When I began planning my financial future, I became obsessed with nailing a realistic rate of return. All of the investment calculators required one.

Plus, everything else flowed from that number – such as how much I needed to save, and how long it would be before I could declare financial independence.

It seemed important. Because if I highballed the number then I was telling myself a fairy story, wasn’t I?

Eventually I read enough fusty old PDFs and insomnia-curing books to convince myself I had an answer.

The average inflation-adjusted rate of return for a portfolio of global equites was about 5%. More than 100 years of returns data said so.

You could dig up a similar number for bonds, too, and all the rest.

Do the maths, and hey presto! One time-tested, personalised rate of return.

Data mining

Then you get down to the hard work. Years of hacking away at the FI coalface. Celebrating when you hit a seam of double-digit returns. Face blackened when you’re scorched by a fireball of negative numbers.

But it’s the damnedest thing. That oh-so-achievable looking positive average return hardly ever turns up. Because investment returns are rarely average:

Data from JST Macrohistory ¹, The Big Bang ², Before the Cult of Equity ³, A Century of UK Economic Trends ⁴, St. Petersburg Stock Exchange Project ⁵, World Financial Markets ⁶, and MSCI. February 2026.

No matter how many annual return charts I see, I never get used to how nuts the variance is. Yet this carnival of volatility is a far better portrayal of the actual investment experience.

In the chart above, the blue line is the average annualised return for World equities 1900 to 2025. It currently stands at 5.6%. (All returns in this post are inflation-adjusted, GBP total returns).

However you can count on your fingers the number of annual returns that remotely resembled that figure. Across 126 years!

Which is fine and dandy when returns come in over the blue line: “Yay, I’m above average – maybe I’ll get to retire early?”

But it’s super-bleak whenever the bad years roll in. Then, everyone wonders if they’ve been sold a pup.

Optimism biased

Luckily a string of defeats doesn’t happen very often, as you can see from the chart. We haven’t experienced more than a single negative year in a row since the Dotcom Bust of 2000 to 2002.

Since then though, interest in DIY investing has exploded. I can only imagine the fear and loathing that’ll reverberate through the community if (when…) we suffer a sequence more like the 2000s, the 1970s, or the 1930s.

There’s no cure for human nature I suppose. But the Pollyanna problem has been on my mind lately, given nerve-janglingly extreme US market valuations.

Gold fingered

The wide variation of returns we see with equities holds too for every other asset class you can plausibly take refuge in. Such as gold…

Data from The London Bullion Market Association. February 2026.

Gold won the past decade. It’s also having a great year (so far).

Tempted? Beware that gold annual returns are certifiably insane.

The last 20 years have been amazing. But the 20 years between 1980 and the year 2000? Not so much.

Necessary historical footnote: The GBP gold price before 1975 was mostly either fixed or distorted by the impact of government regulation. Find out more in our deep dive into gold.

Show me the money

Data from JST Macrohistory ⁷, British Government Securities Database ⁸, and Millennium of Macroeconomic Data for the UK, ⁹. February 2026.

Cash operates in a narrower range, sure. Yet inflation and abrupt interest rate swings can send returns haywire.

I still wonder why everyone piled into money market funds when interest rates spiked in 2022. Had they forgotten the enormous cash bear market that raged from 2009?

Money markets lost over 27% from 2009 to 2023. Every year bar one was a loser. But it just didn’t feel like it because we don’t keep it real. (By which I mean inflation-adjusted!)

His skid mark materials

AQR ¹⁰, Summerhaven ¹¹, and BCOM TR. February 2026.

Commodities are even scarier than equities. Some 42% of years are negative versus just 30% for World equities. You need a cast iron stomach to withstand that level of volatility.

But also look at the number of years commodities returned over 20% – and even 40% – in comparison to equities.

The penny finally drops when you discover that bonza commodities years often occur when equities are in the toilet.

Commodities’ average return looks pretty good, too: 4.3% annualised. Then again, this asset class is the epitome of ‘anything can happen and it probably will’.

Gilt complex

Data from JST Macrohistory ¹², and FTSE Russell. February 2026.

Lastly, if not leastly, there’s government bonds – whose approval rating sank to Trumpian levels when gilts dished out their second-worst annual return on record in 2022.

All Stocks gilts (as featured in most UK government bond funds and ETFs) aren’t really much easier on the nerves than equities. Even worse, their average return is a miserable 0.76%.

