I don't understand


I spent £488.26 on APPL.
Today, Freetrade values it at £486.68.
I try to sell and am told I will get £484.33 (- FX conversion fee of 0.45%, so really even less).

I don’t even understand the mathematical loops Freetrade are using to get this.

The way I see it, as soon as I invest I immediately make a significant loss.

Why am I here?

It’s true that you are at an immediate loss whenever you buy an equity.

For US equities you will be immediately down as you will have paid a small (compared to the mainstream brokers) FX fee.

Plus there is always a spread (difference in price) between the buy and sell prices for a share. The % spread is usually small for very liquid shares like Apple but can be a few percent or more for illiquid stocks.

You’ll also have to account for the exchange rate changes over time - a falling £ against the $ works in your favour if you hold US shares making your shares more valuable but if the £ rises your US shares appear less valuable.


thank-you the explanation.

I had planned to invest over the long term in dividend paying stocks for passive income, but it’s clear that not only fees, but also exchange rate, could reduce my income to zero, or even less.

I stand to lose my investment, and my income.

It’s time I bow out.

There is no such thing as a free lunch,

I think you might be over exaggerating. For one thing Apple is unlikely to go to zero. What if Apple then suddenly rises you will go into profit.

This isn’t a short term buy and sell and make a fast quid. Its consistent longterm investing. You don’t put all your apples (excuse the pun) into one basket.


At the risk of cursing a $trillion Company but I think the risk of you losing your investment is quite slim


Don’t apologise. One must never waste a good pun.

My goal is long term investment with passive income as noted in my opening gambit.

The other couple of grand is not in Apple, but split over several sectors.

I checked all the US shares I had, and every one lost me money when getting a quote based on my original investment even when FTrade app stated I had made a profit.

I am more concerned that any dividends paid will be lost in fees and exchange rates leaving me with my capital, or not.

This mayn’t be Freetrade’s fault, but rather I had not taken all of this onboard from the start. Hence, I do not think I am cut out for this.

With the greatest amount of respect your comments don’t sound very long term in thinking. You bought less than 2 weeks ago :joy: The more you pay in fees means you made a much bigger profit :+1: Personally I would be very happy if my fee was massive as it means the much larger % is mine.


If you’re truly thinking long term, keep these shares until they increase enough until you at least break even. AAPL has been down a bit in recent months but has been up for a couple of weeks now.

If you’re worried about fees in the future, your best option is GBP-denominated based ETFs, such as ISF (FTSE 100) or VUSA (S&P 500), as you won’t pay stamp duty or FX fees. On VUSA, you’re still subject to FX variations. There are also hedged S&P funds, but the ongoing charges are higher.


Yes, the immediate moment you buy a stock, you will be at loss - because of the foreign exchange, and the bid-ask spread. Also, for US dividends, you must pay a 15% tax - so I generally only invest in US companies where growth is more important than dividends.


Also, for US dividends, you must pay a 15% tax

Why do we pay 15% tax? We are in the UK. How do we declare this to HMRC?

I do not want to sell. I did a test to see how much I would lose, and was surprised with Apple. Then I checked with all the shares I had bought, and found that every single position that showed a positive return, would be a loss when sold.

The US does not care that you are in the UK, they want their cut. But you don’t need to declare anything to HMRC if you’re below the £2000 dividend threshold.


Yes but my point is the same, you checked after 2 weeks :+1: it will look very different in the long term for example using Apple as you mentioned

30 days up 11%
1 year up about 90%
6 years up over 400%

This is long term thinking and not what the theoretical money back is after 2 weeks :+1:


OK. How do I inform the IRS? My dividends might be £250 p.a at the very very most

Point. Still unsure how the dividends will pan out.

As for six years is 2027. I might be gone by then :slight_smile:

Why do you want to inform the IRS? The US takes their cut at source already, you won’t have to do anything.


This tax, which is only on dividends, is deducted by the US government before the dividend payment reaches you. The effect on you is that your income is slightly less than it otherwise would have been, but you don’t need to report it to anyone and you might not even notice it if you’re not paying very close attention.

You’re discovering, the ‘hard way’, that there are plenty of headwinds affecting investors, but do stick with it! It is worthwhile in the end!


You don’t need to, kind of.

Dividends from US stock are normally 30%, but the UK (and some other countries) have a discounted rate of 15%. That’s what the W-8BEN form you filled in when you registered was for. The 15% is deducted before it even reaches you. Once it reaches your account, it’s just like any other dividend.

If the dividend is from a stock in your ISA wrapper, you don’t have to worry about it at all. If it’s in a GIA, you only have to worry about it if the dividend payments for the year go above £2000.


Until it goes above 2k?

You should declare all dividends outside of ISA’s on a self assessment. HMRC sort it all out - you don’t need to contact US tax authorities.

The best thing to do is simply use an ISA.

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