Freetrade is a relatively new entrant to the UK and European investment markets but the company is already causing a stir with its disruptive and highly enticing proposition.
Offering completely commission-free trades, no minimum deposit and doing away with almost every kind of fee traditional brokers charge, Freetrade brings the opportunity to invest in the stock market to everyone.
I've used each of Freetrade's products and have one of my investment portfolios on their platform so I wanted to put together a comprehensive review including how it compares against alternatives like Trading 212 or eToro.
Freetrade is one of the best investing platforms available in the UK and Europe. It offers experienced investors and those new to investing commission-free trading, no minimum deposit and a super easy to use app that comes with a few limitations.
If you decide to open a Freetrade account, you can get a free share worth up to £200 by using my referral link: https://magic.freetrade.io/join/sasha-yanshin. You will need to sign up for an account and make a deposit to qualify. I will also get a random free share for sending you their way. If you don't use the referral link, you won't get a free share.
Read on to find out everything I love about Freetrade and some quirks I am really not a fan of.
If you want to watch a video instead of reading, I have a detailed Freetrade review on my YouTube channel so feel free to check it out.
How much does Freetrade cost?
Before going through all the detail, let's cover perhaps the most important aspect and one of the main reasons why you may be interested in Freetrade - pricing.
Freetrade offers a platform where most of the fees you may be used to paying elsewhere don't exist however their app is not entirely free.
Unlike Trading 212, eToro and some other competitors, Freetrade does not offer any CFD trading. This feature enabling customers to carry out leveraged trades elsewhere earns significant revenue through fees and is often used to cross-subsidise other parts of the platform.
With Freetrade, the business model is a bit more transparent but it does mean that you may need to pay some fees.
|Freetrade Account or Feature||Cost|
|General Investment Account (GIA)||Free|
|ISA Account||£3 per month|
|SIPP Account||£9.99 per month|
|PLUS Account||£9.99 per month|
|Foreign Exchange fee||0.45% on top of Spot Rate|
|Account Management Fee||Free|
There are only 4 different types of charges you may have to pay as it stands: monthly fees for ISA and SIPP accounts, a monthly fee for the Plus account (more on what you get for that £9.99 further down!) and the Foreign Exchange Fee.
The 0.45% Foreign Exchange Fee is levied each time you trade in a currency that is different to the one in which cash is held in your account. So if you are based in the UK and you buy U.S. stocks. you will be 0.45% down on the investment the moment you press the "Buy" button.
Remember that the same applies when you sell so (simplifying things a little here) you'll lose 0.9% on any U.S. stocks by the time your invested money is back in your account as cash.
Freetrade account types
Freetrade offers 4 different account types on its app. Three of them are different types of investing account - their General Investment, ISA and SIPP accounts while the Plus account is a paid option that provides additional features and discounts to the other 3.
Freetrade General Investment Account (GIA)
The Freetrade General Investment Account is the standard option for those who want to use the app to invest in stocks and shares.
The Investment Account offers a very broad range of stocks, ETFs, bonds, trusts, REITs and commodities including all the mainstream popular shares traded on the world's most popular stock exchanges:
- MSCI U.S. Prime Market 750 (300 large cap and 450 mid-cap U.S. companies traded on different U.S.)
- FTSE 350 (100 large cap and 250 mid-cap companies trading on the London Stock Exchange)
- AIM 100 (Largest companies trading on the London Stock Exchange Alternative Investment Market)
- IPOs and SPACs (Companies first going public and special purpose acquisition companies)
- All Vanguard, iShares and Invesco ETFs
- And selected other companies and markets
Freetrade ISA Account
The Freetrade ISA account is very similar to the General Investment one above with 2 key differences.
The first is the obvious one - the Stocks and Shares ISA account allows you to invest money in the markets tax-free. In the UK you are allowed to deposit up to £20,000 into ISA accounts every year and you can invest all or part of that into a Stocks & Shares ISA.
