Interactive Investor Review

Expert Review

Interactive Investor or II as its known is one of the UK’s largest self-determined investor platforms. II can trace its roots back to1995 and the startup floated on the London stock exchange back in the year 2000 before being bought by the Australian business Ample in 2002.

Todays Interactive Investor is a privately held company with assets under administration of more than £50.00 billion and 400,000 customers to whom II offers share trading and investment services including, ISAs SIPPs and share dealing, alongside research and analysis. Including model portfolios, selected funds and thematic investments.

Interactive Investor is a low-cost provider competing directly with the likes of Hargreaves Lansdown and AJ Bell.

Stocks & Shares ISA

The stocks and shares ISA is a way to invest in the markets through a government-approved tax-free wrapper. Individuals can invest up to £20,000 per annum in their stocks and shares ISA or indeed across several other ISAs.

In an ISA there are no capital gains taxes on trading profits and no tax is levied on the income from stock dividends or bond coupon payments. Stocks and Shares ISAs are open to all UK residents aged 18 or over, who can open a new Stocks and Shares ISA each year.

There are many securities, both domestic and international that are ISA eligible. However, an ISA can only contain pounds sterling which means that if you trade in overseas securities you will incur FX conversion charges.

II does not charge any additional fees for a Stocks and Shares ISA, over and above its standard trading account charges. Whilst competitors Hargreaves Landsdown and AJ Bell both charge annual custody fees based on the value of your holdings.

SIPP

A SIPP is a self-invested pension plan a way of saving and managing money for your retirement in a tax-efficient fashion. A SIPP can run alongside an occupational pension scheme or stand-alone and it provides the same tax benefits and flexible retirement option as other defined contribution pensions.

The main selling points of a SIPP are that they provide access to individual stock and shares from the UK and abroad and that you, the pension holder, make the investment decisions.

In terms of fees, Interactive investor charges £19.99 per month a charge that combines their £9.99 account service and an additional £10.00 fee for SIPP administration.

II calculates that their flat fee structure could save you as much as £94,000 in charges over the pension lifetime when compared to competitor offerings which is a significant sum.

SIPP account holders can open a Stocks and Shares ISA and trading account at no extra cost and also qualify for one free trade per month.

Charges & Fees

Interactive Investors chargers flat monthly fees to account holders that start at £9.99 with additional admin charges of £10.00 per month for SIPP administration. All account holders receive one free trade per month and additional deals are charged at £7.99 per trade.

If you are trading in overseas securities you will also pay FX conversion fees which vary based on the size of your transaction. There are occasional special offers and research and ideas are provided free of charge.

The flat fee per month structure differentiates Interactive Investor from its peers many of whom charge fees on the monetary value of your portfolio, based on either a fixed-rate or sliding scale.

It could be argued that the monetary flat fee approach doesn’t penalise success in that you pay no more, or indeed less, for the service regardless of your investment performance.

Whereas under a percentage fee scheme the bigger your portfolio the more you could potentially end up paying

International Investing

You can trade in international stocks and shares with Interactive Investors and you can check if stock is available by typing the name into the search for an investment box on the II website and it will return any matches from the list of securities that Interactive Investors offers.

Account-holders get one free trade per month and each subsequent trade costs £7.99. The only other charges are for any FX conversions required to settle the trade or to convert sale proceeds back into sterling for example.

You can trade shares from across Europe and North America as well as Asian markets such as Hong Kong, Australia and Singapore. The coverage is not as extensive as that offered by some rivals for example Hargreaves Landsdown, though their charges are likely to be higher than II’s unless you are trading 20 times a month or more.

Ethical Investing

Interactive Investor offers some pre-selected and pre-packaged investment ideas and styles to their customers. One of which is Ethical Investing the firm have selected 140 funds that allow clients to invest in both the UK and abroad from an ethical perspective.

Alongside equity-centric vehicles, there are bond, money market and property funds to choose from. These are complemented by a clutch of specialist ethical investments.

The list of funds was created with the help of independent research house SRI and data from fund specialists Morningstar, and the II ethical overlay encompasses ESG and sustainability factors.

Costs are the same as other II investment products, which is a flat fee of £9.99 per month including one free trade and additional trade at £7.99 per deal thereafter. And of course, if you dealing bin overseas securities then you may incur FX conversion charges.

Refer a friend

II offers a refer a friend scheme which rewards existing customers with £100.00 for each friend they introduce to the company, who opens an account and deposits £10,000 or more in either stocks, investments or cash, or a combination of all three.

The rewards are credited to your II trading account and not SIPPs or ISAs.

Friends that are introduced benefit from 12 months of IIs free service plan which is worth £120.00 to them, so it’s a win win situation.

Refers can only introduce a maximum of 6 friends under the scheme and referral fees can be reclaimed if the friend closes their account within a year of their introduction. You can’t refer yourself and you will need to wait 10 days to receive your rewards.

Investment Trusts

II has a long association with the investment trust market. Investment trusts are closed-end funds that follow a specific investment mandate. Investment trusts are listed on the stock exchange and their shares trade in the same way that other stocks do.

However, unlike open-ended funds such as ETFs, the value of the shares in an investment trust are driven by the supply and demand for the shares in the trust rather than the values of the underlying investment.

That said investment trusts typically trade and are valued at a premium or discount to the NAV or Net Asset Value of those underlying investments.

You can invest in as many investment trusts as you wish. Though most investors will try to select the best funds in a particular space or theme.

II provides plenty of information about the best-performing Investment trust over various times frames and which funds have proven most popular with II clients, and articles on the sector and investing in it.

II’s flat fee charges apply once again so thats£9.99 per month for a trading and or ISA account, inclusive of one free trade per month and additional trades charged at £7.99 each. SIPP holders pay an additional £10.00 per month admin fee on top of the £9.99 charge.