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Freetrade review – the best commission-free platform?

14–17 minutes to read

In this Freetrade review, we are going to look at why commission-free trading platforms are gaining in popularity. With the promise of zero-fees and removing traditional obstacles to investing, they seem particularly attractive to those just starting their investment journey.

But what actually is commission-free and is it really free? In fact, is it even legit? And is your money protected if the platform goes under? All valid questions. So, before you take the plunge, this is what you need to know.

What is commission free trading?

Commission-free trading is when the investing platform you use does not charge you a broker fee when trading stocks and shares.

Traditionally, brokerage platforms (where you buy and sell your stocks and shares) will charge transaction fees each time you buy and sell. So if you buy and sell frequently, these charges can really add up.

In addition, some platforms offer a fixed-fee service, where for a set monthly cost you can make a certain number of trades.

Debate rages about which is the cheapest and we’ve written a post to answer this and help you decide which investment platform is right for you.

However, either way, it usually costs you money.

For this reason, a new wave of commission-free trading platforms such as Freetrade are now on offer. These don’t have the traditional fees and are appealing because on the surface, at least, you could make some serious savings.

What is Freetrade?

Freetrade is an award-winning, commission-free investing app. Its aim is to help investors get started by taking away some of the complexities that can stop you and me from getting into investing.

Over 400,00 customer have trusted Freetrade with their cash. That’s not bad considering it only launched in 2018!

Crucially, Freetrade promises to remove high commissions and clunky products that you might see on traditional investment platforms. It wants to break down the barriers typically placed in front of smaller, individual investors.

Freetrade is an independent, privately-owned start-up that’s raised money through crowdfunding and venture capital firms.

Heads up – We aim to produce honest and accurate content, however, we are not financial advisors. If you need financial advice, Unbiased can connect you with a suitable professional for free. Some of our links may earn us a small commission to help us run the site.

Freetrade features

Freetrade offers a good range of features:

  • Invest for free, forever – commission-free and unlimited instant trades.
  • Fractional shares – own a piece of even the most expensive US shares. Invest from only £2. Extremely useful if you can’t afford a whole share.

  • Award-winning app – aimed at beginners and experienced investors alike.
  • Choice – choose from a wide range of ETFs & Investment Trusts covering different sectors and markets worldwide.
  • US and UK stocks – access to thousands of stocks from the London Stock Exchange, AIM, NYSE and NASDAQ.
  • Fast, friendly support – customer support from real humans. Nice.

Freetrade free share

To entice new customers in, Freetrade is currently offering a free share worth up to £200 for using this link.

All you need to do is follow the link, sign up and deposit at least £1. The idea is that Freetrade hopes you like the app so much, you’ll stay and invest more with them.

If you’d like more free shares, then check out How to get free stocks in the UK – worth up to £705.

Why use Freetrade

No fees

Most traditional investment platforms charge two types of fee:

  • Platform fee – the charge you pay for holding your investments with them.
  • Trading fee – the price you pay to buy and sell individual investments.

Typically, trading fees are around £10 per trade. If you only have £100 to invest, then £10 is going to get wiped out straight away. In this case, that’s a whole 10%…which is huge!

If you plan to sell your investment, you’ll then pay another £10 on the way out. Now, in this example, you’ve got to make £20 (or 20%) profit before you break even!

Fundamentally, the more you pay in fees, the slower your money grows. High fees mean profits could be wiped out or losses exaggerated. This is why so many people go to great lengths to minimise their costs. It can have a serious effect on your wealth in the long run.

Importantly, Freetrade‘s General Investment account has none of the fees above. This means you keep all the profit.

This is why commission-free trading has helped open up investment markets for those starting small. Freetrade allows you to start with just £1.

Fractional shares

Another huge advantage is Fractional Shares.

For example, if Tesla’s share price is $700, you might not have enough to buy one whole share. This is often a challenge because many larger platforms require you to purchase whole shares at a time. As a result, small er investors are squeezed out.

In contrast, Freetrade allows you to state how much you want to invest in cash terms. It could be £100 or £1,000. Importantly, it doesn’t have to be multiples of the share value, which gives the smaller investor access and more flexibility.

All these points help smaller investors get started and take away some of the barriers previously putting off those looking to get started.

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Is Freetrade really free?

Yes, Freetrade really is free, but only for the basic General Investment Account. Other account types come with a fee.

If you want to hold your investments in a tax-free ISA or have access to any of the Plus features (covered below) then you will have to pay.

Freetrade operates on a Freemium model. If you just want basic features, then you won’t have to pay a penny. However, Freetrade hopes you’ll like the platform do much, you upgrade to a paid account.

Plus, you will need to pay Stamp Duty Reserve Tax (SDRT) of 0.5% on all UK share purchases. This is a tax set down by the UK government on all purchases of UK shares. Though this charge applies to all platforms.

