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Our updated guide to help you find the best online broker

Okay, UK investors, after taking the pain of creating a whopping great comparison guide to the UK’s leading online brokers, we’ve once again returned to the battlefield to fully update it.

Eating a bag of rusty nails water would have been more fun, but it would not have produced a quick and easy overview of all the main execution-only investment services.

Fund supermarkets, platforms, discount brokers, call ’em what you will – we’ve stripped ’em down to their undies for you to eyeball over a cup of tea and your favourite tranquilizers.

Online brokers laid bare in our comparison table

Who’s the best broker?

It’s impossible to say. There are too many subtle differences in the offers. The UK’s brokers occupy more niches than the mammal family, and while I know which one is best for me, I can’t know which one is right for you.

What I have done is laser focus the comparison onto the most important factor in play: Cost.

An execution-only broker is not on this Earth to hold anyone’s hand. Yes, we want their website to work, we’d prefer them to not screw us over, go bust or send us to the seventh circle of call centre hell… These things we take for granted.

So customer service metrics are not included in this table. It’s purely a bare-knuckle contest of brute cost for services rendered.

Why should investors flay costs as if they were the tattooed agents of darkness? Because if – as the FCA predicted – you will see an annual after-inflation return of 2.5% on your portfolio for the next decade, then the last thing you need is to leak another 1% in portfolio management charges.

This makes picking the best value broker a key battleground for all investors.

Using the table

I’ve decided the main UK brokers fall into three main camps. These are:

  • Fixed fee brokers – Charge one price for platform services regardless of the size of your assets. In other words, they might charge you £100 per year whether your portfolio is worth £1,000 or £1 million. Generally, if you’ve got more than £25,000 stashed away then you definitely want to look at this end of the market. Bear in mind that fixed fee doesn’t mean you won’t also be tapped up for dealing monies and a laundry list of other charges.
  • Percentage fee brokers – This is where the wealthy need to be careful. These guys charge a percentage of your assets, say 0.3% per year. For a portfolio of £1,000 that would amount to a fee of £3. On £1 million you’d be paying £3,000. Small investors should generally use percentage fee brokers, but even surprisingly moderate rollers are better off with fixed fees. Many percentage fee brokers use fee caps and tiered charges to limit the damage but the price advantage still favours the fixed fee outfits in most cases.
  • Share dealing platforms – Platforms that suit investors who want to deal solely in shares and ETFs. Sites like X-O and friends fill this brief.

Choosing the right broker needn’t be any more painful than ensuring it offers the investments you want and then running a few numbers on your portfolio.

The final point you need to know is that this table’s vitality relies on crowd-sourcing. I review the whole thing every three months, but it can be permanently up-to-date if you contact us or leave a comment every time you find an inaccuracy, fresh information, or a platform you think should be added.

Thanks to your efforts as much as ours, our broker comparison table has become an invaluable resource for UK investors.

Take it steady,

The Accumulator

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How to earn free cash by switching bank account

Image of a juggler to represent switching bank account repeatedly

This piece on why you should consider switching bank account is by The Treasurer from Team Monevator. Check back every Monday for more new perspectives on personal finance and investing from the Team.

Sounds almost too good to be true, doesn’t it? Getting paid a wad of notes to do very little, without a smidgeon of risk.

Yet earning free cash for switching bank account has been ‘a thing’ for over a decade.

Married people are more likely to get a divorce than switch bank account. It’s unsurprising then that retail banks work hand over fist to attract new customers. They hope that once you switch and pay in your monthly salary, your future self won’t bother switching again until the day you die.

Plus, once you’re a customer of theirs they can then turn on the ‘hard sell’. They can promote substandard products – packaged accounts with benefits you’ll never use, or an overly-expensive life insurance policy. They may even get a mortgage application out of you.

Customer apathy is big business in the personal finance world. It can deliver much more than enough to cover any initial switching bribe.

Yet it’s possible to play the banks at their own game, by switching bank account for the sole reason of grabbing the cash incentives.

Switching bank account for fun and profit

Without trawling through years of bank statements, I can’t put an exact figure on what I’ve earned over the years from my bank account switching.

It’s certainly north of £1,000.

First Direct, HSBC, Lloyds, Halifax, NatWest… You name the bank and there’s a fair chance I’ve exploited them.

My biggest bonus was from Clydesdale Bank back in 2017, when it offered an eye-watering £250. At the time I was working with financially astute colleagues. Between us, we would have opened at least 20 accounts.

