The best value platforms for your Isa investments

Choosing the right platform for your Isa could boost your savings, protecting your returns from being eroded by high fees.

One investor could pay thousands of pounds more than another for running exactly the same portfolio, due to differing charging structures between platforms.

If you have not reviewed your existing service for several years, there’s a chance you’re paying too much.

However, the best value platform may not simply be the cheapest – you’ll need to consider what you want to invest in, and how often you think you’ll buy or sell stocks or funds.

There are a few charges that make up the final amount you pay each year. The annual platform fee is charged either based on the value of your investments or as a flat fee.

The beauty of a flat fee is that your investments can grow without charges rising – but it can work out to be expensive if you have a small investment pot.

When you buy and sell investments there may also be a dealing charge per trade. You might also find a flat fee for this or even a platform that will let you trade for free.

You’ll also want to factor in how easy the platform website is to use, the quality of customer service it offers as well as the range of investment choices and help offered such as research, analysis and tools.

Choosing the right platform will not only save you money, you could also benefit from better functionality and a wider range of investments.

Here, Telegraph Money takes you through the Isas on offer depending on how you want to invest and how much you want to invest via our cheat sheet that summarises the best value fund shop for you.

Best platforms for Isas under £50,000

For investors who want to build a portfolio that includes the whole spectrum of investments – including funds, investment trusts, passive funds including trackers and exchange traded funds (ETFs), as well as individual stocks – then you’ll need to choose one of the larger platforms offering everything you need.

Lang Cat analysis for Telegraph Money (see table below), shows that a modest £15,000 Isa portfolio from Vanguard would cost just £23 a year to run, based on four trades a year.

Vanguard charges 0.15pc as a platform fee capped at £375, with no charges for buying and selling funds. There’s a £250,000 maximum portfolio limit and at Vanguard you can only buy its own funds.

Lang Cat reports that good value is also offered by iWeb, which charges a £100 account opening fee, though you can get this refunded if you transfer in from an Isa with another platform worth at least £5,000. It charges £5 per trade so, based on our assumptions, a portfolio will cost just £20 a year.

To avoid the £100 outlay (if you’re not transferring an account), an AJ Bell YouInvest portfolio of £15,000 would cost £44 a year. It charges a 0.25pc platform fee and £1.50 for buying and selling funds or shares.

Steve Nelson, insight director at Lang Cat, said: “iWeb is a no-frills service which is entirely counterbalanced by the ability to get extraordinary value for money, but only if you know what you’re doing.

“If you’re looking for something more comprehensive then you can consider paying a little more for the likes of AJ Bell.”

Best platforms for Isas over £50,000

Because of different pricing structures, an Isa portfolio of £50,000 and over gets more expensive with some of the brands offering good value at a lower bracket.

Halifax Share Dealing, iWeb and Interactive Investor are those with the most compelling fees as shown in the table.

Mr Nelson said: “You can’t ignore that you can make serious cost savings at the fixed fee models so Halifax, Interactive Investor and iWeb come into play.”

Halifax charges a fixed fee of £36 a year and trading charges at £9.50, meaning a portfolio at any level attracts the same costs (factoring in the four trades again).

However, with trades at £9.50, if you buy or sell more frequently than four times a year, it’s worth crunching the numbers and considering somewhere with lower costs or free trades.

At Interactive Investor, for example, the charges are £9.99 per month, which includes free regular investing and one ad-hoc monthly trade making annual charges £120 a year.

Again, iWeb’s offering is attractive, costing £100 for year one and £5 per trade.

Best for passive funds

Many investors are wedded to buying passive funds – a strategy trumpeted by Warren Buffett as a way for investors to access a low-cost approach to creating wealth over the long term.

Passive funds have been rising in popularity for a number of years. Trackers made up an average of 28pc of fund sales in 2022, higher than the 21pc seen in 2021 and 20pc the year before, according to the Pridham Report.

AJ Bell’s Dodl and Vanguard are designed with low-cost investing in mind.

Dodl charges 0.15pc – with a minimum of £1 a month – and no trading fees, while at Vanguard the platform costs of 0.15pc are competitive.

Bella Caridade-Ferreira, of website compareandinvest.co.uk, said: “Dodl is the pared-down app-only version of the AJ Bell platform, which means that the list of investments has also been reduced.

“Its experts have narrowed the choice to just 30 funds: seven from its in-house investment team, AJ Bell ready-made funds, and 23 themed funds from other fund houses on big trends like technology, infrastructure, healthcare, robotics and property. 

“It’s worth noting that the in-house funds are pricier. Designed for phones and tablets, the app is very easy to use and navigate.”

Ms Caridade-Ferreira also likes Vanguard for being “clean and simple and a joy to use”. On being limited to its own funds, she said: “The range meets a broad array of investor needs. In particular, the multi-asset LifeStyle range has a fund for all level of risks.

“More importantly, the combination of platform and investment fees is cheap as chips and exceptionally hard to beat.”

You might also consider a lesser-known name – InvestEngine. It offers a free Isa where you can trade in ETFs only. With its commission-free DIY portfolio service and no annual platform fees, you just pay the costs of the funds you invest in, which start from 0.05pc a year.

Best for stock trading

By selecting shares rather than funds, you can be in complete control and tailor your Isa portfolio to the companies and themes you expect to prosper.

Investors who want to trade only in shares in their Isas would do well to look at Interactive Investor where the first trade of each month is built into the £9.99 monthly subscription.

Mr Nelson said: “This is a platform with open choice of asset types baked into its heritage, optionality on charging structure, everything it’s done on shareholder engagement. It’s a platform where share trading is front and centre of the platform.”

Investors can also opt to use one of the growing number of free share trading apps. While trades are free, there’s a fee for running the account.

Freetrade offers commission-free stock trading and there’s a monthly charge for an Isa of £5.99. Live pricing is now available on over 6,000 stocks, spanning UK, US and European markets. If you fund the account with £10, you and a friend can get a free share worth up to £100 each.

Trading 212, another broker, offers free trading and there are no account charges for Isas. Watch out for fees if you use a card to add money to your account; it’s free for up to £2,000, but after that you pay 0.7pc on your savings. You can avoid the charges if you add money using a bank transfer.

Rival Wombat allows investors to trade for free in an Isa, which costs £1 a month to run as well as a platform fee at 0.1pc of your investments. Newbies can bank £20 credited to their account to kick start share-buying. It also offers exchange-traded funds (ETFs) with more than 30 themes to choose from – such as space or food.

Jason Modray, of Candid Financial advice, said: “Free and very low-cost dealing services tend to offer a bare-bones service.

“This means these are well-suited to those requiring little guidance or assistance, but perhaps not the right choice if you want to speak to a human and/or get help choosing investments.”