Investing

Freetrade: Anyone can be an investor for as little as £1

By Oliver Smith 24 March 2017
Summary

Can this app make Britain a nation of shareholders?

Why don’t you own any shares? In 1963 over half the population of Britain owned shares.

Today that figure is a paltry 12% – crazy when you think of all the excitement around British companies like Just Eat or ARM (which was recently taken over for a whopping £24bn).

Who hasn’t wanted to back a business they believe in?

There are plenty of reasons for the decline of people owning shares, but the biggest one is that it’s just too costly, in both money and time. Buying shares doesn’t really make sense unless you’re investing thousands of pounds.

That’s why the closest most Brits get to the stock market these days is via their pension fund.

But Adam Dodds is on a mission to change that.

Meet Freetrade

Dodds has a dream, a dream of making buying and selling shares entirely free, and he has a plan to do it.

“We decided that we have the skills to make this happen,” he told The Memo.

Freetrade is his answer, a mobile app coming later this year that offers fee-free trading of shares – all you have to pay is the price of the share itself.

Inspired by Robinhood, a similar free stock trading app in the US, Dodds wants to democratise the stock market in the UK and bring share ownership back to the masses.

In fact, he says there’s no secret around the technology his team are building to offer free trading, instead: “what we’re doing is just passing on a reasonable charge to our users.”

Reasonable, because buying stocks and shares is typically incredibly unreasonable.

Going Freemium

You’ve probably heard the names of big online brokers, like Hargreaves Lansdown.

Hargreaves charges £12 to buy or sell a stock, a fee Dodds says is outrageous and hides “extraordinary” profit margins.

Instead Freetrade won’t charge anything for buying a stock in what’s called ‘end of day execution’ – where your order isn’t a priority and you get it at whatever price it is at the end of the day.

‘Live trading’, when you want to buy or sell immediately, will be available with a small fee of £1 per £1,000 worth of stocks or shares being bought – massively undercutting traditional fees.

The only downside is that Dodds says Freetrade won’t have access to every company on the market when it launches in the second half of 2017, the plan is to start with 100 and gradually expand to 1,000 based on the ones people want to invest in.

While the exact companies haven’t been chosen yet, but you can expect tech giants like Apple, Tesla and Alphabet to feature highly.

A nation of shareholders

Freetrade is going to put free or cheap trading in the palm of your hand, on its mission to bring share ownership back to the masses.

Even Margaret Thatcher, who championed Britain becoming a “share-owning democracy”, couldn’t stop the decline of individual shareholders.

Earlier this month Dodds closed a £1.1m crowdfunding round to finish building Freetrade and launch it later this year.

Will you be investing?