Any gains from your portfolio will not be subject to UK dividend, income or capital gains taxes. So if you invest £20,000 and your portfolio balloons to £100,000, you can withdraw that full £100k without having to pay a penny to HMRC.
However, as with all Stocks & Shares ISA accounts, you still have to pay some other taxes such as the United States Withholding tax on dividends (which is 15% after Freetrade complete the W-8BEN form on your behalf to reduce it from 30%) and UK stamp duty (0.5% on any UK stocks purchased).
There is one limitation on the ISA account vs. the regular investing option - you can invest in less stocks in a restricted number of markets.
This is due to government legislation which places these restrictions so you won't be able to invest in hot stocks that trade on non-core markets such as the popular electric vehicle start-up NIO.
Freetrade SIPP Account
At the point of writing, the Freetrade SIPP Account has not been publicly launched although in the interest of giving you the best information possible, I managed to get a pre-release invite to test it out.
The SIPP Account is a type of UK pension that provides you with much greater flexibility on where your money is invested. Instead of picking from a very small number of in-house funds, you can pick your holdings from a much broader choice.
As with ISAs, the choice is extensive, but there are some restrictions on the types of investments you are legally allowed to hold within a SIPP account - all the mainstream U.S. and UK share and ETF options are available.
You can deposit money directly into the SIPP account with the UK government topping up the difference for basic taxpayers and anyone paying Higher or Additional tax rates being able to reclaim the extra through the annual Self Assessment process.
Transferring your pension into the Freetrade SIPP
You can also transfer a number of different types of pension into the SIPP. At the time of writing, only pensions with fixed monetary values are accepted (e.g. Defined Contribution).
Pension schemes that are linked to final salary, prescribed benefits or other perks that are not implicitly quantifiable in value cannot currently be transferred.
The transfer process is quirky - you have to go through a chat process where one of the customer service agents will ask you the details of the pension account you want to transfer. It can take a while - especially if you try doing it outside regular working hours and after you complete the conversation, expect the transfer to take a few weeks to complete.
Freetrade Plus is the least straight-forward of the different accounts that Freetrade has to offer, not least because it really isn't an account in its own right.
It is a premium tier of Freetrade that provides additional benefits and discounts to the other 3 accounts for one all-inclusive sum of the monthly £9.99 fee.
Freetrade Plus customers get two key discounts on other account fees:
- ISA accounts can be opened for free (instead of £3 per month)
- £2.99 discount on SIPP accounts (that cost £7 per month instead of £9.99)
The Plus account enables a few additional features that are very handy. However these are usually included in basic investing accounts with other providers so I am not a fan of having to pay £9.99 to access features like limit orders, for example.
|3% Cash Interest||Payable on funds in the account that are not invested.|
|Limit Orders||Ability to buy or sell a security for a specific price or better.|
|Stop Losses||Order to buy or sell a security if/when the price reaches the set target.|
|Priority Customer Service||Because you're worth it.|
I'll be honest - I am not convinced by the Priority Customer Service for two reasons. First - their existing customer service is already pretty good so I am not sure exactly what the Plus account offers that is better.
Also I am not a fan of innovative tech companies like this differentiating between how different customers are treated based on price.
In addition to all of the above, Freetrade Plus also opens up more stocks with a particular focus on small cap companies:
- FTSE All Share companies (c. 250 more London Stock Exchange companies on top of the 350 already available)
- All AIM stocks (in addition to 100 already available subject to meeting liquidity and free float requirements)
- S&P SmallCap 600 (U.S. companies with market caps of $700 million to $3.2 billion)
- Some additional curated collections
Opening a Freetrade account
Opening an account with Freetrade is really easy and very fast. You'll need to answer a few basic questions and your account will be set up immediately after.
Remember that if you use my referral link (https://magic.freetrade.io/join/sasha-yanshin), you will also get a free share worth up to £200 when you sign up and make a deposit. I'll get a free share as well as an affiliate, but if you don't use the link, you won't qualify for a free share.
