Trading 212 Invest/ISA Review and FAQs

Trading 212 is an incredible investing app – not just because it’s free but because it’s packed full of awesome features.
It’s a really exciting time in the UK investment app scene right now with lots of innovation and platform fees falling all the time – Trading 212 is at the forefront of this revolution.
We did a full review of Trading 212 back in 2019 and since then the app has gone from strength to strength. As a quick recap, Trading 212 offers zero fee investing in 3,000+ global stocks and ETFs, with no foreign exchange fees.
It also has zero fees for using an ISA and a feature we absolutely love is fractional investing. In his video, unless we say otherwise, we are only talking about the Invest and ISA Accounts.
Since our first review we’ve had hundreds of questions about Trading 212. So, today we are going to answer all of the most frequently asked questions such as:
Is Trading 212 a Scam? Do they pay dividends? If it’s free how do they make money? Should I go direct to Vanguard? And many others. All these and more coming up. Let’s check it out…
Editor’s note: We have lots of cashback offers worth hundreds of pounds on the Offers page – from time to time we have Trading 212 offers where they give you a free share, so it’s worth checking the offers page out. There are currently some great offers for competing apps including Freetrade and Stake, so maybe check these out as well!
YouTube Video > > >

Which Account Do I Use? CFD, Invest or ISA

When you download the app, you’ll have a choice of 3 different accounts or product types. We’re of the belief that most people should not go anywhere near CFDs. These are potentially dangerous financial instruments if you don’t know what you’re doing.
The CFD account is NOT free to use and 76% of retail investors (i.e. you and us) lose money when using this Trading 212 CFD account. We have an entire dedicated video about why to avoid CFD trading, which we’ll link to in the description below, so feel free to check that out later.
The Invest and ISA accounts are the same except the ISA is tax efficient. Although most beginners don’t have enough money invested to pay tax anyway. When you invest through the Invest and ISA account you own the underlying investment – you’re not just placing a bet!
Don't use the CFD section - most users lose money in there! The Invest and ISA sections are for proper investing

Is Trading 212 a Scam?

We’re not sure why people are saying that Trading 212 is a scam. They are authorised and regulated by the FCA. You can check this out for yourself but here we have done this for.
We have also used the app ourselves and know many other people who have had no issues whatsoever.
As we just mentioned, a lot of people lose money on CFDs, so are likely to be extremely disappointed and which we suspect is the root cause of this “scam” myth, but despite this the app has an incredible rating on Trustpilot.
Almost all the negative feedback seems to come from those using the CFD account, which you should only use with caution anyway. We’re not suggesting that there are no genuine complaints, but it seems that this is the minority.
In any case, as a regulated platform they must comply with complaints according to FCA requirements.

Is It Really Free?

Incredibly, yes. At least from fees that they directly control. A lot of things these days claim to be free but have hidden fees that you have to navigate around like a ninja.
Usually there’s a big heading that’s say ‘FREE’ that gets you excited and then you go straight to the T&Cs or fee section only to discover that it was a load of nonsense. Well in this case it’s true – it is free!
We’ve scoured the entire site and have personally used the app ourselves and have not been victim of any hidden nasties.
Of course, these is no such thing as completely free investing because you have to pay the bid/offer spread, which is a feature of the stock market.
All shares and ETFs have 2 prices – a buy and a sell price. The spread is what you would lose if you bought and immediately sold an investment.
You may also have to pay stamp duty or other taxes depending on what you’re buying.
And when you buy ETFs, you will pay a fee called the OCF, which costs typically around 0.10 to 0.30% of your holdings depending on the ETF – again, this fee is to the ETF provider, not Trading 212, and is outside of their control.
Freemium - the "mium" is Latin for "not really"

If Trading 212 Invest/ISA Is Free How Do They Make Money?

According to the co-founder, actual trading costs that they as a business incur are less than £1, so waiving trading commission does not have a detrimental effect. Charging for other services should more than cover for these shortfalls.
The most obvious service that they make money from is their CFD service. So, we would suggest that they are using free investing to entice people to their platform and then hoping they also go on to use this paid product.
Also, as with many online businesses, we would expect them to be currently going through an explosive growth stage where it’s really important to grow as quickly as possible. With size comes economies of scale and strength. Profits can be made later.
Trading 212 adopts a classic ‘freemium’ model – like mobile games or probably your bank current account. Your bank account is free, but they’ll charge you for additional services like overdrafts, loans and so on.
We would expect them to start introducing paid for premium services at some point. They often give little teasers of upcoming features and from what we’ve seen we wouldn’t mind paying a small amount for these if they were to charge.
Trading 212 now offers fractional trading

Should You Use Vanguard/X Platform Instead?