As none of us kept the account after bagging the free cash, our office must have cost Clydesdale a cool £5,000. Plus a lot of plastic!

Admittedly, there were some hoops to jump through to get the offer, such as having to pay in a set amount over three months. But nothing too taxing. (We’ll discuss how to get past these hoops below).

Once I’d ditched my shiny but sub-par Clydesdale account, I moved my faithless custom to the kind folks at NatWest. I bagged another £125 for my troubles.

I’ve done this time after time, for years. I’ve even scored the same bonuses more than once.

While you almost always have to be a new customer to qualify for a bonus, some banks are more lenient than others when deciding who is and isn’t a ‘new customer’. (Halifax scores highly in this regard.)

Top tips when switching bank account

Let’s assume you haven’t considered switching before and you want to get involved. While it’s an easy hobby, there are a few things worth knowing about.

Tip 1: Open a ‘Mule’ Account

My first tip is to open a separate bank account that you have no intention of using other than to hop to another bank account. In other words, retain your existing bank account and open another for the purposes of making your first switch. In personal finance circles, this is known as a ‘mule’ account.

Take your pick, but avoid choosing an account that pays – or has paid – a switching bonus in the past. This is because once you’ve been its customer, it will be far harder to squeeze a bonus out of that bank in the near-future.

Barclays is my top pick for a mule account. It has never offered a bank switching bonus to my knowledge. Digital banks that enable you to open an account immediately through an app, such as Starling or Monzo, will also suffice. Fintech startups have so far avoided the temptation of directly paying cash to attract new customers.

Tip 2: Learn how to get past those hoops

Once your mule account is set-up, you need to understand that some (not all) banks require you to comply with set criteria to qualify for their bonus.

Often this means paying in a certain amount within one to three months. This one is easily circumvented by paying in the cash and then immediately withdrawing it. I have never yet seen a rule that requires the cash to be kept in the account for any particular length of time after it’s deposited.

A more annoying ‘hoop’ is a requirement to have a number of ‘active’ direct debits – usually two – paid out from the account. This isn’t your ‘real’ bank account, so it poses a problem, right?

Well this again can be circumvented by being creative.

If you’re keen to share some of your easily-gotten switching gains, there are a number of charities that will accept direct debits of as little as £1.

If you don’t want to go down the charity route, look into a savings account. Some enable you to fund your account via a direct debit. Try Scottish Widows or the Post Office. Like this you effectively pay yourself.

Alternatively, Small Direct Debit will set up a direct debit for you for the princely sum of £1 a year. However, do check the bank switching T&Cs1 to see whether it requires the direct debit to be monthly. (Note: I haven’t used this last company so please do your own research.)

Tip 3: Get your head around the myths

Finally, let’s consider some common fearmongering.

Credit score impact: You may be worried that continuous bank switching will harm your credit score. It’s a legitimate concern – reducing your future credit worthiness probably isn’t worth a few hundred quid. So it’s worth knowing that when you apply for a bank account, you’ll undergo a standard credit check. That isn’t the same as the one required if you were trying to obtain credit.

Plus, the search gets wiped after a year. Unless you’re planning to obtain a mortgage or hoping to access significant credit over the next six months or so, opening a handful of bank accounts shouldn’t do any harm.

While it’s rare, you may be rejected for a new bank account. To reduce the chances of this happening, turn down any offer of an overdraft facility.

The hassle factor: The other big myth about bank switching is that it’s too much hassle. But as long as you take the time to read the T&Cs and satisfy the switching criteria, it’s pretty straightforward.

The Current Account Switching Service ensures that once you’ve agreed a switching date with your new provider – usually a date within a week or so – your switch will take no more than seven days to complete. Any payments, direct debits, or standing orders will be moved automatically, which is handy for future switches. And your new provider takes on full liability for any mistakes.

Get your profit antennas twitching

I hope you’re all now itching to get switching!

Currently switching bank account offers are a bit thin on the ground, but I’ll be coming back to Monevator soon to highlight the best deals available.

In the meantime, please do share any you find in the comments below.

In time you will be able to see all The Treasurer’s articles in his dedicated archive.

  1. Terms and conditions. []
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Weekend reading: Meet Mr Average

Weekend reading logo

What caught my eye this week.

Have you ever described yourself as just another average kind of personal finance blog-reading mostly passive occasionally active FIRE-obsessed crypto skeptic?

Well Indeedably did us all a favour this week by collating the data on what Mr Average really looks like:

Average” varies by locale, so let’s consider the English version, as told by the statistics.