I have a whole video where I go through the sign up process live on screen so if you're interested to see what it looks and feels like, check it out on YouTube: https://youtu.be/FIpgYagc94s
In order to sign up, you will need to do the following steps:
- Provide your email and then confirm it
- Set up your passcode and Touch ID
- Your full name
- Date of birth
- National Insurance number (or respective local tax identification number)
- Confirm W-8BEN details (stating that you are not a US citizen or tax resident so you can qualify for a reduction in the US dividend withholding tax)
That's it! The process is really quick if everything goes to plan although if Freetrade can't automatically verify your identity details, they may need to follow up manually which will take longer.
Making a Deposit on Freetrade
There are two different ways to make a deposit on Freetrade. Both options are free, but work in different ways.
- Bank Transfer - Make sure you follow instructions within the app to ensure the money reaches your account. Bank deposits are processed from 8 AM to 8:30 PM on working days and can take a few hours so allowing for the fact that your bank might take a while to actually send the money in the first place, this process can take more than a day.
- Apple Pay - A very quick way to deposit money from any payment method that works with Apple Pay but you have a lifetime limit of £1,000 that you can add to your account this way.
Remember that if you use Apple Pay, you can only withdraw money to a bank account. If you didn't use the bank account to make a deposit in the first place, it may take some time to complete the necessary fraud verification checks before you can withdraw your money.
Minimum Deposit Amount
In my opinion this is one of the best features of Freetrade as it allows virtually anybody to get into investing without needing a huge amount of money to get started.
There is technically no minimum deposit at all so you can put in any amount of money you feel like although remember that you have to commit at least £2 per trade so you'll want to deposit at least that much to be able to buy any stocks.
How does Freetrade work?
Most of the basic functionality of Freetrade is very straight-forward. I have explained above and below how some key things work like setting up your account, depositing money and making trades, but there are a few other things that I have noticed in using the app that I wanted to focus on as well.
- Freetrade is only available on mobile as an app. Although I do like the app and it's easy to use, I prefer having the choice of using an app or a browser-based option that most other platforms provide.
- Although Freetrade does offer them, fractional shares are not available for many popular stocks. For example - fractional shares are not available for buying Vanguard S&P 500 ETFs.
- The fractional shares that are available, don't have enough precision to allow exact trades to be made. This is not a huge deal but it means that if you want to invest a fixed amount into a stock, you will usually have a few pennies left over when the platforms rounds down the amount you can invest to the nearest available option.
- Freetrade does not show any company performance data. This means that you have to do all your research prior to making investments off the Freetrade platform and is not a great user experience.
Buying stocks on Freetrade
Buying and selling stocks on Freetrade is somewhat quirky - dependent on when you are making a trade there are two different types of trade available that work in slightly different ways:
|Instant Order||If making a trade during the opening hours of the respective stock exchange, the trade will be executed within seconds at the best available price.|
|Basic Order||If you make a trade at any time outside the market opening hours, the trade will be executed at or shortly after 3 PM on the next working day.|
The Basic order rule is slightly odd - the trade will not execute at the end of the next working day as with some platforms or the moment the market opens (as with Trading 212), but instead it'll happen at the arbitrarily chosen time of 3 PM.
Some interesting quirks
In using the app, I have picked up a few additional quirks that I wanted to point out.
- The Insights tab is pretty much pointless as it doesn't really do anything and shows very little. I feel that this tab doesn't really need to exist - it could just be a submenu that can open from the Portfolio page when you click on your balance.
- The Activity tab is super basic and shows everything you have done with your account in one giant list. It's not at all user friendly and you cannot filter by types of transactions or make much sense of it if you have a lot of entries.
- The Discover section is really neat. It shows you a large number of different categories and groupings of stocks which is perfect for browsing and giving you food for thought. You'll find everything from grouping by industry to companies with female CEOs.
Is Freetrade good?
Overall, Freetrade is an amazing investing app that is doing a lot to change perceptions and availability of investing for regular people.
