HOW TO CHOOSE AN INVESTMENT PLATFORM UK

how to choose an investment platform UK

Over the past one year, we see more people working from home and the Stock Market investing becoming a thing of interest to many

It has been on the radar for both the Millennials and Gen Z, and now more than ever, more people have begun to troop into investment.

This ambition to invest more can be determined by various factors such as the marketing efforts of both new and old investment platforms which took up the present situation as a new gold rush.

Your choice in investment platforms matters because it represents a substantial lifetime value of your finances. 

There are certain factors we need to check out specifically before getting on the journey of choosing an investment platform.

DIFFERENT INVESTMENT NEEDS

I will be walking you through the step-by-step guide on the factors you should watch out for before choosing an investment platform.

You should not choose an investment platform based on influence from your friends, rather you should choose one that is specific to you;

Reasons being that:

i) If you are somebody who has less than £15,000 and someone else have £300,000.

You and that person will choose a vastly different platform.

ii) Your goals can be radically different from that of someone else, so you have to choose an investment platform based on your goals.

Finally,

iii) We have different investing strategies. You could possibly choose trading or passive investing or it could be simple buy to hold.

So, you should now understand why these three factors are necessary for you to choose an investment platform that is specific to you.

HOW TO CHOOSE AN INVESTMENT PLATFORM UK

Here are 5 things that I believe you should check out before you choose an investing platform you will put your money into

1 – WHAT WILL I INVEST IN?

The first question will be to ask yourself, what will I invest in? And the answer to that question should be your guide in selecting or shortlisting several platforms that you might want to consider investing in.

For example, if your investment strategy is to trade typically, that already cancels out many platforms that aren’t suitable for a person interested in trading. Or say your investing strategy is that you are into passive investing; you want to examine other platforms that support the specific assets of interest.

These investment platforms should have the needed index funds or ETF, indicating it is promising to have your money invested in them.

Other things to consider – are the right types of accounts available with these investment platforms you plan to invest your money through? Do they have regulated and suitable tax-efficient accounts to help your money be invested in a tax-efficient way? These are sometimes referred to as tax-efficient wrappers.

2 – THE TYPE OF SERVICE I WILL GET

The next question to ask yourself – what type of service will I get from the investment platform? There are a lot of different investment platforms offering different levels of service. Some don’t offer an app for investing, e.g., Vanguard (partly because their plan is to give their consumers more savings by cheaper products)

However, some propose to their consumers a useful investing app, e.g., Hargreaves Lansdown. If you might be a person who might say, “Well, actually, I don’t necessarily need an investing app.” I’d somewhat pay less for my service instead of requiring an investing app.

It could be that you might be somebody who urgently needs an app because you prefer to observe your investments from time to time.

I would strongly advise that you investigate the service being offered because buying cheap all the time might not be the best thing to do. And now that I know the trend is downward as far as fees are concerned when it comes to investing platforms, balancing the need for a good service with the need for paying for that service should be practiced.

One step I always do with these investment platforms is giving them a call. Regardless of the myth behind calling investment platforms, just give them a call and confirm the vibe you get for their services.

Calling will also help determine how useful they are by answering questions and understanding what you’re investing your money into.

3 – THE AMOUNT IT WILL COST YOU OVERALL

The third thing to consider is an important point on choosing an investment platform: how much will it cost you overall?

As soon as you have your money invested through an investing platform, people often do not change their investing platforms. They just put in money and leave it to invest on autopilot.

So, you might want to make sure you have chosen the right investment platform when you have started that process of investing. Fees deplete wealth over time; investing platforms are run by the fees they provide for each of their services.

Their charge fees are understandably meant to maintain their costs and pay their staff members’ technology, and so on. So, to make sure you are not incurring a loss, choose a platform where the fees are appropriate for you.

In my opinion, the lower those fees you’re paying the investment platform, the better your portfolio, and vice versa. Yet, choosing an investment platform because they’re marketing themselves as “Free” could also be a bad decision.

4 – THE EXTRA TOOLS AND ANALYSIS YOU WILL GET

When it comes to the extra tool and analysis you will get, I know that Hargreaves Lansdown’s website contains a lot of helpful and useful information on investing.

You can see things like charts and performance, dividend history, and company financials before you sign up. Directors’ transactions and news information are not exempted either, and that why I use Hargreaves Lansdown.

So, take your time when creating a shortlist and consider if a particular investment platform is suitable for you when you’re analyzing various platforms.

Check if the extra analytical tools or extra bits of information you will be getting can provide more informed decisions about my investing and maximise the information you’ll be getting!

5 – THE ADDITIONAL FEES YOU WILL PAY OVERTIME

The concluding thing to observe is what additional fees will you be paying overtime?

Hargreaves Lansdown charges 1%, and AJ Bell charges 1% as their dividend investment with minimums and maximums clearly specifying them in your dividend reinvestment. The Share Center, on the other hand, currently charges 0.5% for dividend reinvestment.

Other platforms, including Fidelity and Interactive Investors, charge a flat fee of £1, £1.50, or 99 p, for dividend reinvestment compared to a percentage.

Choosing a platform where those fees are reduced is smarter because it gives your money enough capacity to work for you. You should research some investment platforms that don’t have any dividend reinvestment fees. 

Doing research will give you a better understanding of those fees. Watch for transfer fees and other costs that are detailed as scheduled fees for each investment platform.

I’ll love to end this blog with three action plans you should consider using

ACTION PLAN

  • Are you already investing through an investment platform? Then, review your platform’s fees again.
  • Shortlist the top 3 other investment platforms and compare your current platform fee with theirs.
  • Project impact on your wealth in the future and the effects of the fee difference.
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