A white 40-year-old man. Married to a white 38-year-old woman. With two school-aged children.

Living in a commuter town somewhere in middle England. Home is a three-bedroom, 720 square foot, house worth £249,000. £96,000 remains outstanding on the mortgage.

Their pensions, investments, savings, cars, and other possessions are worth a combined £133,600.

Giving them a total net worth of £286,600.

Their household annual income was £38,550 before tax, resulting in a disposable income of £29,900.

This means they house, clothe, feed, and entertain the whole family on £81 per day.

It’s invariably interesting to see how one compares to these sorts of statistics.

Unless one is looking at the average age from the wrong side of 45. Then it’s more like an Edvard Munch painting lit by Saturday morning’s PC screen.

Arm wrestling Mr Average

I’d never skip reading Indeedably’s posts in full. Even the bit in this one where he questions:

Pseudonymously written blog posts, whose content is regularly interrupted by confidence undermining random advertisements for haemorrhoid cream, lottery tickets, and Mongolian throat singing lessons?

Ouch! All I can say in our defense is that Internet advertising is mostly personalized to the reader’s own browsing habits…

Ahem. 😉

How much like Mrs or Mr Average are you feeling these days? And do you aspire to retire to a life less ordinary – or something more mundane?

Let us know how Middle of the Road you are in the comments below.

Have a great weekend all!

From Monevator

Best bond funds and bond ETFs – Monevator

Are you childish about money? The origins of our money mindsets – Monevator

From the archive-ator: Too big to scale – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

House prices boom, at least outside of London… – Reuters

…and Nationwide predicts the price growth will continue – Guardian

Long hours are killing 745,000 people a year, global study finds – BBC

UK-listed firms fall to ‘pandemic plundering’ as bosses profit – ThisIsMoney

Leonard Blavatnik named UK’s richest person with £23bn fortune – BBC

San Francisco tech firms sit on record amounts of empty space – CNBC

Crash rules everything around me – A Wealth of Common Sense

Products and services

“Custom indexing unlocks lots of benefits” [Podcast]Morningstar

Comparing the cost of UK holiday destinations – ThisIsMoney

Natwest to allow personalized bank transfer caps to beat scammers – Which

Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade

More Britons pursue a holiday home in Portugal – ThisIsMoney

Houses with outbuildings for sale, in pictures – Guardian

Comment and opinion

Larry Swedroe: the endowment effect – The Evidence-based Investor

Three reasons not to worry about hyperinflation right now – MathBabe

Merryn S-W: are ageing populations really bad for the economy? [Search result]FT

Good retirement savers are lousy spenders – Leisure Freak

The black box economy – Vox

Lessons from the Great Crypto Crash of May 2021 – The Escape Artist

Profits beat prophets in today’s market – Bloomberg

The spectacular failure of the endowment model – Advisor Perspectives

Twin certainties – Humble Dollar

Naughty corner: Active antics

Fund managers are betting on a boom and inflation – MarketWatch

High-yield spreads are the best single macro indicator – Verdad

Mishits – Enso Finance

S&P 500 CAPE ratio says US market is in an epic bubble – UK Value Investor

A diverse portfolio is a strong portfolio – The Evidence-based Investor

Covid corner

Tests for travel: how to get a green light to go abroad – Guardian

What has gone wrong in Singapore and Taiwan? – BBC

Covid R number inches up across England – Evening Standard

Emptying the nest. Again – New York Times

Kindle book bargains

Lab Rats: Why Modern Work Makes People Miserable by Dan Lyons – £0.99 on Kindle

What It Takes: Lessons in the Pursuit of Excellence by Stephen Schwarzman – £0.99 on Kindle

Hired: Six months undercover in low-wage Britain – £0.99 on Kindle

The Future Is Faster Than You Think by Peter Diamandis and Steven Kotler – £0.99 on Kindle

Environmental factors

Low emission zones do work – Guardian

IEA: no new oil, gas, or coal if we’re to hit net zero by 2050 – DIY Investor

The biggest climate stress test so far – Klement on Investing

“It’s a dirty currency”: Bitcoin’s growing energy problem [Search result]FT

Climate crisis to put millions of UK homes at risk of subsiding – Guardian

It’s hard to poison a feral pig – Undark

Off our beat

Life satisfaction is better for older people, even when they get sick – Klement on Investing

When all moments have equal value – Raptitude

Daniel Kahneman: “Clearly AI is going to win”Guardian

All hail King Pokémon! – Input

The optimal amount of hassle – Morgan Housel

The blandness of TikTok’s biggest stars – Vox

Fungi and urban planning – The London Review of Books

And finally…

“In most of our decisions, we are not betting against another person. Rather, we are betting against all the future versions of ourselves that we are not choosing.”
– Annie Duke, Thinking In Bets

Like these links? Subscribe to get them every Friday! Like these links? Note this article includes affiliate links, such as from Amazon and Freetrade. We may be  compensated if you pursue these offers – that will not affect the price you pay. Mr Average is welcome to click on anything that catches his eye.

  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []
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Image of a kid as a superhero: Our money mindsets are often shaped by our childhood

Covid restrictions were easing, and I was mildly thrilled to be in the garden of some dear friends – a couple I’ve known for decades.

Thanks to lockdown building works, their house had grown since I’d last seen them. So had their twin boys.

But my friends still had some personal growth to do.

They’ve always bickered. They were bickering again and to be honest that was also comforting.

But it seemed a shame.

My friends were past the hard slog phase of their life. Yet they didn’t seem ready to enjoy the sunny uplands.

Happy holidays?

“Finally we can get away after 12 months in this house and I don’t want to be arguing about spending £50 on a few croissants at the hotel,” he said.

“It’s not a hotel – it’s a horse farm!” she protested. “And it won’t be croissants – it’ll be a bowl of cornflakes.”

“She’s annoyed because we’re going to Wales. And she’s too tight to understand the value of giving the boys an experience like learning to ride.”

“I’m not annoyed. But it’s going to be raining and it’s going to cost £3,000 for five days and you wouldn’t let me even look for a cheaper place to stay.”

“She’s annoyed because we’re not flying to Portugal. Even though we would spend more if we did!”

“I just want to get value for my money. Not rain in Wales.”

“Well I paid for it anyway! I want the boys to burn off some energy, and we can easily afford it. This place is great – friends told us about it. Why spend hours bickering about £50 on breakfast?”

“I just believe we can get the same experience for half the price,” she said. “Maybe somewhere warm, too.”

“Get this…” he sighed. “She wants us to drive there – to Wales, for seven hours – because the hotel is a few miles from the station and I said we’d just get a taxi. She’s complaining taxis are a waste of money. As if seven hours driving isn’t a waste of time.”

“It’s not a hotel – it’s a horse farm. And I don’t want to be the mug that turns up from London in my Hunter wellies with banknotes falling from every pocket. I am not that dumb bitch!”

That silenced us all for a moment.

Meet their money mindsets

So, you think you have a handle on this pair?

London is expensive. Raising children, too, and they have twins. A double helping of expenses moving through their budget like an anaconda swallowing a turkey.

Money is tight. One of them thinks this is best addressed by a staycation. The other by saving on avoidable expenses like paid-for breakfast and taxis.

We can see both sides, right?

But here’s the twist: money isn’t tight for this couple.

Both of my friends – who are not married and have always kept their finances separate – are now (multi) millionaires in their own right.

True, being a millionaire isn’t what it used to be.

But clearly they can afford a mini-break in (lovely, incidentally) Snowdonia.

“Why is she squabbling over this? Can you talk some sense into her? She listens to you. I don’t want to be faffing over fifty quid for the rest of my life when I could be enjoying myself. We have – what – 30 years left? Maybe 20 good ones. You know us well enough for me to say this… We could afford to take the same holiday every week for the rest of our lives. Every single week!”

It didn’t seem like the best time to bring up sustainable withdrawal rates.

“He seems to think having money means it’s perfectly okay to be taken advantage of. Well I don’t. I’ve shopped around for cheaper flights and better deals all my life. Why should I stop now? It’s careless.”

Aha!

Now we were getting to the bottom of it.

How they made it

Some context before we get to the money shot.

He has always had money. Born into relative privilege – public schools, annual skiing holidays, aggressively spendthrift friends in his 20s – he was also unfortunate enough to inherit early.

She had a far harder upbringing. Messy home life. University the escape route. By her own admission she was fortunate to join the small company she did 15 years ago. But she worked most weekends to stay at the top.

Last year her company was acquired. Years of stock grants paid out.

So on paper they now have roughly the same net worth.

The snag is that what their net worth represents to them (and how they obtained it) means that they see money (and how to use it) very differently.

His and hers

He has never had to worry about money. He has had other hardships (as I said both parents died young) but solvency has never been his concern.

He’s seen money used as a tool since childhood. His family speculates, invests, wins and loses, and celebrates freely when things go right.

And while I wouldn’t want to suggest he was on the shortlist for the Bullingdon Club, he has certainly moved in circles where to spend money without any visible care is a virtue, rather than a vice.

Her childhood was much more threadbare.

But it’s not just that she now wants value for money for financial reasons.

It’s that saving money, shopping around, getting deals, not being that ‘dumb bitch’ as she put it – these things have defined her.

He is a product of his upbringing, though maybe harder for many of us around here to identify with. Fretting about £50 is demeaning. It spoils things. Begrudging spending on friends and family is somehow unloving.

For her the price of avoiding being a slave to money is eternal vigilance.

For him that very vigilance is being a slave to money!

Their different life experiences – and these resultant money mindsets – are animating how they interact with money today, and fueling their conflict.

Money is child’s play

Perhaps ironically, the older I get the more I see how such childhood experiences shape our later attitudes.

This is universal. It’s nothing to be ashamed of.

But it’s worth figuring out how your money mindset was formed in order to avoid some of these problems.

Perhaps your parents had a scarcity mindset? They never risked changing jobs or rocking the boat at work. Only saved in cash – nothing riskier like shares. Urged you to get and keep a stable job.

Or maybe one parent was a sometime successful creative? Lurching from feast to famine. Ending up with riches – but before then vanishing from your life for five crucial years when things were going badly?

Did you live in a big house from the day you left the hospital because your grandmother inherited a fortune?

Or maybe your family has never had money. Nobody went to university, either. All this seems like science-fiction to you. But you have come across the concept of financial freedom and you’re wondering if you can have it, too.

All these different experiences will shape how you think about money. And often in contrary ways! We rebel as much as we follow an archetype.

The key is understanding where you came from, and how much is still relevant to your life today.

Our money mindsets must move on

In picking her battles over small amounts of money when she now has bags of it, my friend is a bit like a Japanese World War 2 soldier stuck on a Pacific Island in the 1970s.

Still fighting a war that in their minds never ended.

I know a couple of self-made people from modest upbringings who hate their work now but they just will not stop. They say they don’t want their kids to ‘suffer’ like they did (and their parents did) by having to worry.

They intend to leave their kids a small fortune to solve this.

What they don’t realize is that with their private school education, top-flight university degrees, and a decade of bringing similarly well-off friends back to the family home at weekends, their children are in a thoroughly different place to them already.

Indeed if they really want to worry about their (blamelessly) entitled kids’ relationship with money – sort of futile, I suspect – they should start thinking about very different problems altogether.

But you can hardly fault the motivation.

At the other end of the spectrum, in my professional life I’ve also seen people make a lot of money and become obnoxious. Leave partners, laugh at those who cashed out with less, grow awful goatee beards. They try to be something they’re not – at least until the hedonic adaption kicks in.

Thankfully it seems to be just a phase they go through.

In these cases it’s hard not to see the geek who was laughed at in school still trying to show the world they’re worthy of respect.

A spending plan

I’m no psychologist and I’ve struggled with this money mindset stuff myself.

For example I wrote about how as soon as I earned more than my father, I took my foot of the gas.

I don’t think earning a fortune is the be-all. But I do think that was a dumb reason not to earn more.

Then there is my internal debate over frugality versus simply being a tightwad.

Still, I don’t let my own issues and failings hold me back from giving my friends my unqualified advice.

I explained to my friends that I thought they were each acting out their childish beliefs. No offence!

And I suggested they create a joint ‘rest and recreation’ account that they funded with significant cash inflows every month. Approaching five-figures between them.

Family adventures could be funded from this account, which they can easily afford indefinitely.

They were not to squabble over spending this money. That was the whole point. At the same time they should be alert to their transferring the bickering to another aspect of their financial lives.

(They are looking to buy a new house soon. And I know in that battle I will be solidly backing her view instead…)

Mini-me, mini-you

My friends’ issue may seem like a high-quality problem to have.

Most of us could do with more money. We are best-advised to book holidays months in advance so that we get more value from looking forward to the experience, stretching our spending further.

In contrast my friends need to stop shrinking the dividend from their quality time. They are doing this by turning every indulgence into an argument.

But wherever we are ourselves, the takeaway lesson is universal.

Your inner child is still trying to pull the purse strings. If you don’t notice how then you will be doomed to misunderstand money all your life.

Can you see a little you telling you what to do? Share your money mindsets in the comments below

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