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House prices, mental accounting, and leaky buckets

A photo of a brain in a jar: Mental accounting explains some of the odd things we think about money

People say odd things about the 100 to 1,500% returns they’ve made from home ownership.

  • They say no financial value is created until they sell.
  • They say even if they did sell they’d only buy another home, so the gains still don’t count.
  • They say it isn’t real money, or it’s funny money, or it’s paper money.
  • House price falls don’t count either, because of the ‘unless you sell it’s not real money’
  • They also say a home isn’t an asset because you have to live somewhere. Useful things can’t be assets? (I debunked this in a different post.)

What you’ll notice if you observe this as only an obsessive property-loser like me could – green eyes pressed up against their fancy bi-fold doors, watching them toast their non-existent mortgages – is how the line varies.

Some clearly do believe their house price gains are real money, because they’ll inform you they foresaw stratospheric rises when they bought a bedsit in Balham in the early 1990s for £20,000 that’s now worth £500,000.

When such gurus speak I get out my notebook and learn all I can. It’s not often you meet prescient financial wizards.

More often, thankfully, I hear the ‘only paper money’ sentiments offered not unkindly as a consolation to people who don’t own their own home.

Yet saying your six-figure house price gains aren’t real comes across as about as self-aware as a supermodel giving tips on succeeding on Tinder by wearing a hat.

What anyone normal sees if you got onto say the London property ladder 25 years ago with a £10,000 deposit and a £100,000 mortgage is you now own an asset worth perhaps £700,000 – a gain far north of half a million quid.1

Agreed, the homeowner will have paid a mortgage on top – but remember the We All Have To Live Somewhere clause.

Non-homeowners pay rent, moving costs, and they go to IKEA, too.

We can quibble about the precise numbers, but given landlords (i.e. professional homeowners) aim to profit from renters, it’s clear owning over the long-term isn’t usually a bigger financial burden than renting a similar property.

The net result is Person A bought and owns an asset worth maybe £700,000.

Person B didn’t, rented instead, and doesn’t.

Yet I’m told Person A is not better off than Person B, because it’s not real money.

Have I got that right?

Mental accountancy: The number of the beast

I’m having fun, but this isn’t really a post about the specifics of house prices, or the rights and wrongs of the market – or even sour grapes!

(And yes, I do still owe you an article on why I did finally buy my own flat. It’s coming. Prepare for an anti-climax.)

Today I’m more focusing on this mental accounting people do.

Mental accounting is why they say their home is not an investment, and that house price gains and losses aren’t real.

Their mental accounting is also what can makes them sound so insensitive when they tell you they’re not really better off, because when they sell this £1m property they’ll only have to buy another bloody one.

In reality they could sell-up, rent, and have all that cash in the bank, or in a diversified portfolio of shares.2

But the house equity lives in a different mental bucket, so they rarely see it that way.

Mental accountants I have known

I have a close friend who is of the ‘house gains aren’t real money’ mindset.

Helped by a chunky family-funded deposit, he bought his first flat in a gentrifying part of South London in the late 1990s.

A bighearted person, he has often acknowledged his good fortune in getting help onto the ladder. He even charged me a mate’s rate rent as my landlord for a couple of years, which I didn’t expect and appreciated.

Yet he has shrugged off the growing value of his property assets over the years – even as the equity came to dwarf his other savings and any sensible multiple of his income – due to the ‘needing somewhere to live’ theory.

I saw things differently (increasingly so, as prices got away from me) and said so whenever the subject came up.

Things came to a head recently when he suggested I finally join him on one of his incredibly regular foreign holidays.

I’m also currently single and childless, he said – why not enjoy myself? After all, now I’d finally bought my own flat too I could surely let my hair down.

That – ahem – triggered me.

As tactfully as I could after 20 years debate and several glasses of wine, I pointed out that to buy my flat I’d had to find more than £500,000 from somewhere that he had never had to.

