Best investment platforms for beginners

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The best investment platforms for absolute beginners are offered by the newer entrants into the market, such as Nutmeg and evestor.

These companies are sometimes called robo-advisers, as they are automated services set up to guide people with little or no experience of investing to a portfolio that meets their objectives and matches their risk appetite.

There are now lots of these types of online trading platforms – and many of the older, more established platforms have added similar robo-advice options for beginners, some of which you can set up and manage through a mobile app. We’ve highlighted Nutmeg and evestor as they are two of the cheapest of the new generation of investment platforms or brokerage accounts – and when it comes to investment, one of the only things you can count on is charges.

But there is a growing number of options to fit different needs to help you start trading. We’ve used our ratings, compiled by independent research firm Fairer Finance, to pinpoint the cheapest trading platforms on the market, and also considered how well they would work for a novice investor. Our best platforms for beginners all have top five-star ratings, which means their total costs are below the sector average, and they do not impose any nasty exit penalties or additional high fees or charges.

Investing your cash can make it grow much quicker than leaving it in a bank account. Make sure you check the fees closely when picking an investment platform

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Top five investment platforms for beginners

Nutmeg* 

Best for: robo-advice 

Nutmeg* was one of the first of the new generation of robo-advisers and is now one of the biggest. You can open a pension, stocks and shares ISA or regular general investment account on its site – and can choose from a range of three different portfolio types. The cheapest of these are its fixed-allocation portfolios, where the mix of investment assets decided at the outset remains the same. Alternatively, if you’re willing to pay a little more, you can opt for Nutmeg’s fully managed portfolios – where stockbrokers get involved to monitor your portfolio, buy and sell on your behalf, making adjustments to the investment mix where necessary, to help you achieve your objectives. The firm also offers a set of socially responsible portfolios. Total costs for its cheapest options start at 0.69%, rising to 1.13% for its socially responsible portfolios. The site is easy to use, and uses graphs to show you potential returns and losses.

evestor

Best for: low-cost, simple choices

If you want a site that keeps things simple and provides low-cost investments from a low entry point, evestor is worth a look. It only offers three portfolios to choose from – low, medium and high risk – and its total costs of just 0.47% are some of the lowest in the market. You can put your investments into a stocks and shares ISA, a pension or a general investment trading account, and there are no sneaky extra charges to worry about. You can also start investing from as little as £1, and your money will go into a range of exchange-traded funds (ETFs) and funds that track various stock market and bond indices.

Vanguard 

Best for: lowest cost from a big firm

If you’re looking for the cheapest way to invest – full stop – then look no further than Vanguard. It’s a large American fund management group, which has made a name for itself as a discount broker offering the best value on both sides of the pond. You can invest in its LifeStrategy portfolios for as little as 0.41% a year. There’s not much support for investors on the Vanguard site – so it’s best for those who have a little bit of knowledge. The LifeStrategy portfolios come in five different risk varieties – from cautious to aggressive. 

HSBC

Best for: those looking to invest with a bank

If you want to put your money with a high street name, then HSBC is worth considering. It offers portfolios with five different risk levels – from cautious to adventurous – with total annual costs starting from 0.43%. There’s not much help and support in making your decision – but you can start buying and selling investments with a lump sum of £100, or you can set up a regular monthly payment of £50 from your bank account, and it’s the lowest-cost offer from the banks.

Fidelity

Best for: a full-service platform

If you want to start investing in a ready-made portfolio, but hope to graduate to picking your own investments, Fidelity may be the right solution. It’s one of the largest investment providers in the world, and its UK investment platform offers access to the full range of mainstream investment funds (also known as mutual funds) as well as a trading platform to invest in stocks, shares, bonds and other assets. If you are just getting started, you can use its “pathfinder” tool to help you choose from one of 10 ready-made growth portfolios or six income-focused portfolios. The tool lets you narrow down your choices by helping you decide on your risk level, and then gives you options from the lowest-cost to a more fully managed portfolio. It has an easy-to-use graph that helps you project your potential returns. Its cheapest portfolios have a total annual cost of 0.64%.

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Vanguard Asset Management

Vanguard LifeStrategy portfolio Stocks and shares ISA

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Halifax

Halifax portfolio stocks and shares ISA

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Fidelity Personal Investing

Fidelity Personal Investing Cost Focus portfolio stocks and shares ISA

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Barclays

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HSBC

HSBC portfolio stocks and shares ISA

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What are investment platforms?