The secret though is not to view bonds on their own. Bonds don’t make any sense in isolation. The magic happens when you throw them into a pot with other assets.

Kinda like how most people don’t eat raw chillies, but there’s widespread agreement that they add something to curries.

Enter the Pot-folio

Don’t even think about stealing my amazing new Pot-folio^TM idea. I’ve trademarked the bejesus out of it. (What’s that? “Just stick to the charts, mate…?”)

The improvement wrought by sufficient diversification isn’t totally obvious in chart form. The down rods are definitely fewer and stumpier, though.

However looking at the raw numbers highlights the difference more clearly:

	World equities	The Pot-folio
Annualised return	5.6%	5%
Deepest drawdown	-51.8%	-36.5%
Longest drawdown	13 years	10 years
% years -10% or worse	15%	9%
Volatility	16.2%	11.6%
Ulcer Index	18.4	9.8
Ulcer Performance Index	0.28	0.47

In exchange for giving up a little return, you get fewer and less severe down years. That means:

• Shallower drawdowns
• Shorter drawdowns
• Less volatility
• Better risk-adjusted performance

The Ulcer Index is a measure of downside pain that translates drawdown depth and length into a single metric. A lower number is better.

Portfolio Charts introduced me to the Ulcer Index as devised by Peter Martin.

The Ulcer Performance Index is a risk-adjusted performance ratio that divides the excess annualised return by the Ulcer Index number. Here higher is better.

You say portfolio, I say Pot-folio, you say “Go do one”

I haven’t spent time optimising the Pot-folio. It’s just an equity-tilted variant of an All-Weather portfolio.

Essentially, you maintain positions in assets that when combined can cope with most people’s shopping list of worries:

• Growth – equities
• Inflation – commodities, index-linked gilts
• Recession / panic – government bonds, gold, cash
• Stability / liquidity – cash

However, as much as everyone buys into the concept of diversification, it’s fair to say investors spend more time thinking about how to satisfy their immediate desires. Such as making bank as quickly as possible, if not quicker. Right up to the point that the risk chickens come home to roost – and crap all over the place.

So if you’re nervous about AI bubbles or whatnot, be bolder with your diversification. By which I mean, consider investing in asset classes that look painful when viewed in a vacuum, but that can be blended together to smooth out your ride.

This way you can aspire to be a bit more average most years – and if that means the difference between you staying invested for the long run and bailing out at some market bottom, it’ll make all the difference.

Take it steady,

The Accumulator

1. Jordà O, Knoll K, Kuvshinov D, Schularick M, Taylor AM. 2019. “The Rate of Return on Everything, 1870–2015.” Quarterly Journal of Economics, 134(3), 1225-1298.[↩]
2. Kuvshinov D, Zimmermann K. 2021. “The
   Big Bang: Stock Market Capitalization in the Long Run.” Journal of Financial Economics,
   Forthcoming.[↩]
3. Campbell G, Grossman R, Turner JD. 2021. “Before the cult of equity: the British stock market, 1829–1929.” European Review of Economic History. 25. 10.1093/ereh/heab003.[↩]
4. Chadha J, Rincon-Aznar A, Srinivasan S, Thomas R. “A Century of UK Economic Trends.” ESCoE, NIESR and Bank of England.[↩]
5. Radchenko P. “St. Petersburg Stock Exchange Project.” Yale School of Management, International Center for Finance.[↩]
6. Moore L. “World Financial Markets, 1900–25.” Working paper.[↩]
7. Jordà O, Knoll K, Kuvshinov D, Schularick M, Taylor AM. 2019. “The Rate of Return on Everything, 1870–2015.” Quarterly Journal of Economics, 134(3), 1225-1298.[↩]
8. Cairns A, Wilkie D, ESCoE Historical Data Repository. “Heriot-Watt / Institute and Faculty of Actuaries / ESCoE British Government Securities Database.” ESCoE.[↩]
9. Thomas R, Dimsdale N. 2017. “A Millennium of Macroeconomic Data for the UK.” Bank of England.[↩]
10. Levine, Ooi, Richardson, Sasseville. 2018. “Commodities for the Long Run.” FAJ.[↩]
11. Bhardwaj, Janardanan G, Rajkumar, Geert Rouwenhorst K. 2020. “The First Commodity Futures Index of 1933.” Journal of Commodity Markets. 2020.[↩]
12. Jordà O, Knoll K, Kuvshinov D, Schularick M, Taylor AM. 2019. “The Rate of Return on Everything, 1870–2015.” Quarterly Journal of Economics, 134(3), 1225-1298.[↩]

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

What is the cheapest stocks and shares ISA available?

