Freetrade app review

What is Freetrade?

Freetrade is a trading and investment app that lets you buy individual UK and US stocks, and invest in a range of funds with a variety of ETFs. (What’s an ETF?).

With a slick interface and pink colour scheme, it’s aimed at millennials who are used to well-designed apps like Monzo and Starling and want to dip their toes into the choppy waters of investment.

Is Freetrade good?

Pretty good! If the name hadn’t given you a clue, Freetrade’s big selling point is the price.

By slashing costs, Freetrade undercuts traditional stockbrokers such as Hargreaves Lansdown, Interactive Investor and AJ Bell. A single trade with Freetrade costs either £0 or £1. Hargreaves Lansdown charges £11.95, Interactive Investor charges £7.99 and AJ Bell charges £9.95.

This low cost tactic is similar to Robinhood, the US zero-fee investment app, which has been around since 2013 and launched in the UK earlier this year.

How it works

With Freetrade you can, erm, trade for free.

But, basic £0 trades come with a few caveats.

As mentioned above, a single trade with Freetrade can cost either £0 or £1.

A basic (£0) trade is executed at 3pm every day. This means any price movement between the time you place your order and 3pm will be reflected in the final cost.

Say, for example, you chose to buy Boohoo shares at 11:25. If Boohoo’s shares rise before 3pm, three things could happen:

• You’ll automatically pay a higher price at 3pm
• You’ll get fewer shares than expected at that higher price or
• If the price rises beyond the order you’ve placed (say £10), the trade will be cancelled

You’re free to cancel a basic order at any time before 3pm.

This isn’t a big deal, just something to be aware of. It means the app isn’t suited to people looking to trade in real-time. It seems to be a great option if you’re looking to make the odd purchase from time to time.

If you don’t want to wait until 3pm, Freetrade offers an “instant trade” for £1.

Freetrade also list prices in GBP rather than the industry standard GBX (pence), which is weird for a second, but probably aimed at making it as user friendly as possible.

Is Freetrade safe?

Yes. Freetrade is regulated and authorised by the FCA and covered by the FSCS, so you’ll be protected for up to £85,000 in the event the company goes bust.

Although remember as always when you invest, your capital is at risk.

How does Freetrade make money?

Freetrade makes money in four ways:

1. £1 for instant trades
2. 0.45% FX fee for buying shares in other countries
3. £3 per month for its stocks and shares ISA
4. £5 for same day withdrawals

Freetrade also plans to launch a premium account called Freetrade Alpha which is coming soon.

The Freetrade ISA

Also known as a stocks and shares ISA, the Freetrade Investment ISA is a personal account where you can invest up to £20,000 each year in the available stocks and ETFs and then never pay tax on any profit you make.

You can start an ISA using the Freetrade app, and will then pay a £3 fee per month (£36 a year). With trades costing £0 or £1 (plus the FX costs on US trades), it’s a pretty cheap offering compared with Hargreaves Lansdown or other traditional brokers – all of which charge anywhere between £5 and £12 for a trade.

Again, it’s worth remembering Freetrade has a bit of a limited trading universe. It’s not ideal for those who want to hold a variety of things in an ISA (namely, funds and shares from different markets).

On cost though, it is tough to beat, especially if you’re looking to invest serious money over the long-term. Any profit you make in your ISA will not be subject to capital gains or income tax.

However, all investors also benefit from an annual tax-free investment allowance, known as the ‘Annual Exempt Amount’. This means you won’t pay capital gains tax on any investment profits you make, up to £12,000. If you’re unlikely to exceed this allowance each year, or are only investing for the short-term, it may be worth just sticking with a Freetrade basic account.

You can also transfer your existing ISA into your Freetrade account.

Downsides of Freetrade

Signing up, using the app and pressing “buy” is a breeze.

Everything after that point could use a bit of work.

A common criticism levelled at Freetrade is the pretty-but-not-that-helpful charts and graphs which are supposed to help you track the performance of your portfolio.

The charts aren’t actually labelled, and there’s not that much data here to help gain much insight into how your stocks are performing. Freetrade have acknowledged the portfolio management side of the app needs improving.

Luckily – much like Monzo, Starling, Revolut and other big digital finance players – Freetrade makes regular updates to its app. You can see Freetrade’s roadmap on its website.

Setting up Freetrade

Setting up is super easy. You can download the Freetrade app on the App Store and Google Play.

Once you open the app, you’ll need to provide:

• Your name
• Your address
• Your National Insurance Number

Some of our team also had to provide additional info:

• Proof of address
• ID (driving license, but Passport seems to work better)

Once you’ve done that, you can then choose an account type.

Currently, you can only get a Freetrade Basic account, but the Freetrade Alpha account will be offered in future.

Once your account is set up and funded (you can use Apple/Google Pay or a bank transfer), you’ll be able to buy and sell through the app, as well as track your portfolio performance.

