By: George Sweeney | Updated: 18th January 2021.
If you want cheap and simple investing right at your fingertips, Freetrade could be the platform for you: the commission-free trading coupled with just a £2 minimum investment makes it a great app to dip your toes into the world of stock-picking.
The value of your investments can go down as well as up and you may not get back all the money you put in. All investments carry a varying degree of risk and it’s important you understand the nature of these risks.
The value of your investments can go down as well as up and you may not get back all the money you put in. All investments carry a varying degree of risk and it’s important you understand the nature of these risks. Remember that taxes can be complicated and the tax benefits of this, or any, product depends on your personal circumstances. Tax rules are subject to change.
The Freetrade app has two important features. Firstly, trading is commission free. Secondly, it’s a well-designed app and easy-to-use. This means it’s a great way for first-time investors to introduce themselves to the market. That being said, it may not contain all the tools and options required for experienced traders. There are still plenty of investment options available and Freetrade are hoping to revolutionise what it means to be an individual investor. The zero-fees approach means buying and selling shares on Freetrade is extremely accessible to everyone. Also, the sleek app and platform makes trading a pleasure and not a complicated chore.
A basic account with Freetrade is completely free and there are no additional account fees or inactivity charges. This really is a casual or small investors’ dream. The free use of the platform and low entry prices can be a fantastic way to learn to invest. You also have the ability to buy fractional US shares. This means you can invest in an American company with a high share price for as little as £2. Freetrade also facilitates fractional dividends. So if your chosen investment pays dividends, you’ll receive a payment relative to the fraction of shares you own.
I’m well studied in the field of personal finance and investing, holding a Level 4 Diploma for Financial Advisors (DipFA) from The London Institute of Banking and Finance. On top of my academic qualifications, I’m obsessed with helping people. Especially when it comes to money. I started my own personal investing journey almost ten years ago and use everything I’ve learnt to educate and encourage others. I love to meticulously scrutinise and assess. Once I’ve done the research and legwork, sharing what I’ve learnt with like-minded people is my mission!
You can probably guess from the name of the company, but Freetrade does not charge a commission fee. This means that it is free to buy and sell investments. The lack of commission makes Freetrade an extremely attractive place to invest for both frequent and occasional investors. Having no additional costs to factor into your investing decisions makes life much easier.
Freetrade do charge fees to hold some of their other accounts. A stocks and shares ISA costs £3/month. The Freetrade Plus account costs £9.99/month (and includes use of an ISA account). Also, the upcoming SIPP account will include a flat £9.99/monthly charge (or £7/month for Freetrade Plus members). Freetrade also charge an FX rate equal to the current spot rate plus 0.45%. This is extremely competitive and lower than most competitors who tend to charge a spot rate plus at least 1% on top. Some ETFs also have their own separate fund charges, so it’s always worth checking those.
Accounts can be funded via Google Pay or bank transfer, and orders can be executed instantly (during trading hours). Freetrade boasts a selection of almost 3,000 shares and funds with the free account. Although many major US and UK companies and funds are available, it’s a smaller selection than some competitors. If you’re an experienced investor wanting access to a wide variety of investments, Freetrade may not have everything you’re looking for. There’s also no option for more complex investing methods like margin trading. This may deter seasoned investors; but for people just starting out, it keeps things simple. The Freetrade Plus account does provide access to a wider range of stocks. For a premium of £9.99/month you have access to over 3,700 investment options, with more being added on a regular basis. You can also use the Plus account to create limit and stop-loss orders.
Freetrade’s platform is extremely simple to use. It looks great and is straightforward to navigate. Currently, Freetrade offers a general investment account (GIA), a stocks and shares ISA, a Freetrade Plus account, and they’re due to launch a SIPP (self-invested personal pension) shortly. Some investment platforms can take time to figure out. With Freetrade, that’s not the case. If you’re able to use something like Netflix, you’ll be fine with their app. It feels very welcoming and reassuring to new investors. You definitely won’t feel overwhelmed or confused when using Freetrade.
Freetrade provides all the key points and fundamentals at a glance. Experienced investors may have to look elsewhere (like The Motley Fool!) for additional information, research and news. Although, it’s often the case that the fundamentals are all you need to know when deciding on an investment. The “discover” tab on the app is the starting place when looking for an investment. You can think of it like a contents page displaying new and popular investments along with categories and industries to choose from. You can also search securities by type and will be presented with an alphabetic list. Searching this way shows you the ticker, the current price, and the price performance over the last 30 days. Once you’ve selected a potential investment, an easy-to-read price graph is the first thing you’ll see. Underneath are a few important financial stats and a brief summary of the investment or company. You’re provided all the key information but it’s still quite limited and not particularly in-depth.
Setting up a Freetrade account on the app is extremely simple. You just follow the instructions and fill out some basic information (including your NI number). As for customer service, you can access a support chat directly through the app. There are also extensive FAQs in the help centre and additional resources on the Freetrade website. Unlike some other companies, Freetrade supports an active user community where people can share thoughts and insights. Their blog is also regularly updated with news and useful information.
If you’re new to investing or simply curious, Freetrade is an excellent place to get started. The platform is extremely easy-to-use. The commission-free trading coupled with just a £2 minimum investment makes it a great place to dip your toes. For experienced investors looking for the widest range of investments and ways to invest, Freetrade may not have everything you’re looking for. That being said, there’s an extremely wide selection available and Freetrade are continuously updating and improving their offerings. So if you want cheap and simple investing right at your fingertips, Freetrade could be the platform for you. If you’re an experienced, technical investor – you may prefer a more serious and complex platform.
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