He might not consider his price gains real. But the price rises are very meaningful to someone who has to pay them in today’s market!

In short, he could take a couple of hundred holidays costing £2,500 or so over the next 25 years – maybe 5-10 a year – before I’d be in the same position as him.

Not my finest hour, granted, but there’s only so much you can take of someone saying it’s meaningless trivia that they live in a property that would today cost them roughly 20-times their income before you snap.

His mental accounting met my mortgage budgeting, and there were fireworks.


…it’s actually worse than that. Because I’m sure you saw what I did there.

What earthly reason did I have to set holiday costs against the gains on his flat?

There is no good reason. I was just mentally bracketing them together in the moment to wallow in my martyrdom for a few minutes – and perhaps to get out of an expensive holiday without resorting to voicing environmental qualms or my tightwad tendencies. (I see them more attractively, of course!)

I was fudging the figures for both of us. Instead of his housing equity I could have mentally positioned my investment portfolio against his meager ISAs and booked us both tickets to go.

But sadly I’m only human (my exes may disagree) with the same fit-for-the-savannah mind as everyone else.

And achoring, framing – many of behavioural finance’s Greatest Hits – all featured in that exchange.

More mental accounting

Examples abound:

  • I’ve friends who say they have no savings. Over time I’ve learned (out of concern) most have fairly sizeable pensions. They don’t count these as savings, because they’re locked away for old age. But they are savings. If they didn’t have them, they’d have to start acquiring them.
  • An active investor will sell half of a share holding that has doubled, and consider the residual investment to be free and losable – even though they’d baulk at working overtime for weeks to earn the same amount. See also Las Vegas gamblers and crypto-currency investors after the bubble burst. Sorry, your losses are real money losses.
  • Passive investors will say a market decline doesn’t affect them because they are in it for the long-term. But there’s no guarantee the market will come back – or thanks to sequence of returns risk do it before they want to start spending. If your portfolio halves, it halves. You’re poorer, for now.

To be clear, I believe the passive investing mindset is the right way to go for most.

For that matter I’ve nothing against active investors diversifying out of winning shares, or gamblers resorting to mental accounting trickery to get some money off the table.

The key is to be aware when you’re doing it – because mental accounting can cause problems.

Consider an emergency fund. In my book, that’s a wodge of cash set aside to deal with emergencies.

Yet others will say their emergency fund is covered by their credit cards, or a share portfolio that they’ll sell down if they have to.

Such a strategy to meet cash needs may be right for them (I don’t advise it) but it does not have the characteristics of an emergency fund.

Share portfolios fluctuate, unlike cash.

Credit limits can be cut – perhaps just when you need the cash, and in the worst case for the same reason. And if you’ve just lost your job and need ready money fast is that really the time to go into debt?

Even an allocation of cash in a portfolio that’s mentally accounted for as doing double-duty as an emergency fund might lead you astray.

Perhaps you’ll own few to no bonds because of that cash. Then the market crashes, there’s a recession, you get a lower-paying job – and while you do have the cash to see you through, you didn’t enjoy the counter-balancing benefits you might have had with bonds, because instead you had cash moonlighting in two roles at once.

Worst case is you sell your shares at the bottom, because as you withdraw and spend cash from your portfolio, what’s left comprises an ever-higher proportion of equities that are falling in value, until you get scared you’ll lose everything. If your emergency cash had been mentally accounted for and separate in its own savings account, you might have ridden it out.

The truth is you never had an emergency fund. You had a flawed mental model.

There are also societal consequences of mental accounting.

You might choose to think of your home equity as paper money or not an investment, because you have to live somewhere, or because the costs and time involved in selling make it somehow not an asset in your view.

Fair enough, your call.

But the widespread acceptance of such thinking leads to the situation where as a society we’re asked to have sympathy for cash-poor pensioners rattling around wholly-owned five-bedroom family homes in the midst of a housing crisis, when they could sell up, downsize, and be flush with spending money.

