Freetrade - anyone use this?

maxsteam

I worry more. ETFs are funds. They are not a direct investment in a company's shares. The companies that you list are all relatively small companies. If I asked a lot of people to name 5 companies that are listed on the LSE I would expect BP, BT, some banks, some supermarkets and Unilever to be mentioned but I would have to talk to a lot of people before anyone would mention companies like TRIG, NESF, FSFL, SONG and MCT.

wmb194

maxsteam said:

I worry more. ETFs are funds. They are not a direct investment in a company's shares. The companies that you list are all relatively small companies. If I asked a lot of people to name 5 companies that are listed on the LSE I would expect BP, BT, some banks, some supermarkets and Unilever to be mentioned but I would have to talk to a lot of people before anyone would mention companies like TRIG, NESF, FSFL, SONG and MCT.

No, SONG is quite popular as is TRIG. WPP is FTSE100. I'm sorry that they're not famous enough for you but my point is that you can buy shares in quite mainstream companies and not pay SDRT whilst you asserted that if you don't pay SDRT there must be some kind of shadiness going on. Plenty of ETFs are mainstream, are listed on the LSE, are traded like shares and can be bought through the likes of Freetrade.

Thrugelmir

maxsteam said:

If I asked a lot of people to name 5 companies that are listed on the LSE I would expect BP, BT, some banks, some supermarkets and Unilever to be mentioned but I would have to talk to a lot of people before anyone would mention companies like TRIG, NESF, FSFL, SONG and MCT.

Many people would struggle to name US companies outside of the S&P 500. Yet hold them in their global equity trackers. 

underground99

maxsteam said:

wmb194 said:

maxsteam said:

wmb194 said

maxsteam said:
Another cost will be 0.5% stamp duty on UK shares. If you try to trade UK shares and don't pay stamp duty then it's likely that you are not actually trading UK shares. If Freetrade are offering CFD dealing rather than share dealing, the site should make this clear. While I appreciate that stamp duty is paid to HMRC and not the broker, it's existence makes it impossible to "invest for free" in UK shares.

don't worry, when you buy shares in a UK domiciled company on the LSE Freetrade does charge SDRT.

I do worry. Freetrade promote their service as offering the opportunity to "Invest for free, forever". When dealing with a couple of quid at the bookies, I expect a few misleading promotions. When dealing with investment-sized amounts, I expect promotions and transactions to be transparent and 100% accurate.

Yes, I know, I didn't mention any stock exchange in the CI but to London listed shares that can be bought by most (all?) basic, British brokers including Freetade. For instance companies like TRIG, NESF, FSFL, SONG and MCT. IIRC a couple of these are in the FTSE250. Phoenix (PHNX) used to be domiciled in Jersey(?) and was still in the FTSE100. Resolution, now gone, was another one, and also WPP, both FTSE100. Most ETFs are domiciled in Ireland and these won't attract SDRT either.

I worry more. ETFs are funds. They are not a direct investment in a company's shares. The companies that you list are all relatively small companies. If I asked a lot of people to name 5 companies that are listed on the LSE I would expect BP, BT, some banks, some supermarkets and Unilever to be mentioned but I would have to talk to a lot of people before anyone would mention companies like TRIG, NESF, FSFL, SONG and MCT.

Those companies are only being mentioned as part of explaining how stamp duty works. The point is, Freetrade are not making a misleading promotion when you go to their homepage and it says in big letters:

• Invest. Commission-free.

      - Investing is one of the best ways to grow your savings. We make it simple, beautiful and free. Download the app and sign up in seconds.

"Invest. Commission-free" is accurate, as they're talking about it being commission free and allowing you to execute trades on their platform without an explicit commission fee or charge from them. The fact that your transaction, your income, or your capital gains are still subject to the usual HMRC taxation rules would be a separate point. 

