Top 5 online brokers for buying shares


The rise of DIY investing has delivered a revolution in the way investors buy shares, investment trusts and funds - offering them huge savings and a big boost to their returns through online brokers.

Not so long ago, investing typically required a stockbroker or financial adviser and the willingness to hand over a big chunk of commission. 

Now armed with a computer - or in some cases even just a smartphone - investors can use a DIY investing platform or online broker and the wealth of research at their fingertips to hopefully build their fortune.

But picking the right DIY platform is crucial and the array of different options has left many investors scratching their heads. DIY investing platforms act as a place to buy, sell and hold all your investments and a tax-efficient wrapper around them if you choose to invest in an Isa.

When weighing up the right one for you, it's important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.

I have spent weeks researching online brokerage platforms, particularly looking at their UI/UX, charges and customer services, here are my top 5:

AJ Bell Youinvest

AJ Bell Youinvest has one of the lowest annual administration charge, for non-fund holdings in Isas, such as investment trusts, shares and ETFs, this is capped at £7.50 per quarter.

Admin charge = 0.25% capped at £30 per year
Dealing Charges = £9.95 (0-9 deals pm), £4.95 (10-19 deals pm)
Equity Regular Saving = £1.50 per stock per month
Dividend Reinvesting = 1.5% (maximum £9.95)

Who is it good for? Youinvest scores with a low percentage admin charge that is also capped for shares, trusts and ETFs. It does have fund dealing charges, but a cut down to £1.50 makes these considerably more competitive than before. [More details on AJ Bell Youinvest]

Hargreaves Lansdown

Hargreaves Lansdown is the big gun of DIY investing. The website is packed with information from its advisers and analysts, the shares and fund data is comprehensive and there is a very handy app.

Admin charge = 0.45% capped at £45 per year
Dealing Charges = £11.95 (0-9 deals pm), £8.95 (10-19 deals pm), £5.95 (20+ deals pm)
Equity Regular Saving = £1.50 per stock per month
Dividend Reinvesting = 1% (maximum £10)

Who is it good for? Those looking for an advice-rich service that is price-competitive but not the cheapest around. It does come with lots of bells and whistles, including a very good app and portfolios for easy investing. It offers a proven popular service weighted towards funds but with access to investment trusts, ETFs, shares and the corporate bond market under one roof. [More details on Hargeaves Lansdown]

Interactive Investor

Interactive Investor customers must pay an admin fee of £20 per quarter, adding up to £80 per year, BUT you get that back in free trades spread evenly over four quarters. Standard charges are £10 to buy or sell funds, shares or £1.50 for regular monthly investing. Make ten standard trades in the previous month and a frequent trader rate of £5 kicks in.

Admin charge = £20 per quarter
Dealing Charges = 2 free deals per quarter, £10 (1-10 deals pm), £5 (10+ deals pm)
Equity Regular Saving = £1.50 per stock per month
Dividend Reinvestment = 1% (maximum £10)

Who is it good for? Interactive Investor's pricing structure is good if you play it right, getting all of your admin fee back in free trades. It is definitely worth a look for those with larger sums to invest. It offers a wide range of investments along with solid research and is good for those regularly investing. The model portfolios on offer are well researched and a cheap and easy way to invest. [More details on Interactive Investor]

IG

Stockbroking platform IG offers an affordable option for those focusing on shares as it comes with no admin fee and just £8 dealing charge.

Admin charge = £0
Dealing Charges = £8 (1-10 deals pm), £5 (10+ deals pm)
Equity Regular Saving = N/A
Dividend Reinvestment = N/A

Who is it good for? This is a low-cost way to build a share portfolio as long as you are unlikely to want to buy funds. IG doesn't charge any administration fees or charges to hold an Isa, share-dealing is good value at £8. [More details on IG]

iWeb

iWeb run by Halifax share dealing offers a competitively priced service. Its stocks and shares Isa offers the chance to invest across shares, investment trusts, funds and ETFs, with a big one-off set-up charge but then no annual or quarterly admin charge beyond that.

Admin charge = £25 one-off but no annual maintenance charge
Dealing Charges = £5 per deal
Equity Regular Saving = N/A
Dividend Reinvestment = 2% (£5 maximum)

Who is it good for? iWeb is keenly priced for those looking to regularly buy investment trusts, shares or ETFs thanks to its low £5 dealing fee and the new set-up fee of just £25 is good value. Bear in mind that you do need to pay for fund-dealing here. And also check out Club Finance's Frequent Trader offer. [More details on iWeb]

Why invest through an Isa

Investing in an Isa is one of the few opportunities we have for making money tax-free.
Each tax year investors get an Isa allowance - this is £15,240 for the 2015 and 2016 tax years and will then be £20,000 from April 2017.

The reason for investing in an Isa is its tax-friendly nature, with the added bonus that you don't need to worry about a tax return or declaring gains.

Any gains within an Isa are free from capital gains tax. Everyone has a CGT allowance of £11,100 per year (2016 to 2017) and many may feel they are unlikely to ever make more than this in profit each year from selling their assets.

However, those who invest consistently over time may one day be surprised at how much those investments are worth and holding them in a tax-free wrapper makes sense.

 

Nazrul Hoque - 01 March 2017

Enjoyed reading my article? if so, please consider making a small donation.