Investing small amounts?

Albermarle

Onestepcloser said:

Invest engine looks good at least for the ISA, zero fees.

Trading 212, what's the deal with this, no fees? How do they make money?

Like a lot of fintech and tech companies, their primary aim initially is to get customers, and their investors fund the losses in the hope they will be the next google etc
Plus as the previous poster said they have a sideline in offering gambling on CFD's.

wmb194

Albermarle said:

Onestepcloser said:

Invest engine looks good at least for the ISA, zero fees.

Trading 212, what's the deal with this, no fees? How do they make money?

Like a lot of fintech and tech companies, their primary aim initially is to get customers, and their investors fund the losses in the hope they will be the next google etc
Plus as the previous poster said they have a sideline in offering gambling on CFD's.

Other way around, stockbroking is the sideline.

Onestepcloser

wmb194 said:

Onestepcloser said:

Invest engine looks good at least for the ISA, zero fees.

Trading 212, what's the deal with this, no fees? How do they make money?

It has a CFD operation where it makes good money - you can find its annual report on Companies House. Don't touch CFDs! They're a great way to gamble your money away. It also appears to do some market making so might make something here.

Currently its plan seems to be to build up the brokerage side by offering everything for free and then at some point in the future introduce some kind of 'freemium' model, probably similar to Freetrade's, where e.g., the basic service and a core set of investments are free but then you pay a subscription to access other investments.

Two other low cost ones are Freetrade and CMC Invest. Like T212, CMC makes its money on CFDs and is looking to expand its brokerage business. CMC is a FTSE250 company that's been around for decades.

Excuse my ignorance but what's a CFD?  Won't touch anything that resembles gambling, can't even bring myself to put more than 50p on the grand national, much to the annoyance of my wife lol.

Aminatidi

Doesn't really matter what one is it's more that's the sort of thing the "free" platforms tend to offer and the traditional funds and ETFs are almost a bit of a hook to get customers on the platform.

Remember as well that the free platforms tend not to offer funds and you usually have to buy ETFs in whole units which is hard when only investing small amounts.

Honestly and respectfully from what you've said I would just stick with funds on Vanguard.

They're perfect for the sort of thing you've said you're going to be doing.

wmb194

Aminatidi said:

Doesn't really matter what one is it's more that's the sort of thing the "free" platforms tend to offer and the traditional funds and ETFs are almost a bit of a hook to get customers on the platform.

Remember as well that the free platforms tend not to offer funds and you usually have to buy ETFs in whole units which is hard when only investing small amounts.

Honestly and respectfully from what you've said I would just stick with funds on Vanguard.

They're perfect for the sort of thing you've said you're going to be doing.

Not all, Freetrade doesn't offer CFDs and they're not shown nor mentioned in CMC's 'CMC Invest' stockbroking app. I've never experienced any pressure to use or seen advertising for CFDs in T212's app or web browser so they're easy to ignore.

T212 and InvestEngine offer ETFs in fractions, which is why I've suggested them for small amounts. T212 also offers Investment Trusts in fractions.

wmb194

Onestepcloser said:

wmb194 said:

Onestepcloser said:

Invest engine looks good at least for the ISA, zero fees.

Trading 212, what's the deal with this, no fees? How do they make money?

It has a CFD operation where it makes good money - you can find its annual report on Companies House. Don't touch CFDs! They're a great way to gamble your money away. It also appears to do some market making so might make something here.

Currently its plan seems to be to build up the brokerage side by offering everything for free and then at some point in the future introduce some kind of 'freemium' model, probably similar to Freetrade's, where e.g., the basic service and a core set of investments are free but then you pay a subscription to access other investments.

Two other low cost ones are Freetrade and CMC Invest. Like T212, CMC makes its money on CFDs and is looking to expand its brokerage business. CMC is a FTSE250 company that's been around for decades.

Excuse my ignorance but what's a CFD?  Won't touch anything that resembles gambling, can't even bring myself to put more than 50p on the grand national, much to the annoyance of my wife lol.

They're a way to make directional bets for set periods of time on financial securities without owning the security.

https://www.investopedia.com/articles/stocks/09/trade-a-cfd.asp

Aminatidi

Isn't the fractional ETF thing still a bit up in the air with HMRC?

I'm not saying it should go anywhere just that it might.

For me with the "trade for free" platforms it's that old thing that if something is free then usually you're the product and they'll make their money somehow but again it perhaps depends on amounts and attitude towards platform risk.

Personally I'd still stick with Vanguard.

With the amounts mentioned the platform fees are buttons onestepcloser already has an account there so to me it's ideal for it as click a button job done 👍🏻

wmb194

Aminatidi said:

Isn't the fractional ETF thing still a bit up in the air with HMRC?

I'm not saying it should go anywhere just that it might.

For me with the "trade for free" platforms it's that old thing that if something is free then usually you're the product and they'll make their money somehow but again it perhaps depends on amounts and attitude towards platform risk.

Not in GIAs. Possibly in Isas but the government said that it would correct this. In the meantime Freetrade has stopped offering fractional shares in Isas but T212 continues to do so.

I don't think it's a massive issue anyway, worst case your fraction will be sold and IIRC any tax liability (likely minimal) is supposed to fall on the broker. It's just HMRC being silly.

I think fractional shares are great. There are some worries about their technicalities in certain scenarios e.g., a platform going bust and how shares would be transferred to a new platform but I think they're a brilliant innovation.

I'm paying £10pm to Freetrade for its 'Plus' subscription* so fees are beginning to be introduced and other than transaction fees one of the classic ways for stockbrokers to make money is to avoid/minimise the interest paid on cash balances e.g., iWeb pays no interest but it can earn c.5% in short term money at the moment. The FCA is now trying to minimise this revenue source but there should still be some margin for them.

*Which for me is an amazing bargain, that's worth just two trades per month with iWeb.