Hi, first of all want to say I really love the idea of Freetrade and think you guys have done a great job so far. Every bit of me wants to see you exceed and do well.
The reason I am posting this is I want to understand why I should choose Freetrade, as I understand you offer free investment for execution at 4PM the following day. Given that there is already another UK broker who offers completely free trading with instant execution and plans for another big (and completely free) broker from the US to enter the UK market, what is the benefit of joining Freetrade? Do you plan to change your pricing policy as you grow?
My biggest issue with my current broker is their limited selection of instruments and wideish buy / sell spreads. I signed up to Freetrade to see if it’s any different but so far I can’t see it being any better. So at the moment I don’t have any reason to switch.
So what makes Freetrade better (or will make it better)?
By default the trades are placed at 4PM of the day the order is placed, provided the order is placed before 4PM. They are executed in the following day if the order is placed after 4PM, or if the order doesn’t go through by any reason.
Freetrade’s purpose is to help long term investors, separating it from nearly all other brokers who mainly encourage trading. I think the portfolio chart over time (while not perfected) is unique amongst stockbrokers and shows where FT is heading. It will soon compare you portfolio against a benchmark and release it’s analytics tab giving you further insights (perhaps identifying risks) as well as an autopilot feature to rival Robo-Advisors, giving you control and without the excessive costs. If you’re a long term investor it is sensible to go with a company that is built for your needs.
Built for long term investors
Clear, simple and low pricing
Transparency and community focus
Shares priced in pounds and pence, rather than just pence
Autopilot robo like service (in progress)
Analytics tab (in progress), portfolio chart against benchmark (in progress)
Further innovation (any secret plans! )
I think T212 will follow a similar path to IG: it will lure customers in with low commissions and then pressure them into trading frequently or using CFD products (where 80% of clients lose money and they make a lot). E.g. IG introduced a custody charge £24 per quarter for customers unless you use CFD’s/spread betting or trade frequently. The T212 app’s confusing, particularly for new investors, CFD’s and real shares are muddled in together looking the same. I have no doubt it’s luring some investors into using CFD’s and that they’ll be losing money
has a £100 minimum deposit. Unfortunately, this is also a barrier to entry for too many people.
With Freetrade I can start with as little as £1 or even £0.01. One penny. Of course with one penny I can’t buy much if anything, but that’s not the point. The point is, generally speaking, the barrier to entry has been removed.
Also, in the near future, Freetrade will have fractional shares. I think this is huge. A huge incentive. I can buy £20 worth of Amazon, or Tesla, or Jonhson’s & Johnson’s. Or £1 worth of Apple or EssilorLuxottica.
Everybody has different wallets, or different pocket sizes, or different cash flow streams. Everybody has the ability to save money every month. Just different amounts.
I’ve looked into quite a few brokers myself. And they all have charges, one way or the other. And that’s because they have expenses and profit targets. Nothing will ever be completely free. Look at Robinhood the
A few years back I considered opening an account with Vanguard and get one of their tracker funds. In the end I didn’t because there were a montly minimum deposit of £100.
Once again, welcome to the forum and feel free to share the name of the other stock broker.
If you consider Freetrade it’s not the best option for your personal circumstances I think that’s ok. I wish you well and a boat load of profits in your investment journey, regarless of your chosen broker.
Yes I was referring to Trading212. Also, Robinhood (who are even better than Trading212) which seems to have a very similar business model are also looking to enter the UK (still mostly strong rumours though).
I’ve been with Trading212 from the first day when they opened up their commission free trading, they’ve been very open that their plan is to have people come in via their commission free shares and hopefully that will encourage those same people to go and use their CFD platform as well. There is no pressure from Trading212 to force you to do that and if anything they have relaxed their rules more and more over the past several months to make it even easier.
Minimum Deposit: Used to be GBP 100, dropped to GBP 1 during promotional period and now GBP 29. Withdraw and Deposit Fees: Used to have these, now completely removed except bank transfers.
Inactivity Fee: This used to be in place but they removed it from the Invest accounts and it only applies to CFD accounts now. Single buy order minimal value: GBP 10 - this never used to exist but they added this new restriction in recently.
Generally, I find the Trading212 platform inadequate to help me make my long term investments and I rely on data and charts from third-parties heavily. If Freetrade can provide real good tools for long term investments then you’ve won half the battle. The other half is getting rid of your fees and finding another way to make money.
Also, in terms of transparency and your USP. When I go to your homepage, the first thing I see is “Freetrade” and “zero-commission free trading”. It instantly implies to me that your just like your competitors, you offer free trading and I thought that was cool. But then when you look into it and find out it’s only on the 4PM buy/sell orders, it kinda defeated the purpose for me. Just my view anyway.
Two or three years ago I was visiting Vanguard’s website. I wanted to buy into a tracker mutual fund for, back then, I didn’t want to go the ETF route.
Thinking of it, I don’t remember exactly if the minimum monthly deposit was in the context of their GIA account, or the ISA account, or the specific fund I was looking for. All I can say is, back then, I was under the impression I would have to deposit £100 every month. I’m not sure I can commit to that.
Now you say
When I read what you wrote I get the impression what you are saying is:
When setting up an account with Vanguard, you have to set the minimum (monthly?) amount to £100. Once your done with the setting up process your account is created. You can then go and change the minimum even to £0 or £1 if that’s what you want.
If this is what you meant, I wish I had that information back then.
Yep, it’s probably because they don’t want people putting in less than a £100 and definitely give the impression that £100 is the minimum monthly. The only way you’d know otherwise is if someone told you.
In my personal opinion Trading 212 are miles ahead of Freetrade atm, however I chose Freetrade because I like the fact that they are long term looking. They have a wonderful community, the staff are kind and understanding whilst also reply to the demands of the consumer. Once they get over the bottleneck of the Stock Universe and other minor features, which are all fixable, I believe they would be the best option on the market!
What I think is we live in a free world. Everybody has it’s own opinions, experiences and expectations.
Robinhood sells their costumers trades to high frequency trading companies, which increases the costs per share a few cents. Every company will have to charge something somehow in order to cover costs and make profits.