Can you invest for free?

Whether your portfolio soars or sours, you have to pay fees to your investment platform. At least that was the case: increasingly some platforms are ditching charges all together.

Robinhood, the US trading platform infamous for its role in the 2021 Gamestop stock craze, plans to launch a fee-free stocks and shares Isa in the UK by the end of this year.

The zero-commission broker is one of a number of newer more agile platforms looking to take on the more established names by lowering the cost of entry for investors.

Here, we examine whether these platforms are worth switching to and how exactly they make money.

Please note: the content contained in this article is for information purposes only and does not constitute financial or investment advice.

What fees do platforms charge?

Many platforms charge you a fee to use their services. These usually come in two forms: fixed fees and percentage fees.

A percentage fee is when a platform charges you a percentage of the value of your total investments, usually on an annual basis. Fixed fees on the other hand charge a fixed annual or monthly fee in pounds and pence.

In addition to platform fees, you may be charged a fee each time you buy and sell a share, investment trust or exchange-traded fund. These fees often don’t apply when you invest in a traditional fund.

Also known as forex fees, these charges may be levied whenever you buy or sell international shares and funds. Forex fees usually don’t apply if you buy into a UK based fund which itself invests in foreign shares.

• Find out more: Compare investment platform fees and charges 

Are platforms getting cheaper?

Some platforms, such as iWeb, have ditched account fees but charge for transactions, so are better for those who only rarely buy and sell. Others, such as InvestEngine, offer paid-for managed portfolios. 

But, this isn’t the whole story. You also need to consider forex fees, which are levied by many (including ‘free’) platforms when you buy or sell international shares or funds and can be as high as 1.25%. 

They often don’t apply if you buy into a UK-based fund that invests in foreign shares.

‘The cost of providing Isa services has come down a lot over the past few years,’ says Alex Campbell, head of communications at Freetrade. 

‘Newer platforms and apps also tend to have less staff compared to the more established brands, which means lower overhead costs. Plus, many keep the interest generated from customers’ uninvested cash, which helps keep costs down.’

Freetrade charges £4.99 a month for its investment Isa and offers zero-commission trading.

• Find out more: Best stocks and shares Isas 2025

Do cheaper platforms have fewer investment options?

There doesn’t appear to be a link between platform fees and investment options.

iWeb and Vanguard both earned a Which? Great Value label in our review. iWeb offers investors a choice of more than 3,000 funds and 4,800 stocks with its Isa. Vanguard, on the other hand, offers just 86 funds and 29 exchange traded funds (ETFs). 

Moneybox, one of the more expensive options for a £50,000 portfolio, has just 12 funds, 21 stocks and 12 ETFs available on its Isa.

But if you want the widest selection of investments you’ll generally need to pay for the privilege, with providers Interactive Investor and AJ Bell both charging fees.

Our latest survey of 3,697 investment platform customers also found no link between fees and customer scores. InvestEngine was named a Which? Recommended Provider, alongside fee-charging AJ Bell. Freetrade was among the lower scorers, tied with fee-charging Scottish Friendly.

Our investment platform reviews list the type and number of investments offered by each platform.

Are high-risk investments cutting platform costs?

Newcomer Robinhood has already launched margin trading, which involves borrowing money from the platform to purchase investments. This can lead to higher gains but also higher losses, with Robinhood making money either way, which in theory could be used to subsidise lower investment costs.

Some – but not all – free platforms, including Trading 212, sell contracts for difference (CFDs), where you bet on which way an asset’s price will move without buying the asset itself. 

CFDs are banned in the US and permitted in the UK only for professional investors, with platforms required to display the (frequently very high) percentage of investors that lose money.

Trading 212 told us it ‘doesn’t push or cross-sell CFDs to any of its customers. Access to CFDs requires opening a completely separate account, completing Financial Conduct Authority (FCA)-mandated risk and appropriateness assessments, and explicitly confirming understanding of the product’.

It told us the platform makes money in a variety of ways including forex fees, share lending and net interest margin on uninvested cash.

Platforms have an interest in customers buying and selling more often, as even if they only charge forex fees on each transaction, these can add up. But, an FCA review didn’t find that platforms were ‘gamifying’ apps in a way likely to lead to investor detriment. 

Nevertheless, the ease of using many new platforms and fee-free investing shouldn’t lead you away from your investment strategy: used properly, low fees can mean higher returns.