What is Freetrade?
Freetrade is a commission-free stock trading app with a self-described mission of ‘getting everyone investing by making it simple and commission-free’. It currently has 500,000 users and is a member of the London Stock Exchange. Their mobile app can be downloaded free of charge and offers the following features:
- General investing account: Commission-free investing in shares and ETFs.
- ISA: A Stocks and shares ISA with a flat fee of £3 per month
- Free Trade Plus: A premium investment account offering 3% interest on cash up to £4,000 and access to more stocks.
- SIPP: A tax-efficient self-invested pension.
Easy to use, mobile and affordable, this app is a great way to take your first steps into the world of investing.
Freetrade Expert Review
The Freetrade app is free to download onto your mobile phone. With a simple, eye catching design, it allows users to access a selection of shares online with just a few thumb clicks. What really sets it apart, though, is that unlike many other share dealing services, you can buy shares free of charge. You will need to download the app rather than investing through the desktop, but once you do everything becomes pretty simple. All you need is a bank account, your national insurance number and, once verified, you’ll be ready to start trading. Here is how to buy shares.
Freetrade is a relatively new company that now has over 700,000 customers. It offers a ‘freemium’ share dealing service meaning that basic share dealing services are free but you can pay for extra features. Freetrade won the 2021 Good Money Guide award for Best Commission-Free Stock Broker.
Some of the advantages of trading shares with Freetrade are:
- You can trade UK and international shares commission-free (there are FX fees on international shares).
- You have the option of trading shares within a General Investment Account or a Stocks & Shares ISA.
- You can buy ‘fractional shares.’ A fractional share is a fraction of one share.
- You can earn interest on your cash with a Freetrade Plus account.
- The platform is easy to use.
- It offers a sleek app that allows you trade shares and monitor your portfolio on the go.
On the downside, Freetrade doesn’t offer access to as many shares as other platforms such as Hargreaves Lansdown and Interactive Investor do. It also offers far less research and investment tools than other providers do.
With Freetrade, it’s free to trade shares. However, you do need to pay FX fees (spot rate + 0.45%) if you want to trade international shares.
There are no annual account fees for Freetrade General Investment Accounts. However, there are annual account fees for Freetrade Plus accounts and Stocks & Shares ISA accounts. These are £9.99 per month and £3 per month respectively.
The app was launched in the UK, but currently also operates in Canada, Germany, France, Ireland, Netherlands and Sweden.
Freetrade App Pros
- Accessible: Simple to download and get started.
- User friendly: Stock trading can be intimidating for newbies, but you needn’t worry about that here. The app makes it easy to view your portfolio, make trades and browse stocks.
- Free trading: Commission free and you do not need a huge amount of money to get started. This is an app for people who want to trade on a small scale with just a few hundred pounds at a time.
- Community: The app also has access to a friendly and vibrant community section. It’s a great place to chat, get tips and advice.
Freetrade App Cons
- Limited information: A lot of trading apps come stacked with information and research tools to help you make your investment decisions. However, Freetrade is pretty limited. There are graphs showing historical performance, a blog and a community, but very little else. The app is all about simplicity, but that comes at the expense of detail.
- Lack of choice: You are limited to ETFs and stocks from the UK and US which means you’ll miss out on some emerging markets and Europe. The app is developing and adding new functionality all the time, but it does limit the scope of what you can achieve.
- Risk: This lack of scope means it is tricky to get much diversification into your portfolio.
Investing with Freetrade
Using the general investment account, you can trade shares and ETFs instantly commission free. You can download the app, view available stocks and make your trades. For the moment stocks are limited to US and UK companies so it is somewhat lacking in scale and scope, but it does offer a simple way to get started.
You can also invest in a stocks and shares ISA and a self-invested personal pension (SIPP).
The Freetrade Plus account meanwhile gives you access to 3% interest for the first £4,000 of capital and access to a wider range of shares for a monthly fee of £9.99 per month.