Holding your finances to account

I try to counter my mental accounting with a giant spreadsheet.

This consists of a master sheet that details my best current estimate of my net worth from all sources.

Sub-sheets cover things like my share portfolio, my cash accounts, my unlisted investments, my flat and my mortgage, and other bits and pieces.

Some of the underlying sheets are updated automatically via the Web, others occasionally manually updated by me. The master sheet pulls from all of them.

Like this I can ‘bucket’ my money and investments as our brains seem to want us to do, but I also keep track of the true big picture.

I can also create novel perspectives on my financial status, by dividing various numbers by others. For instance I can work out my own debt-to-equity ratio, my liquidity position, or how exposed I am to property versus shares.

I break out what’s sheltered from taxes, and how, and what’s not.

In recent years I’ve even included an estimate of how exposed I am to different Brexit scenarios via the investments I’ve made (including my flat).

Some of this might seem wonky. But the point is I have many different angles on my finances – conventional and unusual – so it’s harder for me to delude myself.

If you do this, you might realize you’ve got more money tied up in your property than your pension, for example – or vice-versa.

You might see the £5,000 you keep in cash earning 1% that feels like such a drag on your returns is really just a small proportion of your total wealth including all your assets. It may be revealed as a small price to pay for the security of having cash on tap if required.

And if you don’t think your house gains are real money because it’d cost you to move, then fine, apply a discount of 5-10% on the appropriate sub-sheet. That’ll be a more accurate version of reality than pretending it’s still 1997.

Bottom line: However it’s wrapped up, whatever it’s earmarked for, whether it’s easy to get hold of or a right pain – it’s all the same real money.

Share your own examples of mental accounting in the comments below!

  1. In practice you probably moved a couple of times, but of course those wonderfully untaxed gains go with you. []
  2. I’m not saying they should – again, this post isn’t about the rights and wrongs of property ownership. It’s about how people think about it and other assets. []

How to get a 14% return from RateSetter

Mixing RateSetter’s £100 bonus offer and high interest rates should deliver a tasty return

Good news! RateSetter has brought back its £100 bonus for investors who put away just £1,000 for a year. To get the bonus, follow my links to RateSetter in this article. I will also be paid a bonus by RateSetter if you sign up via one of these ‘refer a friend’ links to claim your £100 bonus. This doesn’t affect your returns – it is paid by RateSetter.

I won’t cause any readers to fall to their knees screaming “No! How can it be? Why didn’t somebody tell me!” if I say it’s been hard to get a decent interest rate on cash for the past few years.

Even the Bank of England’s rate rises haven’t done much. High Street banks always drag their feet in passing on rate rises.

But in this article I’ll explain how you can effectively get a 14% return on a chunk of your cash by taking advantage of a bonus offer from RateSetter, the peer-to-peer lender.

True, this very attractive potential return does not come without some risk.

In practice, no Ratesetter investor has yet lost a penny. Every lender has received the rate they expected.

Nevertheless, peer-to-peer does not have the same protections as traditional cash deposits, so you should think about it differently to cash in the bank. More on that below.

If you can accept the risk and have the spare cash to hand, I believe this is a pretty safe – though not guaranteed – way to make a good return.

It also exemplifies how being nimble with your money can enable you to achieve higher returns – even in today’s low rate world.

Not a few Monevator readers have taken advantage of this win-win RateSetter offer over the past couple of years!

About RateSetter

RateSetter is one of the new breed of peer-to-peer lenders aiming to cut out the banks by acting as a matchmaker between ordinary savers and borrowers like you and me.

Rates change all the time, but as I write you can get up to 5.4% as a lender with RateSetter by putting your cash into its five-year market.

Since March 2018 you’ve also been able to open a RateSetter ISA, which means you get your income tax-free.

