Stockbroker Excellence: Minimum Deposit

Welcome to our stockbroker excellence blog series. If you’re interested in what key features or drawbacks you should be looking out for when looking for the perfect stockbroker in the UK, then look no further than this series of posts on just that topic. In this article, we’re focusing on the minimum deposit that UK stockbrokers ask you to invest into the account when opening one for the first time.

The differences between minimum deposit requirements between different investment firms can be dramatic. Our research shows that the minimum deposit to open a stockbroker account can range from just £1 to £1,000. Some investors begin with a large lump sum. Minimum deposit rules are unlikely to affect investors with how to have over £1,000 to invest.

Which UK stockbrokers have relatively high minimum deposits?

Fidelity minimum deposit is £1,000

Fidelity requires customers to invest £1,000 into its standard investment account if they are opening an account with a lump sum (source). However, cheaper ‘regular investment’ payment plans are available from £25 per month. These take the form of a Direct Debit set up to take a sum from your savings account each month.

Direct debit arrangements can be cancelled at any time, meaning that you can get access to the Fidelity platform for much less than £1,000 by setting up a regular investment plan and cancelling it when you have invested your initial value.

Vanguard Investor minimum deposit is £500

Vanguard Investor asks for a £500 initial investment from its standard account holders (source). This is a relatively high minimum deposit compared to other stockbrokers listed below.

However, it is worth holding in mind that Vanguard charges no trading fee on fund purchases. Therefore, this higher initial deposit is likely designed to avoid Vanguard covering the administrative effort of processing tiny trades free of charge.

Which UK stockbrokers have very low minimum deposits?

Interactive Investor minimum deposit is £1

II offers trading accounts with a minimum deposit of £1. You’ll need a debit card to hand when setting up your account to take this initial deposit (source).

Hargreaves Lansdown minimum deposit is £1

You can open a Fund and Share account with just a £1. However, you’ll need to spend at least £100 to make your first investment into a fund. Practically speaking, the minimum you’ll need to invest with HL is £100 (source).

Natwest Invest minimum deposit is £1

With Natwest Invest you can fund and buy shares with as little as £50 (source).

Is minimum deposit size an important factor to consider when picking a UK stockbroker?

We strongly advise against using minimum deposit size as a key factor when choosing your favourite UK stockbroker.

The first reason for this is if you do not have £1,000 (enough to open most of the best stocks and shares ISAs) then we could argue that you shouldn’t be buying shares at this point in time.

Financial experts and government organisations alike recommend that you only begin investing after you have saved up a reasonable emergency fund in cash first. The ideal size of this emergency fund is totally subjective. Some people like to ensure that they can cover their basic lifestyle costs for 3 months, whereas others prefer to keep 6 months of their net wage safe in a bank account instead.

The second reason that minimum deposit shouldn’t play a big part in choosing a broker is that it becomes completely irrelevant after you have opened your account. It’s an initial hurdle that disappears after you’ve passed it.

Wouldn’t it be more effective to choose your broker based upon the features which will continue to impact your investing experience (and potentially your investing success) for the years and years that you will hold the account?

The third and final reason that a lump sum minimums might not matter, is that you can often avoid them by using regular contributions.

Many of the best UK investing apps or investment platforms will offer you the option of depositing via a one-off payment, or by setting up a monthly direct debit to transfer funds into your account. The minimum direct debit size is typically much small than the minimum lump sum. Yet you can cancel the monthly direct debit immediately after the first payment is taken. This is a smart trick, but you may want to check with the broker directly or read their T&Cs to check that this won’t cause any action to be taken against your account.