FreeTrade Review – The best Commission-free stock trading and investment app

FreeTrade Review – The best Commission-free stock trading and investment app

Freetrade is an online trading service that started in the UK in 2016. It provides commission-free trading in stocks and is absolutely safe as it is regulated by the top tier regulator FCA. But should you choose this service over the others when others have been into business for so long? How does it compare with other services? Here is a detailed overview of Freetrade so you can have a better idea of why and when you should use it.

What is Freetrade?

Free trade was founded in 2016 by Dodds and Davide Fioranelli for the sole purpose of making stock trading easy and at the same time making ownership of stocks affordable. They used to work in KPMG, a corporate finance firm from which they gained experience.

There isn’t much going on with the service as of yet as you don’t get all those extra features like precise calculations and speculations as offered by other services like Trade212 and Lansdown. However, they are implementing more analytic data such as Dividend yields, market caps. P/E ratio.  But what this service is known for is its low-cost trading account. The USP is that it allows you to trade with real shares with no commissions or any kind of fees. This helps those people build a portfolio who find investing a large sum of money as a risk. Because you can start trading with only one pound, it is considered risk free.

You only need a Smartphone app to get started and the best thing is that you can even hold your shares in the ISA to keep yourself tax-free, Currently, they have a user base of 250000 and increasing.

How does it work?

In case you are using your own trading platform, it can be expensive. The traditional platforms like Landsdoen and II investor focus more on funds thereby increasing the cost of maintaining and trading stocks. But if you look at Freetrade, it is solely share based. It is extremely convenient to build a portfolio with just one pound of investment.

With free trade, you can invest by purchasing shares of companies in the UK as well as the US. It also has the option for exchange-traded funds. For a basic trading account, you only have to pay the basic stamp duty. If you want to hold your shares in the ISA, it will cost you three pounds a month. For depositing money, you can either set up a bank transfer or you can use your credit card to make direct payments.

It is recommended to use google pay as it will be instantly transferred. For bank transfer, you may have to wait for a while. For withdrawals, you can always transfer your funds to the same account you used with Freetrade and your funds will be transferred within 5 working days. If you urgently need to withdraw, you can pay an additional five-pound and withdraw instantly. Do remember that you will have to request before 5 pm and for solid investments, you will have to wait until the settlement of the case.

How to set up a Freetrade account

Opening an account with Freetrade is fairly simple. It has a detailed website that has all the information you are going to need to register your account. But you cannot register on their website. The only way to register is through your Smartphone. You can easily download the app from the Android play store or App store for apple. Registering your account and setting it up only takes minutes. This shows the developer’s intentions. This platform is only intended for those people who want to manage their money through their app. Just start by registering through your email and you will be sent a verification code to activate your account.

The next step would be to enter your personal details like your address, name, DOB, Insurance number, etc. You can link your bank account to transfer funds and also have the option to use Google pay or Apple pay. This app also allows you to search for ETDs and stocks and you can also see the variation in prices based on their weekly, daily or monthly report. When you invest your money, you can monitor your portfolio to see how it is performing and easily buy and sell stocks. The interface is simple and intuitive and can be deemed to be as user friendly. It is also very informative as it shows what the share price is and how much stock you receive based on your investment.

Freetrade features

  • Freetrade offers commission-free trading which means it is easy to go from one to ten and ten to a hundred pounds in no time. Freetrade won’t charge you anything for shares. This is a DIY investment that returns to you fully.

  • The best thing about free trade is that it allows you to start with just one pound with minimal risk.

  • Allows you to invest in major companies like Google, Facebook, and other giants.

  • You can have dividends and interests free of tax by holding your funds in the ISA. Even if you have a previously existing ISA account, you can still transfer that ISA money to your current account.

  • The free share feature allows you to have shares in the company worth three to over three hundred pounds if you refer a friend on the Freetrade platform. This is a way to have more users for this platform and for retaining them. This also allows users more opportunities to go for high flying stocks.

  • Some companies provide perks to their shareholders. You can expect to get some discounts on their product if you can earn a specific amount. This is a nice way to save.

  • The basic account that you get with free trade is free and it allows you to sell or keep shares. If you want a service from which you can get tax free dividends, then Freetrade is the best choice.

  • Comes with Free trade plus service. This is a subscription that allows you to have access to more high flying stocks. It also comes with additional beneficial features. For example, it has priority alerts and stop-loss features which prevents you from losing more money than you earn.

How does Freetrade make money?

