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High brokerage fees could end up costing you thousands

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The average investor makes 38 trades per year, buying or selling an average of £1,762 worth of stocks each time, according to new research from a UK personal finance comparison site. Trading US stocks, like Tesla and Apple – which are consistently among the most popular on UK trading platforms – could cost up to £32.67 extra per trade, depending on which platform you use. That totals a staggering £1,241 over a year.

The cheapest app you could pick to trade these is Degiro, as you would pay £1.76 in fees for a trade of £1,762, and £66.98 over the year if you traded this amount 38 times. In contrast, the most expensive app is interactive investor, which would cost £34.43 in fees per trade and £1,308 over the year.

Finder.com collected and analysed all publicly available trading and FX (currency) fees for 14 of the leading investing brokers, when trading US stocks, and found a wide range of trading fees and FX fees.

Lifetime fees really stack up

If the average trader was to buy and sell US stocks at the average rate for a decade, they would pay an average of £6,415 in fees. However, the difference between the most expensive and cheapest would be £12,414. Three platforms would have fees above £10,000, with one above £13,000, while three platforms, eToro, Freetrade and Stake, would have fees of under £3,500, with Degiro below £700.

If younger investors were to continue trading for the next 40 years at this rate, they would pay an average of £25,660 in fees. The difference between the most expensive and cheapest apps is particularly big here, standing at £49,655. This is because three platforms would have fees over £40,000, including 1 over £52,000, vs less than £2,700 with Degiro and around £4,000 with Trading 212.


Fees for beginner investors

Unsuspecting traders may be using platforms that they might not be suited to, with beginner investors particularly vulnerable to apps or sites that charge high platform fees for research tools they may not use. As an example, someone trading with just £50 at a time via Hargreaves Lansdown would end up paying £12.45 in fees alone – 25% of the stock amount.

If they traded £50 once a week for a year, this would cost them £647.40 in fees (for trading shares worth £2,600). Cheaper alternatives such as Degiro, Freetrade and eToro would charge just £2.60, £11.70 and £13 in total for the year.

Fees for experienced investors

Many experienced investors are attracted to the security and trust that leading brands such as Hargreaves Lansdown, Halifax and interactive investor provide. While they undoubtedly have higher fees, these become slightly less pronounced as the amounts traded rise. If a wealthy investor was buying US shares worth £10,000 at a time, the fees would be £111.95, £125 and £157.99 respectively. Newer trading apps Degiro, Freetrade and eToro would charge £10, £45 and £50 each.

As with all products, there is no one broker that will be the best option for everyone. Some are clearly more suited to those trading with low amounts, but you also have to factor in the design of the apps, how much you trust your money to them, plus the educational and research tools that the more expensive brokers tend to provide.

Most reputable brokers should be covered by the Financial Services Compensation Scheme (FSCS), which means up to £85,000 of your capital is protected if the platform goes bust. However, if they’re based in another country they may not have their own protection scheme so be sure to check.

It’s also worth remembering that if you decide to open or switch a self-invested personal pension (SIPP) to an investing broker then the amount you’ve invested could exceed £85,000, so you need to feel that your money is safe.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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