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Freetrade
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{{Infobox company | name = Freetrade Limited | logo = Freetradelogo.jpg | logo_size = 60px | image = Freetrade cover.png | image_size = 250px | image_caption = Freetrade app | type = Private company | industry = {{Unbulleted list |Financial services |Investment and brokerage services }} | founded = {{Start date and age|2015|09|25}} in London, United Kingdom. | founders = {{Unbulleted list | Adam Dodds | Davide Fioranelli | Andre Mohamed}} | hq_location = 10 Devonshire Square | hq_location_city = London | hq_location_country = United Kingdom | num_locations = | num_locations_year = | revenue = {{increase}} {{GBP|12.68 million}} | revenue_year = 2021 | operating_income = {{decrease}} {{GBP|(18.23) million}} | income_year = 2021 | net_income = {{decrease}} {{GBP|(17.11) million}} | net_income_year = 2021 | assets = {{increase}} {{GBP|40.23 million}} | assets_year = 2021 | equity = {{increase}} {{GBP|29.33 million}} | equity_year = 2021 | num_employees = 201 | num_employees_year = 2021 | website = https://freetrade.io/ |key_people=Adam Dodds}} Investing in investments is one of the best ways to grow your money<ref>There is substantial evidence to suggest that investing is one of the best ways to grow your money over time. Here are a few key points: 1) Historical Returns: Over the long term, the stock market has provided substantial returns. For example, the S&P 500, an index of the 500 largest companies in the United States, has delivered an average annual return of approximately 10% since its inception in 1926. While past performance is not a guarantee of future returns, this long-term trend suggests that investing in a diversified portfolio of stocks can yield significant returns over time. 2) Compounding Interest: Investing allows your money to work for you through the power of compound interest. When you invest, you not only earn a return on your initial investment, but also on any returns that investment generates. Over time, this can lead to exponential growth in your wealth. 3) Inflation Hedging: Investing can help protect your money from inflation. While the value of cash can be eroded by inflation over time, investments like stocks and real estate typically increase in value at a rate that outpaces inflation. 4) Wealth Creation: Numerous studies have shown that the wealthiest individuals and families often have substantial portions of their wealth invested. For example, a report from the Federal Reserve found that the top 10% of U.S. households by wealth held an average of nearly 90% of their wealth in investments as of 2019. 5) Retirement Savings: Investing is a key component of planning for retirement. Most retirement savings strategies, like 401(k) plans and individual retirement accounts (IRAs), involve investing in a mix of stocks, bonds, and other assets. While investing can offer substantial benefits, it's also important to note that all investments carry risk. The value of investments can go down as well as up, and it's possible to lose money. Therefore, it's important to thoroughly research any investment, diversify your portfolio, and consider seeking advice from a financial professional if you're unsure about where to start. 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" /> The main offering of the company is an app, also called Freetrade, that enables people to buy and sell certain investments without paying any trading commissions.<ref>https://freetrade.io/compare-plans</ref> Currently, with peers such as Trading 212 providing access to more investments (12k vs. 6k), and at a lower cost in terms of platform fees (zero vs. Β£5.99 per month for access to 6k investments) and foreign exchange conversion fees (0.15% vs. 0.59% for the Β£5.99 per month plan), there doesn't seem to be a material uniqueness of the Freetrade offering.<ref>Freetrade and Trading 212 are similar in that they both offer commission free trading. Trading 212 is better than Freetrade in terms of the number of investments offered (12,000 vs. 6,000), FX fees (0.15% vs. 0.39%) and platform usage fee [Zero vs. Β£5.99 per month to access the 6,000 investments (note, to access 1,500 investments only, there is no fee)].</ref> 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 Β£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 Β£1,000 investment in the company is expected to return Β£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 beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'high' risk, it must have a beta value of 1.5 or more. Further information about the beta ratings can be found in the appendix section of this report.</ref> Accordingly, if your desired annual rate of return is 25% or less and/or one of your goals is to get everyone investing (i.e. you share in the mission of the Freetrade company), and you are both willing and able to accept the possibility of losing your entire investment amount, then an investment in the company is considered to be a 'suitable' one. '''Fun fact:''' Freetrade Limited initially raised funds and gained traction through successful crowdfunding campaigns, reflecting its mission to democratise investing.
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