How to buy stocks and shares in the UK – Review of the best investing platforms for new and experienced investors. 24


This post will help to give an idea of what I think are the best online investing platforms for the situations listed below:

  • New Investor
  • Long terms buy and hold investor in an ISA
  • Investor wanting to make use of Capital Gains Allowance (non-Isa Account)
  • Day trader.

 

Best Platform for new investors: Hargreaves Lansdown.

One of the biggest dilemmas new investors who want to buy stocks and shares online face is they don’t know where to start looking. With so many stock brokers or online platforms around these days, it may be difficult for them to chose which one to use.

Click to enlarge and make more clearer. HL gives great research.

Click to enlarge and make more clearer. HL gives great research.

When you are a new investor who has never bought a stock or share in your life, it best to go with a platform that offers the best user friendliness and the easiest platform to navigate, regardless of price, and in this case its undoubtedly Hargreaves Lansdown.

Hargreaves Lansdown is the country’s biggest fund platform, looking after more than £50 billion for do-it-yourself investors. It is is the UK’s number 1 ‘investment supermarket’ for private investors. They have helped investors save time, tax and money on their investments for more than 30 years.

The Hargreaves Lansdown platform aims to help people make more of their investments by giving them the tools and information to make informed decisions. They have and award-winning website and apps that give you access to your investments anytime. They also have a specialist helpdesks which aims to simplify your financial life by making it easy and straight-forward to manage your investments and pensions.

The Hargreaves Lansdwn platform gives investors the flexibility to choose from one of the widest range of investments which includes more than 2,500 funds, UK, US, Canadian and European shares, Exchange Traded Funds, investment trusts, bonds and gilts. This gives you the freedom to choose and switch between those investments you believe will give you the best returns.

Having personally used Hargreaves Lansdwon, i can say that it is good, reliable and very easy to use. Here’s the rub though. It imposes a rather expensive annual fee of 0.45% for assets under management. So, for every £10,000 you have invested using Hargreaves Lansdown, it will cost you £45 a year. And if you are holding investment funds, expect to add about £75 a year in fund management charges.

Click picture to enlarge. It is easy to trade shares using Hargreaves Lansdown

Click picture to enlarge. It is easy to trade shares using Hargreaves Lansdown

The trading fees are also on the high side as it is £11.95 per trade (although buying into funds are free). But if you are a new investor, this fee is worth it due to the ease with which any novice investor can use this website.

Advantages of Hargreaves Lansdown are :

  • Hargreaves Lansdown has probably the widest selection of tradable stocks of any UK online investing platform.
  • Extremely user friendly interface which is suitable for an investor at any level.
  • Free to buy into funds ( you also get a discount for buying funds with HL; lower annual fund charge).
  • Offers free investment guides and tools.
  • Great Customer service – I have personally used the help desk mentioned above by calling in and sending a secure message via the platform and I have to admit that they are extremely helpful.
  • Great range of stocks

Disadvanatges of Hargreaves Lansdown are:

  • Price – They charge £11.95 per trade and also charge a fee of 0.45% for Assets under management.

See the price list here “ http://www.hl.co.uk/shares/share-dealing/dealing-charges

 

Best Platform for Buy and Hold Investors (ISA)- Youinvest

For buy and hold investors, one of the biggest aspects is cost. You need a platform that charges a relatively low trading fee and one that charges low fees for assets under management. AJ Bell Youinvest does just that.

The research feature on Youinvest. Click on picture to enlarge.

The research feature on Youinvest. Click on picture to enlarge.

AJ Bell is a leading online investment platforms and stockbroker services. They have more than 111,500 customers and assets under administration exceed £26.1 billion. There unique selling point is that they provide award-winning investment products, backed up with excellent service and online functionality at a low cost.