The investing world can be complicated, but this time we have a simple answer for you.

Right now the cheapest stocks and shares ISA is the DIY option from InvestEngine.

InvestEngine is the lowest cost stocks and shares ISA on the market because right now it costs nothing.

Zip! Nada!

Now that’s my kind of price range!

Read on for more about InvestEngine’s share ISA.

Cheapest stocks and shares ISA: good to knows

InvestEngine’s ISA costs zero for annual fees, dealing charges, FX fees, entry/exit levies and most of the other multi-headed investment costs that snap at our wallets like a financially-incentivised Hydra. (It’s little known that the Ancient Greek polycephalic snake-beast was on a bonus scheme. Fifty drachma per hero slain.)

The only costs you will pay are the usual Total Expense Ratio / Ongoing Charge management fees that must be borne when investing in any fund, plus trading spreads. So far, so standard.

The platform’s downside is that its range of ETFs is more restricted than costlier platforms, and you can only trade at fixed times per day.

Frankly though, I think that’s a reasonable trade-off. Especially because you can easily create a good investment portfolio from the ETFs available.

Read our full InvestEngine review. We like it. Just make sure you choose the DIY ISA, not the managed one.

Our only concern is how long can the service remain free?

We’ve previously investigated how zero commission brokers make their money. In InvestEngine’s case, it’s mostly hoping you’ll opt for its paid managed offering.

Cheapest stocks and shares ISA: alternative

There are plenty of other commission-free brokers out there now including Freetrade, Lightyear, Prosper, Trading 212, and IG. Prosper and InvestEngine don’t charge FX fees, the rest do.

This piece explains how you can avoid FX fees using ETFs.

Some Trading 212 users also report paying higher bid-offer spreads on their trades than may be the case on other platforms.

It’s very hard for us to know if they’re right, but no platform can afford to offer its services for free. They all have to make money somehow. They will usually tell you how they do it if you search: “How does ‘Broker X’ make money?”

Cheap stocks and shares ISA hack

What if InvestEngine’s prices creep up, or you don’t like its pool of ETFs, or want an alternative because you’re concerned about the FSCS investor compensation limit of £85,000?

In that event let’s recap our cheap stocks and shares ISA hack. It still delivers tax shelter satisfaction for an exceptionally low cost.

Here’s how the hack works:

• You begin by drip-feeding into your stocks and shares ISA with the best-value percentage-fee broker on the market.
• Once your ISA is full you transfer it to the cheapest flat-fee broker.
• You don’t buy and sell your investments at the flat-fee broker. You only trade (for zero commission) on your percentage-fee platform.
• In the new tax year, you open a fresh stocks and shares ISA with the percentage-fee broker.
• Rinse and repeat.

You now enjoy a best-of-both worlds deal that takes advantage of the brokerage industry’s niche marketing strategies.

Percentage-fee platforms offer the best terms to small investors. They tend to rake it in once your account swells beyond £25,000 to £50,000. They’re relying on your inertia.

Flat-fee brokers offer good rates to large investors. They hope to make it up in trading fees. They’re relying on high rollers who treat their portfolios like a night at the casino.

You can arbitrage these cost models, provided you’re active in transferring your ISA and then near-comatose once you’ve parked it at your long-stay platform.

Cheap stocks and shares ISA hack in action

Vanguard Investor offers the cheapest percentage fee stocks and shares ISA.

It charges 0.15% on the value of your assets and zero for trading fees. ¹

Were you to drip-feed your ISA allowance in evenly (£1,666 every month), you’d pay approximately £16 in platform fees for the year.

Leave your assets with Vanguard forever though and it’d keep charging 0.15% until you hit its £375 cap – the point where your account has accumulated £250,000.

But you’re not going to hang around.

Instead, you transfer your ISA to the most convenient flat-fee platform for long-term stashing. There’s a few choices but the cheapest is Scottish Widows Share Dealing (formerly iWeb).

Scottish Widows charges a quite reasonable £0 for platform fees.

Dealing commission is much less competitive at £5 a throw. But we’re not trading there so we plan to pay pretty much zero pounds to Scottish Widows.

Total cost of your stocks and shares ISA per year = £16. 

Not bad!

Just transfer your ISA from Vanguard when it’s full, or after you’ve paid in your last contribution during the current tax year.

