Honest Review of Trading 212: Is It Right for You?

Choosing the right broker is crucial when starting your investment journey. In this review, we'll take a closer look at Trading 212, a European broker known for its commission-free trading and support for multiple currencies. We'll explore its pros and cons, fee structure, account setup process, and safety measures to help you decide if Trading 212 aligns with your financial goals.

🚀 What You’ll Learn:

  • 🟢 Pros and Cons of Trading 212

  • 💸 Detailed Fees and Pricing Structure

  • 🌍 Currency Support and FX Fees

  • 📱 Ease of Use and Convenience of the Platform

  • 🔒 Safety and Regulatory Protection Measures

Table of Contents

Overall Assessment 4/5

Trading 212 is a user-friendly platform offering commission-free trading on stocks and ETFs, making it attractive for cost-conscious investors. Its support for multiple currencies and low FX fees make it appealing for international investors. However, it's geared more towards active traders and might not be the best fit for beginners due to its complex interface and lack of comprehensive tax support.

CriteriaRating
Fees and Commissions
Product Range
Platform Usability
Customer Service
Safety and Regulation
Account Setup and Minimums
Additional Features
Currency Support and Conversion Fees
Educational Resources
Wealthy Forever Rating

Quick Overview

FeatureAvailableDetails
Commission-Free Trading✅Zero commissions on stocks and ETFs
Fee LevelVery LowCheck detailed fee structure
Currency Conversion Fee0.15%Applies only when converting funds
Support for Multiple Currencies✅Deposit and invest in 13 global currencies
Fractional Shares✅Invest from as little as €1
Interest on Uninvested Cash✅Earn interest on cash balances
Read more
Regulatory Safe✅Details on regulatory safety
Hidden Fees❌Transparent fee structure
Securities Lending✅Optional feature to earn extra income
Learn more

Pros and Cons of Trading 212

  • ✅ Pros of Trading 212:

  • - Commission-free trading on stocks and ETFs

  • - Support for 13 global currencies, reducing FX fees

  • - Offers fractional shares, allowing investment from as little as €1

  • - User-friendly mobile and web platforms

  • - Good customer support via chat and email

  • ❌ Cons of Trading 212:

  • - Geared towards traders, which might overwhelm beginners

  • - Limited tax support; you have to handle taxes yourself

  • - Unable to transfer assets to another broker easily

  • - Securities lending is enabled by default

Fees

Understanding Trading 212’s Fee Structure

Trading 212 offers one of the most competitive fee structures in the market. Here's a breakdown:

  • Trading Commissions: Zero commissions on buying and selling stocks and ETFs.

  • Currency Conversion Fee: A low fee of 0.15% applies only when converting funds from one currency to another.

  • No Extra FX Costs: You'll never pay more than 0.15%, even on weekends. Trading 212 uses live interbank rates for conversions.

  • Deposit and Withdrawal Fees: Bank transfers are free. Card deposits are free up to a certain limit.

  • Interest on Uninvested Cash: Earn competitive interest rates on your uninvested cash in various currencies.

How Does Trading 212 Keep Costs Low?

You might wonder how Trading 212 manages to offer such low costs and commission-free trading. Here's how:

  • FX Fees: Trading 212 earns revenue from the 0.15% currency conversion fee when you trade assets in a currency different from your account's base currency. This fee is lower than many other brokers, such as DEGIRO, which charges 0.25%.

  • Securities Lending: Trading 212 offers an optional feature where your shares can be lent to other financial institutions. The revenue generated from this is split 50/50 between you and Trading 212. This feature is enabled by default but can be turned off if you prefer not to participate.

  • CFD Trading: On the CFD (Contracts for Difference) side, Trading 212 earns money through overnight interest fees and CFD spreads. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

By generating revenue through these streams, Trading 212 can offer low-cost trading options to its users.

It's important to note about CFD trading, that CFDs are complex financial instruments that come with a high risk of losing money rapidly due to leverage. They are generally not recommended for beginners or for those following a long-term, passive investment strategy. Wealthy Forevers stand on CFDs are to stay away.

Currency Support and FX Fees

One of Trading 212's standout features is its support for 13 global currencies, which helps investors avoid unnecessary FX fees.

  • Supported Currencies: USD, EUR, GBP, CHF, DKK, NOK, PLN, SEK, CZK, RON, BGN, HUF, and more.

  • Deposit in Your Preferred Currency: Deposit and withdraw funds in the same currency as your bank account to avoid conversion fees from your bank.

  • Trade in Asset's Currency: Pay no FX fees by trading in the same currency as the asset. For example, buying Vanguard FTSE All World ETF in USD or Xtrackers MSCI WORLD UCITS ETF in Euro.

  • Instant Currency Conversion: Convert funds instantly at live interbank rates, even on weekends.

However, if your base currency is not one of the supported currencies, or if you wish to invest in assets not available in your currency, you'll need to convert funds and incur the 0.15% FX fee. While this fee is relatively low compared to other brokers like DEGIRO (which charges 0.25%), it's something to consider. In such cases, you might want to explore local investment options or accept the FX fee for access to international markets.

Convenience of Trading 212

Trading 212 provides several features aimed at enhancing user experience:

  • AutoInvest Feature: Allows you to set up automated savings plans and build a diversified portfolio.

