I am sorry if this has been covered elsewhere, I could find a few 212 threads but not comparing ISA (and in particular fees).
I have invested in Freetrade and want it to succeed, however a friend has just challenged me on this and Iām losing that argumentā¦
If an investor is only interested in long term ETF (VUSA and VUK) investments then using a Trading 212 ISA would appear to be cheaper than Freetrade. Vanguard charge 0.15% platform fee, Freetrade charge Ā£3pm, Trading 212 appears to be free.
What am I missing? Or would it be better for that individual to use Trading 212?
I donāt think youāre missing anything. If T212 offers the product youād like to invest in, then as it stands going with T212 will get you the most money in the end, since the fees are Ā£0.
Will this last? Is it a sustainable model for T212? Could they introduce fees later? Could they collapse? Who knows.
But as long as theyāve implemented ISA transfers out (I think itās a requirement anyway) and you donāt invest more than the protected Ā£85k through them, I think itās safe enough.
I imagine theyāre already profitable, so at least they already have a proven business model, unlike Freetrade.
Trading 212 is as it stands a cheaper option. Their model is based on the idea that they can lure you into the CFD trading side of their offered services, where they make high margins.
As it stands T212 is a better offer for the strategy you have mentioned.
On Senduās point I would clarify that both VUSA and VUKE are Irish domiciled ETFs (as is common practice) and therefore I donāt believe they are covered by the FSCS. The Ā£85k protection for T212 would only protect you fom T212 going bust.
There also use to be an inactivity fee for T212, no idea if that applies to the ISA, maybe someone else has more details on that?
To add to what Sendu and Jack said, I believe Trading212 will always intend to direct its users towards profit-making CFD products, because otherwise is makes no commercial sense to offer completely free service, which even Freetrade, as much as they cut out the middlemen and save on costs, will never be able to do.
The issue here is that in the long term you save Ā£36 per year on ISA costs, but if you get into the āget rich quickā trap of Trading212ās core business model, the CFDs, you may lose significantly more. The following is from their website:
76% of retail investor accounts lose money when trading CFDs with this provider.
Yes, itās only protection again them going bust. Iām not sure what you think them being (Irish) ETFs has to do with anything though. No kind of investment (even UK stocks) will get any further protection with any online broker, since theyāre all of the āno adviceā type.
Thatās an interesting point. There is some extra (small) counterparty risk with an ETF because itās run by another company. If itās a UK ETF does FSCS cover that? does it depend if the ETF company has FSCS protection?
FSCS protection does not apply to investment products! No ETF is eligible. No share of any company is eligible.
Protection essentially only kicks in if:
You were given negligent advice on a regulated product that fails, in which case you can make a claim against the advisor
Your stock broker fails and they use client money and investments to pay off their creditors, in which case you can make a claim to try and keep at least Ā£85k
Yes, thereās a small risk that the ETF fails in some way, but the point Iām trying to make is that this has no relevance to the topic of Trading 212 or to the topic of stock brokerās going bust or to the topic of FSCS protection.
If youāre raising an unrelated topic of āwhat are the risks of my investment choice failingā, then the risk of an ETF failing is going to be much less than the risk of any of its constituents failing, or the risk of an individual stock pick you make failing.
My little take on Freetrade v 212. They both have a nifty app, perhaps 212 a little more advanced but to cut straight to it from my experience a clear winner is FT. Iāve just had some appalling customer service from 212 via live chat. At best it was rude. So 212 may be cheaper but thereās a reason the CS is rubbish and CS is everything in my opinion.
Understandable but :freetrade: customer service has a long way to go: itās just okay from my experience. Latest example from me, was given a 3-5 working day timeframe after chasing a query, and double the time later still no response @robjackson:
blunt!