Under the "why invest with us", they put the headline and subheadline the other way around:

• Invest for free, forever

       - Commission-free, unlimited instant trades.
The second line is following very swiftly after the first, to clarify that your trades are free of commission for placing the trade ; it should not be taken to imply they are meaning that they will avoid government stamp duty or other transaction taxes through the use of contracts for difference or derivatives - because they're not doing that. There's no stamp duty avoidance, but they're saying their service (placing trades on the market) is 'free' to you, just like you can open a Facebook or Google account and use it for free even though some people will provide Facebook or Google some income which helps enable them to offer it free. 

The comment from wmb is just by way of explanation that you will pay stamp duty if you need to (e.g. UK share on a UK exchange) and not if you don't (non-UK domiciled share, e.g. Channel Islands, Bermuda, Cayman, Irish ETF, etc). You shouldn't 'worry more' that ETFs are funds and 'not a direct investment in a company's shares'; they provide diversified exposure and are probably a better way to invest than having a punt on an individual company like BP or Tesco - so not a bad thing if they provide the kind of exposure that you want.   

UK-listed stocks will not always have a UK residence or UK shareholder registry ; plenty here will have invested in things on the UK stock exchange like TRIG mentioned above, or its stablemate HICL before it redomiciled to London recently, or non-UK based FTSE miners (I held Randgold before it was taken over a couple of years ago), not to mention most AIM shares are stamp duty exempt. Tencent and Alibaba are valued at many hundreds of billions, and if they had chosen to list here rather than HongKong or New York they would have been stamp duty free due to having Cayman holding companies.

I should declare an interest as a user of, and investor in (but not an employee or marketer of) Freetrade. The service is absolutely fine for play money here and there. Though most of my ISA and pension money (more meaningful amounts) is with AJ Bell, as I'm mindful that profitable platforms are probably more suitable hosts for more life-changing sums - due to the headache that could be caused by a broker going into administration.

thenewcomer

maxsteam said:

I have just visited the Freetrade website. It looks genuine but it also looks like it is aimed at the investor who has just seen a story about GameStop, or whoever, on the news and wants to jump on a bandwagon rather than being for serious investors. It alarms me greatly to see how many times the site promises that you can "Invest for free" when it should state that they offer commission-free trading. There is a difference.
The site states that the pinnacle of the CEO's previous career was being a manager at KPMG. I have met a few managers at KPMG but this is the first time that I have seen anyone boast about it.
To answer the question about where there are charges, one obvious place is the price that you pay for your shares. When you buy, the price you pay will always be more than the price that you can sell at. With a reputable broker and a FTSE100 stock, the difference between the buying and selling prices will be a fraction of a percent. In other circumstances, the difference can be substantial.
Another cost will be 0.5% stamp duty on UK shares. If you try to trade UK shares and don't pay stamp duty then it's likely that you are not actually trading UK shares. If Freetrade are offering CFD dealing rather than share dealing, the site should make this clear. While I appreciate that stamp duty is paid to HMRC and not the broker, it's existence makes it impossible to "invest for free" in UK shares.

do we not have to pay 0.5% stamp duty on US shares too?

wmb194

thenewcomer said:

maxsteam said:

I have just visited the Freetrade website. It looks genuine but it also looks like it is aimed at the investor who has just seen a story about GameStop, or whoever, on the news and wants to jump on a bandwagon rather than being for serious investors. It alarms me greatly to see how many times the site promises that you can "Invest for free" when it should state that they offer commission-free trading. There is a difference.
The site states that the pinnacle of the CEO's previous career was being a manager at KPMG. I have met a few managers at KPMG but this is the first time that I have seen anyone boast about it.
To answer the question about where there are charges, one obvious place is the price that you pay for your shares. When you buy, the price you pay will always be more than the price that you can sell at. With a reputable broker and a FTSE100 stock, the difference between the buying and selling prices will be a fraction of a percent. In other circumstances, the difference can be substantial.
Another cost will be 0.5% stamp duty on UK shares. If you try to trade UK shares and don't pay stamp duty then it's likely that you are not actually trading UK shares. If Freetrade are offering CFD dealing rather than share dealing, the site should make this clear. While I appreciate that stamp duty is paid to HMRC and not the broker, it's existence makes it impossible to "invest for free" in UK shares.

do we not have to pay 0.5% stamp duty on US shares too?