Youinvest covers the majority of stock exchanges and also offers an ISA and Pensions accounts which is great for any long term investor

Although the user interface can be better, the fact that it charges no fee for assets under management is a no brainer for any serious long term investor

Advantages of Youinvest are:

  • Low fee – This is crucial for longterm buy and hold investors and the cost savings could lead to higher compounded returns in the future.

    Youinvest platform. click to enlarge.

    Youinvest platform. click to enlarge.

The list of charges can be found here “ https://www.youinvest.co.uk/charges-and-rates/isa

Disadvantages of YouInvest are:

  • Not that most user friendly interface.
  • No automatic dividend reinvestment.
  • Charges a fee of £4.95 to buy into funds.

 

 

Best Platform to make use of your CG allowance – Degiro but Freetrade when it launches.

In UK, you can buy and sell shares using three accounts a dealing account, an ISA or a SIPP (pension). Whilst an ISA and SIPP offer great tax advantages, dealing accounts should not be neglected. This is because every resident in the UK gets a Capital Gains allowance of £11,1000. This means that you can make profits on shares of £11,100 a year before you have to pay tax. To find out more about Capital gains, read:

Using the DeGiro platform

Using the DeGiro platform. Click picture to enlarge and make clearer

Whilst Degiro does not have an ISA or a SIPP Account, it does have a dealing account which is the lowest cost of any found in the UK. But Freetrade will be the cheapest platform once launched.

Read my review of Degiro here.

Advantages of using Degiro over other platforms:

  • Low fees – it has a cost structure that no other platform can compete with.
  • Investing in fractions – Degiro will soon provide the unique opportunity to invest in fractions of products. You could for example, buy 0.100 of a share in Google. If you were to do this for the entire NASDAQ, your portfolio would contain the equivalent of 0.100 of the Index. Ideal for investors with smaller portfolios who would like to spread their investments effectively.
  • User friendly web trader.

    Buying stocks is easy with degiro. Click picture to enlarge if not clear.

    Buying stocks is easy with degiro. Click picture to enlarge if not clear.

  • No Hidden costs – It’s free to open an investment account with DEGIRO and once you do, you’ll have immediate access to unheard-of low fees. DEGIRO’s pricing structure is simple and transparent with no hidden costs, so you know exactly what you are paying for and when, avoiding any unpleasant surprises.

Disadvantages of using Degiro:  

  • No analysis tools as you might expect from a discount broker.
  • No trade confirmations – When orders are executed there is not such thing as trade confirmations in your mail. Everything is just on the platform itself.
  • To deposit money, you can not do a simple debit card payment but you have to instead do a transfer from your bank to theirs.
  • No ISA  or SIPP – Degiro does not at present allow you to open an account with an ISA wrapper

 

Best platform for investors who don’t want to pick their own stocks – Nutmeg

 

If you want to benefit from the wealth created in the stock market but have no interest in stocks, then Nutmeg might be just the platform for you. Nutmeg is a fully automated wealth manager that buys into exchange traded funds or indexes (e.g FTSE 100, S&P500) on your behalf and you don’t have to do any work at all. Apart from buying into the various indexes for you, Nutmeg tailors the whole portfolio for you depending on your risk preference. So say you don’t like risk, Nutmeg can make a portfolio for you that hold more bonds than equities (stocks). And the best news is all this is done for the low price of 1% of your assets under management.    nutmeg

Nutmeg is the best platform if you want to make money from stock market with no effort 

Read my review of Nutmeg investments to see if thesis the right platform for you.

 

Advanatges of Nutmeg?

  • Low cost and easy to use – best for financial Investors looking for an easy investing approach, the best bang for their bucks and the best time savings.This group may be intimidated by starting an investment program, and may not want to invest all their time to figure it out. This group may be young millennials skeptical of high-priced financial advice, or busy older professionals who need to get started on their retirement savings.
  • No effort required – best for long-term passive investors with some financial knowledge. The so called “Planners and Forgetters.” These types of investors understand how to be patient with their money. They understand the concepts behind portfolio diversification and how fees impact long-term returns.

