Freetrade Review: Is It Worth It?

Freetrade review exploring offered services, best features, the drawbacks and benefits of using Freetrade.

Updated: January 15, 2024
Matt Crabtree

Written By

Matt Crabtree

 

Are you looking to invest in stocks, shares, ISA and other tradable goods but don't know where to start?

There are many UK trading platforms to use, but if you're a first-time investor, you may want a platform that is user-friendly and accessible. Freetrade is a platform that allows you to buy, sell, and hold stocks and shares, ISA, and ETFs commission free.

In this article, we'll be sharing a Freetade review, talking about the services they offer, the best features we think will help you, the drawbacks and benefits of using Freetrade, and giving you our honest thoughts.

Who Is Freetrade?

Freetrade is a UK-based fintech company that provides a freemium share dealing service.

Freetrade is headquartered in London and was founded in 2016 by Adam Dodds and Davide Fioranelli. The company is privately owned, with around 8,000 shareholders through crowdfunding.

The company's mission is to make stock market, stock ownership and trading more affordable and accessible. The platform allows you to buy, sell, and hold stocks and shares, ISA, and ETFs commission-free. There are currently 1.4 million users on Freetrade's award-winning investing app.

There are three plans to choose from: basic, standard and pro. All Freetrade accounts are covered by the Financial Services Compensation Scheme (FSCS), and the platform is authorised and regulated by the Financial Conduct Authority (FCA). So, you're protected if anything unlawful happens to your funds or account.

What Stocks Does Freetrade Offer?

Freetrade has a wide range of options for you to invest in. In this section, we explore each type of investment on the platform.

Freetrade's stock list includes:

  • Various stocks: Freetrade over 6,000 UK, European, and US shares to buy and sell across all markets and sectors.
  • Cash investments: You can invest in low-risk, easy-access cash investments with high rates. Freetrade's cash investments are a collection of low-risk exchange-traded funds (ETFs).
  • Fractional shares: You can invest in a partial share of a company that allows you to invest in a company without buying a whole share. Fractional shares are cheaper than buying full shares, so you can still invest in high-value businesses without purchasing a full share. You can invest in US stocks for just £2. You can still get dividends even if you only own fractional shares.
  • ETFs: You can choose from over 400 ETFs to invest in commission-free. ETF trading is simple, helps diversify portfolios, is low-cost, and is tax efficient.
  • Investment trusts: Over 150 investment trusts are available on Freetrade's platform. Investment trusts allow investors to diversify portfolios across geographic areas, market sectors and private equity.
  • OTC stocks: Invest in over-the-counter (OTC) securities if you choose the Standard or Plus plan. Companies tend to trade OTC if they don't meet the requirements for a formal exchange, as OTC securities are assets that aren't listed on major exchanges. All OTC stocks on Freetrade are American Depository Receipts (ADRs).
  • SPACs: There are over 200 special purpose acquisition companies (SPAC) to invest in. More companies are added monthly, so you'll have plenty of choice for your next investment.
  • REITs: Freetrade has over 160 real estate investment trusts (REITs). You can earn regular dividend income and diversify your portfolio, and there are opportunities to get a total return on investment.

What Are Freetrade's Best Features?

Whilst using the platform, we explored all the features Freetrade had to offer.

The platform is feature-rich, but what features you can access will depend on the subscription plan you pay for. However, there are some essential features that you can use regardless of whether you pay for a plan or not. So, here is a list of Freetrade's features and what they can do for you as an investor:

  • Commission-free trading: Some investment platforms charge for buying and selling shares, and Freetrade doesn't charge for share dealing.
  • Low-cost trading UK investments: You can start investing in stocks and shares for just £2. Low-cost investments make trading more accessible.
  • Cash investments: Freetrade allows you to invest in low-risk ETFs that could provide a high yield. So, there is potential to earn profit and make the most of your cash.
  • ISA: With Freetrade, you can transfer any ISA money you may already have into a Freetrade ISA account, and you can earn interest and dividends from shares tax-free through ISAs on the platform.
  • Stocks and shares ISA: If you want to invest up to £20,000 a year without any tax, you must use one of the tax-advantaged accounts available with the £4.99 and $11.99 plans.
  • Most traded shares: The Freetrade app provides graphs and charts of the most popular shares and ETFs bought over the last week and ranks by the total value of buy orders. This feature is ideal for looking at potential investment options.
  • Shareholder perks: When you become a shareholder, some companies may reward you once you earn a minimum amount.
  • Self-invested personal pension (SIPPs) plans: SIPPs usually qualify for tax relief, so for every £80 you contribute, the government contributes £20. SIPPs are only available on the Standard and Plus plans.