Meanwhile borrowers can get a loan charging less than 4%. RateSetter claims that rate is competitive with the mainstream banks, and says banks are its competition (rather than it simply getting all the bank rejects).

RateSetter charges no lending fees, which is great news for savers like us. Borrowers do pay a fee.

Over £2.5 billion has now been lent through the RateSetter platform. This is no longer a tiddly operation.

And importantly, of the 66,942 investors who’ve lent money with RateSetter not one has yet lost a penny of their investment.

In 2010 RateSetter set-up a ‘Provision Fund’, which is funded by charging all borrowers a risk-adjusted fee.

Money from the Provision Fund is used to repay lenders whose borrowers miss a payment, for as long as there’s money in the fund to do so.

It’s a different model to the initial approach of rivals like Zopa. Back then you were encouraged to spread your loans widely and accept a few would go bad, reducing your return.

The RateSetter approach is different.

But as sensible people of the world, we should understand there’s no magic here.

Downside protection

Some loans will still go bad. And those bad loans will still reduce the returns enjoyed by lenders in aggregate – because the Provision Fund fee levied against borrowers as part of the cost of their loan could otherwise have gone to lenders through a higher interest rate.

However what the Provision Fund does is share those losses between all lenders, reducing everyone’s return a tad.

This makes your returns predictable. Your outcome should be dependent on the interest you receive – rather than being distorted by the poor luck of being personally hit by an unusually high number of bad debts.

Note that the Provision Fund does not provide complete protection against a situation where all the loans made at RateSetter default. Far from it!

Rather the Provision Fund aims to cover the bad debts predicted by RateSetter’s models, with a margin of safety on top.

At the time of writing, Ratesetter says:

  • Future losses would need to be 1.23 times larger than it predicts before investors’ interest income starts to be at risk.
  • Future losses would need to be 2.48 times larger than predicted before investors’ initial investment starts to be at risk.

What would happen if losses did exceed the RateSetter projections?

First the Provision Fund would be used up, and ultimately exhausted.

After that interest payments could be redirected to repaying capital. You’d lose on interest payments, but it could cover lenders’ losses on capital unless the default rate got too high.

Finally, in a doomsday scenario with very high default rates, capital could be eroded. I’d expect other investments like equities and corporate bonds would also be taking a pummeling. But cash in the bank would not.

At the end of the day, I believe for most people the Provision Fund approach is preferable to the lottery of individual loans defaulting. But don’t mistake it for a panacea or a guarantee.

You could conceivably lose money if defaults are much worse than expected. More on that below.

How to bag that 14% return from RateSetter

At last, the good bit!

RateSetter is currently offering a £100 bonus to new customers who invest at least £1,000 in any of its markets and keep it there for a year.

This £1,000 minimum investment can be made up of new subscriptions and/or transfers from other ISA providers.1

The £100 bonus is paid once that year is up. It will be deposited into your RateSetter account, after which you can choose to do with it (and the rest of your money) as you please.

Clicking on any of the RateSetter links in this article will take you directly to the sign-up page for the £100 bonus.

For full disclosure, RateSetter will also pay me a £50 bonus if anyone does sign-up via my links, which would obviously be very welcome! My bonus doesn’t affect your returns. It’s paid by RateSetter.

As for your £1,000 investment, you can put it into any RateSetter market, which range from a rolling one-month option to a five-year lock-up. But you must keep it within RateSetter for a year to get your £100 bonus.

To keep things simple, let’s assume you invest your £1,000 in the one-year market, which matches the period required to qualify for the bonus.

The one-year market is paying 4.7% as I type.

So after one year you’d have your 4.7% interest on your £1,000 and you’d also receive your bonus, which works out as a return of 14.7% on your £1,000.

Very nice!

I’ve ignored taxes here because everyone’s tax situation is different.

