Are there any free stock trading apps/systems like Robinhood available in the UK?

Malthusian

I was going off this sentence in the FT: "Wealthier customers will also be charged to use the service. Those with portfolios in excess of £10,000 will be charged 1 per cent a year."

1% plus £36 a year (the vast majority of UK investors will have an ISA) is even more of a rip off.

grey_gym_sock

ah, the classic "it's free, providing you pay us lots of money" model.

a.k.a. "we used the word 'free' prominently, but it isn't really".

Joe_Faragelli

Malthusian wrote: »

Apparently FreeTrade's plan to make money is that anyone with more than £10,000 will be charged 1% pa. Why on earth would anyone with £10,000 put up with such a complete rip-off?

The proposed pricing they quoted during their Crowdcube campaign was a 0.01% per month charge for amounts > £10k. So, 0.12% pa. Seems cheap to me.

Robos like Nutmeg generally charge c. 1% pa when all fees are included, so would be curious what investment platform you use that you think 1% pa is a complete rip off? I think Hargreaves is at 0.5% or something thereabouts.

grey_gym_sock

Joe_Faragelli wrote: »

The proposed pricing they quoted during their Crowdcube campaign was a 0.01% per month charge for amounts > £10k. So, 0.12% pa. Seems cheap to me.

not really.

who is this for?

people just starting out investing? they should be buying open-ended funds (OEICs / unit trusts), not shares. isn't this product for shares-only, no funds? and they shouldn't be trading frequently, which any product with zero trading fees encourages - so it's encouraging bad habits.

and is malthusian correct about the £36 per year ISA fee? that's very expensive for small investors.

people with large investments? £36 + 0.12% per year + zero trading fees is easily beaten by a fixed fee platform, e.g. iweb with zero per year + £5 trading fee - again, providing you don't trade too often. and iweb gives you access to open-ended funds, too.

in general, making trading "free" encourages people to trade more. and trading always incurs other costs. over-trading is an easy way to destroy your investment returns. so it's encouraging bad habits.

Robos like Nutmeg generally charge c. 1% pa when all fees are included, so would be curious what investment platform you use that you think 1% pa is a complete rip off? I think Hargreaves is at 0.5% or something thereabouts.

neither nutmeg nor hargreaves are known for being cheap.

and hargreaves are mainly expensive for people holding open-ended funds (which freetrade presumably don't offer anyway). for holding shares, hargreaves would be cheaper than freetrade for some ways of using them (i.e. larger investment size, infrequent trading).

savenator

"who is this for?"

I think for me. :j
I don't have a full £10,000 now to invest (nor do I have any friends who do), although hopefully this will be a problem for me later. That's the dream. But I'll wait until they launch to see what the pricing is.

Joe_Faragelli

grey_gym_sock wrote: »

people just starting out investing? they should be buying open-ended funds (OEICs / unit trusts), not shares. isn't this product for shares-only, no funds? and they shouldn't be trading frequently, which any product with zero trading fees encourages - so it's encouraging bad habits.

£36 + 0.12% per year + zero trading fees is easily beaten by a fixed fee platform, e.g. iweb with zero per year + £5 trading fee - again, providing you don't trade too often. and iweb gives you access to open-ended funds, too.

Antiquated advice. OEICs are obsolete. Can anyone give an example where an OEIC is the best investment choice vs. the equivalent Vanguard or iShares ETF?

I'd also question your maths. 0.12% on a £50k portfolio would be a £60 annual charge. That's equivalent to commissions for 5 - 10 trades on any other online platform I'm aware of, before considering platform fees etc. Presumably, one would be making at least one buy a month to top up their investments, not even considering rebalancing moves. If your portfolio is over £50k, good for you, but yeah, a mobile-only stockbroker aimed at 'millennials' probably isn't your cup of tea anyways.

grey_gym_sock

savenator wrote: »

"who is this for?"

I think for me. :j
I don't have a full £10,000 now to invest (nor do I have any friends who do), although hopefully this will be a problem for me later. That's the dream. But I'll wait until they launch to see what the pricing is.

are you putting off starting investing because this service hasn't launched yet? that would be a bad idea - there are already suitable services available for investors with less than £10k. IMHO, the obvious place to start would be vanguard's direct service.

though if you're putting off starting while you do more research, decide exactly what you want to do, etc, that makes much more sense.

what kind of investments are you planning to buy? because there is no sense in buying individual shares with < £10k.