The transparent and near-free platform makes it super easy for anyone to get started and from the amount you have to deposit to not having to pay £12 per trade as you do with some of the old platforms, investing has never been this accessible.
Although there are a few downsides like not having performance information on individual companies and the app still needing some improvements in features, it's already offering something that goes above and beyond offerings by much more established competitors.
I firmly plan to continue using Freetrade as part of managing my portfolio and will focus the investments here on UK stocks in the future as this is where the best value is provided (you can trade these completely for free with only the UK stamp duty tax of 0.5% on BUYING ONLY applicable).
Freetrade vs Trading 212
Freetrade and Trading 212 are the 2 main disruptors when it comes to investing platforms in the UK and Europe. Both are streets ahead of all the main competition including Hargreaves Lansdown and AJ Bell in terms of cost and features.
Both offer trades with zero commission and without punitive monthly account management fees and both allow you to begin investing with any amount you want (£2 on Freetrade vs. £1 on Trading 212).
There are a few subtle differences between the platforms to be aware of:
- Trading 212 offers a CFD account within the app - Contracts for Difference are a leveraged trading product where the vast majority of customers lose money and is something that is not advisable for anyone who does not fully understand how they work. Freetrade does not offer CFDs.
- Freetrade charges a 0.45% Foreign Exchange Fee for any trades carried out in a currency other than the currency of your account (in my case British Pounds). Trading 212 does not charge any fee for exchanging currency.
- Trading 212 offers a free ISA account whereas Freetrade charges £3 per month.
- Trading 212 currently offers more than double the number of different stocks available on its platform with over 10,000 to choose from compared to 4,000 for Freetrade.
- Trading 212 has in-depth performance data for available stocks with historic balance sheets, cash flows and P&Ls. Freetrade doesn't provide any performance data.
The Freetrade app is very popular with its users which reflects in the large growth the platform has experienced starting from 2020.
On the Apple App Store, Freetrade has received an average rating of 4.7 out of 5 from over 10,000 reviews at the time of writing.
At the same time on the Google Play store the app scores 3.6 out of 5 from over 2,000 reviews and 4.0 on Trustpilot although most of the reviews on there seem to be spam.
Through scanning a few hundred reviews, the following seemed to come up time and again as particularly strong points that customers really like:
- Very easy to set up and use
- Low cost compared to traditional investing apps
- Availability of fractional shares
- Active and very engaged community
Along with the pros, I noticed some recurring themes in customers' reviews about things they didn't like:
- Lengthy deposit process
- No information or data provided about company performance of the available stocks
- Share prices lag slightly compared to some other platforms
Is your money safe with Freetrade and is it legit?
Freetrade is a UK-based company and it is fully authorised and regulated by the Financial Conduct Authority.
This means that the way Freetrade deals with customers' funds and the way the shares are held on customers' behalf has to adhere to a number of stringent rules which provide an increased level of protection.
Your money has to be kept in specific types of bank accounts that Freetrade does not have recourse to without the customers' explicit authorisation and shares are kept on behalf of customers with a large intermediary broker.
In addition to the above, as with other regulated trading apps, Freetrade is part of the Financial Services Compensation Scheme which means that any funds held with Freetrade are protected for up to £85,000 by FSCS.
It's important to note that this protection covers both invested funds and cash so whatever state your account is in, that protection from the UK Government body still applies.
Freetrade is one of a small handful of new investing apps that is significantly disrupting the UK investing market.
The app is almost completely free with no commission and no account fees for the regular investing account although the 0.45% charge on investing in US stocks means it is more expensive than Trading 212, although still cheaper than almost every other available option.
The user interface is very nice to look at and simple, but it also lacks a number of important features such as providing company performance information with others hidden behind the Plus Account paywall (limit orders and stop losses).
Freetrade is great for those who don't want to use a company that offers CFD trading and is great for those looking to invest in UK stocks or UK-based ETFs as you can invest in these without any Freetrade charges at all.