What Do You Need to Use Freetrade?

Freetrade is accessible and easy to use; you don't need much investment information.

The only requirements are to be a UK resident for tax purposes and have a UK bank account. You only need the following information to open a Freetrade account:

  • Personal details: You must share your name, date of birth, address and nationality. You can use your national insurance card or a payslip from a recent employer.
  • National insurance number: You will need to provide your national insurance number. However, if you're not a British citizen but a UK resident, you must provide the relevant national identification number.

The platform is fully digital, including the application process, so you must apply online or through the smartphone app. Most trading occurs on the app, especially if you opt for the Basic or Standard account, so that you will need smartphone access. However, you can access the platform via desktop for the Plus account.

Freetrade “Free” Trading Explained

Freetrade prides itself on free trading.

However, that isn't what you think it does. What is meant by free trading is there is no trading fee, so it's commission-free trading. However, other charges may incur, such as:

  • Monthly charges: There are no account fees for holding your investment, but if you want access to all of Freetrade's features, you must pay monthly subscription fees. There is a basic free plan, but the subscription cost will depend on your trading needs. The two paid-for plans are £5.99 and £11.99 per month.
  • Stamp duty on UK stocks: Freetrade doesn't charge stamp duty, but the tax office does, and you will find this charge with all brokers when purchasing stocks and shares. The stamp duty charge is currently 0.5% of the transaction value.
  • FX fee for overseas stocks: There is a currency conversion fee for transactions that aren't in GBP; depending on the tier of your account, the fee could be 0.35% or 0.99% of the transaction value. 

The Benefits and Drawbacks of Using Freetrade

We've compiled a list of all the benefits and drawbacks of using Freetrade so you can see what works well and what doesn't for investors.

Benefits

✔️ Free basic plan: You can choose a free and two paid-for plans. You will gain access to more features with the paid plans. However, if you want to simply buy and sell shares and stocks, you can do so with the Freetrade basic plan, which comes with a general investment account, commission-free trading, and an investment range of 4,800.

✔️ Free stock and exchange-traded funds trading: Invest without worrying about transaction fees. Freetrade doesn't charge commissions or platform fees for the transactions made on their platform.

✔️ Diversified portfolio: Freetrade has a wide range of stocks and shares available across the UK, Europe and the US. You can diversify your investment portfolio by having access to different kinds of shares and shares from overseas.

✔️ Easy set-up: You only need some information to set up an account. You enter your details like name, address and national insurance number, and you can join immediately.

✔️ Low-cost trading platform: You can start investing with as little as £2, so if you're worried about not having a massive chunk of money or losing a lot of money in investing, you can start small. 

✔️ Easy-to-use interface: The app is straightforward, especially for first-time investors.

Drawbacks

❌️ Debit card-only deposits: When you want to deposit money into your account, you can only use a debit card. Other investment platforms will have more deposit options.

❌️ Lack of research: The platform has limited research tools. There is a learning hub with essential information for starting investors but only a little for experienced investors.

❌️ App only: The Freetrade platform typically offers app-only investing unless you're a Plus plan user. So, if you're not into investing using your smartphone, you may have to pay for the most expensive plan (£11.99 per month).

Freetrade Review: Overview

Freetrade is ideal for investors with little money who want to explore investing in shares.

As a trader on the Freetrade platform, you can invest from as little as £2 and commission free. The starting price alone is an excellent way to make investing more accessible, and the user-friendly interface is ideal for people who aren't used to investment platforms.

With no commission fee, a small starting investment price and a simple process to open an account with Freetrade, we were sceptical of the safety. However, Freetrade is authorised and regulated by FCA, so it’s reassuring that the platform is held to strict standards and regulations that ensure user data and funds security.

