not that you asked me, but for me 212 would need to greatly increase the transparency on asset custody, as well as more distinctly separate their (what I consider) gambling business from their investing business (which I donāt think will happen without regulation)
Im not sure that the casing after smaller and smaller fees is really the most beneficial goal for everyone which means while 212 is āfreeā in terms of account fees, I donāt actually care. id rather pay for my product than be the product. in the grand scheme of things Ā£10/m for a SIPP, ISA, GIA, & treasury account I think is actually quite good value. (of course taking into consideration other fees, 0.35% on Fx, 0.1% on treasury)
People all have their different views of what they want, 212 is a bit of an anomaly because of how they make their money and how they position their products. their investment product is effectively loss leading to make it attractive, but if or when they decide to rely less on CFD profits they will have to move to a subscription model or similar (which theyāve stated themselves previously)
Freetrade I think also have a disadvantage in that what I think are some of their advantages are less visible. direct market access to the UK (and I think European exchanges, canāt remember) is a good benefit, their not reliant IBKR for example, which means the restrictions 212 have on some stocks Freetrade donāt. The in house approach here where it makes sense to do so I think offers longer term benefits for Freetrade as a broker.
as an example 212 cant offer treasuries, because they rely on IBKR who donāt offer this service.
Mutual funds might also be a benefit freetrade will hook into, while IBKR do offer these on their own platform, im not sure why 212 havenāt picked them up. maybe cost prohibitive or its not offered as a white label, or maybe its in the works who knows.
the clearer custody arrangement as well I think is a benefit thatās not well understood. though most big brokers have a similar clear custody (212 is a bit less clear)
Some valid and interesting points there. I agree with your point on fees. When Freetrade initially raised their fx fees on the free plan, I followed a similar logic in that they have to make their money in some form and I would rather pay a little bit extra and know my broker isnāt engaging in dodgy or risky activities.
As you say, Trading 212 is an anomaly. I looked them up before opening an account and found a slightly checkered past. The CFD gambling does appear to be their main revenue driver, agreed. I agree with most of what you say, in fairness. As you say, Freetrade benefits may be less clear. An everyday retail investor may see FSCS 85k protection, Trading 212 UK Pty and think fair enough, thatās good enough for me. My issue is more that we arenāt receiving this commentary/info from management, so we sit speculating and hypothesizing in these threads. Even if it has been discussed before somewhere in a thread, a semi-annual letter could easily have a small section with a paragraph or two that reiterates managementās views on the competition and the strengths Freetrade has in their view. A paragraph or two, similar to what you sent there, could easily sit in an update to us all. For example, if management believes T212 will eventually cross paths with regulators on CFDs, and will have to switch business models and that the in-house approach will pay off in the long run, or that sticking to a more ethical broker model will win in the long run by attracting the right customers and staying out of the regulators way, thatās the type of thing we should hear from them in a bi-annual update, in my opinion. Especially when you consider that crowdfunding often involves retail investors with, at times, limited knowledge of the intricacies of the businesses and industries they invest in. I feel that this new era of neo-brokers are operating using business models that are relatively new and untested vs the conventional models brokers have used in the past. When Robinhood are doing it their way, T212 their way, Freetrade their way. It would be reassuring to hear from management in light of this.
I have created a simple spreadsheet for crowdfunding investors to estimate the profit/loss of their investments. You will need to input some share price (according to your estimate) and the number of shares for each investment round.
I am not an accountant, so if you spot something wrong please let me know. Make a copy of the file to change the values (in blue).
crowd cube success fee isnāt accounted for (R7 onwards - could lead to some sad faces when they get hit with it)
% Return is ārightā but slightly misleading when compared to %profit as shows 100% extra as its only a 67% return if you take profit/cost. (For example I could make anyone 100% returns yearly and take 5% for myself at the moment with the current definition )
Tax portion is only taking into account the last 3 rounds/rows not sure if this is intended as idk if its for EIS or other reliefs (I live in a 0% CGT tax jurisdiction so pay 0 attention)
Hi @AndyFreitas Thank you very much for the feedback and pointing those out!
On the success fee, itās difficult to account for those. I donāt have the information of the thresholds needed for each round. I know that on the latest round if you had more than Ā£1000 invested those were held directly, so Crowdcube arenāt able to charge you anything(because they donāt hold your stock, this is what I understood). For the lower amounts it can have a significant impact.
I have changed the % return to only compare the profit to the amount invested
Yes, this is correct. The rounds prior to R7 were eligible to EIS and I had a note on the spreadsheet stating it. I am taking the assumption that you have claimed the EIS to HMRC. Personal calculations are needed, based on your allowances, to know exactly how much you owe to HMRC.
Thanks for making this! Iām only -Ā£2,948.16down on my Freetrade crowdfunding adventure. My early round gains got wiped out and I really couldnāt be where I am without having stretched so much to be eligible for @Viktorās ācoolā NFT and its promised perks in Round 7.
Yes but FT specifically said it does not apply to us R7 investors. It really was a double whammy of the price diving and then this but at least the 5% success fee is probably irrelevant anyhow.
But if I did stretch to the Ā£10k plus I would be raging at the blatant ignoring of the question @CashCow has asked many times.
All these things really should crystal clear and not in doubt. It IS NOT in any shape or form but feels like a scam product when such important information is not clear. And even worse is it isnāt even that complicated to be clear about it.
is a relative measure. If earth is 4.5 billion years old, thatās (54 billion months), then 1 million years from now is still
Freetrade has gotten boring. Ever since they raised the last round, theyāve gone so quiet, youāll be hard pressed to find any news about them since the valuation slashing in June 2023. They probably cut costs to the bone. they will share another roadmap that will be marred by delays.
When you lose the support of your crowdfunders you lose evangelism, which is everything.
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we will all be 