Freetrade: Investing in UK stocks or ETFs? There’s few places cheaper if you fit into the right category

If you’re new to investing, Freetrade could suit you well. The good-looking and well-designed app does a great job of paring things down and translating the bewildering world of investing into something relatable, digestible and enjoyable.

That said, as Freetrade doesn’t offer A ready-made portfolio is a pre-made collection of investments that have been put together by investment experts. They are designed to be a simple option for those who don’t want to choose individual stocks or funds for themselves.ready-made portfolios and there is no ‘robo-advice’ type of help with investment decisions, this is a DIY platform for those who feel confident enough to make their own investment decisions. That means understanding the basic principles of investing (building a diverse portfolio, understanding risk and your tolerance to risk, and the importance of thinking long-term) and being comfortable undertaking your own research into which stocks/ETFs to invest in. Freetrade does also provide some beginner guides to help you learn and the social trading element of Freetrade is a great resource.

More experienced investors looking for a greater choice of assets, instruments, and sophisticated research tools will want something more than Freetrade offers. You can’t short-sell on Freetrade, for example, as you can on eToro and Trading 212.

If you decide to move onto a more complex platform or branch out into more regular trading, try a broker that offers a demo platform where you can hone your skills with virtual money first. Again, eToro and Trading 212 offer this.

Freetrade is, therefore, best suited to those comfortable and excited to choose their own stocks, but not looking to over-complicate things.

There’s another group who benefit from trading on Freetrade, and that’s investors who have a large investment portfolio. That’s thanks to the flat fees (and zero annual fees if you choose to invest through the Basic plan). The way to get the best from Freetrade in terms of costs, is as an investor with a large portfolio investing in ETFs, UK stocks or investment trusts.

Accounts

At Freetrade, you can invest through an Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAEnterWordHereISA, A self-invested personal pension (SIPP) is a type of private pension that allows you to control the specific investments that make up your pension fundself-invested personal pension or General investment account (GIA) is an account designed to provide access to investments. You may be liable for tax on any income or capital gains earned within a general investment account but this can be a useful vehicle for anyone who has maxed out their ISA allowancegeneral trading account.

Here’s how that measures up against other comparable trading platforms:

Assets

The first thing to note with Freetrade is that it doesn’t offer A ready-made portfolio is a pre-made collection of investments that have been put together by investment experts. They are designed to be a simple option for those who don’t want to choose individual stocks or funds for themselves.ready-made portfolios within any of its products, meaning this is a platform solely for those happy to make their own investment decisions. There are also no mutual funds here – only Exchange traded funds (ETFs) are traded in much the same way as stocks. Instead of an individual stock, however, you own a basket of different assets which track the performance of a particular index or market. ETFs.

If you’re comfortable building your own portfolio for your ISA, SIPP or general investment account, Freetrade offers access to a selection of:

• UK shares
• US shares (inc Fractional shares are portions of shares (or ETFs) that are smaller than one whole share. They are designed to make ownership of large, expensive shares more accessible. fractional US shares)
• European shares
• ETFs
• REITs
• Investment trusts
• Treasuries (a form of UK government bond)
• Over the Counter (OTC) shares

Freetrade offers investors a choice of 6,100 stocks, ETFs, and investment trusts. While that sounds like plenty to choose from, some of these assets are only available on the top-priced plan (see Fees section for details of which assets are available with each plan ).

If you were just planning to take advantage of the free Basic plan, do a search for the assets you want to invest in before signing up to check if they are available. I had a look for International Consolidated Airlines Group SA (IAG) which owns British Airways, and it wasn’t listed, despite the fact that it’s a FTSE 100 listed company.

Freetrade does make a point of saying they are always looking at suggestions from users for new stocks to add and have stated that their long-term vision is to make all listed companies globally available within the Plus plan. However, British Airways shares were promised some time ago by Freetrade and they have still failed to materialise.

With Freetrade, you’re getting an uncomplicated platform with fewer assets and fewer complex instruments than professional trading platforms like Interactive Brokers, Saxo Markets, and IG. As such, it doesn’t offer access to options, CFDs, cryptocurrencies or forex.