FCA in the UK also regulates Freetrade's third-party custodian, DriveWealth, which is based in the United States. On top of FCA regulations, the broker is also a member of the FSCS, which protects all investor's assets up to £85,000 if Freetrade goes out of business.

All three plans have a Freetrade general investment account and commission-free trading. However, there are some distinct differences between the three plans.

We tried all three plans and have written a review for each in the following sections to help give you a better understanding of what Freetrade has to offer. You can pay monthly or annually for your plan, whichever option suits your finances.

Freetrade Review: Basic Plan

  • Cost: £0
  • Investment range: 4,800

If you're new to investing or want to test the platform first, the free basic plan gives you access to a general investment account, commission-free trades, fractional shares and exploration of 1,500 stocks and ETFs.

The basic plan is limited in features, but if you're new, having minimal features may help you avoid being overwhelmed with choices. We found this plan is a deal if you want to buy and sell shares casually at a low volume. It's a great beginner's plan. However, if you're an advanced investor, you may need more comprehensive access to features and a higher investment range.

We recommend starting with a Basic plan while you become familiar with the platform and then consider upgrading your plan when you need more features and are confident with the app.

Freetrade Review: Standard Plan

  • Cost: £5.99 per month
  • Investment range: 6,000+
  • Interest paid on uninvested cash: 1% on up to £2,000

The Standard Plan is the lowest-paid plan that Freetrade has to offer. You get all the features from the basic plan, plus more like trading Stocks and Shares ISA, self-invested personal pension securities, and gain exposure to US and European shares and ETFs as well as UK ones. For the basic plan, there was no reduced FX fee.

However, with the Standard account, there is a 0.59% reduced FX fee for USD and EUR stocks. With the Standard plan, you can earn interest on your uninvested cash. You can earn 1% up to £2,000.

The price of this plan is reasonable. More features are available to investors and a chance to earn interest and take advantage of reduced fees. The plan is worth the money; you get more than the basic plan but fewer features than the Plus, but the price is reasonable for what you get.

Your investment range increases with this plan to 6,000 from 4,800, the maximum amount. So, if investment range is your primary focus, you won't get a higher volume than this even if you upgrade to the next plan.

The Standard plan is ideal if you want more features than the Basic plan offers but want to pay less for the Plus Plan. It's a mid-range account that will excel your portfolio whilst giving you additional benefits.

Freetrade Review: Plus Plan

  • Cost: £11.99 per month
  • Investment range: 6,000+
  • Interest paid on uninvested cash: 3% on up to £4,000

Freetrade's Plus plan is the most feature-rich plan that you can access. The plan is a higher price, but the benefits outweigh it. The account allows you to trade Stocks and Shares ISA and self-invested personal pension just like a Standard plan.

However, the additional features include automated order types, advanced stock fundamentals, Freetrade Web beta, and priority customer service.

What makes this plan our favourite, besides the just mentioned additional features, is that you can earn more interest on uninvested cash at 3% up to £4,000 and a 0.39% reduced FX fee. So, where you pay more for the plan, you will earn more in interest and pay lower fees than the other plans available.

This plan will allow you full access to the platform with no limitations, and unlike the other plans, you can use the platform online on a desktop and your smartphone. The additional automated order types feature means you can set your trades to start without even needing to be on the platform, so you can go about your day without worrying about missing out on investing opportunities.

The plan comes with risk control features to help stay in control of your investments with limit orders and stop losses, so you can set your investment to prevent it if it reaches a certain amount, which is ideal; if an asset decreases in value, you can limit your loss.

You will also gain deeper stock insights with enhanced fundamentals on companies so you can make smarter investment decisions.

With advanced trading tools, priority customer services with extended hours, and expanded stocks, this plan would be ideal for more advanced investors as you can utilise the tools to their abilities.

You get more for your money with this plan, and although it's the most expensive, it's reasonably priced and gives you more opportunity to earn and save money than the other plans that Freetrade offer.

Freetrade App Review

You can only trade via the Freetrade app, so that you will spend a lot of time on it. We thought it was only fitting to share our thoughts on the app.

The mobile app is available on Android and Apple devices, so you need a smartphone to use Freetrade. A perk of the platform being mostly app-based is that you can trade from your smartphone whenever you want.

