Freetrade: how to invest, costs, features and more

We reveal how Freetrade works, how much it costs and what your chances are of getting a free investment worth £200.

Freetrade is a free stock market investing app available via the Apple Store or Google Play that allows you to invest in stocks, bonds, gold and various exchange-traded funds (ETFs).

It currently has more than 100,000 customers in the UK, according to Viktor Nebehaj, the app's co-founder.

Freetrade is regulated by the Financial Conduct Authority (FCA) and offers protection under the Financial Services Compensation Scheme (FSCS), which means up to £85,000 of your money is covered. 

If you want to sign up, you’ll need a basic account or a Stocks and Shares ISA, as well as your National Insurance number.

It’s worth thinking about what account you want, as there will be different tax implications.

With a Stocks and Shares ISA, you can invest up to £20,000 every year without paying tax on any dividends or Capital Gains Tax (CGT).

If you choose a basic account, you’ll pay CGT on any gains over your tax-free allowance, which is currently £12,000, plus you’ll pay tax on dividends of over £2,000.

If you already have an ISA, you can transfer it over to Freetrade free of charge.

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How much does Freetrade cost?

You can join Freetrade and put through basic UK and US trades for free, as well as invest in bonds and gold via ETFs, plus there are no exit fees.

Initially, these basic trades were only executed as a batch in the afternoon  – not ideal when markets are volatile  – but the company now offers free instant trades on its basic account as well*.

Note that it will cost you £3 a month if you wish to open a Stocks and Shares ISA instead of a basic account.

With US stocks, you’ll pay the spot price and a 0.45% FX cost as these are accessed by Freetrade via market makers on the London Stock Exchange. 

While it’s free to transfer money to your bank, which takes a few days, you can pay £5 if you want your money on the same day.

These costs shed some light on how Freetrade makes money, but they are easy enough to avoid.

*An earlier version of this article incorrectly stated only batched trades were free.

How costs compare

Below is a rough breakdown of some of Freetrade's costs compared to its rivals.

It should be noted trading fees with Hargreaves Lansdown, Interactive Investor and AJ Bell can be lower than the prices shown below, depending on the amount of trading.

Hargreaves Lansdown costs £11.95 for up to nine share deals in the previous month, but this falls to £8.95 for between 10 and 19 deals and declines further to £5.95 for 20 or more deals.

When you use Interactive Investor as a regular monthly investor using a Direct Debit, you can invest in as many investment trusts, funds, ETFs and UK shares that you want to every month for free.

But you’ll pay either £9.99, £13.99 or £19.99 every month depending on which account you choose.

The below table outlines what you’ll pay for different accounts.

It costs £9.95 to buy or sell shares with AJ Bell although this costs £4.95 if you complete 10 or more online share deals in the previous month.

Even when tiered fees are factored in, Freetrade is cheaper than its rivals.

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Is there a premium version?

Freetrade launched its own brokerage platform, Invest by Freetrade, in late November, to execute trades straight away, instead of taking up to an hour.

The platform is set to include new features, including fractional share trading and the ability to invest in thousands of new stocks.

Fractional share trading allows you to own less than one share, which is useful if you are interested in a company that is expensive to invest in due to the high share price.

So, for example, if you only have £25 to invest but you’re interested in Unilever, which theoretically costs £50 a share, you could use fractional share trading to buy half a share.

Freetrade is also expanding into Europe, starting with Ireland and the Netherlands. On top of this, the company is working on its premium account but there few details yet on what this will include. 

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You could win a share worth £200

If you refer a friend to Freetrade, both of you can get a free share worth between £3 and £200.

To do this, you send a referral invite in the app to a friend. Once they download the app, sign up, fund the account and complete a W-8BEN form, you both get a free share.

It can take between seven and 10 days to get your free shares and it can only be put in a basic account, not an ISA.

The stocks will be randomly selected from a list of 90 companies, ETFs and trusts, so you can get a UK or US share. If you successfully invite a friend, you may be able to invite more but this is not guaranteed.

According to Nebehaj, the chances of someone getting a high-value stock (worth £200) is one in 600.

Freetrade can be a handy way to invest for free, but it’s vital you make sure it meets your needs.

For example, make sure you’re happy to trade shares for free at a specific time or that you’re willing to pay a monthly fee for a Stocks and Shares ISA (if you don’t have one to transfer).

Remember, it’s always best to consider all your options, particularly if you trade frequently or prefer to in real-time, before signing up to any investment service.

Compare your investment options at loveMONEY (capital at risk)