However, Freetrade does offer access to some leveraged ETFs through the Standard and Plus accounts. As leveraged ETFs are classed as ‘complex instruments’, Freetrade will ask you to take an appropriateness test, which you’ll need to pass before being able to trade these securities – something that’s required by regulators.

Freetrade has done an impeccable job of designing the menu of assets on offer. It’s a visual feast.

The opportunity to buy fractional shares will make Freetrade an attractive proposition to those looking to hold stock in some of the biggest US companies but who don’t have the budget for whole shares. It also gives Freetrade an advantage over some of the bigger, more established names (including interactive investor) who don’t currently offer them.

Stocks and Shares ISA

The Freetrade ISA received the best score in the Investors’ Chronicle’s ISA rankings and Freetrade was also voted Best ISA Broker for 2022 by Brokerchooser.

A Stocks and Shares Individual Savings Account (ISA) is a tax-efficient investment account that enables you to put up to £20,000 into stocks, funds, bonds, ETFs and other assets. ISAs are exempt from tax on savings interest, dividends or capital gains tax on funds. Withdrawals are also not subject to income tax. Read more about ISAs here.

To access Freetrade’s ISA account, you’ll either need to pay for a Standard account (from £4.99 per month), or upgrade to a Plus plan (from £9.99 per month), as it’s not available to those on the free Basic account.

It’s free to make a transfer if you already have an ISA somewhere and want to transfer it over. You’ll need to complete a form but Freetrade takes care of the rest for you. The transfer process typically takes four to six weeks.

Junior ISA

Freetrade does not offer a A junior self-invested personal pension (SIPP) is a way of investing money for your child’s future retirement, free from capital gains and dividend tax. As it is designed to be started before a child turns 18, it must be opened by a parent or guardian although anyone can contribute. Once the beneficiary turns 18, they take control of the account, however, the money within the account cannot usually be accessed until age 55 (rising to 57 in 2028 and likely to rise further)Junior ISA product.

Cash ISA

Freetrade does not offer a A cash ISA is a type of individual savings account where you can earn tax-free interest on your saved cashcash ISA.

Lifetime ISA

Freetrade does not offer a Lifetime ISAs (Individual Savings Accounts) (LISAs) are designed to help you save for your first home or retirement and come with an automatic 25% government bonus on all contributions up to the value of £4,000. There are stocks and shares LISAs – where you invest your savings – and cash LISAs – where you earn interest on your savings. You must be between 18 and 40 to open a LISA and all income, capital gains and interest earned within LISAs is tax-free, although these funds can only be used to purchase your first home or for retirement. Ensure you are familiar with the rules surrounding this account before utilising itLifetime ISA.

SIPP

You’ll need to open a Plus plan (from £9.99 per month) to start saving into a SIPP as it’s not available on either the free Basic account or the Standard plan. You’ll also have to be confident enough to pick your own investments with Freetrade’s SIPP, and adjust your exposure to risk as you approach retirement age, as there are no ready-made portfolios here.

Freetrade won’t charge you to transfer a pension to them, but you may incur fees from your existing provider which Freetrade doesn’t unfortunately offer to refund, unlike a few other providers. (AJ Bell, for example, will cover up to £500 of transfer costs.)

One possible downside to opening a SIPP here is that Freetrade isn’t currently able to accept employer contributions. That means it’s not an option if you wanted your employer to pay into your SIPP.

Cash savings account

Freetrade does not offer a cash savings account.

Company account

Freetrade does not allow for accounts to be opened in limited company names so you can’t take advantage of more favourable capital gains tax rates or offset losses against personal income, as you can when investing through a limited company.

Joint accounts

Freetrade does not facilitate joint accounts.

Voting rights

This is something to be aware of with Freetrade. Currently, voting rights are only supported on proxy voting for US securities and mandatory voting on some takeovers.

Corporate actions are events which may have an impact on shareholders and/or a company’s share price, so this may be something that you want a say on.

Unfortunately, Freetrade doesn’t guarantee they can support the ability to vote in all elective corporate actions, and even on mandatory voting events, Freetrade says that it “does not guarantee customers will receive information on all corporate actions ahead of the effective date”. They state they are exploring how they can support this in the future, but don’t yet have a timeframe to share on this.