The app's overall look is clean and intuitive to help users navigate the platform seamlessly. With only a few tabs, it's easy to use so that you won't get lost in information pages.

All you need is the toolbar at the bottom of the screen, and you can access Portfolio, Insights, Discover, Activity, and Account. A range of neat graphs shows investment performance clearly and well presented so most, if not all, traders can read.

The app lets you buy, sell, trade, and track your investments. With the basic and standard plan, you can only access trading via the mobile app. However, if you pay for the Plus plan, you can use the desktop online trading platform, a replica of the app, in a slightly different format.

Exploring Freetrade's Cost and Fees

Even though it is free in the business title, and the trades are commission-free, other costs are still included on the platform.

There are costs for subscription plans, taxes, and different types of trades. 

The cost of services is as follows:

  • Basic account: Free
  • ISA with the standard account: £5.99 monthly fee, or you can pay an annual fee of £59.88
  • Freetrade Plus (including SIPP): £11.99 per month or £119.88 per year
  • ISA with plus account: Free
  • Basic trades: Free
  • Standard bank transfer: Free
  • Forex trade: 0.45% of the transaction plus spot rate

How to Start Investing With Freetrade

Before we share our final thoughts in our Freetrade review, we wanted to share how to start using the Freetrade platform for investing.

Investing has never been easier with Fretrade; you can start investing in six simple steps:

  1. Pick a plan: Visit the Freetrade website and explore it as much as possible. Get a feel for the platform, explore its features, and compare each plan to see which best fits your needs.
  2. Download the Freetrade app: Once you've signed up and accessed your general investment account, you can explore the app on your smartphone. The mobile app is compatible with Android and Apple devices.
  3. Create a plan or investing strategy: Don't just buy the first stock you see. Look at your current investment strategy and see where your new opportunities fit. If you've not got a strategy, now is an excellent time to create one. Creating and sticking to a plan can help you reach your goals and stay on track with minimal tangents and unnecessary spending.
  4. Research stocks: Once you've got your plan, it's time to use Freetrade's stock categories. See their reports and check for trading volume, price, history, and anything that can help inform investment decisions.
  5. Add funds to the account: You can deposit money via the app using Apple Pay, Google Pay, and bank transfer. If you've chosen the Standard or Plus plan, remember that you will earn interest on uninvested cash, so you may want to transfer over more funds than you need so you can make a little extra on your account balance.
  6. Choose investment amount and buy stocks: Once you've done all the above steps, it's time to purchase the stocks. When you have the shares, stocks or ETFs, you can track them and see their performance any time from the app. Freetrade updates its services monthly with new investments, so check to see if any opportunities are available.

Final Thoughts on Freetrade

So, is Freetrade worth it? We'd say yes.

The platform is straightforward, low-cost, and a great gateway to diversifying a starting investment portfolio. Sure, there are more advanced platforms, but Freetrade offers a quality, affordable, accessible service.

To make the most out of the platform, try the Basic account to get used to the format and features and then move straight to the Plus plan when you feel more confident with Freetrade.

You get more features than the other plans, such as advanced stock fundamentals, Freetrade web beta, and priority customers. You also get better interest, like 3% on uninvested cash up to £4,000, and a low FX fee of 0.39%.

The extra you pay for the plan, you can earn back in interest and save on FX fees. With suitable investments, the account will pay for itself.

Our final thoughts on the platform are that if you're a beginner or intermediate investor, you will likely use Freetrade more than an advanced investor. However, it is a solid platform all around.

Related Guides:

Freetrade Review: FAQs

Can You Make Money With Freetrade?

What Are the Drawbacks of Freetrade?

Is Freetrade a Trusted Investment Platform?

What Are the Benefits of Using Freetrade?

Does Freetrade Offer Free Trading?

What Happens to My Investments If Freetrade Cease Trading?

Related Articles

Pepperstone Review
Generally speaking, whether you've been trading various financial instruments for...
Best Free Trading Platforms
Top free trading platforms in the UK offer multiple benefits. If you're interested...
Best Demo Trading Accounts
If you are interested in trading various financial instruments but are unsure how...
Best Investment Platforms
If you're new to investing, you’ll want to choose an investment platform that’s...