Choosing an online stockbroker is essential to your investing journey but it is often a rather painful process to work out who to go for. In this article we’ve tried to take some of that pain away by doing a detailed comparison and sharing our personal experiences too.
To start investing, you need to decide on the broker that you will invest through. Once you have a brokerage account, you can transfer money in and out of it – like a bank account.
Below we have compiled a comparison between a number of different types of stockbrokers in the UK. This is not an exhaustive list but it does cover off the various different flavours of brokers you can get – from the large institutional types, to the no-commission challengers, to the high street banks.
Make sure you read the helpful pointers and tips in the sections below the comparison too!
|Name||Asset options||Costs||Account Types||Account Minimum||Tools/Functionalities||Education resources||Security Features||Trustpilot rating||Customer Service||Regulation||Notes||Shariah Compliance||Link||Do IFG use it?|
|AJ Bell||Shares, funds, investment trusts and bonds||0.25% custody charge, £1.50 for funds and £9.95 for shares||ISA, General, SIPP||£500||App||Videos, research tools, Shares magazine||Encryption||4.1||Helpdesk receiving calls.||FCA & FSCS||One of the largest brokers in the UK. Investment ideas’- specialist resources||ISA|
|Degiro||Shares, Funds, Bonds||£1.75+0.014% per share; currency conversion 0.1%; real time figures (£4.50 per month)||General||£0||App||Blog (insights and ideas); investor’s academy.||Secure structure protects investors from liquidation.||4.1||Calls from Monday to Friday 7am to 9pm; email access.||FCA & ICS (Dutch)- only €20,000 euros guaranteed.||Real time prices, immediate trades, order by amount, Investor’s academy for education resources.||Just make sure you purify any interest earned and make sure you don't tick the box where they allow your shares to be be loaned for short-selling.||Here||Yes|
|Etoro||Stocks, Funds, Crypto, commodities,||0% commission; fees calculated on daily basis; $5 withdrawal fee;||General||£200||App, Demo account||Market analysis, podcast, News and insights, learning lab, trading school.||2 factor authentication; segregated account for funds.||2.1||Livechat.||FCA and CySec, FSCS||Etoro absorbs Stamp Duty tax.|
Copy Trading feature, offline trading, charts, insights from analysts, social network community of investors.
|No obvious issues but stay away from their CFD and forex offering as that is haram. Also don't leverage or short-sell shares as that too is typically seen as impermisisble.||Here||No|
|Freetrade||Stocks, Funds, investment trusts||£0 commission; ?9.99 per month||ISA, General, SIPP||£2||App||Forum, blog posts/articles||Waive liability for any breaches of security and instruct users to keep app updated and protect account details.||4.0||FAQs, email, and live chat 8 am-9 pm Weekdays 10 am-5 pm Weekend||FCA & FSCS||Customisable auto-investment option.||No obvious issues.||Here||No|
|Halifax||Shares, Funds, Bonds||£12.50 per trade; 1.25% exchange rate for international trading; charge; transaction and ongoing charge for funds (>1%)||ISA, General, SIPP||£0||App||Market News, Insight articles.||'Technology and safeguards that meet or exceed industry standards’.||1.6||Calls from Monday to Friday 8am to 7pm; web chat.||FCA & FSCS||Investor meets Company service, Investment Ideas.||No obvious issues.||Here||No|
|Hargreaves Landsdown||Shares, bonds, Funds, Investment trusts||Max charge of £11.95 per UK deal, max annual charge of 0.45% on funds, max fee of 1% charged on foreign exchange; currency conversion 1%||ISA, General, SIPP.||£1||App||Factsheets, market reports, newspaper round-ups, live share prices,||Encryption||3.2||Helpdesk receiving calls.||FCA & FSCS||One of the largest brokers in the UK. Analyst resources, automated investing.||No obvious issues.||ISA|
|Interactive investor||Shares, Funds, investment trusts, bonds||£9.99 a month, £7.99 for all UK and US trades. Streaming prices and real-time portfolio management (?20 per month); currency conversion 1.5%||ISA, General, SIPP.||£0||App||Insight resources: impartial editorial, rated lists and portfolios||Face & Touch ID, Encrypted data,||4.7||Calls from Monday to Friday 7:45am to 5:30pm; email access.||FCA & FSCS||Flat fee structure, free daily newsletters and market update emails, discussion forums, multiple portfolio watchlists, track shares, notes on investments Ranges across 17 stock exchanges.||No obvious issues.||Here||No|
|Trading 212||Indices, commodities, stocks, forex||£0 commission; currency conversion 0.5%||ISA, General, CFD||£1||App, Demo account.||Youtube channel with weekly content||24x7 Security Operations Center, security audits and regular external security tests||4.3||24/7 assistance||FCA & FSCS||Customisable auto-investment option.||Don't open a general account with them - only the ISA. As in their general account they lend the shares out for short-selling. |
Also stay away from their CFD offering as that is haram. Also don't leverage or short-sell shares as that too is typically seen as impermisisble.
Right – Broker Sorted – What Should I Buy?
Check out our Halal Investment page here which helpfully compares between dozens of funds and other investment options available today.
ISA/SIPP and Tax-Saving Considerations
Brokerage accounts are subject to Capital Gains Tax (on profits over £12,300 a year) and and Dividend tax (on dividend profits over £2,000 a year).
If you’re thinking of investing regularly and think you’ll exceed those thresholds in terms of profits, you may want to use an Individual Savings Account (ISA) or a Self-Invested Personal Pension (SIPP) rather than opening a brokerage account due to their tax advantages.
But bear in mind, each ISA is limited to investing £20,000 per year. On the other hand, there are no limits to how much you can invest in a SIPP but tax relief will only apply to a maximum investment limit of £40,000 per year and there are restrictions on how and when you can withdraw the money.
When a brokerage account is right/not right
If you want to purchase and manage your own investments, a brokerage account at an online broker is for you (and the comparison table above is for you). Other options you may want to consider is a managed brokerage account (where your money is managed for you- which you pay for) or a robo-investor/advisor such as Wahed Invest for those that want to be hands-off.
Sharia considerations: CFD Trading, Margin Trading
When opening an account, you may be given the option of a cash account, a margin account or an account that involves CFDs. Margin accounts allow you to borrow money (with interest) from the broker to make trades – this is of course haram so stick to the cash account. Any account involving CFDs (Contract For Differences) are also haram as CFDs enable profiting from price movement without ever owning the underlying assets.
Important Factors to Consider in a Broker
What will you invest in? What features are important to you? What will cost less in light of the aforementioned? If you are a beginner, you should also consider the ease of use, education support, and access to market research.
A few notes of caution
Remember: don’t invest money you need within the next few years because just as you can profit through investing, you can also lose money. How you’re taxed will depend on your circumstances, and the rules can change.
How to Learn Halal Investing Quickly
If you want more information on investing, be sure to check out our course on halal investing for busy professionals.