One must ask if it is all for free, how does Freetrade itself make money. For sure it is not a charity. The basic service is free but they earn their part from their monthly fees from optional subscription such as:

  • Freetrade ISA, £3/month

  • Freetrade Plus, £9.99/month

  • Fee of 0.45% of the Base FX rate on each US order placed  (The standard FX rate is 1.50%)

  • Small amount of interest earned from banks on customers’ cash

As a rough comparison, other brokerages can charge a 1% annual management fee for an ISA account. 

Freetrade is current £36 a year 

A portfolio of £5000 with another brokerage could be £50 (this is only going to get more expensive as your portfolio grows eroding away your tax free gains)

Is Freetrade safe?

If you are worried about the safety of your money then stop. This service is regulated by one of the top tier regulators. There is no question of your money going anywhere except trade. The financial conduct authority makes sure that each customer is treated fairly. If you have complaints, you have the option to complain to the platform as well as the financial ombudsman service in case your issue is not resolved. It also acts as principal secured financing because your assets are protected up to the value of 85000 pounds by the financial compensation scheme in case the platform becomes insolvent. Other losses that occur through unsound decisions are not covered.

Pros

  • The Freetrade platform is very easy to set up where you can very easily invest your money securely in the stock market within a matter of seconds because of the fast and simple process.

  • The user interface is very user-friendly and the app is designed to be very simple.

    FreetradeIPOS

  • The app is very well organized and is arranged in easy to use five sections which include your insights, portfolio, information on stocks and ETFs, and where your money is going.

  • Unlike other traditional stock trading, this does not cost you anything. Furthermore, it doesn’t have any commission, so you can increase your profits fast.

  • A growing list of international stock options as well as IPO’s.

  • It allows you to hold your shares in the ISA where you can be free of all taxes.

  • It has a huge community where users can learn from the experiences of other traders.

Cons

  • The biggest risk of trading with this platform is that it is easy to lose a lot of money without even knowing.

  • There is not any kind of detailed information or warnings regarding stocks.

  • Part of this has to do with the easy to use interface. It is very easy to buy and sell shares with this platform that it almost becomes like an addictive game.

  • While the figures are decreasing, one doesn’t realize how much money he is losing.

  • There is no trading limit to stop overspending like on most of the gambling websites.

  • There is little to no research tools available for the user to analyze his place in the market and the condition of the stocks.

  • There is nothing to tell neither you how the stocks are progressing nor any news page where you can have an update about the companies.

  • It is all share-based and there are no funds. Funds can diversify shares but in Freetrade you are only limited to stocks.

  • Freetrade only has companies enlisted in the UK and US which means that you are left out of all other companies from Europe.

Free trade is essentially ETF and stock trading. While it is easy to maintain and open an account and trading seems effortless, it doesn’t have any protection from over-trading neither it provides many tools to analyze the stocks. Furthermore, cards are available only for deposits and not withdrawals.

 

Freetrade vs Trading 212

freetrade v trading212

Both services have a lot to offer. Both allow you to trade stocks for free without even having to pay any commission fees. Other companies like eToro are also following suit. Freetrade allows you to trade in stocks and ETFs while Trade212 allows you to trade in instruments. You can trade over 1800 of them. Instruments such as commodities like oil and gold, stocks, currencies, and cryptocurrencies are some things that you can expect to trade-in. In this manner, Trade 212 has a broader scope. Let us see how these two free trading services compare with each other.

Both the Freetrade and Trade212 are the same in terms of Stocks and shares, ISA, Fractional shares, and Ethical investing practices. Neither of the two services provides anything for Pension (SIPP) or Lifetime ISA (LISA). Both platforms have apps for Desktop, Android, and iOS platforms. Trade212 has a lot of Guides and other information on the available products while Freetrade provides nothing like that. It has limited research tools as well unlike Traded212 which allows you an in-depth analysis. Trade212 offers demo accounts and has a good number of videos and walkthroughs while Freetrade doesn’t have any of those.

Costs

While both of the platforms are absolutely free and they charge you almost nothing, there are but few differences between the two when it comes to actual costs. Trade212 does not charge anything except for the 0.5 per cent foreign exchange fee. There are also some incumbrances on the deposit amount and withdrawals as well.

Compared to this Freetrade also has some charges. For example, it charges 0.45 per cent for foreign exchange if you are buying shares from another country. There are also a couple of charges to use their stocks. As for withdrawal, there is no fee but if you want the same day withdrawal, you will have to pay as much as five pounds. These fees are still peanuts if compared to other trading platforms. On other platforms, you can easily incur charges as much as ten pounds that decreases your returns. This ensures a good deal of incurring a lot of profits without having to spend money.