We did have a mixed bag when it came to depositing money in the app. For some it took about 10 minutes, while others waited for the top up to come through for 6 or 7 hours.

That is one main criticism of the platform, you can spend a lot of time in limbo wondering when your money will be topped up or when you’ll get your free share.

Freetrade referral and free share

After you buy your first security, you’ll be able to refer a friend. Send your lucky pal a link, and once they’ve signed up too, you’ll both get a free share up to £200 in value – could be an Apple or a Tesla! Freetrade dish out the free shares on a Friday.

Freetrade fees and charges

What stocks can I trade on Freetrade?

Amazon, Apple, Netflix, Tesco… there’s over 500 UK and US stocks and ETFs on Freetrade, and it’s adding to this each week. You can search for stocks in the table below.

What is the Freetrade community?

The Freetrade community is a forum for all Freetraders to share investing tips, chat about the economy and share their ideas on what can help make Freetrade better.

The verdict

Freetrade’s fees are the shining star here. Buying stocks and ETFs for free? Doesn’t get much better than that, though there are the caveats we mentioned above. No monthly fee or inactivity fee is also great, stopping your portfolio being slowly eroded over time. Opening the account is easy, and you’re quickly ready to go. The app is slick and satisfying to use.

But, the graphs are more pretty than helpful, and the app is quite limited. There are the caveats that come with free trading, as well as the additional costs for buying US shares. Equally, the app only covers products from the UK and US, so it is a bit limiting. Then we had a few problems with the app being laggy when loading money and getting the free referral share.

Overall, Freetrade is a great option if you’re a beginner not looking to invest too much. You can make the most of the daily free trade so your investments aren’t eroded by fees, while having a decent play around and learning the basics.

Trading platforms similar to Freetrade

Updated January 28th, 2020

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Name	Product	Price per trade	Frequent trader rate	Platform fees
Degiro Share Dealing		£1.75 + 0.022% (max £5.00)	£1.75 + 0.022% (max £5.00)	Portfolio transfer fees (in & out)	Your capital is at risk.	Go to site More Info		loading Fetching your data...
IG Share Dealing Account		£8	From £5	£0 - £24/quarter	Your capital is at risk.	Go to site More Info		loading Fetching your data...
eToro Free Stocks		0% commission, no markup, no ticket fee, no management fee	N/A	Withdrawal fee & GDP to USD deposit conversion	Your capital is at risk.	Go to site		loading Fetching your data...
The Share Centre Share Account		from £7.50 on the Frequent Dealer Option (or 1% minimum £7.50)	£24 per quarter	£2.00 for a Share Account	Your capital is at risk.	Go to site More Info		loading Fetching your data...
Saxo Markets Share Dealing Account		£8	0.05% (min £5)	0.12% per year & transfer-out fee	Your capital is at risk.	Go to site More Info		loading Fetching your data...
Interactive Investor Trading Account		From £7.99 on the Investor Service Plan	From £7.99 on the Investor Service Plan	No transfer fees or exit fees. £9.99 a month on the Investor Service Plan	Your capital is at risk.	Go to site More Info		loading Fetching your data...
Hargreaves Lansdown Fund & Share Account		£11.95	£5.95	Transfer out fee	Your capital is at risk.	Go to site More Info		loading Fetching your data...

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Frequently asked questions

• What happens with dividend paying shares?

  Dividends are paid into your Freetrade account as cash. You’ll get an email, notification and an activity feed item when those are paid.

• Is there a Freetrade web app?

  Not yet. But this is the latest from the Freetrade team: “It shouldn’t be too difficult to do once we have more resources available. We already have all the necessary APIs for the mobile apps anyway.”

• Does Freetrade offer investment advice?

  No, Freetrade is not a financial advice service and does not provide investing advice. Investors are responsible for their own purchasing and trading decisions.

• Is there a Freetrade web app?

  Not yet. But this is the latest from the Freetrade team: “It shouldn’t be too difficult to do once we have more resources available. We already have all the necessary APIs for the mobile apps anyway.”

• Will I pay tax on my investment profit?

  Yes, you will likely need to pay tax on any gains you make from buying and selling shares, although this will depend on your personal tax rate. However, you can invest up to £20,000 per year in the investment ISA, which will not be subject to tax.

• How do I withdraw my money?

  You can withdraw your money using the app directly into your bank account. There is a £5 fee for same-day withdrawals.

• Can I get Freetrade on Android?

  Yes you can! Download Freetrade either on the App Store or get it on Google Play.

• What is an Investment ISA?

  Also known as a Stocks and Shares ISA, this is an account that lets you invest up to £20,000 per year in stocks. You do not need to pay tax on any profits you make in your ISA.

• What is an ETF?

  An exchange-traded fund (ETF) is an investment fund that is traded on a stock exchange. It operates like a normal stock, but is actually a bundle of various assets such as bonds, stocks and commodities. We have a full guide to ETFs if you’re looking to take a nap.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest.