freetrade for investing hobby

tiger135

Hi all,
I want to put invest small amounts (£10/£20)  per week, so it builds up slowly over time.
Some weeks I would play safe and invest in an index fund and other times I might invest in a single company I like. I already have a pension pot so this is more for fun but also a potential other pot to draw on if needed.
Not sure if I should bother with an Isa wrapper or not.
Would freetrade fit the bill? 

masonic

If it is more for fun, then it depends how enjoyable you find keeping records for tax purposes as to whether you'd use an ISA or not. Freetrade is probably not the best option for ISA. You might consider InvestEngine (ETFs only) or Trading212 in that case.

Brie

Do consider what the fees are for investing as it might take a big bite out of any possible profit.  I went through a few years of putting £50 or £100 into an account and then buying something that took my interest.  Even though the market was generally on the up there weren't too many that did well enough to counter the fees for such small amounts being invested.  I'd say save up and invest when you're at £500 or more at least unless there's something really special come along.

masonic

Brie said:

Do consider what the fees are for investing as it might take a big bite out of any possible profit.  I went through a few years of putting £50 or £100 into an account and then buying something that took my interest.  Even though the market was generally on the up there weren't too many that did well enough to counter the fees for such small amounts being invested.  I'd say save up and invest when you're at £500 or more at least unless there's something really special come along.

The platforms under consideration are zero commission. Costs are percentage-based (e.g. FX, spread).

tiger135

If I just use the GIA with freetrade, how does the tax thing work? Would I have to declare any profits I made upon withdrawal? Obviously Ive paid tax to earn this money in the first place. 
I wasnt sure if invest engine was as safe as its a lot newer. Would ETF only stop me investing in a single company?
Are there any others other than freetrade and t212?

wmb194

tiger135 said:

Hi all,
I want to put invest small amounts (£10/£20)  per week, so it builds up slowly over time.
Some weeks I would play safe and invest in an index fund and other times I might invest in a single company I like. I already have a pension pot so this is more for fun but also a potential other pot to draw on if needed.
Not sure if I should bother with an Isa wrapper or not.
Would freetrade fit the bill? 

Freetrade would work but Trading212 would probably be better as it offers fractional shares for everything and so you'll be able to invest the full amount each time and not be left with fractions of pounds in cash or unable to buy the share you want because each one costs more than the amount you want to invest that week. T212's FX fee is just 0.15% as well.

Whilst not strictly necessary an Isa is a good idea from a record keeping perspective i.e. you can be as sloppy as you like and it'll never matter but with Freetrade an Isa costs £4.99pm whilst with T212 an Isa account is free.

If you Google around you can usually find refer a friend offers for Freetrade and T212.

ColdIron

tiger135 said:

If I just use the GIA with freetrade, how does the tax thing work?

Rather than discussing the ins and outs of the tax regime, wouldn't it be easier to just open an ISA?

masonic

tiger135 said:

If I just use the GIA with freetrade, how does the tax thing work? Would I have to declare any profits I made upon withdrawal? Obviously Ive paid tax to earn this money in the first place.

You would need to record your purchases and sales for the purposes of calculating capital gains, which you would only need to declare if above the annual allowance. You might be selling many years later, so don't assume your gains will be too small to be of consequence.

You would need to do the same for dividends, but the platform should prepare a consolidated tax certificate showing total income each tax year.

tiger135 said:

I wasnt sure if invest engine was as safe as its a lot newer. Would ETF only stop me investing in a single company?
Are there any others other than freetrade and t212?

They are all FCA authorised and FSCS protected and the amount you intend to invest is low, so this should be of little concern. Yes, ETF only means only ETFs, not single company shares.

CMC Invest is another option (only GIA is free) and it offers funds as well as ETFs and shares. There is also Robinhood that is soon to launch (maybe - currently they are collecting email addresses for a wait list). I expect there are one or two others currently escaping my memory.

tiger135

Thanks for the info. Regarding fractions of shares, I do not have a fixed amount I want to invest, it could vary week to week.
Is one possible approach to buy a specific number of shares in a chosen company each week? 
For example if deliveroo was £3.50 a share I could decide to buy exactly 3 shares for £10.50 one week. 
Then make a note that I have bought these 3 shares  at this price, for future reference.
If the share price goes up then I own 3 x whatever that price changes to.

Hoenir

Might as well save the cash up and pay a lump sum into your pension scheme every so often. 

tiger135

anyone a freetrade member , tempted by the 5.99 a month for an isa plus 3% interest on up to £2k uninvested ?