Morning All. Thoughts on best value trading accounts? Currently ISA with FineCo they only charge 2.49 a trade and similar per month to hold shares. They're apparently stopping their UK business, so need to move somewhere else ☹️
III, A J Bell seen to be expensive trading and on costs. Trading 212 looks really cheap. But what are people's thoughts?
I'm an infrequent, small pot of money investor
Given you say you are "an infrequent, small pot of money investor" I-web could be a good choice.
But if you want app based / mobile type of thing then the likes of Trading 212 or Freetrade might be good options or AJ Bell have a cheaper (than their main offering) DODL app based service for starters.
Hope this helps.
Annoying that Fineco is closing. They don't charge fees/commission on Share CFDs and no spread on FTSE 100 CFD shares (the spread is the same as the underlying stock). I haven't found an alternative broker that is as cheap as Fineco - still looking,
I use Trading212 and my experience is great so far.
- No monthly broker custody charge.
- Zero commission on all trades and full access to UK & US with good selection of European stocks too.
- FX fee of only 0.15% and uses the interbank FX conversion rate.
- Fractional shares available for both US and UK.
- Regulated by FCA and backed up by the FSCS
Another cheap provider is freetrade.io. I have my SIPP with them but they offer ISAs and are very competitively priced too.
- Monthly fee of £4.99 for ISA and £9.99 for ISA and SIPP
- Zero commission on trades with excellent coverage of UK & US and some European stocks.
- FX fee varies based on the product you choose, but can be as low as 0.39%
- Fractional shares on US only.
- Regulated by FCA and backed up by the FSCS.
I would look into these smaller finTech companies as high commissions and fees from the likes of Abrdn (LON:ABDN) , AJ Bell (LON:AJB) or Hargreaves Lansdown (LON:HL.) eat into your returns.
If you grow your accounts into a larger sum (£500k +) then it might be worth going with a bigger brokerage, so you have better execution and limit your slippage (especially in more illiquid names).
Hi Benson, I've been looking at trading 212 and looking at it it seems too good to be true so I have held off switching to them. If there is zero monthly charge and zero trading fee how do they make their money? Surely its not all through FX fees? I tried to find if they had wider spread but couldn't find any data.
Also do you have access to funds on the platform?
Thanks
From what I can gather, Trading212 make money in two ways:
First, they operate one of the biggest CFD platforms in Europe, rivalling IG group (LON:IGG), CMC Markets (LON:CMCX) and Plus500 (LON:PLUS). CFDs is a highly profitable business because the vast majority of speculators lose money. Trading212 state 79% of retail clients lose money, and as the brokerage takes the other side of the trade, it's a cash cow for the business.
Furthermore, like spreadbetting, CFDs also charge overnight holding fees on open positions which generates a daily revenue stream.
The other main source of income is from the share dealing / ISAs. They take part in a practice called "share lending" (apparently nearly all brokerages do this, which I didn't know until recently!). This is where T212 uses customer's shares which they have purchased on the platform and lends them out to other financial institutions in exchange for interest payments. They usually lend them out to hedge funds who want to accumulate large positions in stocks, but can't buy them on the open market. The share lending programme is facilitated and secured by Interactive Brokers (NSQ:IBKR).
They will also make money from the spread and the 0.15% forex fee (the vast majority of stocks bought on the platform are US listed).
Seeing as the like of Hargreaves Lansdown (LON:HL.), AJ Bell (LON:AJB) etc, don't offer spreadbetting or CFDs, they generate their chunky margins from mutual fund fees, commissions and subscriptions.
And no, they don't offer mutual funds but have a very wide selection of ETFs and Investment Trusts.
I use AJ Bell and Trading 212
I am slowly moving more cash over to Trading 212 as there are no fees for buying and selling shares.
The negatives of 212 are when you buy or sell a stock, the trade is as executed at the best market price (unless you place a limit order). You don’t actually know the exact price until the trade is complete. Where as with AJ bell you know the price before the trade is executed.
Also trades on 212 seem to be executed minimally lower than the Iive price?
Also some stocks can not be traded on 212, smaller CAP stocks. Another negative is some stocks seem to take an age to get executed and limit orders not filled or very slow. Again AJ bell is much quicker in executing all orders.
I don’t quite know how 212 work, but it’s like they operate through a third party service which slows everything down.
I only use Trading 212 because it’s free, AJ Bell is fat better in my opinion, but a £10 fee for both buy and sell it’s expensive (over 10 trades a month and it reduces to £5 a trade for the following month).
It's ok for large stocks that use the order book. They don't use RSP so completely hopeless for SETSqxx stocks. They only seem to process limit trades during auctions.
