The 3 most important things to consider when choosing an investment platform, outside of low costs

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This article is sponsored by eToro.

The world of stock trading has never been easier to join, particularly for those with little knowledge of how it all works. Before the days of mobile trading apps and micro-investing, things were definitely a lot less user-friendly — you not only had to really know your way around the market (something that’s still highly advisable today), you were also limited to a certain number of platforms that would confuse the most enthusiastic novice.

Nowadays, there are a plethora of trading platforms that promise low fees, low minimum investment amounts and more. With so much choice available to Australian investors, the question then becomes one of value. Simply put, how do you know if you’re getting a good deal? Looking outside of traditional methods is a good place to start.

“Traditional investing in stocks and ETFs were seen as expensive with lots of account management fees,” eToro analyst Josh Gilbert told Business Insider Australia. “Over the years this has significantly changed with Social Trading platforms such as eToro providing access for the everyday investor to get started, with 0 commission on US stocks.”

“Going through a bank or other financial institutions may see you being charged for admin fees, account charges as well as paying commission every time you want to place a trade.”

In other words, the extra costs often associated with investing are a big factor in the choice. Researching a potential platform is essential prior to sign up. “Lots of platforms provide low fees for trading, but sometimes have hidden costs such as inactivity fees for not trading frequently,” Gilbert said.

“Other platforms will charge a commission for trading an ETF, so it’s always wise to be aware of the fees before investing anything and ensuring you do your research.”

Depending on your investment goals, it’s also worth looking into the minimum trade amount on each prospective platform to ensure it’s a match. For example, if you’re looking for somewhere to test the waters with minimal risk, a platform with a lower minimum trades/spends is probably something to consider.

“Different platforms will provide different minimums,” Gilbert said. “This can be from the minimum amount you must deposit to the minimum amount you must trade.”

“eToro provides access to more than 2,000 different financial assets, including stocks, cryptocurrencies, ETFs, indices, currencies and commodities. You can invest from a minimum of $25USD and choose your investment options.”

The variety we see in platforms today all comes down to competition, Gilbert says. With so many players vying for your portfolio, there’s plenty of incentive to keep fees and commissions as low as possible. Of course, with so much choice, there’s no way around it — you’ve really gotta do your homework to find the most relevant option for your investment goals.

“Do your research, contact that particular platform and get some information if you’re ever unsure about something. Using comparison sites is also a good way to check the legitimacy of a company,” he added.

When it all boils down, Gilbert says there are three important things you should look for in an investing platform outside of just extra costs — options, useability and regulation.

“Some platforms are restrictive in what you can invest in. I would always ensure that you find a multi-asset platform that provides you with lots of options,” he said.

“The user interface is also important, making sure you are comfortable with the platform before using it, many great platforms provide virtual accounts you can try before investing your own capital. Regulation is also important, especially in Australia, ensuring the platform you choose is ASIC regulated is key.”