Dividends

If the company you’re invested in pays dividends, Freetrade will ensure you receive the cash into your account once dividends are paid out, or, if the company performs a stock dividend payout, then you’ll receive the extra shares.

Freetrade is pretty good at paying out dividends quickly. You’ll usually receive them either on the payment date or within one working day.

Mobile platform

Freetrade is a mobile-first company. As such, you’d expect their mobile app to be first-class… and it is. So good, in fact, that it’s been awarded the title of ‘Best Online Trading Platform’ for five consecutive years at the prestigious British Bank Awards.

A lot of thought has clearly gone into making the app as simple, intuitive and user-friendly as possible – and it’s paid off. It gifts a fantastic user experience.

The app is available on iOS and Android and has a 4.3-star rating at the time of writing in the Google Play Store. Users are generally very positive, although some comments relate to niggles.

App security is strong, with biometric login enabled for users.

Web platform

Freetrade has developed an online desktop version of its platform which is currently only available to Plus account members in its beta form. That’s a shame but hopefully, it’ll be rolled out soon.

As this is a beta product in testing, if you do have access to it, you still won’t be able to fund or make investments at this stage, but you can view and sort your portfolio and the instruments you’ve invested in. Freetrade has promised to continue adding more features in time to make it a real alternative to the app.

First, what Freetrade doesn’t charge:

• Commission
• Spreads
• Trading fees

So far, so good. But they have to make their money somehow. So where are you paying for Freetrade’s services?

Freetrade operates a ‘freemium’ business model. That means, while it’s possible to access their basic trading account services free of charge, you’ll need to pay if you want to tap into their more advanced features and other investment products.

The three account types are:

Basic Account

This is a free account.

A Basic account gives you have access to:

• A general investment account
• Commission-free orders
• Choice of 4,800+ stocks on the UK 350, US stocks, OTC stocks, all Vanguard, iShares and Invesco ETFs, AIM 100, and all the major European indices
• US Fractional shares are portions of shares (or ETFs) that are smaller than one whole share. They are designed to make ownership of large, expensive shares more accessible. fractional shares
• A foreign exchange (FX) fee is added to all trades involving foreign currencies. If you buy a stock that trades in US dollars, for example, and your home account is in GB pounds, you’ll need to pay an FX fee.FX fees at 0.99%
• Interest rate of 1% on cash up to £1k

The fact that you can sign-up for a free account gives Freetrade an edge over those platforms that charge monthly account management or platform fees. Combined with the commission-free trades, it makes for a great low-cost provider for beginners.

Having said that, watch those foreign exchange fees which are a steep at 0.99%. At that rate, commission-free US stocks aren’t quite as free as they might initially sound. Interest on uninvested cash also stops at £1k which isn’t great.

Standard Account

£4.99 per month (if paid annually; price rises to £5.99p/mo when paid monthly)

A Standard account gives you access to:

• A general investment account
• Stocks and Shares ISA
• Commission-free orders
• US fractional shares
• Choice of 6,100+ stocks on the UK 350, US stocks, OTC stocks, all Vanguard, iShares and Invesco ETFs, AIM 100, and all the major European indices, plus 1,100+ additional securities
• Advanced stock fundamentals (metrics to help you measure a stock’s value)
• A limit order is an instruction to automatically buy or sell a stock once it reaches a certain threshold. With a limit order, you’re saying there’s a limit on the maximum price you’ll pay (if you’re buying) or a minimum price you’re willing to receive (if you’re selling).Limit orders and A stop-loss order is an instruction to sell an asset automatically once it reaches a certain price point. The aim of a stop-loss order is to limit losses. Stop Losses
• 3% interest on cash up to £2k
• FX fees at 0.59%

You’ll get more choice and lower currency conversion fees with a standard account, along with access to the Stocks and Shares ISA so you can start building your tax-free savings.

Plus Account

£9.99 per month (if paid annually; if paid monthly, the cost rises to £11.99p/mo).

