Oops 
I blame the heat. And the fact it’s Friday. But mainly the heat.
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Yeah same with me, one of the stocks I got as a test is up 24+% and the other is up 14+%, and I’ve had dividends that I wasn’t expecting from both of them, but i know it was luck (I just chose stocks whose products I liked/bought).
My (more considered) plan now though is to buy global ETFs monthly. I won’t be selling those two early stocks, but I’m not buying more shares for them either.
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This is what worries me most about freetrade. It’s basically a stockpicking app for complete amateurs - some people will get badly burnt.
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I think you got pretty good information from others already, so I’ll cover a few missing details.
Going with Vanguard Direct lets you invest in not only their LifeStrategy funds, but also their Global-all-cap fund, which doesn’t have a UK bias (but no choice of getting bonds). It’s basically the better (very) long-term play.
They do claim to have a £100 minimum on regular monthly buys, but apparently you can go in and change it to a lower value. Not sure if there’s a “true” minimum.
When it comes to investment platforms, the 2 main things you’re looking for are:
- Do they offer the thing(s) I want to invest in?
- Are they the cheapest for the amounts and frequencies I invest at?
Freetrade offer Vanguard’s VWRL ETF, which is slightly worse than the global all cap fund, but maybe not so you’d really notice. Their general account is free, which makes them cheaper than Vanguard. But their ISA account (fixed fee) is more expensive than Vanguard (percentage-based fee) until your portfolio is worth more than £24,000.
There are other platforms such as iWeb that are cheaper than Vanguard for the ISA if you only buy once per year, for example.
At £20/month, it will be many years before you actually need an ISA, so don’t waste money on one if you don’t need to. Freetrade’s ISA fees, for example, would eat most of your gains.
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what makes you think it promotes stockpicking?
They make noble efforts to try to align some of their features and fee structure toward the long-term investor, but ultimately any platform that lets you trade in stocks for free (and in the future, especially one that allows fractional share purchases) is going to enable building a portfolio from stock picks that wouldn’t be possible on other platforms due to the fees.
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But brokers who have huge fees already let people chose their stocks. Are you saying that stocking picking is fine for the rich but people less well off don’t understand?
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Stock picking is a bad idea for the majority of people.
But I wasn’t making a classist value statement. If someone wants to stock pick, they’ll make more money doing so on a platform with low buy and sell costs. In the UK, the lowest costs can be found with Freetrade and Trading 212.
In that sense, they “promote” (really, “enable”) stock picking.
In the same way Tesco promotes/enables alcoholism because they sell alcohol
Most people will pick a few stocks because they like the company. It won’t lead to financial ruin. ETF are prominent in the app
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Whatever your views on what people should or should not be doing, the reality is that costs have so far prevented widespread stockpicking.
No one is all that bothered when the wealthy lose significant money, partly because they’re a minority anyway, but it will be much more of a problem if large numbers of people start losing a chunk of their money.
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You’ve no way of knowing what proportion of total assets people are putting in, so I don’t see how you can be so certain
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In the same way access to cheap alcohol can lead to increased alcoholism, yes. It’s one of the reasons taxes on alcohol are high.
Most people will pick a few stocks
I see you selectively quoted there
A few stocks as part of a balanced portfolio isn’t going to be harmful. The new breakdown donut will show people the make up of their portfolio
Whether it’s a few stocks or not is irrelevant - it’s the proportion of total assets that tells you about the risk
But they’re introducing those analytics into the app. Of course people can ignore that but that’s on them
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Until fractionals are in (and will they do fractional ETFs?), it’s not possible to create a balanced portfolio with a low percentage of stock picks on a small amount of money per month.
There are numerous people in the Freetrade forum with portfolios that are mostly stock picks.
Some of those might be using Freetrade “just for fun”, with the majority of their investments in another platform. But certainly some only use Freetrade. We can only hope they also have cash savings and an emergency fund.
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Until it grows into a systemic risk
They tend to be divided investors so they’ve done a lot of research and continually watch the figures. Not something I’m interested in at all
To be fair to the forum, there are almost always replies saying such unbalanced portfolios are a bad idea, and ETFs are recommended instead.
I wouldn’t say Freetrade are doing anything wrong here. Maybe they should have a pre-investment quiz like Crowdcube do, but would that be too much nannying? We’re all adults at the end of the day.
At the end of the day, they’re a platform rather than a service and don’t offer any investment advice themselves.
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I don’t think it’s specifically a freetrade issue. Just that democratising trading is not problem-free.
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