The good news on taxes is that:

  • You can now open a RateSetter ISA and collect the bonus. You can fund this with a transfer from another ISA provider. In an ISA the income you earn is tax-free.
  • Most people even outside of an ISA will pay no tax on cash interest, thanks to the new-ish Personal Savings Allowance that covers the first £1,000 of interest earned by basic rate taxpayers, and £500 for higher-rate payers.

Is this bonus too good to be true?

A great question.

Clearly it’s not sustainable for RateSetter to lend your money out at, say, 4%, while paying you an effective rate of nearly 15%.

(The cost is even higher to RateSetter if it pays me a bonus, too.)

RateSetter must be hoping this is the start of a multi-year relationship with its new sign-ups, after they become comfortable with its platform.

Once you get over the initial hurdle, peer-to-peer is straightforward. I’ve used these platforms for ten years now.

RateSetter will hope many customers deposit more than £1,000 and ultimately prove profitable in the long-term.

Like all peer-to-peer lenders, RateSetter will be aiming to scale as quickly as possible. Greater size will improve its margins and enable it to continue to meet demand in both the savings and loans market. Scale is a critical factor in virtually all money-handling businesses.

Finally, I expect the cost of this offer is allocated internally to its marketing department.

If 5,000 people sign-up for the bonus that’s clearly a lot of money – but it wouldn’t buy very much TV airtime. At least this way RateSetter can precisely calculate the return on its investment.

I do think it’s a smart question to ask, though, and it neatly brings us back to risk.

A final word on the risks

I have already stated that peer-to-peer lending is not a straight swap for a cash savings account.

The risks are higher.

Firstly and crucially, there’s no Financial Services Compensation Scheme coverage for peer-to-peer lenders. If you lose money, the authorities will not bail you out like they would for up to £85,000 with a High Street bank savings account.

That’s important because even though no savers have yet lost a penny with RateSetter, that’s not a guarantee they will not do so in the future.

The economic situation could change markedly, say, or RateSetter could get its sums wrong on bad debt.

In the most likely (in my opinion) worst-case scenario, the Provision Fund would not be able to cover all the bad debts. This would mean some loss of interest.

  • According to RateSetter, as of August 2018 the loss rate experienced to date is 2.29%.
  • It currently projects this to rise to 3.33%. (Loans take a while to go bad.)
  • If credit losses rose to 127% of expected losses, RateSetter‘s model indicates the Provision Fund would still cover interest.
  • In what RateSetter terms a severe recession, you’d get no interest but it believes you’d get your initial money back.
  • If we saw 400% expected losses, investors might lose 5.6% of their capital.

This illustration is summarized in the following chart:

Provision Fund figures correct as of 1st August 2018. (Click to enlarge)

Source: RateSetter

As for the worst worst-case scenario, like with any business it is possible to imagine catastrophic situations where you’d lose much more.

But to my mind these would probably require fraud or massive incompetence within the company, and/or a far deeper recession than anything we saw in 2008 and 2009. (Probably both at once – as Warren Buffett says you only see who has been swimming naked when the tide goes out.)

Obviously I don’t think that’s at all likely, otherwise I wouldn’t have put any money into RateSetter.

But a hint of what might have gone wrong came in 2017, when the company intervened to restructure several businesses and cover repayments from one via its own funds. This prevented its bad loans from being defaulted to the Provision Fund. This decision to intervene reportedly2 delayed authorization from the FCA. It has subsequently been granted.

RateSetter says: “This intervention was an exception and will not happen again.”

As I understand it, RateSetter has since withdrawn from the wholesale funding operations that produced this situation. (Wholesale funding is when a company lends money to third parties, who then lend those funds on themselves.)

You invests your own money and takes your choice.

Personally, I am happy with the risk/reward here. Not everyone feels the same. My co-blogger, for instance, doesn’t use any peer-to-peer platforms.

As a halfway house to reduce risk one could perhaps only invest in RateSetter’s monthly market, in the hope this would give you more chance of getting money out relatively quickly if say the economy was coming off the rails. The price is a lower interest rate, of course.