Investment platforms are online services that allow you to buy and hold investments in one place. Some will only allow you to invest in shares, some focus on funds – while others will allow you to do both. 

Over the past decade, old-fashioned stockbrokers have started to face competition from a new generation of investment platforms, which focus on providing low-cost and straightforward access to investing for people who have little or no experience.

These are sometimes called robo-advisers, as they provide automated guidance on which options might be most suitable for you. This does not actually count as financial advice – it’s just support to help you make the best decision for your needs. But some of these platforms do also offer access to personal financial advisers in return for an extra fee.

Traditional investment platforms allow you to choose what you invest in yourself. They are also known as DIY platforms or share trading platforms. However, most of these now offer ready-made portfolio options as well.

Choosing the best type of investment platform

If you’re looking for an investment platform that does all the heavy lifting for you, then you’re likely to be best off with the newer generation of firms. These often have slick apps and online journeys for trading funds that make it easy to choose a suitable portfolio and start investing.

But you also need to think about costs. While no one knows how different investment portfolios are going to perform, the one thing you can be certain about at the start is the expense and online brokers tend to be cheaper.

Our ratings give you an idea of how providers shape up here. Those with top five-star ratings have total costs that are below the sector average, and are also free of any nasty exit penalties or additional high fees.

However, customer service is important too – and if a platform you’re considering doesn’t appear in our customer experience ratings, it’s worth giving a few of them a try before you buy. (Note that we award gold, silver and bronze ratings to large firms that are transparent and have great customer service and low complaints figures; we don’t review smaller firms as we can’t get a meaningful sample.)

In most cases, it’s easy to go through the investment selection journey without having to jump through too many hoops. Some platforms don’t even make you enter your personal details and open an account until you’ve made your selections. So try out the journey and see which ones feel right in terms of the website or app, keeping an eye on the costs too.

One thing to bear in mind is that most platforms will charge an annual platform fee as well as management costs for the portfolio. You need to make sure that these management costs also include the transaction costs that the fund incurs for trading. We add these into our ratings – which are based on the total cost.

If you’re looking for a platform where you can start making your own investment decisions, decide how much choice you’re looking for. Some offer access to both shares and funds – while others only allow access to one or the other and some may even offer some free trades. Again, cost is key – and our ratings can help you work out who is cheapest.

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Vanguard Asset Management

Vanguard ISA

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Barclays

Investment ISA

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Close Brothers Asset Management

Close Stocks & Shares ISA

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Trading 212

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Halifax

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Frequently asked questions

What are the main types of investments?

The main types are shares, bonds, property and cash. You can also buy “passive” funds that track stock market performance or the price of assets such as gold; these are low cost, but don’t benefit from having an expert manager choosing where to invest your money. If you want “active”, skilled management – and a selection of assets such as shares that could outperform the markets – you will have to pay slightly higher annual charges. Our article How to choose investment funds explains this in more detail.

How can I invest smartly?

The important thing when investing in the markets is to take a long-term view. You shouldn’t invest for any less than five years – and it’s most sensible if you’re looking at a time horizon of at least 10 years. That way, you can ride out any downturns in the markets and boost the growth potential of your money. Most people agree that it makes sense to invest money in a pension – meaning a time horizon of decades – as you’ll benefit from tax relief (free cash from the government) plus, if it’s a workplace scheme, a contribution from your boss.

But if you’re putting money aside for a house deposit, and plan to buy in a few years, you’re better off looking for a decent savings account, cash ISA or lifetime ISA (if you’re a first-time buyer aged under 40). 

The other key point is to assess your risk appetite realistically. If you invest in an aggressive portfolio, bear in mind that you could lose money – even over the long run. It’s important to understand what the worst-case scenario could look like – and to be sure you would be comfortable with that outcome in the context of your personal finances.

We have more on investing smartly in our Beginner’s guide to investing.

How much should I invest?

If you’re investing for a pension, a good rule of thumb is to halve your age and pay this much as a percentage of your salary each month. For example, if you’re starting a pension at 40, you should be looking to put 20% of your salary away each month. 

If you’re investing for shorter-term goals, then think about how much you’re aiming to save, and work back from there. You can add in some assumptions about investment growth, such as 3% or 5% a year, but don’t forget to deduct fees. If you end up saving more than you need – it’s a nice problem to have.

Before you start investing, make sure you have a decent amount of cash in an easy access account – say, three months’ worth of salary –  that can be used for any emergencies such as your car or boiler breaking down.

James Daley is managing director of Fairer Finance, the independent consumer group that produces our product tables