Open a fresh stocks and shares ISA with Vanguard on new tax year day (6 April) while your old one is lodged with Scottish Widows, gratis.

Before you transfer, make sure your Vanguard portfolio holdings are tradable at Scottish Widows.

You don’t want to have to sell out of the market and then buy your portfolio again when it arrives at its new home.

Even if you’ve opened another type of ISA elsewhere this tax year (e.g. cash ISA or LISA), you can still activate a new stocks and shares ISA with Scottish Widows.

Arguably, you can do so even if you’ve maxed out your annual ISA allowance, as Scottish Widows don’t require you to fund your stocks and shares ISA with them.

Any other options?

You’d expect to pay £36 a year for your investment ISA at Halifax or Lloyds Share Dealing. (They’re the same firm).

Trades cost extra at these brokers – but you do your buying and selling at Vanguard.

Sitting on a £20,000 investment ISA at Vanguard costs you £30 a year alone. Plus another £16 on top as you build up your current tax year’s ISA.

Still, the bottom line is that InvestEngine is the cheapest stocks and shares ISA. The Vanguard / Scottish Widows combo places second in most scenarios if you make monthly trades.

The other downside with Vanguard is you’re restricted solely to its funds and ETFs. That’s okay though because it runs excellent, cost-competitive index trackers.

The other main compromise with Scottish Widows is its website is basic. Reviews on the likes of Trustpilot are distinctly average.

It’s a bare bones offering so don’t rock up expecting five-star customer service.

I’ve personally dealt with what was iWeb for many years and found it to be perfectly acceptable. Plenty of Monevator readers say the same.

Note: accounts held with Halifax / Bank Of Scotland, Lloyds Bank, and Scottish Widows count as one for the purposes of the FSCS investment protection scheme.

Low-cost stocks and shares ISA: alternatives to Vanguard

You could replace the Vanguard leg of the hack with Dodl. That’s AJ Bell’s spin-off app-only brand.

Like Vanguard, Dodl charges 0.15% per annum in platform fees and nowt for trading.

However, your fees would be higher because Dodl charges a £12 minimum fee no matter how empty your account is.

It also features a restricted fund and ETF range, though it’s not Vanguard only.

Trinity Bridge is your next stop among the percentage-fee brokers. It charges a 0.25% platform fee and zero commission for funds. ETF trades are £9 a pop, with no mercy for regular investors.

If you hate the idea of filling in transfer forms then you can make the entire hack work at a slightly higher cost at Fidelity:

• Buy funds monthly for zero trading fees while racking up platform fees at 0.35% per annum.
• Once you hit the breakeven point, sell your funds and buy as few ETFs as possible to reconstitute your portfolio at £7.50 a trade.
• Fidelity caps ETF fees at £90 per year.

Using this scheme, there’s no need to worry about which year’s ISA you’re transferring. The entire dosey-doe happens within your Fidelity stocks and shares ISAs.

It works because Fidelity act as a percentage-fee/zero commission broker with funds, and a flat-fee broker with ETFs.

Check out our comparison of ETFs vs index funds.

Tidying up the loose ends

All the cheap stocks and shares ISA options laid out above handle ISA transfers free of charge.

You need to transfer your investments in specie (so they’re not sold to cash) to avoid paying dealing fees to your flat fee broker at the other end.

In Specie or re-registration transfers mean you don’t have to worry about being out of the market either.

Check your new broker offers the same funds and ETFs as your old one.

Invest in accumulation funds and ETFs from the beginning. This will save you paying to reinvest dividends at the flat-rate broker.

I’ve ignored rebalancing costs once you’re all parked up at your cheap platform. A small investor should be able to rebalance with new money. Anyone with an embarrassment of riches can set their rebalancing alarm to once every two or three years. That gives you just as good a chance of being up on the deal as any other rebalancing method.

Or you could invest everything in a Vanguard LifeStrategy fund. LifeStrategy is a multi-asset fund that takes care of rebalancing for you.

Either way, rest assured this manoeuvre does not contravene the stocks and shares ISA rules:

• You can have as many stocks and shares ISAs as you like.
• Transferring old ISA money or assets does not use up your ISA allowance for the current tax year. 
• So every tax year, you can open a new ISA at the percentage-fee broker, and ship last year’s ISA to the flat-free broker.
• You can transfer any amount of your previous years’ ISA’s value. You can transfer the whole lot into one ISA, or transfer a portion of it into several ISAs, or any other combo you desire.

Read more on stocks and shares ISA transfers.

