Best Mobile Investment Trading Apps – Forbes Advisor UK
There are different types of fees charged by investment trading apps:
1. Stock trading fees
This is a flat fee charged by the platform each time you buy or sell shares. Some platforms charge no stock trading fees, while others may charge between £6 and £12 per trade. Most trading platforms charge lower or even zero fees for trading funds.
2. Platform fees
This is an annual fee charged for holding the stocks and funds on your platform. Some platforms charge no fee for this, others charge a flat fee, and some charge a percentage, usually 0.25% to 0.45% of your wallet value.
These charges will generally be taken from cash held in your account or you can pay the charge directly by debit card. However, the platform is likely to sell some of your shares (as a last resort) if the fees remain unpaid.
It’s also worth looking into the types of investments that incur platform fees, as some platforms charge for holding funds, but not stocks. When a platform fee is charged for holding shares, it is sometimes capped at a maximum amount per year.
There are two types of percentage-based platform fees:
- Tiered fees: this is the most common type of platform fee, where 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 and then 0.25% on the next £50,000.
- Non-tiered fees: only one of the platforms (Fidelity) charges a non-tiered fee, where you pay the same fee for your entire wallet. For example, if you have a portfolio of £300,000, you would pay 0.2% on all £300,000.
3. Foreign exchange fee
If you buy or sell stocks denominated in a currency other than sterling, almost all platforms charge a foreign exchange fee. This is also called a foreign currency conversion fee and usually ranges from 0.5% to 1.5%. Some platforms also charge higher trading fees for foreign stocks.
A small number of platforms allow you to hold foreign currency in your account, allowing you to convert it once and use that money to buy shares and hold the proceeds from the sale of shares in the local currency .
4. Other costs
Some of the platforms charge other types of fees, such as inactivity fees and withdrawal fees (for accounts held in a foreign currency) and telephone trading fees.
Although not technically a fee, the platforms also make money on the buy-sell spread on stocks. For example, you might be looking to buy a stock with a bid-ask spread of 100 to 102 pence. This means that you would pay 102 pence to buy a share and receive 100 pence to sell a share.
Some platforms may offer more competitive buy-sell spreads than others, and less traded stocks, such as FTSE Small Cap companies, generally have wider spreads than FTSE 100 companies