I think it’s worth stressing again that nobody has lost money so far with RateSetter. And even if the economy turns very far south, you probably won’t lose more than a small percentage unless something very bad or criminal happens.

That would be a much worse situation than with cash, but not a catastrophe.

However we all know by now that bad things can happen, and every investment can fail you. Do not invest money you cannot afford to lose.

RateSetter and your portfolio

Personally I have always taken a pick-and-mix approach to spread the risk with these sorts of alternative opportunities.

For instance, I have used both RateSetter and Zopa, I’ve invested a little in mini-bonds and retail bonds, I have money with NS&I, and I have taken advantage of high interest rates and cashback offers with accounts like Santander 1-2-3 to boost my returns.

When putting money into the riskier alternative options, I only invest a low single-digit percentage of my net worth with any particular platform. Like this I aim to mitigate the risks of being hit by some sort of systemic or company failure.

I’m not going to labour the point on risk further. Most peer-to-peer articles barely mention it, and I’ve devoted half this piece to it. Consider yourself warned, and read the company’s extensive material if you want to know more.

I think peer-to-peer and other cash alternatives are interesting additions to our arsenal as private investors. But they’re not slam dunk safe bets. I size my exposure accordingly.

Get your £100 while it lasts

So there you have it – a hopefully even-handed assessment of the risk and reward potential of this £100 bonus offer from RateSetter.

From here you’ll have to make your own mind up.

I do hope some of you found this article interesting and enjoy those bonus-boosted returns.

  1. Note: Terms and conditions apply with transfers, so check the small print. The money must be transferred over within a certain time period, which may be down to the ISA provider you’re transferring from. Just setting up a new RateSetter ISA with a fresh £1,000 should be straightforward. []
  2. See this article at Reuters: https://uk.reuters.com/article/uk-interview-ratesetter/ratesetter-recovering-after-asteroid-strike-bad-loan-discovery-idUKKCN1BN1PF []
Weekend reading logo

What caught my eye this week.

Writing a regular personal finance and investing blog isn’t all glamour, acclaim, and partying with insouciant French models, you know.

Sometimes it can even be a tad dispiriting.

You, dear reader, can come across a comment like…

  • “I don’t see the point in bonds – I decided not to buy any when I started investing 18 months ago and I haven’t looked back!”


  • “Stop trying to pump up FED-inflated shares even higher I bought shares in 1999 and they crashed in 2000 and I lost everything IT WILL HAPPEN AGAIN.”


  • “Index funds are for losers. I got my Amazon shares in 2005 when I didn’t know what I was doing and then forgot I owned them and now I’m rich.”

…and you can shrug and be glad you decided not to invest with that particular active fund manager.

(Ha ha. Little joke there, active fund manager friends.)

But as someone who has been writing a blog about this stuff for ten years – well over 1,000 articles in total – it’s hard not to take such silliness personally. Especially when it’s written in the comments of your own website.

It’s understandable that investors in the 1930s, the 1950s or even the 1980s might base their beliefs about investing on personal experience.

Up until the 1990s you had to hunt to find good books about investing.

As for accessing data to reach your own conclusions and devise the right plan – you had to be rich already to buy that data in the first place!

Nowadays though we’re drowning in solid investing advice. Obviously lots of rubbish, too, but there’s so much good stuff being written it’s almost excessive. Filling this page with links every week takes a while, but it’s never for a lack of decent material.

Resources like the wonderful Portfolio Charts has brought data to the masses, too.

So why do some people persist with hokey homemade theories based on just a few years’ personal experience?

Presumably it’s evolutionary. There is good reason to believe what you’ve seen before with your own eyes when another caveman tells you to go cuddle a sabre-toothed tiger.

But as Michael Batnick pointed out in his Irrelevant Investor blog this week, your personal experiences and mine may differ wildly – and when it comes to investing both may be inadequate when it comes to the big picture.

