Things to Know Before Using Freetrade Trading & Investing App | Is Freetrade legit or scam

Freetrade is a LEGIT popular trading and investing app designed to simplify investing for both beginners and seasoned investors. It offers commission-free trading on a variety of financial instruments, making it an attractive choice for those looking to manage their investments with minimal fees. However, while its core features make it stand out, there are limitations and frustrations users should consider.

In this article, we’ll explore the pros and cons of Freetrade, how it works, and what you should know before using the app.

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Introduction to Freetrade

Freetrade was established with a simple mission: to make investing more accessible and cost-effective. The app provides commission-free trading, allowing users to invest in stocks, ETFs, and other instruments without incurring traditional brokerage fees.

Key benefits of Freetrade include:

• Commission-Free Trades: As the name suggests, you won’t pay a commission on trades. However, there may be other fees, such as foreign exchange (FX) charges.
• User-Friendly Interface: The app is designed to be intuitive, making it easy for beginners to navigate.
• Fractional Shares: Invest in expensive stocks like Amazon or Tesla by purchasing fractional shares.

Despite its simplicity and affordability, Freetrade’s lack of advanced features and limitations in its free tier can be a source of frustration for more experienced investors.

How Does Freetrade Work?

Here’s how it operates:

1. Account Setup

• Sign-Up Process: Download the app, register an account, and verify your identity using government-issued documents.
• Free vs. Paid Tiers: The free version allows basic trading, while premium tiers (Freetrade Plus at £10/month) unlock advanced features like access to AIM stocks and ISA accounts.

2. Depositing Funds

• Funds can be deposited via your nominated bank account. Deposits from non-nominated accounts may result in delays or missing funds, requiring customer service intervention.
• Missing deposits have been reported as a common issue, so users are advised to double-check their funding method.

3. Trading Features

• Stocks & ETFs: Trade a wide range of UK and US stocks and ETFs. However, the free version limits access to certain stocks, including some AIM-listed options.
• Fractional Shares: Invest in high-value stocks with as little as a few pounds.
• No Advanced Trading Tools: The app is focused on simplicity, which means features like technical analysis tools and market data are limited.

4. Dividends & Tax Documentation

• Dividends may take longer than the stated five days to arrive in your account, which can be frustrating.
• Exporting data for tax purposes is not user-friendly, and users often face challenges generating reports for capital gains tax filings.

5. Withdrawals

• Withdrawals are quick but can be delayed depending on banking processes.

Key Features and Benefits of Freetrade

1. Commission-Free Trading
   • Freetrade eliminates the traditional brokerage fees, making it more affordable for casual investors to buy and sell stocks.
2. Fractional Shares
   • Fractional investing allows you to diversify your portfolio without needing large amounts of capital.
3. User-Friendly Design
   • The app’s simplicity and fluid interface make it accessible to beginners.
4. Investment ISAs
   • With the paid plan, users gain access to Stocks and Shares ISAs, allowing tax-efficient investing for UK residents.
5. Transparent Pricing
   • While there are some fees, such as FX charges for non-GBP transactions, Freetrade is transparent about its costs.

Drawbacks of Freetrade

1. Limited Free Version
   • The free tier locks many useful features, such as access to AIM stocks and advanced filtering options. This can be frustrating for users who want more flexibility without upgrading.
2. No Web Version
   • Freetrade is app-only, which raises concerns for users who might lose their phone or prefer managing investments on a larger screen.
3. Customer Support Issues
   • Users frequently report delays in resolving issues, such as missing deposits or account discrepancies. The lack of a direct phone line further compounds this frustration.
4. Dividend & Tax Challenges
   • Late dividend payments and difficulty exporting tax certificates can create additional hassles for investors.
5. Delayed Price Updates
   • Share prices displayed in the app are often delayed, which can impact decision-making, especially for active traders.

My Personal Experience with Freetrade

I’ve been using Freetrade for over a year, and while I appreciate its simplicity and cost-effectiveness, my experience has been mixed.

• What I Liked:
  • The app is intuitive and easy to navigate, making it a great choice for beginners.
  • Commission-free trading and fractional shares are excellent features for those with limited capital.
• What Frustrated Me:
  • The lack of a web version made me anxious about losing access to my account if my phone were lost or damaged.
  • Missing deposits and delayed dividends added unnecessary stress to my investing journey.
  • Advanced features and certain stocks were locked behind the paid plan, limiting the free version’s usefulness.

Despite these challenges, Freetrade remains a solid option for casual investors who prioritize cost savings over advanced features.

Things to Know Before Using Freetrade

1. Consider the Paid Plan:
   The free version has significant limitations. Serious investors may find the paid plan more suitable.
2. Be Prepared for Delays:
   Missing deposits and dividend delays can be frustrating. Double-check your funding method and be patient with customer support.
3. Tax Obligations:
   Ensure you understand your tax responsibilities and keep records for capital gains and dividends, as the app’s tax tools are lacking.
4. No Advanced Tools:
   If you’re a trader who relies on technical analysis or real-time data, you may find Freetrade’s tools insufficient.