Best Investment Apps UK For October 2024 – Forbes Advisor UK

FEATURED PARTNER OFFER

We applied three main criteria in selecting our list of best investment trading apps:

• Does the app offer a good level of functionality for investors?
• Does the platform provide access to a range of investments from different international markets?
• Does the platform have a good rating on consumer review site Trustpilot? If the platform did not currently have any reviews on Trustpilot, we considered its ratings on other review sites.

We compared different features across the leading investment trading apps, with the greatest weight given to the level of fees, the range of investments offered and the quality of information provided on the app.

We also considered other features, including the option for desktop trading, advanced trading features, customer support and research, foreign transaction fees, the option of holding fractional shares and the types of accounts on offer.

In addition, we checked that the trading platforms were authorised by the FCA and reviewed the level of customer complaints using data from the FCA.

We overlaid this research with editorial judgment to arrive at our Forbes star ratings.

We calculated the fees by platform based on the following assumptions:

• Type of investments: split 50% shares and 50% funds (or 100% shares if funds were not offered).
• Frequency of trading: buying or selling one investment per month, totalling 12 in a year, split equally across funds and shares (or 100% shares if funds were not offered). If free monthly trades were offered, we assumed that half of these were able to be utilised and remaining trades incurred a fee.
• Platform fees: we assumed that the portfolio was split equally between funds and shares, as platform fees can vary significantly between these. For platforms not offering funds, we calculated the platform fee based on holding shares only. For platforms offering reduced platform fees for frequent traders, we assumed that half of these were able to be utilised over the year.
• Value of portfolio: we calculated the fees for three different portfolio values, being £1,000, £10,000 and £50,000.
• Type of accounts: for providers offering different accounts (such as interactive investor), we calculated the lowest cost option for each portfolio value.

Investment trading apps offer investors a means of buying and selling stocks and shares, funds, investment trusts, exchange-traded products and other assets directly, rather than indirectly through a financial advisor.

In its simplest form, an investment trading app provides software for investors to make their trades via an application on their phone or tablet, although many platforms also offer desktop and telephone dealing.

The app market has grown significantly in recent years. According to the App Radar tool from data firm SplitMetrics, the estimated number of app downloads stood at 6,848,670 to 14 December 2023. From the beginning of 2023 to 14 December, downloads to the top 8 app providers alone stood at 1,127,383. These figures, included in Table 1 below, refer to global downloads via the Google Play Store.

Investors are able to view their investments in real-time on the app, enabling them to monitor their portfolio and make timely investment decisions. In addition, apps typically offer advanced features to allow orders to be placed automatically.

However, one of the disadvantages of apps is the risk of impulse and over-trading. Shares typically should be seen as a long-term investment as speculating on short-term price movements is challenging, even for professional investors.

Investment apps offer a wide range of assets, including shares in UK and international markets, exchange-traded funds (ETFs) and investment trusts.

A few of our selected providers also offer trading in more specialist assets, including foreign exchange and commodities. However, these assets are highly volatile and likely to be suitable only for experienced investors.

The Financial Conduct Authority’s ‘Financial Lives‘ survey published in 2023 shows that the main reason (51%) given by respondents when asked why they invest was to potentially gain higher returns than offered on savings products. The second most important reason (49%) was investing to provide an income in retirement, while the third highest response (43%) was to invest for a rainy day.

According to the survey, the most commonly held investments in May 2022 were shares/equities, held by 21% of respondents, followed by stocks and shares ISAs (17%). Investment funds were held by 9.1% of respondents.

The account opening process can usually be carried out online or via the app, and the major platforms state it should take around 10 minutes. You’ll need to provide some basic information, such as bank account details, debit card details (for a lump sum investment) and your National Insurance number.

You may have to supply further documents to support the verification of your identity, although these checks may be carried out electronically during the initial application process. When these checks are complete, and funds have been received into your account, you will be set up to start trading on the app.

You can trade UK shares on a real-time basis from 8 am to 4.30 pm when the London Stock Exchange is open. After logging into the app, search by company name or ‘ticker’ to select the share you want to buy.

There are various types of fees charged by trading platforms:

1. Share trading fee

This is a flat fee charged by the platform each time you buy or sell shares. Some platforms charge no share trading fee, while others may charge between £6 to £12 per trade. Trading fees for funds vary from zero to the same fee as trading shares.

2. Platform fee

This is an annual fee charged for holding the shares and funds on your platform. Some platforms charge no fee for this, others charge a flat fee and some charge a percentage, typically 0.25% to 0.45% of the value of your portfolio.

These fees will usually be taken out of any cash held on your account or you can pay fees directly by debit card. As a last resort, however, and if fees remain unpaid, the platform is likely to sell a proportion of your shares to cover its costs.

Be aware, also, that it’s worth understanding the types of investments that incur a platform fee as some platforms charge for holding funds, but not for shares. When a platform fee is charged for holding shares, this is sometimes capped at a maximum amount per year.

There are two types of percentage-based platform fees:

1. Tiered fee: this is the most usual type of platform fee, whereby you pay different fees on different ‘slices’ of your portfolio. For example, if you have a portfolio worth £300,000, you might pay 0.45% on the first £250,000, then 0.25% on the next £50,000.
2. Non-tiered fee: a small number of providers charge a non-tiered fee, whereby you pay the same fee across your whole portfolio. For example, if you have a portfolio of £300,000, you would pay 0.2% on the whole £300,000.

3. Foreign exchange fee

If you buy or sell shares denominated in a currency other than pounds sterling, platforms charge a foreign exchange fee. This is also referred to as a foreign currency conversion fee and typically varies from 0.5% to 1.5%. Some platforms also charge a higher trading fee for overseas shares.

A small number of platforms allow you to hold foreign currency in your account, which enables you to convert it once and use this money for buying shares and holding the proceeds from selling shares in the local currency.

Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

4. Other fees

Some of the platforms charge other types of fees, such as inactivity fees and withdrawal fees (for accounts held in an overseas currency) and fees for trading by telephone.

Although not technically a fee, platforms also make money on the buy-sell spread on shares. For example, you might be looking to buy a share with a buy-sell spread of 98-100 pence. This means that you would pay 100 pence to buy a share, and receive 98 pence to sell a share.

Some platforms may offer more competitive buy-sell spreads than others, and less traded shares, such as FTSE Small Cap companies, typically have wider spreads than FTSE 100 companies.

The investment trading app market has become increasingly competitive in recent years. Our selections above aim to offer would-be investors a range of providers, each with features that could suit their particular investing style.

The list is not exhaustive, however, and will be bolstered further when Robinhood enters the UK market in 2024. 

Investment trading apps may appeal to investors on the move who are comfortable making trading decisions from a relatively small screen compared to a desktop.

While most trading platforms offer apps, it’s worth comparing fees and the range of investments as these can vary widely by provider. Some investors may also look for more advanced functionality from the app in terms of technical analysis and charts.

A recent FCA survey revealed that nearly 10% of all adults in the UK use a DIY (or ‘direct to consumer’ platform), significantly higher than in 2020. Interestingly, there is a much higher uptake by men than women, and 25-34 year olds are most likely to invest in this way.