Demo account

Freetrade does not offer Demo accounts. This means that you have to go straight into trading without practicing. Trading212 however, has Demo accounts and you can practice as much as you want before going into the real thing. Once you feel that you are ready to trade, you can try this for real. The good thing is that it lets you practice on a Demo account without having to register through an Email. But if you want to have an insight into your stocks then you will have to sign up for them.

Is Freetrade better than Trading 212?

Both services are amazing choices for free trading. Freetrade is simple to use and aims at new users. Trade212 has a lot of options and is a comparatively well-made platform for more advanced users. That is why it gives you a demo account to practice first. Neither of these two will give you a pre-made portfolio and you will have to make your own. If you want pre-made portfolios then these services might not be for you. We think that both Trading 212 and Freetrade have their own pros and cons making it suitable for a variety of users.

Freetrade vs Lansdown

  • Interface

Both the platforms have an easy to use interface and allow for fast trading options.

  • Stocks

They have free stocks and provide the option for ETF trading as well.

  • App

Both platforms have mobile and desktop apps for easy usage.

  • Learning tools

Both platforms have intuitive learning tools that educate the user of the trading principles and best practices.

  • Customer service

Both platforms have great customer service who are always there to help you.

  • Investor protection

Both the platforms offer a high level of investor protection

  • Clients

The majority of the clients on both platforms are from the top tier authorities.

  • Stock exchange listing

Lansdown is listed on the stock exchange while Freetrade isn’t.

  • Negative balance protection

Freetrade does not have protection for the negative balance.

  • Banking license

Neither of the platforms holds a banking license.

Freetrade offers almost no tools to properly research the stocks and has a very limited Portfolio. Furthermore, the Debit card can only be used for deposits and not for withdrawals. On the other hand, Lansdown has a high fee for ETFs and stocks and if you are outside of the UK, you have to open an offline account. Furthermore, if you want to trade in any other currency, you cannot do it with Lansdown.

Free trade ISA

When you are investing, there is always more risk of loss than profit. Couple that with tax laws and commission brokerage fees and you are left with pretty much nothing. Freetrade has a three-pound monthly fee for holding your share in the ISA. ISA rules have different tax rules and this can save you from taxes.

  • Tax-efficient

With the ISA there is no income tax or capital gains on your investments and return therefore you are always tax-free

  • Limit

You can deposit up to £20000 pounds per year for a three-pound monthly fee.

  • Long-term investments

While holding your investments in the ISA, you can secure your dividends and capital gains by making them tax-free. This allows your wealth to increase much faster. Furthermore, your investments are secured for the long term.

Why should you open an ISA with Freetrade?

  • Commission-free

When you open ISA with Freetrade, there are no commissions whatsoever for buying and selling the stocks. This essentially means that your investments can grow manifolds in no time.

  • Allows instant trading

Freetrade allows unlimited instant trades for free during the stock market hours.

  • Safe and secure

As Freetrade is one of the few services regulated by the top tier regulator FCA, your investments are secured and safe. Furthermore, you are also covered by the Financial Compensation Scheme as well.

  • Low fees

Freetrade doesn’t have hidden charges or vague fee structures. It charges three pounds flat every month for holding your investments in the ISA. This way you can grow your investments without having to worry about the increased fees.

  • High-quality stocks

Freetrade allows you to choose from several high-flying stocks like that of Google, Apple, and many others.

  • Fractional shares

Here is something that separates this service from others. Even if you have to buy the most expensive share, you can have a chunk of it for yourself for as low as two pounds. This is very good if you are looking to make a more diverse portfolio for yourself.

  • Support

Freetrade has amazing support with fast resolution times. They are there for you when you need them. For ISA they have extended support as well.

Bottom line

Freetrade is a comparatively new company in its initial stages. Established in 2016 it has grown massively and has a good track record as a broker. It even survived the financial crises and has sustained its existence. Freetrade is regulated by top tier regulators and is, therefore, a safe platform to trade on. Furthermore, the PEC also does an annual audit of the company that provides a high degree of investor protection.

Free trade allows trading in stocks and ETFs with a great fee structure. Starting with almost nothing you can build a considerably vibrant portfolio because you get to purchase a part of the most expensive stocks for just two pounds. The account opening is easy and pretty fast. The app is intuitive and easy to use while the whole thing is very user-friendly.

Although it has some drawbacks like the inability to go beyond the US and UK stocks and the limitation imposed on credit cards plus the severe lack of research tools. But it is a great choice for people if you want an easy-to-use trading system with instant trades and execution on a very low fee. If you are looking for tax-free investments and want to hold them in the ISA then Freetrade is a great choice indeed.

 

Freetrade offer a free share for new accounts
Freetrade offer a free share for new accounts
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