  • Fractional Shares: Invest in high-priced stocks with as little as €1.

  • Customer Support: Responsive support via email and chat, but lacks phone support.

  • Platform Usability: The interface is feature-rich but can be overwhelming for beginners.

Setting Up an Account with Trading 212

Opening an account with Trading 212 is straightforward and quick:

  • Account Types: Offers "Invest" accounts for stocks and ETFs, and "CFD" accounts for more advanced trading. Be sure to select the "Invest" account if you're focusing on stocks and ETFs.

  • Minimum Deposit: Low minimum deposit starting from €1.

  • Registration Process: Account approval usually within one business day. You'll need a copy of your ID or passport.

  • Limitations: Does not support joint accounts, children accounts, or business accounts.

Note: Residents of Belgium are currently unable to open an account with Trading 212.

Is Trading 212 Safe?

Safety is a paramount concern for any investor. Here's how Trading 212 ensures the security of your assets:

  • Regulation: Regulated by reputable authorities such as the FCA in the UK, CySEC in Cyprus, and ASIC in Australia.

  • Investor Protection: Assets protected up to €20,000 under the European investor protection scheme.

  • Cash Protection: Cash balances are not protected under the European deposit guarantee scheme.

  • Securities Lending: Enabled by default, but optional. You can choose to opt out if you prefer. This feature allows you to earn extra income by lending your shares.

  • Payment for Order Flow: Trading 212 does not engage in payment for order flow practices.

Trading 212 has not had any significant regulatory issues, adding to its credibility as a trustworthy broker.

Supported Countries

Trading 212 offers its services in multiple countries through different entities:

Trading 212 UK Ltd.: Serves clients in the UK and several other countries including Kuwait, Qatar, and UAE.

Trading 212 Markets Ltd.: Caters to clients in EU countries like Germany, France, Italy, Sweden, and more.

Trading 212 AU PTY Ltd.: Operates in Australia.

Important Note: Residents of Belgium are currently unable to open an account with Trading 212 due to regulatory restrictions.

Before signing up, check the list of supported countries to ensure that Trading 212 offers services in your country of residence.

Summary: Is Trading 212 Right for You?

Trading 212 offers an accessible platform with commission-free trading, support for multiple currencies, and a user-friendly interface. It's a solid choice for cost-conscious investors who are comfortable managing their own tax obligations and prefer a platform that supports fractional shares and multi-currency accounts. However, if you're a beginner looking for extensive educational resources or need assistance with tax reporting, you might want to consider other options.

Ready to give Trading 212 a try? Open your account today.

Open account at Trading 212

Frequently Asked Questions

DEGIRO charges three main types of fees: transaction fees, connectivity fees, and currency exchange fees. Transaction fees include a commission and a handling fee, while connectivity fees are charged annually per stock exchange. If you trade in a currency other than your account's base currency, a 0.25% currency exchange fee is applied.

Yes, DEGIRO offers low-cost ETFs for global indices, particularly through its Core ETF selection. These ETFs have a €0 commission plus a €1 handling fee, making them a cost-effective choice for passive investors.

DEGIRO is regulated by BaFin (Germany) and AFM (Netherlands), providing strong oversight. Additionally, your assets are protected by the European investor protection scheme up to €20,000, and cash deposits are protected up to €100,000 by the German deposit guarantee scheme.

No, DEGIRO does not support fractional shares. You need to buy whole shares, which might limit flexibility, especially if you are investing smaller amounts.

While DEGIRO is generally transparent with its fees, it’s important to note that there is a payment for order flow for German accounts. Additionally, connectivity fees can apply if you trade on multiple exchanges.

No, DEGIRO does not pay interest on cash balances held in your account.

No, DEGIRO is not available for legally US Persons. On top of that they don't have USD as a base currency.

The DEGIRO app is available in multiple languages, including English, Dutch, French, German, Spanish, Italian, and more, catering to a wide European audience.

The DEGIRO app is available for investors in many European countries, including but not limited to the Netherlands, Germany, France, Spain, Italy, Greece, Switzerland, Finland, Sweden, Denmark, Czech, Poland, Portugal, Ireland and the United Kingdom.

DEGIRO does not offer automated savings plans or investment automation directly. However, you can set up regular transfers to your DEGIRO account and manually invest in selected ETFs.

DEGIRO has mutual funds named investment funds. Their selection is limited and expensive compared to ETFs and don't include any passive index funds. Therefore, we recommend sticking to ETFs for a cost-effective and diversified investment strategy.

No. DEGIRO does not offer any free ETFs. However, they have a Core Selection of ETFs with a €0 commission and €1 handling fee, which is one of the lowest-cost options available.

Yes, DEGIRO offers margin lending. Current rates as of 2024-09-04 ranges from 5.25% to 6.90% allowing you to borrow money to invest in securities. However, margin trading involves higher risks and is not recommended for inexperienced investors.

Disclaimer: The information provided on this website is for educational and informational purposes only and does not constitute financial advice. Investing in financial markets involves risk, including the potential loss of principal. Past performance is not indicative of future results. We recommend consulting with a qualified financial advisor before making any investment decisions. Wealthy Forever is not responsible for any investment decisions made based on the information provided here.

We encourage you to conduct your own research and consider your personal financial situation when making investment decisions.