Stake and Robinhood

Stake and Robinhood

The ISA costs £36 a year, so assuming you go for the £1 trades, you would be ahead of iWeb (the cheapest ISA) after 10 trades.

  • But the limited UK stocklist means that it’s not really suitable for a trading ISA.

And if you buy and hold, you need a large portfolio in order to be able to shrug off the extra £36 a year going forward.

  • ISA transfers are not currently supported, it would take you 18 years to get to £360K (ignoring any growth in the value of your investments).

I ended up using Freedtrade for a global ETF portfolio – to test the service out.

  • If the fabled market “melt-up” occurs in 2020, I will probably switch to us tech stocks.
Stake

Stake Pricing

Stake Pricing

We can dispense with Stake pretty quickly:

  • The free tier only includes two free trades per month.

After that it’s $5 (£4) per trade, so Freetrade is cheaper at just three trades per month.

There’s no ISA, and the investment universe is limited to US stocks only.

The Unlimited tier costs $108 pa (£82.50 as I write).

  • You would need to make 83 trades a year (7 a month) for Freetrade to cost more.

So this offer is clearly aimed at those who want to punt small amounts at the US market.

Robinhood

I had high hopes for Robinhood, which is very popular in the US.

  • But they’ve ended up porting a sub-set of their US product to the UK, rather than building a UK specific offer.
  • It’s possible that this is because EU rules (Mifid) make it more difficult for them to sell their order flow (allegedly a key part of their business model).

The bits they have left out (options and ETFs) are the ones that were the most interesting to me.

  • So in the end, their product is very similar to Stake’s – albeit cheaper.

Robinhood

Robinhood

The waitlist opened at the end of 2018, and I’m fairly high up on it.

  • A couple of weeks ago, Robinhood held a series of launch parties, which I skipped because of dry January.

But they were written up on Reddit, which I why I now know more about the product:

  1. Completely free trades, which are instant rather than batched at 4pm
  2. US stocks only (plus ADRs listed in the US) – no ETFs, options, crypto or UK stocks
  3. There’s no ISA
  4. All transactions in dollars – converted at the mid-market rate with no commissions
  5. Insured under the US scheme rather than the UK one – but with cover up to $500K
    • They are FCA approved, however.
  6. There’s a premium level (called Gold)
    • In the US this costs $5 a month and gives you margin trading, Level 2 data and research reports.

Robinhood does beat Freetrade for an actively-traded US stock portfolio, if you can put up with the money being held in the US, in dollars.

  • Since there’s no ISA, the CGT allowance of £12K pa in gains would be used up in a good year (like 2019) by a portfolio of just £50K.

This is a niche product, but I’ll give it a try when it launches.

Until next time.

Article credit to: https://the7circles.uk/stake-and-robinhood/




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