A UK based financial technology (fintech) company, since 2016 Freetrade has been offering the chance to trade in stocks and shares, commission-free. Once seen as something only for the elite, Freetrade has opened up the world of dealing in stocks and shares to the masses. With around 500,000 active customers, Freetrade has allowed beginners and experts alike the chance to increase their wealth through commission-free trading.
The trading tools offered by Freetrade allow users to invest in stocks and shares in the US and the UK, exchange-traded funds (ETFs), and investment trusts. Freetrade aims for a simple experience and steers away from the more risky contract for differences (CFDs) and cryptocurrencies.
There are of course other trading platforms available such as Trading212, so let’s have a look at what makes the Freetrade platform stand out from the other options out there and consider if it is worth taking the plunge and opening a Freetrade account.
What’s on offer on the Freetrade platform?
By utilising the Freetrade website, or the award-winning mobile app, users are able to invest in various markets. With as little as £2, you are able to invest in UK stocks, US stocks, ETFs, and investment trusts. With the share dealing side of things, Freetrade offers fractional shares. What this means is that no matter what your budget you are able to invest in giant companies such as Tesla, Apple, and Google. This is possible because rather than buying a whole share, which may be out of some people’s reach, the Freetrade platform allows you to buy just part of a share.
As we have seen, Freetrade does not deal with CFDs. While some people may see this as a negative factor, the truth is that CFDs are extremely risky. Even seasoned professionals can experience substantial losses when trading CFDs, so by excluding these from its offerings, Freetrade is ensuring that it is an investment platform that is suitable for everyone. Of course, there is always an element of risk with any form of investing, but CFDs are exceptionally high-risk.
Where some fintechs are lacking is in terms of the security of their users. The Freetrade platform, we are pleased to say, differs here. Freetrade is authorised and regulated by the Financial Conduct Authority and is backed by the Financial Services Compensation Scheme (FSCS). This means that, just like a bank, your funds are protected up to a maximum of £85,000. In the unlikely event that Freetrade ceased to exist, your funds are safe.
As the name suggests, the Freetrade platform allows its users to trade for free. There are also other options on offer, so let’s have a look at the choices that you have when investing with FreeTrade.
What are the Freetrade account options?
The headline grabber from FreeTrade is that you can trade stocks and shares commission-free. This is certainly the case on the Freetrade platform and you can do this with the general account that is on offer. Here’s a brief overview of all of the accounts that you can access.
The general account allows users to trade US and UK stocks, ETFs, and investment funds, commission-free. Users can trade instantly during the times that the stock markets are open and can invest from as little as £2.
A Freetrade plus account costs users £9.99 a month. This allows you to access all that is on offer with the general account, but it also opens up the chance to choose from a wider selection of stocks and shares. Additionally, users also earn 3% interest on any cash in their accounts each month.
Freetrade stocks and shares ISA
For £3 per month, users can choose to invest in a Freetrade stock and shares individual savings account (ISA). Gains on trading activities are subjected to the relevant level of tax and investing in an ISA can mitigate how much tax you may need to pay. You can currently invest up to £20,000 a year tax-free into an ISA.
Although not available just yet (you can sign up to join the waiting list for launch), Freetrade is also offering a self-invested personal pension (SIPP) option for its users. A SIPP provides an ideal way to consolidate your pensions into one pot and to continue to invest in stocks and shares to increase its worth. There is also tax-relief applied at 25% that makes this an attractive option. Freetrade will be charging £9.99 a month for this, but if you are already a Freetrade Plus user, this reduces to £7.
Does Freetrade offer free shares?
Freetrade is looking to grow its platform and it is clear that it wants to open up the world of investing, making it accessible to everyone. One way that it goes about achieving this mission is by offering its users the chance to claim shares, for free. If that sounds appealing, let’s have a look at how it actually works.
To be allocated free shares, you must first download the Freetrade app. This is available on iOS and Android, so matter what device you own you will be able to do this. Once you have signed up and made a deposit to your account, you will also need to complete a form called W-8BEN. This allows you to trade on the US market.
Once you have completed these steps, you’ll see that there is a button that says ‘free share’. Clicking this will generate a referral code. Send this to your friends and family and once they have completed the same steps, you will both be rewarded with a free share. This could be in either a US or UK company, and the value of the share could be anything from £3 up to £200.