A Plus account gives you access to:

• A General Investment Account
• Stocks and Shares ISA
• SIPP
• Commission-free orders
• US fractional shares
• All stocks listed in the standard plan, plus London-listed (main market + AIM market), S&P SmallCap 600, OTC shares, all other ETFs (including some FTSE 100 ETFs managed by HSBC), and all other European stocks
• Advanced stock fundamentals (metrics to help you measure a stock’s value)
• Limit Orders and Stop Losses
• 5% interest The annual equivalent rate (AER) is used to describe the percentage of interest you’ll receive on your savings and investments. AER accounts for compound interest whereas the gross interest rate does not. AER is also known as APY (the annual percentage yield). AER (4.88% gross) on cash up to £3k
• Access to Freetrade’s beta desktop version
• Curated stock collections
• Priority customer service
• FX fees at 0.39%

You get more for your money, of course: the availability of a SIPP, more choice of investment assets, and more tools, plus lower foreign exchange fees. But again, for smaller portfolio holders, those flat fees can work out costly. Check out Dodl for a comparison with a provider that uses percentage fees.

At 5%, that interest rate on uninvested cash is highly competitive. BUT, you won’t receive it on anything over £3k, which is definitely not competitive.

Fee examples:

A flat fee of £4.99 or £9.99 per month is a lot if you don’t have a large portfolio. Here’s how those fees work out with different amounts invested, and FX fees included on non-GBP trades.

You’ll notice it becomes more economical, if you’re trading non-GBP stocks, to have a Plus account on anything over £2k.

If you’re only invested in UK stocks, then it always works out best value to have a free Basic account. If you want to invest through a stocks and shares ISA or SIPP, however, that isn’t possible as you’ll need to pay for an account, but then you’re no longer getting those stocks for free.

Freetrade’s SIPP can be a good deal, but, as this comparison table shows, it’s those with larger portfolios who benefit from Freetrade’s fixed fee pricing structure. There are cheaper options available for those with smaller funds:

Tip: Account fees are 17% higher if you choose to pay monthly so opt to pay annually in one lump sum if you can.

A foreign exchange (FX) fee is added to all trades involving foreign currencies. If you buy a stock that trades in US dollars, for example, and your home account is in GB pounds, you’ll need to pay an FX fee.FX fees

An FX fee is charged on all US and European orders and varies by plan:

Basic plan: Exchange rate + 0.99%
Standard plan: Exchange rate + 0.59%
Plus plan: Exchange rate + 0.39%

That’s pretty high at the top end, although cheaper than eToro’s 1.5%. For overall market comparison:

Other fees

An additional fee may be charged by Exchange Traded Funds (ETFs) and Investment Trust providers for managing the product and other associated costs.

Some fund managers charge performance fees when a fund exceeds a benchmark set by the fund manager.

Inactivity fees

You won’t face inactivity fees at Freetrade, which makes it a good match for ‘buy and hold’ investors. For comparison, you’ll find no inactivity fees either at Dodl, but eToro charges $10 per month after 12 months of inactivity.

Withdrawal fees

There is no charge for standard withdrawals (in contrast to eToro’s $5 per withdrawal) although Freetrade charges £5 for same-day withdrawals, so try to avoid those.

Deposit fees

There is no charge to deposit funds into your account.

Minimum deposit

There is no minimum deposit on Freetrade.

Interest

I’ve referenced the rates of interest in the commentary on the plans above. Since Freetrade raised their rates in March 2024, they’re certainly more competitive. However, keeping a ceiling on how much cash you can claim on, means you’ll only be looking at pennies when it comes to payments, so keep that cash moving.

For comparison, there are no ceilings on interest payments on the following platforms:

Research and analysis tools are rudimentary, pitched mainly at the level of new investors and those who would find a more advanced trading platform too complex and overwhelming.

You’ll find charts showing the stock’s performance over different periods of time, and stats, all annotated with helpful explanations, that are designed to aid smart decision-making among those new to investing.

Crucially, your account type will determine the specific tools you have at your disposal over and above the basics.

Everyone, even those on a free account, has access to some financial data, provided by the experts at IEX. One thing I really liked was that each metric is explained in layman’s terms (explanations are available within one click and they don’t take you away from the page you’re on) to make understanding quick and easy for the uninitiated.

