Trading 212 can be bad because it offers high-risk leverage products like CFDs alongside an app that is aimed at new and inexperienced investors. That is the answer to the question you may have asked if you’ve stumbled onto this page because you are looking for reasons not to trade with Trading 212.
But Trading 212 is not a bad investment platform, there are just some bad points about it. I’ve worked in financial marketing for 20 years and if you are going to praise a product, you also have to list it’s cons. Be balanced, as compliance would say. This is even despite the fact that they are offering a massive 5.2% interest on cash held in an investment account with them. It’s clearly a loss leader, but one thing Trading212 are good at is promotions to get bums on seats.
In fact, when we didn’t include Trading 212 in our 2020 Awards survey, there was outrage on their community forum. So one of the things that they are obviously good at is customer service and giving people what they want. I’ve noticed that a lot of free investing apps have developed an almost cult-like status.
We’ve also covered them a bit when we looked at whether free stock broking is here to stay and they also get a mention in our guide to fractional shares. Both are two massive positives for the industry because the cheaper it is to invest the more people will do it. And, if you can’t afford to spread your risk across a few different companies when a single Tesla share costs $267 giving people the ability to just dip their toe in and buy $50 of five shares instead of just one means people can diversify.
But there are two things that don’t sit well. Every time I flick on social media, I see a lot of “investment gurus” saying that to start investing you should buy an S&P 500 tracker with an app, and a lot of tag, or link to Trading 212.
Which is fine, because that’s actually not bad advice. An SPX tracker is a good way to invest in a diverse range of 500 of the largest listed companies in the US. And Trading 212 certainly has a good low-cost offering for new investors.
The other is their free share offer. Which again on the surface is fine. It’s an incentive for opening an account. But I was having a chat, a rather lively one with a friend the other day about, how free offers encourage the wrong type of investing. The investing for investing’s sake.
I see his point. You shouldn’t invest if you can’t afford it. But then again, can you afford not to invest?
Because when it comes to investing, the earlier you start the better chance you have at making money in the long run.
And if you get cross-sold into a CFD account and lose money trading, what’s worse? Not having started on your investing journey at all and waiting till you hit 40 to start investing. Or, getting carried away a bit and thinking there is easy money to be made in the markets in your 20s, then learning your lesson quickly.
And realising that you should stick the the fundamentals because good things, sometimes take time.
Whether you think that Trading 212 is “bad” is another matter and we want to know what you think. If you’ve used them visit our Trading 212 review page and tell us what you think. It all goes towards helping people make more informed decisions about where to trade and invest.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
You can contact Richard at richard@goodmoneyguide.com
