Fancy a free share of £200, no charge for a year or £100 to tell a friend? The Benefits of DIY Investment Platforms and Apps
- DIY investment platforms have become hugely popular during the pandemic
- Platforms and trading apps looking to further expand their customer base
- These include refer-a-friend schemes that offer useful bonuses
Do-it-yourself investment platforms have gained a lot of interest as more people become interested in investing during the pandemic.
Major players such as AJ Bell, Hargreaves Lansdown and Interactive Investor have reported significant new client numbers as savers shun low interest rates, investors try to capitalize on the recovery from the coronavirus crisis and a new generation of DIY investors emerges.
And one way the established DIY investment platforms and newer rivals in the form of trading apps, such as Freetrade and Trading 212, are trying to bring in more customers is by offering perks to a friend.
These can get you a free share worth up to £200 with Freetrade, or a payment of £100 with AJ Bell or Interactive Investor, the latter also offering those referred a year with no monthly fees.
Commission-free trading apps like Freetrade are looking to expand their customer base by offering free stocks through the referral program
Free trade is currently promoting its free stock offering. It has seen a meteoric rise since its launch in 2018 and the app-only trading platform, which allows users to invest in stocks and ETFs, now has more than 600,000 users.
Now it wants to further expand its customer base by offering a customer referral program.
The referred friend will be given a link and must download the app, fund their account and fill out a W-8BEN form that allows them to invest in US stocks. Both parties will then receive a free share of Freetrade.
The shares are randomly selected from a list of 90 UK and US companies, ETFs and trusts valued from £3 to £200 and deposited into a general investment account.
Probability is weighted, so more expensive stocks will be rarer, but there is no limit to the number of referrals a customer can make.
Trade 212 offers its customers one free share worth up to £100 once the referred friend has funded their investment or Isa account with a minimum deposit of €1. Customers can refer up to 20 friends.
The shares may be sold immediately and the cash value of the share may be withdrawn 30 days after receipt of the bonus. There is one minor glitch though, Trading 212 says it is currently not accepting new UK clients due to unprecedented demand.
Both apps saw an increase in customers as a new generation of stock investors and traders emerged on the scene over the past 18 months.
The uptick in tech-influenced stocks like Zoom and Tesla added fuel to this early on, while early this year came the meme stock frenzy — which saw stocks soar due to social media hype.
It even prompted the Financial Conduct Authority to warn young traders about the risks of investing, especially in ‘inappropriate’ risky assets.
Commission-free stock trading has been one of the factors driving the recent wave of investment, especially among young people. They have attracted new investors by offering fractionation, which allows users to buy fractions of whole shares.
But critics say the trading apps can promote financial products and behaviors unsuitable for long-term investments.
Stake is another newbie on the block, trying to take on the more established players as well as the newbies like Freetrade. However, unlike its competitors, it only offers US stocks and ETFs and claims to offer the cheapest way to buy and sell.
Now it is trying to ramp up its presence with a referral program that offers both the customer and friend the opportunity to win free shares of Dropbox, GoPro or Nike.
Other more established trading platforms offer a similar scheme for referring a friend, but give the referrer cash instead of stock.
eToro offers referrers $50 and it is available to users who have made an initial deposit of at least $200 into their trading account and have opened one or more trades totaling at least $100.
likewise, Hargreaves Lansdown offers its clients and the referred friend £100. New clients must be eligible for consulting services and the payment is treated as taxable income.
AJ Bell YouInvest offers customers £100 if they refer a friend who opens a Sipp or Isa and finances it with £10,000, while Interactive Investor a referred friend offers the standard service of £9.99 per month (worth £119.88) and £100 to the referrer for free for one year.