On all accounts, you can view data on:

• Beta
• One way to determine a stock’s value is by comparing the company’s share price (P) to its earnings (E). The lower the P/E ratio, the better value it is deemed to be.P/E (price-to-earnings) ratio
• The price-to-book ratio compares the stock market value of a company with the value of its assets on paper. It is used by some investors as a way to spot undervalued stocks.P/B (price-to-book) ratio
• Market cap
• Dividend yield
• Previous choose
• Open price

With a Plus account, you can gain access to ‘Enhanced stock fundamentals’ including:

• P/S (price-to-sales) ratio
• The PEG ratio is a stock’s price-to-earnings (P/E) ratio divided by the growth rate of its earnings over a specific time period. The lower the PEG ratio, the more undervalued the stock.PEG (price-to-earnings-growth)
• PS (price-to-sales)
• Analyst ratings

Analyst ratings are valuable as they give you the experts’ opinion on whether to buy, sell or hold a particular stock. That said, it’s easy to find that information for free elsewhere online so probably not a reason to upgrade alone.

Freetrade has a lively community forum (also open to non-customers). It’s a good place to post your questions or ask for help, and compensates to some degree for the lack of education and news service.

You’ll find stock discussions, reading suggestions, ideas, ask-me-anything opportunities to quiz experts, and you can make stock requests to the Freetrade team.

Always remember, however, that tips, insights and ideas gained from a community forum do not constitute regulated, professional financial advice. You should consult an independent, qualified financial adviser if you are unsure what investment strategy could be right for your specific circumstances, goals and appetite for risk.

When selecting a provider for your investments, it is very important to first ensure they meet certain minimum safety standards. We judge Freetrade to meet the threshold for a ‘safe’ provider because:

• It is regulated by the Financial Conduct Authority (FCA) in the UK.
• It is a member of the Financial Services Compensation Scheme, meaning that in the unlikely event of Freetrade failing, the value of your assets (both cash and investments) are protected up to a maximum of £85,000.
• Freetrade holds all of your money and assets under the FCA’s CASS rules, which means they are held in segregated accounts, separate from the company’s money.
• The company is annually audited by Deloitte.
  Freetrade is a member of the London Stock Exchange.

Freetrade has faced some controversy though. In December 2022, the FCA ordered Freetrade to delete certain social media promotions after flagging problems with the company’s partnership with a personal finance influencer. The influencer had not complied with FCA rules regarding the way she promoted products. Freetrade complied with the instructions and the ban on using influencers as a means of promotion remains in place at the company.

Always remember that investing involves risk. The value of your investment can go up as well as down, and you could get back less than you put in.

Account security

Biometric login is facilitated on Freetrade, which can help protect your account from account takeover.

Buying and selling on Freetrade is kept very simple. You can only buy and sell shares so there is no short selling. You’d need a platform like Trading 212, or eToro to get into derivatives.

Order types

Instant Orders (for immediate execution during trading hours) and Basic Orders (placed out of trading hours, but for immediate execution when trading commences) are available to all customers. If you are a Standard or Plus account holder, you’ll also get access to:

• A limit order is an instruction to automatically buy or sell a stock once it reaches a certain threshold. With a limit order, you’re saying there’s a limit on the maximum price you’ll pay (if you’re buying) or a minimum price you’re willing to receive (if you’re selling).Limit orders
• Recurring orders (automated trading)
• A stop-loss order is an instruction to sell an asset automatically once it reaches a certain price point. The aim of a stop-loss order is to limit losses. Stop loss orders

These types of orders allow you to limit the risk of losses and limit the risk of missing out on optimal pricing, so are well worth understanding if you plan to trade often. Freetrade does a great job of explaining order types on their website if you want more information.

The ‘Learn’ section of Freetrade’s website has some guides and articles on the basics of investing and how to build a portfolio. It is just the basics, however, so I would advise topping up with resources from elsewhere if you want a more of a comprehensive understanding of Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAISAs, A self-invested personal pension (SIPP) is a type of private pension that allows you to control the specific investments that make up your pension fundSIPPs and the principles of investing.

There are also some ‘Market News’ pages under the Learn menu but these are next to useless. The UK Stock Market News, US Stock Market News webpages and Invest Hub news pages haven’t been updated in more than a year and the An Initial public offer (IPO) is when shares in a company are made available to investors. It’s sometimes known as either a ‘listing’ or ‘floating’ on the public market.IPO listings page has been abandoned since 2021.