Joe_Faragelli

grey_gym_sock wrote: »

what kind of investments are you planning to buy? because there is no sense in buying individual shares with < £10k.

Disagree. Investing in individual companies shouldn't be restricted by your portfolio size. Just because I haven't had as much time to save up as other forum members doesn't mean I'm less competent at researching companies I'd like to invest in.

The only way your comment makes sense is if you are referring to the cost of commissions and inability to invest in fractional shares. Which, of course, is the whole point of these fintechs, like Robinhood and Freetrade.io, coming in.

grey_gym_sock

Joe_Faragelli wrote: »

Antiquated advice. OEICs are obsolete.

wrong. OEICs (or unit trusts) are in several respects better than ETFs. it depends on your situation.

for instance, buying and selling OEICs is easier to understand - your units are created/redeemed at the value of underlying assets. with ETFs, you need to decide what kind of order type to use, and you ought to be paying some attention to the possibility of there being a significant premium or discount.

OEICs are also better for keeping your total costs of investing low when you're a small investor. because there are lots of platforms who don't charge you to buy or sell OEICs, and instead charge a percentage of the value of your investments (which is cheaper for a small investor). with ETFs, just about everybody does charge a fixed fee (typically £5-£12.50) to buy and sell them - in an attempt to avoid that, you're reduced to looking for providers who haven't even launched yet, whose pricing may change anyway, and who may go out of business as a result of not having a sustainable charging structure.

Can anyone give an example where an OEIC is the best investment choice vs. the equivalent Vanguard or iShares ETF?

yes. vanguard US equity index fund, which tracks a US total market index. AFAICS, no equivalent ETF is available - only S&P500 trackers - i.e. big-cap, which is only about 80% the same as the total market.

another example: in a number of cases, there is no accumulating ETF available, only a distributing ETF. e.g. vanguard FTSE developed europe ex-UK equity index fund. vanguard do offer an exactly equivalent distributing ETF (VERX), but i don't know of a similar accumulating ETF from any provider.

I'd also question your maths. 0.12% on a £50k portfolio would be a £60 annual charge. That's equivalent to commissions for 5 - 10 trades on any other online platform I'm aware of, before considering platform fees etc. Presumably, one would be making at least one buy a month to top up their investments, not even considering rebalancing moves. If your portfolio is over £50k, good for you, but yeah, a mobile-only stockbroker aimed at 'millennials' probably isn't your cup of tea anyways.

iweb wouldn't be the best choice for monthly buys. it's more suitable for people doing lump-sum investments, once or twice a year. for monthly, you might use halifax share dealing, who charge £12.50 per year for an ISA + £2 for each monthly purchase.

however, either of them beat £36 + 0.12% on £50k - that suggested charge (not even available yet) comes to £96. compared to £60 for iweb (with 1 monthly purchase) or £36.50 for halifax share dealing.

but for smaller investments, look at vanguard, charging 0.15%, with no extra fee for an ISA. and that actually is available now! why this enthusiasm for a service which hasn't even launched yet ?

grey_gym_sock

Joe_Faragelli wrote: »

Disagree. Investing in individual companies shouldn't be restricted by your portfolio size. Just because I haven't had as much time to save up as other forum members doesn't mean I'm less competent at researching companies I'd like to invest in.

there's no difference in competence between big and small private investors.

we should all assume we're incompetent compared to professionals, and just buy passive funds instead. minimal effort, and we get the average return - in what other field of endeavour can you do that? in investing, a lot of effort may give you no higher return at all - or, very easily, a lower return.

but suppose, for the sake of argument (and totally implausibly), that X hours of research per year can increase your investment returns by Y% a year. to make it concrete, suppose it's 200 hours of research and 2% extra return. if you have £10k invested, that comes to £200 a year extra return, so your research is being rewarded at £1 per hour. not worth it! but it could be worth it (on the same, implausible, assumptions), with a much larger amount invested.

The only way your comment makes sense is if you are referring to the cost of commissions and inability to invest in fractional shares. Which, of course, is the whole point of these fintechs, like Robinhood and Freetrade.io, coming in.

that's another way it makes sense. these products don't exist yet (in the UK). they may not be as cheap as hoped for if/when they do launch. they may then go out of business, or raise their prices. there are good ways to invest (small or large) amounts already! why put off investing (assuming you have money you can afford to invest, and you're confident about how to go about it, etc)?