Stocks & Shares ISAs: XTB vs Trading 212 vs IG vs eToro

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Banking Without Borders 10 min 2 speakers 7 chapters transcribed 1 month ago
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What are the three main types of stocks‑and‑shares ISA products and how do their fees differ?

Jonny Pease 0:00
Okay, welcome back to another episode of Banking Without Borders. So today Jan and I are talking about stocks and shares ICEs, including the providers we recommend, but also importantly, the providers we'd avoid. And around 20 million people in this country have an ICE, with a good chunk of them sitting in cash or in something wildly overpriced, which is really what this episode is about. We want to look at the affordable options, the ones with the lowest fees, the widest. choice of investments, ultimately the ones that give you the most value. But Jan, before we jump into the comparison, when you look at stocks and shares ISES, you really see three different products being sold. And I think people are being led into the expensive one without even realizing.
Jan Watermann 0:40
That's right, Johnny. There's the do-it-yourself route where you pick the stocks and ETFs yourself. Fees start at zero percent. Some providers literally offer um fee-free stocks and shares ISOs in that category. Then there's the managed route where firm builds and runs the portfolio on your behalf. That's typically 0.5 to 1%. And then there's an advised route where you get access to a human advisor that you can call with questions. They're gonna tell you what to invest. Invest in, and that's the most expensive route by far. Costs are 1.6 to 2%, and in many cases, there's also a setup fee involved. I think that's quite fascinating. Um, if you think about it, 2%, it's such a high fee if you consider that.
Jan Watermann 1:19
Um, and yeah, not sure if that's really needed. My opinion, the do-it-yourself route is probably the most sustainable route for most people.
Jonny Pease 1:28
I do agree with you, but I think some people will be put off by the idea of do it yourself.
Jan Watermann 1:32
Yeah, they don't have to be in my opinion. I think they can just go ahead and invest as diversified as possible, ideally, into the global economy by picking an an ETF on the MSCI world or the FTSE All World, uh which are indices that cover, you know, many different economies and then statistically speaking they're likely to succeed in the long term.
Jonny Pease 1:50
The four providers that we're talking about, so XTB, Trading Two One Two, EToro, and IG, all have those options available. So they have ETFs, which are ideal for a DIY investor. What's important to note though that eToro only has around a thousand financial products or instruments, whatever you want to call them, available. Wow. Um whereas Trading Two One Two has as many as 12,000, IG as well, and XTB sitting at around 9,000.

Which providers offer the widest range of ETFs and why is eToro considered the weakest option?

Jonny Pease 2:19
eToro is quite clearly the weaker one in terms of uh versatility or options that are available in terms of investing Yan. There's also a couple of other red flags on eToro's side, which makes me question why we're even talking about them today, but I think it is important because they are such a popular provider and I have used them personally, and the app is fantastic, super seamless and intuitive. You know, if you are looking for a really simple app to use. Etoru is certainly one of them, but The fees? Yeah. Yeah, and the fees.
Jan Watermann 2:46
They the only provider charge a platform fee in our comparison, the only one that charges per trade, at least if you um invest within reasonable amounts of money. And also don't like the fact that they charge a point seven percent FX fee, which is yeah, among the most expensive in our comparison. It's on par with IG IG. And that's just not ideal. If you can avoid that, better do it. Also they don't pay any interest on idle cash, which is I mean, maybe not a deal breaker for some people, but uh it's not ideal either. I think one of the reasons why I like XTV so much is because they give you four percent on idle cash within your stocks and shares ISA. And you've you've mentioned in the past that that's a great idea to circumvent this um this reason um recent uh yeah.
Jonny Pease 3:30
Yeah, the cut the cut to the the yes, exactly. Sorry to interrupt. Yeah, the twenty thousand pound threshold has been cut to twelve thousand for cash ICEs for under sixty five. When this first was announced, people thought, well, I'll just deposit all of the money into a stocks and shares ICE, invest into say a money market fund that could generate, say, four percent on interest.

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