Editing Freetrade
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In addition, while investing can be a powerful tool for wealth creation, it's not the only strategy. Other important aspects of personal finance, such as maintaining a budget, managing debt, and building an emergency fund, also play critical roles in financial health.</ref>, and Freetrade is a company that's on a mission to get everyone investing.<ref name=":8" /> | In addition, while investing can be a powerful tool for wealth creation, it's not the only strategy. Other important aspects of personal finance, such as maintaining a budget, managing debt, and building an emergency fund, also play critical roles in financial health.</ref>, and Freetrade is a company that's on a mission to get everyone investing.<ref name=":8" /> | ||
Assuming that Freetrade increases its share of the global brokerage market by | Assuming that Freetrade increases its share of the global brokerage market by 1000x to 1% (from less than 0.0010%<ref>The annual global brokerage market right now (2023) is estimated at $1.30 trillion, and Freetrade generated around £12.68 million ($15.93 million) in revenue in its most recent full-year results</ref>) and other assumptions, the expected return of an investment in the company over the next five years is 202%, which equates to an annual return of 25%. In other words, an £1,000 investment in the company is expected to return £3,016 in five years time. | ||
The degree of risk associated with an investment in Freetrade is 'high', with the shares having an adjusted beta that is 85% above the market (1.85 vs. 1).<ref>Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used the seven available share price Freetrade data points. We note that the amount of available data observations for Freetrade is less than what's typically used in the five years of monthly data beta calculation (i.e. seven observations vs. 60 observations), and accordingly, calculating the beta of such a company has been considered by many to be abnormal; however, for the benefit of simplifying investment comparisons and decision making, we believe that a single standardised risk measure is useful, and that the most appropriate measure is beta. | The degree of risk associated with an investment in Freetrade is 'high', with the shares having an adjusted beta that is 85% above the market (1.85 vs. 1).<ref>Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used the seven available share price Freetrade data points. We note that the amount of available data observations for Freetrade is less than what's typically used in the five years of monthly data beta calculation (i.e. seven observations vs. 60 observations), and accordingly, calculating the beta of such a company has been considered by many to be abnormal; however, for the benefit of simplifying investment comparisons and decision making, we believe that a single standardised risk measure is useful, and that the most appropriate measure is beta. | ||