Winner of the 2020 British Bank Awards, Freetrade is regularly considered one of the best investment platforms in the United Kingdom. At first glance, there’s a lot to like about this platform. There are two beautifully-designed apps (one for iOS and one for Android), they claim to offer commission-free investing, and they offer fun features like fractional shares. The question is, of course, does Freetrade live up to its claims on its website? Let’s see with our in-depth Freetrade review!
Freetrade Review: Some Background Information
For those that have not heard of Freetrade, it is an investment brokerage based out of London. It was the brainchild of Adam Dodds, an immigrant from Canada, and Davide Fioranelli. Adam Dodds was surprised by the UK’s trading platforms’ overall quality, so he set out to create his own, competing with financial giants like Hargreaves Lansdown and AJ Bell.
Their goal was quite simple: to create a platform for investors that breaks down investing barriers. They wanted to make investing easy for people of all technical skill levels.
So, in 2016, the company started. It raised £1M in crowdfunding in 2019 and $15M (£10.8M) in Series A financing later.
As of right now, over 600,000 registered users use Freetrade for their investments. The app and site have grown immensely in popularity!
Who Can Use Freetrade?
As you may have guessed from the background information in this Freetrade review, this company targets UK investors. Specifically, you’ll need to be a UK resident for tax purposes and have a UK bank account.
One interesting exception to this rule is that US citizens cannot apply for an account even if they reside in or are also citizens of the United Kingdom. Likely this rule has to do with the sometimes demanding FATCA requirements that the US government has.
While Freetrade is looking into expanding into new markets, as of right now, the products they offer are UK-only.
What Does Freetrade Offer?
With that in mind, let’s take a look at what Freetrade offers prospective investors.
You can open up one of three different account types with Freetrade:
- GIA (General Investment Account)
- ISA (Stocks and Shares ISA)
- Freetrade SIPP (Pension Savings – click on the link to read our in-depth breakdown of what SIPPs are and how they can benefit your retirement!)
Freetrade also offers a subscription-based service called Freetrade Plus. The gist of this service is that you can access more stocks, get higher interest on your cash balances, and access a few more perks for £9.99/month. We’ll cover more about what you can do with Freetrade Plus and who should sign up for it later in this review.
Freetrade offers an iOS and Android app for trading. They also provide an “Invest Hub” centre for people to learn more about the stock market and trading in general.
There isn’t too much fancy with Freetrade. It’s a relatively straightforward brokerage that aims to make investing accessible for everyone!
Freetrade Review: What’s Good About This Platform?
There are four primary advantages of Freetrade over other similar brokerages.
First, you pay £0 in commission per trade. That’s huge when you consider that most investment firms charge anywhere between £8 and £12 per transaction. While this might not sound like a tremendous amount of money to save, it adds up – especially if you’re looking to average your investments.
To illustrate the power of £0 commissions, consider the following example. Instead of buying £1,000 worth of stock all at once, let’s say you take the approach of buying £100 per month for ten months. This way, you’ll spread out your investments. Accumulating wealth at regular intervals is usually one of the best ways to improve your financial future.
With Freetrade, at the end of your ten months of £100 investing, you’ll have invested £1,000. However, with Hargreaves Lansdown, you’ll have only put in £885.50 due to the commissions.
Now, let’s say your investment rises by 10%, and you decide to sell. With Freetrade, your account balance will be £1,100. With Hargreaves Lansdown, you’ll only have £956.60.
In other words, the stock will have risen by 10%, yet with the £11.95 commission brokerage, you’ll still be in the negative. With Freetrade, you’ll be ahead £100. That’s the power of £0 investing!
Freetrade also supports fractional shares! You can buy as little as £2 worth of any US stock (that’s the minimum order limit on the platform) and own a part of it instead of the whole thing. Let’s say you want to buy a share of Google, for example. That stock costs thousands of USD to own one share. However, with Freetrade, you can own part of a share and trade with that.
By providing investing with £0 commissions and fractional shares, Freetrade opens up so many possibilities. You can invest – profitably – by even putting £20 a week in stocks.
Low Foreign Exchange Rates
While Freetrade does not offer the lowest foreign exchange rates of any broker, it does offer quite competitive ones. The cost is the spot FX rate, plus 0.45%. This amount applies no matter if you convert £100 or £1 million.
By contrast, Hargreaves Lansdown’s rates look like this:
- The first £5,000 costs the spot FX rate plus 1.00%.
- The next £5,000 costs the spot FX rate plus 0.75%.
- The amount you convert between £10,001 and £20,000 costs the spot rate plus 0.5%.
- Finally, any amount you convert over £20,000 costs the spot FX rate plus 0.25%.
In other words, if you convert £20,000 at Hargreaves Lansdown, you’ll pay £137.50 above the spot FX rate. That rate is £90 with Freetrade. At £50,000, you’ll pay £212.50 with Hargreaves and £225 with Freetrade.
Unless you regularly convert tens of thousands of pounds, you’ll almost always be better with Freetrade than many other financial institutions.