See how to calculate your cheapest platform option.

Our broker comparison table tracks the UK’s best platforms.

Cost shavings

If you truly want the cheapest stocks and shares ISA possible then you’ll need to factor in the cost of the low-cost index funds and ETFs available on any platform versus those available through Vanguard.

Paying slightly higher OCFs than necessary could overwhelm your platform fee / dealing fee savings. Be especially vigilant if you have a very large portfolio.

None of this takes into account the value of your time spent filling in forms. Although when you’re getting this anal then maybe that’s a net positive. (A person’s gotta have a hobby!)

Take it steady,

The Accumulator

1. You pay zero for trading ETFs as long as you accept the fixed daily trading times.[↩]

What caught my eye this week.

A flood of articles this week highlighted how people are abandoning Hargreaves Lansdown in favour of other – presumably cheaper – platforms.

I wasn’t surprised to hear it, going by comments from readers on our latest broker update and the broker comparison table.

Hargreaves’ fee rejig – effective from 1 March – was the firm’s first for donkey’s years. The headline platform charge was cut, and there are lower trading costs for ETFs, shares, investment trusts, and gilts. But total fee caps will rise, along with trading costs for funds.

Whether this leaves Hargreaves cheaper or dearer for you depends on how you invest.

Yes, I said it: cheaper! Potentially.

Virtually all Monevator readers who’ve commented have said they’ll see their costs rise. But calculations show Hargreaves Lansdown will be cheaper for me if I continue to trade as I have in the past.

That’s because I invest (too) actively, of course.

Most Monevator readers are much more passively invested – and they were cannily taking advantage of quirks in Hargreaves’ old fee structure to keep their costs low.

See how they run

The big articles covering the alleged exodus – from The Financial Times, The Telegraph, and The Daily Mail – are paywalled.

But this extract from the FT gives the gist:

Investment site AJ Bell said it had seen “a big spike in applications from HL customers” following the adjustment. In a typical month, AJ Bell receives inbound transfers in the high hundreds of millions of pounds from other platforms and on a normal day 10-15 per cent of this would be from HL. However, on the day after HL’s announcement this jumped to 50 per cent.

Another platform, IG, said that as of Wednesday last week, inbound transfer requests from HL had reached 94 per cent of 2025’s total volume. The mean transfer value rose from £95,000 last year to £280,000 in the same period since the fee changes, it added.

Freetrade said its average daily transfer in requests had increased threefold since January 22, compared with the average total in all of December 2025, with Hargreaves one of the leading sources.

For its part, Hargreaves said its new fees would either be the same or lower for eight out of ten customers.

The company also told the FT that almost half the transfer requests it’s seen since it revealed the new fees were from the 400,000 or so customers set to pay more from March.

Flights of fancy

I imagine all these stories were driven by data being doled out by Hargreaves Lansdown’s rivals.

Nothing like kicking a competitor when they’re down!

However I wonder if these other platforms will regret their schadenfreude someday?

I’m not here to bat for Hargreaves Lansdown – or its new-ish private equity owners. At the last count Hargreaves was host to over £150bn in assets under administration. The Bristol-based behemoth can take care of itself.

But it is interesting – and to a great extent heartening – to see how footloose at least some of its millions of customers can be.

Go back 20 years and you would have assumed the bulk of its vast pool of client money was effectively locked up. Not through any de facto gating, but through inertia, the hassle factor, and very little regulatory drive to make it easier for customers to transfer elsewhere.

For a significant cohort of customers today, though, that’s clearly not the case.

We’re ready and able to move our money in order to keep more of it for ourselves. So platforms cannot get too greedy.

Hence I wonder whether the platforms now so happy to be chosen by Hargreaves Lansdown’s fleeing customers will just be the evacuation zones of tomorrow.

No enshittification, Sherlock

Either way, our willingness to move our money should be a good defence against what’s now called enshittification – essentially when a dominant supplier first crushes the competition with a superior offering, but once secure jacks up fees and degrades its service to boost its profits.

There are just too many competing investing platforms around to allow this currently. And more are being launched each year.

Indeed if the AI-fear-driven sell-off in wealth management firms this week is any guide, the competitive pressures will only grow.

Bad news if you’re a private equity firm that bought a giant platform for cashflow, maybe…

…but good news for small and nimble private investors like us!

Wondering whether you should switch?

• Our recent platform update post highlighted the better offerings
• See our broker table for a summary of all the contenders

Have a great weekend.

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