Look at how various cohorts of investors fared with the S&P 500 over the first ten years of their investing life:

Those are extremely different outcomes. As Batnick notes:

Consider an investor who started in 1946 (black) versus one who started in 1966 (light blue).

The former got the chance to invest in a market that compounded at 16.7% while the latter saw stocks compound at just 3.3% while being ravaged by two bear markets.

Now you and I might look at that graph and conclude luck plays a huge role over the short-term in investing.

Some ambitious folk might even believe the graph demonstrates that you need to pay attention to levels of market valuation or momentum when deciding how much to allocate to shares – though I wouldn’t recommend it for most.

But what one should clearly avoid doing is concluding “shares are the only place to be” because you happened to get going in 1946 or “when I hear the phrase ‘stocks for the long run’ I reach for my revolver” because you started investing 20 years later.

True, we can never be sure the future will look like the past.

But it must be better to be aware of a hundred years of ups and downs than to believe investing started the day you opened your broker account.

[click to continue…]

Painting: Two friends compare their investments.

Working out the best online broker or platform1 to use in your investing can be frustrating.

Just when you have got your head around shares versus funds, corporate bonds versus James Bond, and you’re finally ready to start investing, you discover dozens of different brokers to choose from.

All have their own similar-but-different fee structures.

We have long kept track of the different broker platforms and what they charge via our fee comparison table.

But comparing the charges levied by say Hargreaves Lansdown with those of Interactive Investor can be fiddly work.

Details matter. Some brokers charge lower fees for trading but sting you with high withdrawals fees. Others offer cheap trading, but make additional annual charges for each different kind of account you open with them – once for an ISA and again for a SIPP. There may be entry and exit fees, too.

You also need to compare fixed annual platform fees – for instance £15 a quarter – with the alternative method of levying a percentage fee – say 0.25% year – on your investment pot. Which is more cost effective for you?

What’s more, the winner of this equation will probably change as your nest egg grows! You’ll need to run the numbers every few years to keep your costs as low as possible.

Get tooled up to compare investing platforms

If you find all this fun then you’re in the right place. We’re investing nutters around here.

But most people frankly do not.

Out in the wider world, people use interactive tools to compare things like insurance products and energy bills.

Well, that is now possible with investing platforms, too.

We’re hosting an interactive comparison tool created by our partners at Broker Compare. We hope it will help casual investors get their money onto a suitable investment platform with a lot less hassle.

In fact anyone who wants to hone in fast on the best potential brokers will find it a quick way to generate a shortlist of candidates.

True, if you want to work out precisely what you’ll pay – in your specific situation – you’ll always need to do the sums for yourself.

There are just so many quirks out there, and any tool needs to make a few assumptions. Only you know exactly how you plan to invest and why.

But for many people, getting a good idea of the best platform to use quickly is the most important thing.

They’d rather know approximately what they’re going to be charged than laboriously figure out the exact costs from a dozen or more competitors.

Compare the brokers and save hundreds of pounds

Monevator regulars love to debate the minutia of different platforms with all the passionate enthusiasm of trainspotters arguing about the best non-standard railway gauges found in the wilder mountainous regions of Europe.

And long may that continue. (You’re among friends here.)

But the average person has little idea of their broker’s fees – or how what they’re paying compares to the competition.

For these people, five minutes with a comparison tool could be a quick way to save hundreds or thousands of pounds.

So what are you waiting for?

Note that just as with the price comparison websites we all use to compare energy bills or mortgages, Monevator may receive a payment from a broker that you visit or sign-up with via the table or tool. This does not affect the fees you pay – it’s made by the company to us for introducing you to their business.

Happy hunting – and let’s save some money!

  1. We tend to use the words ‘broker’ and ‘platform’ interchangeably. A broker is a stock broker – a person or company who trades and holds investments on your behalf. The platform is their website that lets you see and adjust your investments. []