken out of your total balance whilst others charge you for every purchase you make.
Type of Products Available
There are a range of products you can invest into:
- Stocks and Shares ISA – a tax wrapper meaning you will not pay any tax on dividends or capital gains tax. Every tax year you are given a £20,000 tax limit. For a guide on ISAs check out this blog post.
- General Investment Account – unlike an ISA, you will pay start paying dividends tax once you earn over £2,000 in dividends and pay Capital Gains Tax after you earn £12,300 in capital gains
- Lifetime ISAs – you can open a Lifetime ISA and choose to invest in it. For more information about Lifetime ISAs read more in this post.
Amount of Assistance
Full managed portfolios, such as those provided by Nutmeg allow you to provide an assessment of your investment risk and they will provide chose the funds and investment your money. Do note – this will come at a cost.
Other platforms allow you to choose exactly where you want your money to go and will give you full flexibility to invest as much or as little as you want in the specific investment type that you have chosen.
- There is a wide range of investment platforms available, from fully managed, apps, low cost and ISA accounts
- Take your time finding out what you want from the investment platform and what they will provide you
- The investment platforms that I / your family or friends use may not be the best suited platform for you. Hence researching beforehand is crucial