The cheapest investment platforms for stocks & shares ISAs

So you've decided you're going to open a stocks & shares ISA. You might also have an idea of what you're going to invest in, for example individual shares or managed funds. Now you also need to decide where you're going to hold your investments.

The cheapest places to open a stocks & shares ISA are online investment platforms and sharedealing services. The two terms are somewhat interchangeable these days, so we're just going to refer just to investment platforms throughout this article. And this article is designed for people who are happy to DIY invest, ie choose investments for themselves.

There's more on platforms and what they offer in our Beginner's guide to investment platforms. If you don't really have much of an idea how they differ, you might want to read that before coming back here.

Deciding which investment platform you’re going to use is arguably as important than choosing your shares or investment funds. That's because the cost varies dramatically between them and that can have a significant effect on your returns and therefore your wealth in future.

Costs

Following regulatory changes as part of the Retail Distribution Review (RDR), platforms have moved away from commission-based charging, towards new 'clean' pricing. What this means in practice is you'll usually be charged an annual platform or service charge by the platform. If you're using a predominately share-dealing service, this may be payable quarterly or every six months, or you may have to pay every time you buy something instead.

[SPOTLIGHT]As well as the already-mentioned platform or service charges there may be a management cost for the investments, for example annual fund charges. These will be charged by the investment provider, but some platforms have negotiated discounted rates for funds, known as 'clean' or 'super clean' funds.

You should also look out for these charges, which are likely to be hidden in the small print:

• dealing charges, if you think you're going to want to sell shares, for example; 
• dividend reinvestment charges, if you ask for any dividends you receive to be automatically reinvested;
• inactivity charges, for not using your account for some time;
• exit charges, for moving your investments somewhere else.

Cheapest platforms by portfolio size

Now we've done that it's time to look at some pounds and pence examples.

Analysis by financial consultancy The Lang Cat has revealed the cheapest platforms for different portfolio sizes. We've added to that other potential charges to bear in mind to give you a sense of what you might pay overall.

Investing in funds

Here are the cheapest platforms for various portfolio sizes based on investing in funds only. To be clear, this is the annual cost charged by the platform, and doesn't include charges by the fund provider, which will vary between platforms, although never hugely. And where there is a charge to buy or sell funds, the figures assume there will be 10 trades a year.

Cheapest platforms for a £5,000 portfolio

Here are the cheapest platforms for a £5,000 portfolio.

Position	Platform	Annual cost	Notable additional charges
1	Cavendish	£13	None
-	Charles Stanley Direct	£13	Closure fee
3	AXA Self Investor	£18	None
-	Close Brothers	£18	None
-	Fidelity	£18	None
-	rplan	£18	None

Cheapest platforms for a £10,000 portfolio

Here are the cheapest platforms for a £10,000 portfolio.

Position	Platform	Annual cost	Notable additional charges
1	Cavendish	£25	None
-	Charles Stanley Direct	£25	Closure fee
3	TD Direct Investing	£30	Dividend reinvestment, transfer fee, closure fee
4	AXA Self Investor	£35	None
	Barclays Stockbrokers	£35	Dividend reinvestment, transfer fee, closure fee
-	Close Brothers	£35	None
-	Fidelity	£35	None
-	rplan	£35	None

Cheapest platforms for a £20,000 portfolio

And here are the cheapest platforms for a £20,000 portfolio.

Position	Platform	Annual cost	Notable additional charges
1	Cavendish	£50	None
-	Charles Stanley Direct	£50	Closure fee
-	iWeb Share Dealing	£50	Transfer fee
3	TD Direct Investing	£60	Dividend reinvestment, transfer fee, closure fee
4	AXA Self Investor	£70	None
	Barclays Stockbrokers	£70	Dividend reinvestment, transfer fee, closure fee
-	Close Brothers	£70	None
-	Fidelity	£70	None
-	rplan	£70	None

Cheapest platforms for a £50,000 portfolio

Finally, here are the five cheapest platforms for a £50,000 portfolio.

Position	Platform	Annual cost	Notable additional charges
1	iWeb Share Dealing	£50	Transfer fee
2	Interactive Investor	£100	Dividend reinvestment, transfer fee, closure fee
3	Clubfinance	£120	None
4	Cavendish	£125	None
-	Charles Stanley Direct	£125	Closure fee

But again bear in mind the investment charges, the investments on offer and the quality of the service before you sign on the dotted line.

More on investing:

Beginner's guide to stocks & shares ISAs

Beginner's guide to investment platforms

How to invest in an IPO