Compared to other apps available it is quicker and simpler. Most competitors such as Interactive Investor, AJ Bell and Hargreaves Lansdown will charge a fee per trade. However, these are more comprehensive and offer a wider choice than the somewhat limited Freetrade app.
Freetrade Pricing, Charges & Fees
Freetrade’s big selling point is commission-free trading. Although any international trade you make is free with a foreign exchange fee from spot rate of 0.45%.
This compares favourably with its competitors. Hargreaves Lansdown, for example, charges £11.95 per trade, Interactive Investor charges £7.99 while AJ Bell costs £9.95. AJ Bell also has a share dealing account fee of 0.25% while Interactive Investor charges an account free of £9.99 per month.
Where Freetrade does charge is in its subscription fees for other services:
In sheer price terms they compare very favourably with their main competitors. However, other free trading apps such as Trading 212 also offer commission-free trading.
Freetrade General Investment Account
The standard account offers commission free investment in stocks and ETFs. You are restricted to companies in the US and UK which means the whole of Europe and emerging markets are shut off to you. It offers the chance to invest in fractional shares which means you could own a piece of even some of the most expensive US stocks.
There is no commission to pay. Customer support is fast and friendly and there is an investment hub offering general information and advice about investment. It is much cheaper than other platforms, although its limited scope may feel like a problem as you become more comfortable with investing.
A stocks and shares ISA is an individual savings account which allows you to invest your money in a range of shares, ETFs, funds and bonds. It is tax efficient with no capital gains or income tax with an annual ISA allowance of £20,000. You’ll pay a monthly fee of £3 for a Freetrade ISA and can buy stocks free of charge.
It is much more cost efficient than most comparative products. Hargreaves Lansdown, Interactive Investor and AJ Bell all charge £11.95, £7.99 and £9.95 respectively for trades. They also charge monthly fees of 0.45%, £9.99 and 0.25% as well as spot rates of between 1% and 1.5%.
Freetrade Plus Account
The Freetrade Plus account is for those who want something a little bit more. For $9.99 you can get 3% interest on cash up to £4,000 as well as having more stocks to choose from. This applies to your general trading account as well as a stocks and shares ISA. You can also place limit orders to control the price you are paying, use stop losses and receive priority customer service.
This is effectively a better value version of the basic service. Your money works harder with interest paid monthly and you’ll have access to all the stocks from the basic plan plus FTSE small cap, FTSE AIM all shares ex AIM 100 and the SBP Small Cap 600.
Self-invested personal pensions provide a tax efficient way to save as well as full control over your investments. They are great for people who prefer a more proactive approach to their funds in the hope of securing a superior return.
Using a SIPP allows you to contribute as much of your salary as you like and receive tax relief on contributions up to £40,000 per tax year. You can decide how your pension is invested, consolidate pensions, monitor performance and make decisions at the click of a button.
The Freetrade SIPP is £9.99 or £7.99 if you are a Freetrade Plus Member. It compares favourably with other platforms such as Hargreaves Lansdown (0.45%), Interactive Investor (£19.99 per month) and AJ Bell (0.25%)
Freetrade offers a fast, affordable, but slightly limited approach to share dealing. With their general investment account, you can invest in shares and ETFs with no commission. The lack of commission gives it a major advantage against its main competitors most of which come with a fee. The mobile app makes for a seamless, user friendly operation, but its selection is limited. You can invest in company stocks, investment trusts and ETFs with English and US companies.
The Freetrade Plus account offers the benefit of 3% interest on all cash up to £4,000 as well as more stocks and tools such as stop losses and limit orders. However, it is still a relatively small pool compared to others.
An initial public offering occurs when a company decides to go public. They offer a way for companies to raise money and for investors to get in on the ground floor of a company with real growth potential. Freetrade now offers the opportunity to get involved with IPOs commission-free. This is a major new string to its bow and gives it another facet against larger and more established competitors. While most charge fees, Freetrade retains the commission-free approach it offers with all its share trading. You can see a list of new and upcoming IPOs on their IPO calendar. This lists all IPOs which have been filed as well as those which are still just rumours.