You can repeat this step as many times as you like and, once your friends are signed up they can do the same. Any free shares can be held, or if you choose you can sell them instantly. It takes 30 days to access the funds but it is a great way of generating some cash quickly and, more importantly, risk-free.
How to use the Freetrade platform to invest
The Freetrade website is a great source of information, but you’ll need to download the Freetrade mobile app to be able to invest. The website itself is simple to use and easy to navigate. As a relatively young fintech, its design seems to be made to appeal to millennials and Generation Z.
The Freetrade website also has great FAQa for most sections, as well as handy guides on how to get started investing. It does really feel that Freetrade does all that it can to do away with all of the complexities and mysteries surrounding the world of investments.
The Freetrade mobile trading app has much in common with the website in that it is easy to use and navigate. Signing up took less than a minute and all that was required was a name, date of birth, address, and national insurance number.
The Freetrade app allows you to instantly see an overview of your portfolio, as well as making it easy to search for shares that you may have an interest in. Allowing the app to send alerts means that you will be notified when there are any significant changes to your portfolio as well as receiving news on what’s going on with other markets.
What fees are there with Freetrade?
Freetrade is known for the fact that it allows people to trade with zero-commission. Ordinarily, when trading stocks and shares users would be subjected to a variety of fees. The sort of fees that you’d usually see take the form of commission, spreads, financing rates, and conversion fees. Other platforms also charge you withdrawal fees. Just knowing this alone makes it apparent that Freetrade can save you a significant amount in fees alone.
By using the Freetrade platform you will see that there are no commission fees, no fees to make a withdrawal, and no fees for your account being inactive. There are fees to converting a currency and this is currently charged at a rate of 0.45%.
How does Freetrade make money?
When it comes to a Freetrade review, most people focus on the fact that they can trade, for free. Sometimes though, this makes people a little dubious as they stop and consider how the company actually makes any money. After all, Freetrade is a business and just like any other business it needs to be profitable. Fear not, there is nothing in the small print to catch anyone out!
With the general account option, users can trade for free of fees for life. As we have seen, the Freetrade platform also offers paid options such as Freetrade Plus, Freetrade stocks and shares ISA, and the upcoming Freetrade SIPP. These are premium products with monthly subscription fees and this is where Freetrade makes its money. There are clear benefits by signing up to any of these, but there is never any pressure to do so and you can continue trading for free.
Given that Freetrade markets itself on the fact that you can trade for free, it is unlikely that there will be any changes to the general account that is offered, and by signing up you will be able to continue to trade for free.
How can I open a Freetrade account?
If you have perhaps liked what you’ve seen so far in this Freetrade review, then maybe you’d like to take the plunge and open your own account. The whole process of opening an account is easy and hassle-free. Opening our account took less than 2 minutes, although it could take a little longer if Freetrade is unable to verify your identity.
If you want to learn more about the options on offer, or to learn more about trading itself, it is well worth visiting the Freetrade website before you register an account. The information available makes trading simple for beginners and also ensures that you fully understand any of the associated risks. Once you have taken a look here, it is time to download the app.
The Freetrade mobile platform can be downloaded on both iOS and Android, so by going over to your app store of choice, find and download the app. You’ll be asked for your email address, which you will need to confirm before you can proceed, and then you’ll need to provide some personal details. Once you have provided your name, date of birth, address, and national insurance number, Freetrade will attempt to confirm your identity. In our case, this was almost in an instant and we were good to go.
How to make deposits and withdraw from Freetrade
Investing with Freetrade can be done with as little as £2, but before you are able to do that, you’re going to have deposit some funds. As it stands right now, Freetrade has 3 ways that you can make deposits: bank transfer, Apple Pay, and Google Pay. Apple and Google Pay both allow you to make deposits up to £250 and the funds show in your Freetrade account instantly. Bank transfers take a little longer.
Even if you choose to make deposits with Apple/Google Pay, you will still need to link your bank account to Freetrade so that you can make withdrawals. When you make a deposit with your bank account, assuming you are doing this between Mon-Friday and 0800-2030, the funds will show in your account within 2-4 hours. Any deposits made during the evening or over the weekend, won’t appear until the next working day.
The number of deposit methods may appear slightly limited, but this is fully intentional on the part of Freetrade. The business model offered by the Freetrade platform means that it needs to keep costs down. If it were to offer card deposits or other methods, this would increase Freetrade’s operating costs which would of course need to be passed on. Freetrade operates as it does to ensure that it can remain free to use.