Education from Freetrade is lacking but it isn’t hard to find good quality videos, guides, courses and workshops for free elsewhere online so it isn’t necessarily a dealbreaker. Always choose educational materials from a reputable source that are designed to inform rather than influence you. Start here with our impartial guides to investing, trading, ISAs and SIPPs.

Account opening

Opening an account is made as quick and simple as is possible with Freetrade. It took me five minutes to complete the fully digital process and all I needed was my National Insurance number and bank account details (No money was taken during application – I could decide when to deposit funds once I was comfortable with the platform).

Closing and transferring an account

Requesting a transfer into Freetrade is done via an online form which you can access from the app. It’s free to do and you can monitor the progress of your transfer in the app.

If you want to transfer out, you don’t need to let Freetrade know – your new provider should take care of everything. Freetrade doesn’t charge a fee for transferring out or closing your account.

Deposits

Freetrade provides a selection of ways to deposit cash into your Freetrade account:

• Instant transfer from a bank account
• Direct Debit
• Apple Pay
• Google Pay

You cannot make a deposit using a credit card. Payments made using Google Pay / Apple Pay must be linked to a debit card too, not a credit card. There’s a £2500 lifetime limit on these payment methods.

The minimum amount you set up a Direct Debit for, is £25 per month, per account. If you don’t want to commit to regular deposits, then you can pay using one of the methods above and pay on an ad-hoc basis.

Transfers

Transferring into either a A self-invested personal pension (SIPP) is a type of private pension that allows you to control the specific investments that make up your pension fundSIPP, Sometimes called an investment ISA, a stocks and shares ISA is an individual savings account that allows you to invest in shares, unit trusts, investment funds, and bonds. You will not need to pay tax on any income or capital gains earned on investments within an ISAISA or General investment account (GIA) is an account designed to provide access to investments. You may be liable for tax on any income or capital gains earned within a general investment account but this can be a useful vehicle for anyone who has maxed out their ISA allowancegeneral investment account is very easy.

For a SIPP: Once you’ve opened your Freetrade SIPP, simply head to the Account page in-app and tap ‘Transfer a pension’. You will then be asked to provide details of the pensions you’d like to transfer.

For an ISA: You can transfer any current year’s, or previous year’s, cash ISA, Stocks and Shares ISA, or innovative ISA to Freetrade. It is free to make a transfer.

All you need to do is open an ISA in the Freetrade App and submit a transfer request using the form on this page. Make sure you have to hand your National Insurance number, existing provider’s ISA reference number and the approximate transfer value.

You should always check you will not lose valuable guarantees by transferring an ISA and that you are aware of any transfer charges that your existing provider may apply.

One thing to be aware of: you cannot transfer any shares not listed by Freetrade. In that circumstance, your provider could sell those investments on your behalf, and transfer across the cash from the sale, along with the shares that are supported by Freetrade.

Withdrawals

Standard withdrawals typically take 2-3 working days to reach your linked bank account but can take up to 5 working days. Standard withdrawals won’t cost you anything. It is possible to request a same-day withdrawal, but beware; you will incur a £5 fee. That’s a hefty charge if you’re only withdrawing small amounts.

Support at Freetrade is available via:

• Help Hub on the website – a search box which leads you to pre-written questions and answers. I found this very detailed and contained the answers to most of my questions.
• In-app FAQs
• In-app chat
• Email – hello@freetrade.io

If you are a Plus plan member, you’ll have access to priority customer service – this includes faster response times from the dedicated Plus Support Team and longer support hours from 6:00 am – 9:00 pm.

Priority customer service is not the same as having a personal account manager, which you might expect to get at the higher tiers of a traditional brokerage like Hargreaves Lansdown or interactive investor. Freetrade is very much a DIY platform so those ‘premium service’ extras, such as personal account management, or the option of in-house financial advice, aren’t part of the package.

Freetrade has a ‘Great’ score on Trustpilot – 4.1 at the time of writing – based on 3,600+ reviews.

Have a question about Freetrade that I haven’t covered? Ask it here and we’ll come back to you with an answer.

This review is the result of my first-hand experience as an account holder at Freetrade and in no way represents financial advice.