Freetrade International Investing
Freetrade is primarily focused on UK stocks although it does have access to some US shares such as the S&P 600 and MSCI US Prime Market. As with all other options you can buy these shares without any commission. You can also get involved in IPOs and special purchase acquisition company. They charge a rate of 0.45% on the base FX rate of every US order placed.
However, unlike some other platforms it does not currently offer access to other territories such as Europe or emerging markets. So, while it offers a cheaper alternative to other platforms, choice is somewhat more limited.
Freetrade Investment Trusts
An investment trust is a fund with a manager who invests in a portfolio of shares based around the strategy and objectives of that fund. They can be a great way to diversify your portfolio, receive a consistent income and benefit from the expertise of the trust’s board of directors. Over the long term, most trusts tend to outperform other funds.
Using the general investing service, you can get involved in investment funds with zero commission, and 0.45% on the FX rate for any US based trusts. The Fairtrade Plus option gives you access to more investment trusts and other stocks for a monthly fee of £9.99. Both the standard and premium models are considerably more cost effective than most competitors.
Exchange-traded funds (ETFs) track the performance of an underlying index or bucket of stocks. It’s a low cost, and simple way to diversify your portfolio to access leading indices such as the FTSE All Share market. They are generally less expensive than actively managed funds, have fewer transactions and lower trading costs. They are also exempt from the 0.5% stamp duty rate. If you hold them as part of an ISA or SIPP, you can gain additional tax benefits.
The downside is that they are unlikely to outperform the market. Their movement will be influenced by the underlying fluctuations of the market.
You can buy and sell ETFs as part of the four main product groups. The General investment account allows you to invest commission free, while a Stocks and Shares ISA, SIPP and Freetrade Plus accounts come with small monthly fees. However, these are still much lower than most competitors.
Freetrade Investment Funds
Freetrade allows you to invest in a selection of US and UK investment funds and ETFs. Investment funds are actively managed to a specific strategy and give you the benefit of the skills and experience of their fund managers. ETFs, meanwhile, are lower cost and track the performance of an underlying group of funds. They provide a low cost, passive and tax efficient way of saving. Their movements will be influenced by the wider market, so it’s unlikely your fund will significantly outperform wider funds.
Investing in funds is quick and simple. You can do so as part of the basic or premium Freetrade Plus account or through their SIPPs or stocks and trade ISAs. You can get involved commission free on transactions with a small fee of 0.45% over the basic FX rate for US based funds.
Freetrade SPAC Stocks
Freetrade gives you access to more than 40 Special Acquisition Companies with more being added each month. A SPAC is a company formed with the sole purpose of raising funds through an IPO. Also known as blank cheque shell companies, they have become a popular way for companies to go public. They are led by a management team made up of various experts who use their knowledge of a specific industry to raise capital. SPACs generally trade by themselves until 52 days after the IPO, at which point they split into common shares and warrants which can be traded separately. It’s at this point that retail investors can get involved through Freetrade. The capital raised by the IPO is placed into a blind trust until the SPAC agrees on a merger or acquisition. They have two years to identify the merger. If they do not, the funds are returned to investors. They are becoming increasingly popular, but they carry a risk in that there is no way of knowing if the SPAC will successfully complete a merger or acquisition.
Freetrade Investment Hub
The Freetrade investment hub is a knowledge centre to support you in your investment journey. It includes latest news, trends and development in the investment space, a dictionary of terms and a guide entitled ‘get started in investing.
This offers useful tips on getting stared with investing such as choosing what to invest in, how they are taxed and how stock exchanges work. They are a useful for anyone who is new to the investment scene and wants to build up their knowledge.
The hub is constantly being updated which makes it a great way for you to not only develop your skills, but also stay up to date with the latest news.