Disadvantge of Nutmeg?

  • Cant pick your own stocks – not good for people who think they can beat the market, or want to trade individual stocks. As Nutmeg will look after your portfolio for there is nothing for you to do investing wise. Thus if you think you can consistently beat the market, than this service is not for you.

 

Best platform for new day traders – Etoro

If you are new to day trading, the most important thing is for you to learn off someone else to see how they make money. With Etoro you get the benefit of learning from thousands of traders – heck you can even copy other traders so that you can piggy back off their hot streak.

In essence, Etoro takes a social networking approach to trading and investing.Through the power of social trading, Etoro links traders from all over the world into one big network and encourages traders to use each other’s skills to trade smarter together.

Read my review of Etoro here to see if it will benefit you

Advantages of using Etoro:

  • Harnessing the power of the crowd – As you can see other peoples research ad analysis, you can make more informed decisions about the trades you are going to make. You can also bounce ideas off fellow trades to ensure you use each other’s skills to trade smarter together.
  • Easy to use platform – the interface is easy to use and easily navigable. Buying and selling assets is very easy and the platform offers good analytical tools to assist you in making trades.

Disadvantages of using Etoro:

  • The stocks you can trade are limited. There are currently just under 40 stocks you are able to trade using etoro. (But they have been increasing this amount steadily).

 

Best platform for experienced day traders – IG

If you are an experienced day trader and want to make a living from it, you want to use a platform that offers the best spreads.

IG is the World-leading provider of contracts for difference (CFDs) and financial spread betting, and hold a market-leading position in many countries, including the UK, Australia, Singapore and France.

The vast majority of their clients are not City traders but are professional men and women who are interested in the financial markets

They pride themselves on high standard of customer service – providing 24-hour telephone support (speaking to real people), as well as a comprehensive range of education, training tools, trading tips and market commentaries online.

Their technology combines superior features with high-speed execution, designed to meet the needs of the most demanding trader and provide an outstanding experience on all devices.

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  • http://www.smartpolak.co.uk/ Paweł Kłosiński

    Thanks for informative article. How do you decide when to use Youinvest and when to use Degiro for buying shares?

    • http://moneygrower.co.uk moneygroweruk

      I use Degiro for stocks that cannot be held in an ISA e.g. Gazprom. I also use Degiro when I want to take up small positions in a company as taking up a small position is justified via the low dealing charge Degiro has. The only way to take up small positions via Youinvest is using the monthly stock purchase programme where the dealing charge is lower but as this programme happens on a certain date, there is no guarantee a beaten down share will remain low and thus I use Degiro.

      • https://www.smartpolak.co.uk/ Paweł Kłosiński

        Thanks for reply, what are tax implications of using Degiro. I know there is a capital gains tax break but when do you declare it, when selling the shares? Do you need to do self assessment?

        • http://moneygrower.co.uk moneygroweruk

          Hi Pawel,

          If you are investing outside an ISA with Degiro (or any other broker) you will need to pay tax if you exceed the capital gains allowance or dividend allowance for the year. To pay this tax, you will need to do a self assessment. So say you bought stocks for £10,000 and sold for £30,000, your gain is £20,000. Subtracting the CGT allowance of 11,100 leaves you with a gain of £8,900. You would then pay 18% or 28% of this amount as tax depending on your taxable income. As the tax year runs from 6 April to 5 April of the following year, if you had to get a gain today, you will need to complete the self assessment for the 2017/2018 tax year and make a submission of this self assessment return online by 31 January 2019. Hope this helps.

  • Joelle W

    I’m totally new to investing but I know that it’s what I want to do now for my future. I really want to learn more about it, your website is really helpful thanks.
    The first thing I want to do is open an investment ISA. I don’t have a large lump sum to deposit, only £1500 and then I can pay in around £800 every month.
    My question is, while I learn more about investing in stocks, would you recommend opening an ISA using Nutmeg or I’ve read a post where you mentioned Youinvest? Does Youinvest have the option of passively managed funds in order to keep management fees low?
    Also, when I learn more and then want to start investing in company shares that pay dividends. What platform do you use for that and can the dividends be paid into an ISA?