No. 0.5% is due on UK domiciled companies listed on the LSE* and Ireland's equivalent duty of 1% is due on Irish domiciled companies e.g., shares in Smurfit Kappa, CRH. If you buy US shares you'll have to pay an FX fee, which at the moment with Freetrade is 0.45%.

*If they exist, if you can buy their ADRs in New York there's no SDRT to pay.

maxsteam

Freetrade is pretending to offer the chance to "invest for free, forever". This is a false claim.
Freetrade are pretending to offer mainstream investments but they are offering ETFs, not company shares. Their website does not clearly mention this.
I would also be concerned if they are encouraging UK investors away from FTSE100 companies and towards small companies. There is nothing wrong with an investor deciding to invest in a small company but this needs to be the decision of the investor, not the broker.
I am also hugely concerned that Freetrade are touting for business among the internet communities that are looking for free stuff. IMHO, this is a totally inappropriate way to find investors.
I don't have first hand experience of using their platform so my current opinions are based solely on what I have read here, on the Freetrade website, and elsewhere. In the next few days I will try to get a free share and to view the platform for myself.

wmb194

maxsteam said:

Freetrade is pretending to offer the chance to "invest for free, forever". This is a false claim.
Freetrade are pretending to offer mainstream investments but they are offering ETFs, not company shares. Their website does not clearly mention this.
I would also be concerned if they are encouraging UK investors away from FTSE100 companies and towards small companies. There is nothing wrong with an investor deciding to invest in a small company but this needs to be the decision of the investor, not the broker.
I am also hugely concerned that Freetrade are touting for business among the internet communities that are looking for free stuff. IMHO, this is a totally inappropriate way to find investors.
I don't have first hand experience of using their platform so my current opinions are based solely on what I have read here, on the Freetrade website, and elsewhere. In the next few days I will try to get a free share and to view the platform for myself.

No, it IS offering company shares, which obviously includes investment trusts, and ETFs. ETFs are mainstream and it offers the major ones from iShares and Vanguard that you'd expect. If you explore its website you can find the data and it is very clear so I'm not sure how you've reached the wrong conclusion: see below a screenshot of its landing page. It isn't directing anyone to anything - it's simply an execution only broker.
Yes, rather than endlessly speculating and consistently missing the mark by a wide margin you should definitely try it. Good idea.

underground99

maxsteam said:

Freetrade is pretending to offer the chance to "invest for free, forever". This is a false claim.
Freetrade are pretending to offer mainstream investments but they are offering ETFs, not company shares. Their website does not clearly mention this.
I would also be concerned if they are encouraging UK investors away from FTSE100 companies and towards small companies. There is nothing wrong with an investor deciding to invest in a small company but this needs to be the decision of the investor, not the broker.
I am also hugely concerned that Freetrade are touting for business among the internet communities that are looking for free stuff. IMHO, this is a totally inappropriate way to find investors.
I don't have first hand experience of using their platform so my current opinions are based solely on what I have read here, on the Freetrade website, and elsewhere. In the next few days I will try to get a free share and to view the platform for myself.

As mentioned in the earlier posts, they do offer the ability for you to invest without charging a commission for placing the trade. Their two taglines are "Invest. Commission-free" and "Invest for free, forever - Commission-free, unlimited instant trades".

You can't avoid UK taxes such as stamp duty or CGT and income tax (unless using an ISA) and if you want to trade something traded in a currency other than sterling (which you are not forced to do, as most UK shares are not) they charge 0.5% for converting the currency. But it's true that the basic service of allowing you to invest without a commission being charged on each trade is offered.