You would think that Vanguard’s own platform would be the cheapest place to buy its own funds, but this is not the case. Vanguard’s platform is incredibly cheap, but you cannot beat free.
However, price is not the only factor when choosing a platform. Investment choice along with additional services need to be considered.
Trading 212 doesn’t offer the extensive choice that you get with more premium platforms such as Interactive Investor. We both prefer to have more choice and are prepared to pay a little extra for this, but this doesn’t stop us from occasionally using Trading 212 and other free trading platforms.
Vanguard’s platform is amongst the cheapest place for the full range of Vanguard funds – Trading 212 for instance does not offer OEICs, so you cannot invest in the LifeStrategy range for example.
You can use multiple platforms, so you don’t have to commit to any 1, but you can only use 1 active Stocks and Shares ISA in any given tax year.

Do They Pay Dividends?

We’re not sure where this question comes from. We suspect it arises from the complexities of CFD Trading.
As you can see here, dividends for the Invest and ISA accounts are paid directly into your account balance. We can confirm this from our own experiences with the app.
Some ETFs are of the Accumulation variety, in which case dividends are not paid directly to you, rather they form part of the growth in the ETF price.
The ETFs that pay dividends to you directly are the Distributing variety. Check the ETF providers own site to find which type it is.
On Invest and ISA accounts, you own the shares and ETFs

Why Does The Share And ETF Prices Differ To The Real Price?

This is going to surprise beginners, if they even notice it, as the price you pay for the stock is very likely to be different to what you see on the screen prior to placing the order.
Stock prices change all the time and it should be expected that by the time the order is fulfilled it will have moved. This is the explanation they give and we know this will be part of the answer. However, we have noticed significant differences and we doubt this is the full explanation.
We have seen some people incorrectly state this to be a spread, but this is not the case. T212 don’t apply their own spreads on the Invest and ISA accounts and the actual market bid/offer spread is usually tiny.
From what we’ve worked out this is just an error or delayed price that the app is showing – perhaps due to extreme market volatility.
We tested this by taking a live ETF price from a different app and comparing it to Trading 212. In this case Trading 212 was over stating the share price by about 4%. The price had crashed that day, so it seemed that T212 was delayed somewhat.
However, the executed price from T212 was almost identical to the live price that we were expecting. This was correct and expected as prices move continually.
To sum all this up, we have no concerns in their executed prices, but the app does display incorrect prices on occasion, which is annoying.

Is It Okay To Invest In German Listed Stocks And ETFs?

Unfortunately, we don’t know for sure. Many foreign countries automatically apply a dividend withholding tax and we’re unsure if Germany does this but from what we’ve read, it does seem to withhold tax.
Unless we totally understand an investment, we don’t invest.
What do you think of Trading 212? Let us know in the comments section.

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11 Comments

  1. Hello, I’ve just put £700 on trading 212, have you any tips, I’m not sure if to go short term or long term as I’ve never done anything like this before, thanks

    • Well we would always go long term, and invest in ETFs. Here’s an example: search VWRL on the T212 app, it covers the whole world. Ben

  2. Investing should be a long term pursuit. Suggest 80% in a global equity tracker VWRL and the rest in global bonds VAGP. Gets you access to 3000 shares and 4000 bonds in 2 etfs. Diversification is important especially with small amounts. If you are nervous starting out you could opt for equal amounts in both etfs initially. Good luck with your investing.

    • Pretty much agree with this – i’d forget the bonds though if you want growth, and diversify out into a range of global equity ETFs, more flexibility than a single All-World ETF. Ben

  3. I just wanted to reach out and say hello.

    You, among a few other Youtubers and bloggers inspired me to start my own passive income journey.
    I now have a blog, a Youtube channel and a dividend investment portfolio.

    Seeing some good growth already, look forward to seeing where it will take me.

    Thanks both!
    Sean C

    • Good for you – and best of luck. Ben

  4. Trading 212 released a set of T&Cs relating to “lending your shares” is this the norm? How can a free to use platform afford this, and is it a high risk strategy by them?

    Brett
    p.s. This website and your Youtube channel inspired me to invest, and start assessing my finances, thank you!

    • Updating Ts&Cs is normal and happens all the time. T212 make their money from their highly profitable CFD arm of the platform, and we believe the Invest and ISA arms are loss making. But by getting you to sign up for the free stuff, they hope you’ll try out the CFDs. We advise caution against doing so, as the vast majority of people lose money trading CFDs. Ben

  5. What would your advise be to start investing with only £500.

    • I’d be going for globally diversified ETFs. Or just the one – maybe VWRL (Vanguard All-World ETF). But that’s just me.

      Thanks, Ben

      • Look at VWRP or HMWO. Both are Accumulating all world ETFs. VWRL pays a small dividend.


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