    Sorry this is lengthy, I’m quite confused about all of the different options. Thank you for any help you can offer!

    • http://moneygrower.co.uk moneygroweruk

      Hi Joelle, thank you for your comment.
      I can’t give you advice but I can give you my opinion. To start investing you don’t need to have a lot of money. This is a common misconception people have – many people fail to start investing due to thinking that they have too little funds. They think investing £100 at a time will not make a difference. They think they have to start with an entire Napoleon-like army. They suffer from the “not enough” mentality; namely that if they aren’t making £1,000 or £5,000 investments at a time, they will never become rich. What these people don’t realise is that entire armies are built one soldier at a time; so too is their financial arsenal. So even if you have £250, my opinion would be to start investing and to add to that investment over time.

      With Nutmeg, all you do is set your risk level and the platform and its people do all the investing for you. Have a look at my review: http://moneygrower.co.uk/2014/11/nutmeg-review/. The problem I have with Nutmeg is they charge to high a fee for what they deem as passive investing. In my opinion, it makes more sense to open an account with Hargreaves Lansdown, Youinvest or TD Direct and invest in passive index trackers yourself. An example is here:http://www.hl.co.uk/funds/fund-discounts,-prices–and–factsheets/search-results/l/legal-and-general-uk-100-index-class-c-accumulation

      In regards to specific investing platform, this is my opinion:
      Hargreaves Lansdown is the best for ease of use and beginner investors but it is also slightly costly
      If you want something cheaper than Hargreaves, Youinvest and TD Direct Investing are the next best. TD Direct Investing has a higher dealing fee but if you have more than £5,100 in your portfolio than there is no custody charge. With Youinvest the custody charge is 0.25% of your portfolio. (maximum £7.50 per quarter).

      With all three of the above mentioned platforms, you can invest via an ISA meaning any capital gain (increase in share price) and any dividend you receive is completely tax free. To answer your question in specific, provided you hold a dividend paying share in an ISA than yes your dividend will be paid in your ISA>

      Hope the above helps.

      • Joelle

        Thank you very much for your opinion and the different options you mentioned. I’m going to research more about Hargreaves Lansdown and open and ISA sooner rather than later.
        I understand what you say about not worrying about having a small amount of money, you’re so right!
        One more thing, what are the best books about investment that you’ve read? I’ve searched but can’t see if you’re written an article about it, I think it would be really great if you did. Thank you!

        • http://moneygrower.co.uk moneygroweruk

          Hi Joelle,
          No problem, make sure you do your research by going to the fees page on various platforms to see if it is the right one for you.
          I don’t think I have written an article on books I would recommend but I think it is a good idea for me to do one.
          As a beginner, the best books you can read in my opinion are The Intelligent Investor by Ben Graham, One Up On Wall Street by Peter Lynch, Common Stocks For Uncommon Profits and Fillip Fisher, Little Book of Common Sense Investing by John Bogle and You Can Be A Stock Market Genius By Joel Greenblatt. These would give you a good foundation. I find that you only have to read a certain number of books to get a good grasp of what you need to look for when looking to invest as most books just parrot each other. I personally am leaning to the psychology side of investing and have been reading books such as antifragile by Nassim Taleb.
          I would also highly recommend reading The Richest Man In Babylon By George Clason. It is a personal finance book but it shows the importance of saving and investing via a number of parables. I personally thought the book was absolutely brilliant.

          • Joelle

            Thanks so much for the book suggestions.
            It’s interesting that you’re learning more about the psychology of investing, I’ll have to look for the book by Clason too.
            Thanks again for your help, you have a great website!