Freetrade Community Forum
The Freetrade community forum is a place where users go to discuss the platform and investing in general. It’s a place to find out more about what’s happening with the app to debate issues, or to get general investing advice from other users. Once you’re signed up, you can contribute to existing discussions, or start a thread of your own.
It is often used by people to suggest ideas for how Freetrade can be improved. As such, Freetrade uses the forum to give its own users a say in shaping the platform and deciding what direction it should go next.
Freetrade’s free share for referring a friend promotion rewards you for spreading the word. If you refer a friend who signs up to the app, they will reward you with a free share worth anywhere between £3 and £200.
To take advantage of the offer, all you have to do is open the app, tap on the free share button, send it to a friend. If your friend accepts and signs up, you will both receive a free share. The stock will drop into your general investment account or you can have it added to an ISA. To qualify both you and your friend must have a fully funded account and complete the W8BEN form which lets you invest in US stocks.
Freetrade Versus Trading 212
Freetrade’s biggest rival in this space is Trading 212. Like Freetrade, it offers commission-free trading in stocks and ETFs. However, they differ in several aspects. Trading 212 is more established having been running since 2004 and has more services and stocks. While Freetrade only deals with US and UK stocks, Trading 212 offers access to Canadian stocks, Euronext and German’s Deutsche Borse. Trading 212 also offers CFD trading for higher-risk speculation.
Trading 212 also has a more comprehensive learning resource with videos and walkthroughs and also offers a demo account which gives you a chance to learn the ropes without putting capital at risk. On the other hand, Trading 212 is slightly more complicated which may make it a better option for those investors who have gained a certain amount of knowledge and confidence. While Freetrade is a great resource for newbies, Trading 212 is a good option for anyone who is looking to step things up a notch.
Freetrade Customer Reviews[WPCR_INSERT]
Freetrade CEO Interview
Freetrade Frequently Asked Questions:
Is Freetrade safe?When investing your capital will be at risk. However, Freetrade is as secure as a trading app can be. It is authorised and regulated by the FCA and is protected by the FSCS which protects £85,000 of capital if the firm were to go bust.
How does Freetrade make money?Freetrade works on the freemium model. This means its basic general investing account is free forever. It makes money on other products such as the SIPP, and Freetrade Plus accounts which come with monthly subscription fees. They also charge a rate of 0.45% on the basic FX rate of all US stocks bought.
How do you use the Freetrade app?The Freetrade app is available from Google and Apple stores. You can download it to your mobile device, enter your information and you’ll be ready to go.
Does Freetrade pay dividends?Yes. Lots of companies on the Freetrade app pay dividends. You’ll receive a notification every time you receive any income from an investment.
How is free trade free?Freetrade’s basic account is commission fee. The only thing you’ll pay are fees for foreign exchange when buying US shares. It can offer this because it has optimised its costs. It also offers more premium services such as the FC Plus which offers more options for a monthly subscription fee.
Can you short stocks on Freetrade?At the moment no. Freetrade does not allow you to short stocks and there are no plans to add it on their current roadmap.
Freetrade Latest News
- Freetrade to start lending out customer shares to increase revenue
- Freetrade ticked off for Tiktok…
- Freetrading in European stocks
- Freetrade valued at £650m in latest crowdfunding raise
- Freetrade now has £1bn client funds on depost!
- Freetrade hits the million user mark
- Freetrade offers investors 3% on their cash
- Are loss-making fintech investment providers worth the risk?
- Freetrade launches Freetrade Plus subscription
Freetrade Facts & Figures
|Number Active Clients||1,000,000|
|Client Funds||£1 billion|
|SIPP||£9.99 per month|
|Stocks & Shares ISA||£3 per month|
|US Stocks||£0 + 0.45% FX|
|Alternatives||Freetrade versus AJ Bell Youinvest|
|Freetrade Versus Hargreaves Lansdown|
|Freetrade Versus Interactive Investor|