Now, with that said, Freetrade does not have the lowest rates. For example, Trading 212 has rates that are the spot rate plus 0.15%. On those £50,000, you’d only pay £75 above the spot rate – much cheaper than most other brokerages! We’d recommend reading our Trading 212 vs Freetrade comparison for a more in-depth look at which brokerage is better.
Still, given that Freetrade has relatively low FX rates, that’s a pro for this brokerage!
No Account Minimums
Finally, Freetrade does not have account minimums. You can put as little as £1 in your account at the opening! Many other brokerages have a £100 or more minimum that you need to put in to open an account. The fact that you can even put £10 into an account and buy a fractional share is a massive win for people who want to start investing without necessarily putting up a lot of money upfront!
What’s Bad About This Platform?
Now that we’ve taken a look at the good aspects of Freetrade, let’s talk about the bad. While Freetrade is a strong brokerage, no place is perfect, and Freetrade does have some faults.
Freetrade only permits trades through the mobile app. While this isn’t necessarily bad for some people, it can feel a little limiting at times. The app is powerful and useful, but using your phone to trade can sometimes feel slower or more difficult (due to internet connections) than trading on your laptop or desktop. Again, this may not be a massive issue for some, but it can feel limiting.
The app also doesn’t have quite the same trading and research capabilities that some larger brokerages do. In terms of trading, you’ll get the bare essentials here, including a chart that shows you the pricing. You can select the time scale, enter your dollar amount, and hit buy or sell, but that’s about it. You won’t get any super in-depth knowledge from this app, nor can you implement any complicated strategies.
Similarly, in terms of research, there isn’t too much here. There’s a “Discover” section, but, again, you can find that type of help anywhere online.
In other words, Freetrade seems to have developed its product around the notion that the app would be the only way to trade and that it would be as simple and easy as possible to start trading. There’s no complexity or nuance here. For some people, that’s a good thing. For others, they’ll need to get their stock market news and more in-depth analyses elsewhere. If opening a web browser and pouring over comprehensive market data is how you want to trade, Freetrade is not for you.
A Word About Freetrade Plus
As you can likely tell already from this Freetrade review, there’s a lot to like about what Freetrade has to offer. However, complicating matters somewhat is the concept of Freetrade Plus. If you’re interested in an in-depth review of Freetrade Plus, including a discussion of whether or not it’s worth it, check out our comprehensive Freetrade Plus breakdown here.
Our review ultimately concluded it wasn’t worth signing up for Plus unless you have a lot of money in the Freetrade ecosystem. If you are looking to invest £50 a month, for example, in some stocks, the £9.99 per month fee is hard to justify.
If you don’t get Freetrade Plus, it’s worth noting what you can do on the platform without paying any money to Freetrade:
- Open a GIA (ISA and SIPP accounts both have monthly fees).
- Buy or sell certain stocks, including ones from:
- FTSE 350 (Large + Mid Cap)
- MSCI US Prime Market (Large + Mid Cap)
- All Vanguard + iShares + Invesco ETFs
- AIM 100
- IPOs & SPACs
- Transfer money to and from bank accounts.
- Place both Basic and Instant orders.
Free members cannot:
- Open a SIPP or ISA (without paying money)
- Buy or sell stocks from these markets:
- FTSE Small Cap (FTSE All-Share minus FTSE 350)
- FTSE AIM All-Share ex AIM 100
- S&P SmallCap 600
- Place limit and stop-loss orders.
- Earn interest on cash deposits.
As you can see, you can do quite a bit for free with this brokerage and most of the benefits that Plus provides people are not that useful to the average trader. If you find that you need more, you can always pay for Plus then, but most people will see the base level is perfectly acceptable, especially if you merely want a General Investment Account!
Freetrade Review: Can I Get Free Stocks with Freetrade?
One of the nice things about Freetrade is that you can get free stocks if you use the right link! That’s right, you can get stocks to start your investing journey entirely free by using this link to sign up instead of going to Freetrade’s site directly.
Of course, Freetrade is not the only stock brokerage to offer free shares as an incentive to register. Many other brokers are offering these shares. Here’s our short but handy guide for how you can get free stocks in the UK from multiple different brokers! We list how to get entirely free stocks from companies like Orca, Stake, and Trading 212.
Freetrade Is One of the Best Online Trading Platforms
What Freetrade does well, this company does exceptionally well, providing a comfortable, intuitive way to buy and sell stocks for free in the UK. Its name is perfect – Freetrade – because that is the primary reason to use this brokerage. To be honest, it’s tough to argue against this. Trading for free means more money in your pocket, and that’s always a good thing!
While there are some downsides (like the lack of in-depth market analyses and reviews), for beginning investors, there’s nothing out there as simple, intuitive, and as free as Freetrade. That’s why we wholeheartedly encourage all our readers to claim their free stock and at least give Freetrade a spin. You have nothing to lose. You won’t have to pay any fees or commissions if you don’t want to, and by signing up, you’ll at least gain one free stock!