How is Freetrade’s customer service?
Any Freetrade review needs to cover the level of customer service that is on offer. Given the nature of investing and trading, customers need to know that they can reach out to a platform and receive assistance should it ever be needed.
When it comes to making contact with Freetrade, there are 2 options: email and an in-app chat function. Using the email options sees a response within 3 working days. By clicking on the chat function in the app, you will see your likely waiting time for a response. When we tried this we could see that we could expect a reply within 2-4 hours and that there were 25 agents currently working. Given that this was a Sunday afternoon, this was quite impressive.
Aside from contacting Freetrade for assistance or advice, the FAQs across the site really are a great starting point. You should find that most queries can be resolved by using the search function. As well as this, there is also a community forum on the Freetrade website. On here you can get help from other users, but there are also team members from Freetrade online. All in all, there are plenty of ways to seek help as and when you may need it.
Is the Freetrade platform suitable for me?
Freetrade states that it wants to make investing “simple, beautiful, and free,” so this means that the chances are that the platform is suitable for you to begin investing. The Freetrade mobile app really does mean that anyone can successfully invest in stocks and shares: this is no longer something that is reserved for the ‘special few’.
If you are a novice when it comes to investing, Freetrade has you covered. It has guides that take you by the hand and teach you all that you need to know to get started. The guides are also useful for those who are more experienced. The Freetrade app is also very simple to use meaning that even if you have a slight aversion to tech, you can still use this with ease.
As we have seen, no one needs pots of cash to get started. Investments start from as little as £2 which means investing really is opened up to the masses. You may think that £2 is unlikely to allow you to invest in anything of value, but as we have seen, by taking advantage of fractional shares, it is more than possible to own a piece of huge companies such as Tesla and Apple.
What makes the Freetrade platform a great way to trade markets is that it steers away from CFDs and cryptocurrencies. Whilst these are worthwhile in their own right, Freetrade recognises that they bring high risk and a level of complexity that is unnecessary. This is all part of Freetrade ensuring that trading is simple.
The main features offered by the Freetrade platform
This Freetrade review has covered a lot of ground so far. What might be useful is a quick recap and summary of the main features that Freetrade users can benefit from:
- Investing starts from as little as £2
- Fractional shares allow you to invest in bigger companies
- The general account is fee-free forever
- The ISA option allows you to invest in a tax-efficient way
- The upcoming SIPP option allows tax-efficient pension planning
- The Freetrade Plus account opens up more trading opportunities
- There are no deposit or withdrawal fees
- The referral programme allows you to claim free shares worth £3-£200
Bringing it all together
This Freetrade review has highlighted that the Freetrade platform offers a great opportunity to get started in investing. The mobile app is visually appealing and easy to use, meaning that anyone can master trading the markets. The offer of free shares makes it easy to begin building a portfolio with no financial risk. Unlike other platforms, you are not limited to the number of free shares you can receive. You can keep bringing in referrals and assuming those people make a deposit you’ll continue to receive free shares.
The Freetrade platform does all that it promises to do. The company mission is to open up trading the markets to everyone in a simple way. Just visiting the website and downloading the app will allow you to see that Freetrade delivers here. The easy to navigate app and a clear overview of your portfolio make using the platform a joy.
Beyond just looking good and being easy to use, perhaps more importantly the Freetrade platform is safe and secure to use. It is not uncommon for modern fintechs not to have any backing or security for their users. What makes Freetrade different to many is that it is regulated by the FCA and registered with the FSCS. This gives users confidence a real boost as they know that should the unexpected happen, there is a level of protection that isn’t always found elsewhere.
If you have ever toyed with the idea of getting involved with investing, but have been put off by the levels of money involved, or the complexities that surround market trading, then Freetrade is definitely for you. The Freetrade platform has successfully removed all of the barriers that usually exist to entry. Low minimum investments, fractional shares, and an easy to use app truly mean that trading is now for everyone.
The Freetrade app is available on iOS and Android meaning it can be found in your relevant app store.
Yes. The general account allows you to invest and trade with zero fees. The monthly subscription options are not mandatory although you may choose to take advantage of them at a later date.
Yes. Freetrade is already trusted by over 500,000 users and users can take confidence in the fact that it is FCA regulated.