What's the first stock / ETF you'll buy when the app launches?

[Vlad (Vladislav Kozub)]

Your example does not involve exchange rates. To make it very simple, I will assume £1 = $2.

If you invest £5,000 into VRAY, you will gain $10,000 less 0.5% → $9,950 (which will be presented as £4,975 in your portfolio). Assuming the FX rates remained as they were on the next day (£1 = $2), you sell the holdings for $10,149 ($9,950*1.02), which is £5,074.50. And after the sale is complete, you will end up with £5,049.128 ($10,149 into GBP less 0.5%).

Frankly, you will always be exposed to 1% exchange commission, but at least you always get the best rate, unlike (probably) with DeGiro. And as Alex has said, staying longer will make this 1% negligible as it does not scale as much with your return growth, so you could treat it as 1% commission.

Apologies for a misleading in terms of the “commission”. I will quote Rob Sexton explaining the rationale behind it being called Interbank rate + 0.5% and not commission per se.

@Rob

The point I was trying to get across is Freetrade does not get 0.5% commission from the conversion. The interbank rate is the rate that banks can transact at, and no one other than a bank can actually get this - everyone will pay interbank+x%. Even someone like Revolut, who provides the Interbank rate to customers, will not be getting that itself (as whoever it uses to convert will need their cut!), and will be absorbing the cost difference.

This is in contrast to the Mastercard rate, which is available to the general market, and which people like Monzo offer.

So we have chosen to give you certainty over the rate you will pay, rather than the approach most take which is the best rate they can get plus a percentage.

I hope that would make it clearer.