On launch, they were only 'free' for daily pooled trades and charged a fee for instant trades, but eventually dropped that fee as their customer base grew to 6 figures. They hope to grow their revenues by more people signing up to the paid services such as a premium account (having more order types and stocks available), or an ISA, or a SIPP (in due course).

Freetrade are pretending to offer mainstream investments but they are offering ETFs, not company shares. 

False. They are offering company shares. You can buy a share in Shell or Mitchells & Butlers or Tesco or Ocado or Microsoft or Amazon or Beyond Meat (the latter three are on the US exchange where they offer the facility of trading in fractional shares). Thousands of stocks are available, though the more obscure ones which would not usually have much trading volume are only available within the 'Plus' account which carries a monthly fee and more features. They offer ETFs, and ETFs are mainstream investments these days. If they did not offer ETFs, you would say they were not a proper stockbroker. Perhaps you misunderstand what an ETF is.

Freetrade are pretending to offer mainstream investments but they are offering ETFs, not company shares. Their website does not clearly mention this.

Can you show us on the picture of the homepage where they tell you that they do not offer ETFs and where they do falsely say they offer company shares?  No you can't: they do explicitly tell you that they offer ETFs and investment trusts (both methods are 'mainstream' investment types used by many regulars on these forums) and they do genuinely offer shares in UK and US companies.


See?

I would also be concerned if they are encouraging UK investors away from FTSE100 companies and towards small companies. There is nothing wrong with an investor deciding to invest in a small company but this needs to be the decision of the investor, not the broker.

As with all brokers, they offer FTSE100 and non-FTSE100 stocks. They do not tell investors what to buy. None of my trades have been the result of pressure from them, and were entirely my choice.  They do not allow you to blindly 'copy' the portfolios of other users (as is offered by e.g. eToro). 

It's an app targeted towards millennials and suits those who are investing small amounts across multiple companies or ITs / ETFs where transaction fees would eat into returns. Older or more experienced investors may already have a solution that meets their needs - and perhaps be investing larger amounts of money so be less comfortable with putting a bug chunk of their assets on a platform that does not currently make profits.

As it is catering to novices, the 'popular stocks' that come up on the 'Discover' tab will skew towards whatever is trending (e.g. at the moment it is showing Tesla, Nio and also Blackberry - the latter in particular being driven by 'wallstreetbets' type activity). These may not be suitable bedrocks for your portfolio. This does not stop you searching for what you want and making your own decisions, as 'popular stocks' is just one row in the discovery page, just like 'what's trending now' is one row on a Netflix or Amazon Prime Video app.

I am also hugely concerned that Freetrade are touting for business among the internet communities that are looking for free stuff. IMHO, this is a totally inappropriate way to find investors.

Perhaps you should write them a nice email to tell them that they should not offer their internet-accessible, commission free services to internet communities where people want things for free or cheap. And suggest a better place for them to find potential customers. 

I expect changing their tagline to "Lose money. For free." would not go down well - but if you have constructive criticism they do have a community/forum system where you could give them suggestions.

Lee_N

maxsteam said:

I don't have first hand experience of using their platform so my current opinions are based solely on what I have read here, on the Freetrade website, and elsewhere. In the next few days I will try to get a free share and to view the platform for myself.

Here's one of the problems. You're making assumptions based on everything bar actually using it yourself ... and then posting your view on a forum creating a circular problem. Most of your assumptions are wrong, or based on a misunderstanding of how things work. 

I'm not a big fan of Freetrade but I have been using it cautiously so far. There are many things about it that I could complain about but it's none of the things you have mentioned because they simply aren't valid. The only thing I would agree with is they are indeed touting the wrong crowd, they say they only want to attract serious investors but the recent events have probably proved that this is not true - all new sign ups are fair game and welcomed at the cost of almost breaking the system.