Support for large investments?

Let’s say I have £400,000 to invest. That obviously goes beyond FSCS protection. Do Freetrade consider their platform safe enough to handle this much money? What is the likelyhood of Freetrade collapsing and me losing everything?

Technically, is it even possible to transfer that much money in? Will the app show that many zeros?! :sweat_smile:

If I wanted to invest it all in a particular trust or ETF, is there a way to know up-front if that’s possible? Technically in terms of the app? Can they run out of shares? Can we run out of sellers and end up noticeably increasing the price to buy them all over a too-long period?

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Nothing is guaranteed in life,but the fact they have a long term road map and are aggressively hiring for roles other than creative accountant means I don’t think their demise is imminent

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If you’ve bought shares then your investment is held in a nominee account. So if Freetrade the platform failed the nominee account should remain unless there’s fraud or something.

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Freetrade mention Beaufort Securities as the Elephant in the room regarding nominee accounts. That was in February 2018. Anyone know the outcome ?

Freetrade is a fully regulated broker, so they are as safe as you can be under FCA rules. As I understand it, cash is protected up to 50k. Investments are held in a nominee account on your behalf separately from the Freetrade. So in the worst case scenario you should see most of your money back, I said most because of Beaufort Securities last year ( btw I like that Freetrade included this in their blog post ).

In terms of large transactions, in theory there’s nothing stopping the app showing larger figures. However getting the money in/out might trigger all sorts of alarm bells at your Bank, plus most Banks don’t have a daily/weekly/monthly transfer limit to support that. But it’s not impossible to get them to lift those limits temporarily.

By the way it’s worth noting that you can only do 10k in one investment because beyond that there’s the PTM fee, which is not supported by Freetrade.

I think most ETFs would be able to support buys of that level, besides it would be 40 separate 10k transactions.

It’s probably a good idea to have a chat with Freetrade’s support, and see a financial advisor*

*this is how disclaimers work, right

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Are you investments protected under £50,000 or only cash ?

PTM levy explained http://www.thetakeoverpanel.org.uk/the-code/ptm-levy (is that the takeover panel’s official site?!)

Absolutely, Freetrade including Beaufort Securities in the blogpost shows there is no spin. Open and honest.

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Cash up to 50,000 is protected under the Financial services compensation scheme.

Investments are held in a nominee structure on your behalf, which means they are yours.

Unfortunately I have no idea what their official website is…

I think the fear of losing the small life savings people on low to middle incomes have is what stops most from investing at all. It’s not just the fear of losing money on the investment itself but also the broker experiencing problems etc. That is a shame as people are losing money in savings accounts earning interest lower than inflation.
I hope Freetrade will change all this with such low fees.
As Freetrade say themselves they are the new kids on the block.
As account numbers grow, profits grow, the app grows the trust will grow.

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Agree. Though not all risk/reward feels the same: there are a lot of people in the UK who are comfortable investing in houses. The tangibility of bricks, the familiarity of Kirstie and Phil, the apparent volatility of markets that are priced by the day/minute/microsecond… (So you wonder if REITS might be a gateway to investing for those people.)

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What about a closed ended investment company? Are the shares on the LSE that you can buy on Freetrade only ones being sold by other investors? How do you find out the likelihood of there being enough for sale?

I’m struggling with this hypothetical as if you had £400,000 why would you decide to only buy 1 particular trust or ETF? Diversification :grimacing:

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As long as you are buying a large scale EFT (Such as Vaguards FTSE All World Tracker) then there should be no issue with buying just one. These can contain hundreds or even thousands of underlying equities so they give you all the diversification you need

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The £400,000 is currently as non-diversified as possible (in a single property), so going to a single trust is a big improvement :wink:

Yes, I can and may diversify, but I basically need max yield dividends to get as much cash in hand per month as possible, and I feel like my options are limited anyway.

Separate to this I invest in a normal diversified portfolio for growth.

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I think you’d be best asking in app to be honest. They could probably advise better based on the specific fund you’re considering

I’m not sure how you’d find out how likely a Buy transaction will happen. Guess you’d try, and find out. It’s a bit academic though since the maximum single investment on Freetrade is £10,000 at the moment. Definitely worth asking Freetrade support for their take on it.

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The volumes traded are public. So for example 1.7 million shares of the Scottish Mortgage Trust were traded today. At £5 per share you’ve plenty scope to buy £400k worth in one go. At 4.35pm today someone sold £1.2m worth of them.

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Thanks all. Just to follow up, I contacted Freetrade support, and it looks like it’s all possible. There is that £10k limit per buy though, but it looks like I can queue multiple free buys of the same stock, so I think it can still be all done on the same day for free.

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