Freetrade accounts

As you’d expect, Freetrade offers a number of account types:

  • General Investment Account – buy and sell stocks for free. Declare and pay tax on the profits you make.
  • Stocks and Shares ISA – tax-free savings wrapper.
  • SIPP – tax-efficient pensions savings wrapper.
  • Freetrade Plus – advanced features and more stocks.

Each account is explored in more detail below.

Freetrade General Investment Account (GIA)

The General Investment Account is the starting point for any potential Freetrade customer. You can sign up quickly and easily and if you use this link, you’ll also get a free share.

For those considering Freetrade, this account will give you an idea of how the platform works. You can start with as little as £1.

The Freetrade General Investment Account has the following features to get you going:

  • Commission-free trading.
  • Fractional shares.
  • Access to thousands of US and UK stocks.
  • ETFs including a wide range of index funds, industries and exchanges across the world.

Remember, a General Investment Account provides no tax-efficiencies. You are subject to Capital Gains Tax (CGT) after your personal CGT allowance, and get hit by Dividend Tax after your annual dividend allowance.

On the flip side, three is no limit on how much you can put into a GIA.

Alternatively, a Stocks and Shares ISA can protect your investments from these taxes. Again, as with all things in life, there is a downside. You can only put in a maximum of £20,000 per year.

For more ISA information, read Stocks and Shares ISA – simple, tax-free investing.

Freetrade ISA

The Freetrade ISA account gives you all the feature benefits of the GIA. In addition, it also ensures you can safely tuck away up to £20,000 per year and none of that money will be subject to Capital Gains Tax (CGT) or Dividends Tax.

Most investors will not want to hand over any of their profits to the taxman. So once you start your investing journey, most people will be considering a Stocks and Shares ISA.

At £3 per month, the Freetrade ISA offers good value when comparing against its competitors. This value is further realised if you plan to trade each month.

A platform such as Hargreaves Lansdown will charge £11.95 per trade and a platform charge of 0.45%.

By comparison, Freetrade‘s fixed platform charge costs £36 per year (£3 per month). Therefore, for accounts under £8,000, Hargreaves Lansdown has cheaper platform fees. However, if you make one trade per month, Hargreaves Lansdown would charge an additional £143.40 in trading costs. So, this makes Freetrade very attractive to those who wish to trade fairly frequently.

Freetrade SIPP

A SIPP can provide a tax-efficient pensions savings wrapper. The advantage of a SIPP over your company pension is that you can choose what to invest in, rather than be tied to your employers’ company plan. However, the buck stops with you. Make a bad call and it can go horribly wrong.

The Freetrade SIPP hasn’t actually launched yet, although you can add your name to the waiting list. Watch this space for more updates when they come.

If you are thinking about retirement and you don’t know how much money you’ll need, then check out this article on how much pension do I need to retire happy?

Of course, you can always pick up your Freetrade free share while you’re waiting and try out the platform for free.

Freetrade Plus

The Freetrade Plus account costs £9.99 per month and offers all the benefits for the General Investment account plus:

  • 3% interest on cash in your account.
  • Access to more stocks.
  • Limit orders
  • Stop losses
  • Stocks and Shares ISA
  • Priority customer service
  • Curated stock collections

Most GIA investors won’t require Freetrade Plus. However, for those paying for the Stocks and Shares ISA, it’s only £7.00 extra per month. Plus, if you are buying and selling shares frequently, then having features such as limit orders and stop losses could protect you from potential losses. They also mean you don’t have to be staring at your phone all the time.

As for the additional shares, both the General Investment Account and ISA contain the majority of the large UK and US companies. Unless you plan on trading relatively unknown companies, then this isn’t going to make a big difference for most.

Freetrade Plus Account

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Freetrade Alpha

Freetrade Alpha was the working title for the now launched Freetrade Plus account. Freetrade Alpha and Plus are effectively the same thing.

Freetrade app review

Crucially, the Freetrade platform is only available via the app.

That said, the app itself is clean and easy to use. Finding stocks is simple and straight forward by using the magnifying glass icon.

On the flip side, this clean and easy-to-use feel means it lacks deeper research tools and features that you usually find on other platforms. You need to know specifically what you want to buy before using Freetrade.

Freetrade review app

Is Freetrade safe?

Freetrade has all the regulations you’d expect from an investment platform, offering investors the following protections:

Remember though, Freetrade, or any other platform, does not protect you against investment losses.

How does Freetrade make money?

Freetrade operates a Freemium model. This means the base General Investment Account is free forever.

That said, it needs to stay in business, so Freetrade makes money when users upgrade to other accounts and pay:

Freetrade has also openly stated (source) that it makes money from FX fees of 0.45% on each US order, and a small amount of interest on customer’s money held in the bank.

