Last updated in October 2020
This Freetrade review focuses on Freetrade, a UK-based stockbroker. Buying and selling stocks can be an expensive, tedious, and difficult process. Many people are completely unaware of how to buy stocks or invest in the stock market.
Freetrade aims to make investing “simple, beautiful and free”. With this, the app addresses the most common problems new investors face. Additionally, Freetrade operates a lucrative friend referral scheme, offering referrers and referees a free mystery share (grab yours here).
This post contains affiliate links. Should you make a purchase or sign-up through my links, I will receive a commission at no extra cost to you.
Monethalia does not offer financial advice. Should you take any action based on the information provided, Monethalia will not be liable for the outcome.
Table of Contents
Why you should invest
Money sitting in your current account is losing in value. This is because of inflation. Inflation means prices rise by around 2% every year; thus your money loses around 2% of its value. Plus every year you do not invest, you are missing out on compound interest.
The cost of not investing can be substantial over time.
The outstanding feature of Freetrade is that it is free to use. And everything you need is actually free. There are no charges for depositing, buying or selling.
However, if you want to open a Stocks & Shares ISA, the cost is £3 per month. Equally, buying stocks in a different currency will attract a charge of 0.45%. Lastly, Freetrade charges £5 for outgoing same-day bank transfers.
With this, Freetrade is much cheaper than key competitors:
Freetrade security and rating
Freetrade is a UK-regulated stockbroker and authorised by the Financial Conduct Authority. Investors are also covered by the Financial Services Compensation Scheme (FSCS) protection scheme. This means that should Freetrade go bust, your assets up to £85,000 are protected.
Additionally, Freetrade has high user ratings both in the Google Play Store and in the App Store. This provides evidence that Freetrade is legit and not a scam:
Freetrade friend referral
The Freetrade friend referral scheme is an interesting feature of the app. The most exciting point about it is that you do not know what share you will get or how much it will be worth. It could be anything up to £200.
Interestingly, you can refer more than one friend. This means you can get an unlimited amount of free shares, depending on how many people you know.
The friend referral scheme is simple:
The free share can be cashed in after 30 days and you can withdraw the money.
Freetrade review: How to sign-up
The sign-up process is straightforward. Open the app and enter your email address. Freetrade will then send you an email and you will need to click the activation link.
You also need to confirm whether you are a US tax resident. To do so, click on the icon in the upper right corner of the screen. This is called W-8 BEN form and sounds super complicated, but actually it is just a couple of boxes to tick.
Freetrade review: How to buy stocks
Before you can start buying stocks, you have to deposit money first. Notably, you do not need huge amounts to get started with Freetrade. Simply depositing £2 are enough if you are only after the free share.
During the sign-up process, you will be asked to link a bank account. Subsequently, to deposit money, head to the “account” section and tap “top-up”.
You will then be presented with Freetrade’s bank details and your unique reference code. With this, you can manually make a bank transfer from you banking app or online banking.
There is currently no option to pay with your bank card.
Buying stocks with Freetrade is simple and beginner friendly. To get started, tap “discover”. You will then be presented with a large selection of stocks. Choose the stocks you wish to buy by tapping on it.
Drawbacks of Freetrade
Freetrade is a brilliant tool to get started with investing. Nonetheless, there are some drawbacks to it:
- Stock buying orders are not instantly, they are carried out at a fixed time
- Depositing money is tedious
- The fee for a S&S ISA is quite high
Buying stocks at a fixed time
Because you cannot buy stocks instantly, Freetrade is not suitable for those looking to make money with quick trading. For investors following a buy-and-hold strategy, buying at a fixed time matters less. This means, if you are a beginner, buying at a fixed time is fine. If you are more experienced and know the stock market well, you may want to use a different broker.
Opening an S&S ISA
With the current fee for an ISA, it is not worth opening one with Freetrade unless you plan to invest a large sum of money. If you are a beginner and only want to try investing small amounts, having an ISA is not important. Equally, if you are only after the free share and have deposited your £1, you would not need to open an ISA.
Thus, the ISA fee mostly affects medium investors. If you think you fall within this category, it may be worth looking at a different stock broker.
Freetrade review summary
Freetrade is an innovative stockbroker with a user-friendly app. Signing-up and buying stocks is easy and anyone can do it without previous experience. Getting a free mystery share is exciting and a fun way to spread the word about Freetrade.
You can grab your free share here.
There are some disadvantages to using free shares compared to other stockbrokers. These become especially apparent if you are an experienced investor looking to make money with trading.
Additionally, investors planning to open an S&S ISA to buy and hold stocks may find other brokers cheaper. Nonetheless, Freetrade is a great starting point for beginners. If that applies to you, learn how to invest with confidence.
It is important to remember that you should only invest money that you can afford to lose. There are several ways you can make a few coins to toss into Freetrade without investment.
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