What Your Investment Platform is Actually Costing You over Ten Years

What your investment platform is actually costing you over ten years

The cost of the investment platform you choose can vary by thousands of pounds over a decade.

Don’t make the mistake of simply choosing one that looks simple or one you have heard of.

Platform fees do not feel significant in any given year. A charge of 0.45% on a £20,000 portfolio is £90. That is roughly what you might spend on a nice meal.

But those annual charges compound in the same way that returns do.

Over ten years, the platform you choose can make a material difference to the size of your portfolio.

How platforms charge you

Most UK investment platforms use one of two fee models. Percentage-based platforms charge a set percentage of your portfolio value each year, typically between 0.15% and 0.45% for a straightforward stocks and shares ISA.

Flat-fee platforms charge a fixed amount each month or year, regardless of portfolio size, typically between £9.99 and £19.99 per month.

For smaller portfolios, percentage-based fees are usually cheaper. For larger portfolios, flat-fee platforms become more cost-effective because the fee stays the same regardless of how much your money grows.

There are also fund fees, which are separate from the platform fee and charged by the fund itself. A global index fund may charge 0.06% to 0.22% per year. An actively managed fund may charge 0.75% to 1.5%.

The platform fee and the fund fee together form your total cost of investing.

A worked comparison
The following figures are illustrative. They assume a starting investment of £20,000 with no additional contributions, and a consistent annual return of 7% before charges.

Past performance is not a reliable guide to future returns, and individual circumstances will vary.

Platform A charges 0.45% per year in platform fees, plus an assumed 0.20% fund fee. Total annual charge: 0.65%. Over ten years, the portfolio could grow to approximately £35,800 after charges.

Platform B charges 0.15% per year in platform fees, plus the same 0.20% fund fee. Total annual charge: 0.35%. Over ten years, the same portfolio could grow to approximately £37,400 after charges.

The difference between Platform A and Platform B in this example, which is a seemingly modest 0.30% gap in annual charges, produces a difference of approximately £1,600 over ten years. On a larger portfolio, or over a longer timeframe, the gap is wider.

What you are not paying for with lower-cost platforms
Choosing a lower-cost platform does not necessarily mean accepting a worse product.

Many of the lowest-cost platforms in the UK offer clean interfaces, a broad range of funds and shares, and full access to ISAs, Junior ISAs, pensions, and general investment accounts.

The most important questions when selecting a platform are: Does it offer the account type I need? Does it allow me to invest in the funds or shares I want?

What is my likely total annual cost given my portfolio size and how often I plan to trade?

Finding your true total cost
Platform fees, fund fees, and trading fees combine to determine your actual cost of investing.

Our fee comparison tool allows you to enter your portfolio size and see a side-by-side comparison of estimated annual costs across the main UK platforms. No guesswork required.

What to do next

Use our platform fee comparison calculator: investinginsiders.co.uk/self-invested-personal-pension-sipp-cost-comparison-calculator
Compare ISA fees across UK platforms: investinginsiders.co.uk/quick-stocks-and-shares-isa-fee-calculator
See our full platform review and rankings: investinginsiders.co.uk/best-investment-platform