Updated: 20th February 2022
A relative newcomer, and growing fast. Low cost, but with a wide number of features and services. Free share trading too – as you would expect!
What is Freetrade?
Freetrade is one of a new breed of investing DIY platforms, taking on the old guard like Hargreaves Lansdown and Interactive Investor. Freetrade believe that the buying and selling of investments should not cost the earth, and so they don’t charge commission each time customers trade. Based on current market rates, this could be saving you up to £12 every time you buy or sell shares. The Freetrade investment app is now used by over 1 million people, and they have plans to launch similar services throughout Europe. The company has expanded quickly by using crowdfunding – they now have over 13,000 shareholders and more recently have used money from professional investors to fuel their expansion plans. We like the fact Freetrade have an online community and have built their own technology to allow customers to access stock markets quickly and cheaply.
Watch our Freetrade review
Overall Score 3
What accounts are available?
All the main accounts are available at Freetrade: the Individual Savings Account (ISA), the Self Invested Personal Pension (SIPP), and the General Investment Account (GIA). It’s worth noting though that the SIPP only allows you to build a pension pot. When you want to draw on your pension you’ll need to go elsewhere. Investing for your children (or grandchildren) is also limited at Freetrade as there’s no Junior ISA or SIPP at present.
We upweighted scores for providers who had the basic accounts available - ISA, SIPP and GIA.
What kind of investments can I make?
All the main investments that are listed on a stock exchange are available to buy and hold within your Freetrade account. This includes shares in companies and pooled investments like investment trusts and exchange traded funds. However the largest type of pooled investment, by some margin, known as funds are not available on this platform. The choice of available investments within specific investment types can also be limited, but they are adding to their universe all the time and this is based on demand from their customers.
We upweighted scores for providers who made funds, investment trusts, exchange traded funds and UK shares available. Bonds and international shares were less important.
What services do they offer?
The big news here is the Freetrade online community. None of the other platforms reviewed here offer it, and it’s a real benefit for the novice investor. Ok, yes, there will be some know-it-alls on there who actually know very little, but that’s no different from any other online forum. What’s great is that there seem to be no stupid questions and people are all too keen to help, whether its understanding more about how their service works, or discussions about specific investments.
The most important services were monthly investing, and dividend reinvestment, so we upweighted scores for platforms who provided these services.
How much does it cost?
It’s cheap. Very cheap. In fact, of the platforms we have reviewed it scores the best in this category. The platform fee (sometimes called an admin fee, which is basically to cover the custody of your investments) is competitive. Buying and selling shares, investment trusts and exchange traded funds is free, as the name implies. Hard to beat on overall costs.
For custody we looked at the costs for an ISA with a value of £20,000 - either with just funds or just listed investments. Scores were highest if the annual charge was below £50, and lowest if they were over £100/year. For trading costs, the most points were awarded where a platform did not charge, and the least where the charge was over £10.
Can you trade stocks for free on Freetrade?
The short answer is yes – you can trade stocks on the Freetrade investment platform for free. Are there aren’t many investment platforms that can claim that! It means if you’re looking to buy shares in companies from the UK, US and Europe, then each time you buy and sell those shares there’s no fee to pay to Freetrade.
So, if you’re planning on buying and selling stocks regularly, this could be the platform for you. Other investment platforms charge between £5 and £12 every time you trade, which can soon add up if do so regularly.
However, it’s worth noting that if you want to trade in an Individual Savings Account (ISA), while you still won’t pay for each trade you make, you will need to pay £3/month for the privilege of having the ISA. And unless you upgrade to Freetrade Plus (£9.99/month) then you only get access to a limited range of stocks to trade. For a Self Invested Personal Pension (SIPP), it’s also £9.99/month.
Is Freetrade Legitimate?
Yes. Freetrade is a member of the London Stock Exchange and is regulated by the UK’s Financial Conduct Authority (FCA).
All the accounts offered by Freetrade are covered by the Financial Services Compensation Scheme (FSCS). As of 2022, Freetrade now have over 1 million users of their investment app, and 13,000 shareholders. They have also won a variety of awards from people such as AltFi, The Sunday Times and the British Bank Awards.
So yes, Freetrade is very much a legitimate investment platform. It may be new(ish) but there’s nothing wrong with that!