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Freetrade reviews

Freetrade has received great reviews from the independent customer review site, Trustpilot. It scored 4 stars (3.8 out of 5), which isn’t the highest we’ve seen, but still very respectable.

Interestingly, the Freetrade app itself gets a rating of 4.5 out of 5 on the Apple app store but only 2.0 out of 5 on the Android Play store. Being an Android user, this surprised me as I thought the app was well designed and easy to use.

I’ve read through a lot of the negative reviews and I think they’ve come from the huge amount of new users signing up to jump on the GameStop investment train and chase those tendies. This is because some of the communities looking to invest in GameStop have encouraged negative reviews of investment platforms to make a political statement.

To its credit, Freetrade has been recognised by industry professionals earning the following awards:

  • Best Online Trading Platform – British Bank Awards 2020 & 2019.
  • People’s Choice – Good Money Guide 2019.
  • Best New Investment Service – Consumer Investment Awards 2019.

You can try out the app yourself and grab a free share using this link. Let us know what you think of the app via our Facebook group.

Freetrade vs Trading 212

Freetrade and Trading 212 are very similar. They both offer commission-free trading and zero platform fees.

Whilst Trading 212 also operates a freemium model, there are a few key differences:

  • CFD AccountsTrading 212 hopes users will upgrade to a CFD account. In case you don’t know, over 70% of traders lose money with CFDs. This is where Trading 212 makes money.
  • Free ISA Account –  handily, Trading 212 offers a free ISA account, making it cheaper than Freetrade.
  • Range of stocks – more range on offer here from Trading 212, though both have all the major UK and US companies.
  • PiesTrading 212 has a feature called Pies. It allows you to easily and automatically invest and divide your money between your investments.

Both platforms are easy to use and whilst Trading 212 has a few more features and offers a free ISA account, I get a better feeling with Freetrade. There’s a good community here backed by customers who have crowd-funded Freetrade and really believe in what they are trying to do.

The part I don’t like about Trading 212 is the push to CFD trading. This is an advanced investing strategy laden with a risk level that most people are not familiar with.

In our view, very frequent trading and ‘gambling’ on CFDs are not a reliable way of building long term wealth. If you want to learn more about investing, then check out our guide Investing for Beginners – How to bankroll your financial freedom.

We have written a full review on Trading 212 here and you can pick up your free share here.

What we like about Freetrade

  • Commission-free trading – this helps you get started with small amounts, fees eating into precious profit.
  • Fractional shares – again, a stepping stone to getting those expensive stocks.
  • Easy to use – a great platform to get set-up and started.
  • Company ethosFreetrade feels like it’s there to support customers looking to start their investment journey.
  • Free share – who doesn’t want a free share! Yes, it’s a very minor thing but it feels like a nice reward. PS. this shouldn’t be the only reason to open an account.

What we don't like about Freetrade

  • Encouraging over-trading – the proven way to build long term wealth is to invest over the long term. There is a valid viewpoint that feels platforms making it cheap and easy to trad by removing some of the friction encourages less thought, wariness and consideration of the risk with frequent trading.
  • ISA charges – while the ISA charge may not feel that high, a lot of people will use Trading 212 instead to avoid this charge. Freetrade doesn’t offer CFDs and so has no other way of making money unless they charge. Personally, I feel this is the right thing to do, but it may lose them customers.
  • UK and US focus – while most large companies reside on UK or US stock exchanges, Freetrade doesn’t offer access to other markets including Europe, Japan or China. While this isn’t a huge problem for most, some customers will want more choice.

Freetrade Review - conclusion

Freetrade is considered an easy-to-use platform that particularly appeals to beginner investors. It offers an intuitive app that can get you set up and start investing quickly. Fundamentally, commission-free trading and fractional shares mean you don’t have to worry about fees, and you can invest the exact money you want in a wide range of companies.

However, the Freetrade ISA account which most people will opt for sin;t free and is more expensive than its closest competitor, Trading 212.  All that said, it does feel like a company set up to help investors rather than filter them through to riskier accounts.

The downside with commission-free, easy to use platforms is that they can encourage the wrong behaviour. Trading frequently and taking higher risks can harm your performance as an investor. So, be careful with your money, don’t gamble it and invest it wisely. Focusing on long-term, predictable growth is usually far better than risking your hard-earned cash chasing the net meme stonk!

Here’s to Financial Fitness

EatSleepMoney.co.uk does not offer financial advice and is intended for reference/information only. Remember, you should always carry out your own research and/or take specific professional advice before choosing any financial products or services or undertaking any business or financial venture. If you need financial advice Unbiased can connect you with a suitable professional for free. Investments may go up as well as down and you may get back less than you put in.