Wisdom of the Crowds

The idea of ‘wisdom of the crowds’ has always intrigued me and I’ve parted with a bit of money through crowdfunding, including charity and property crowdfunding, which I posted about here.

My most recent bit of crowdfunding ‘investing’ was when I bought some shares in BrewDog – less to make money, more because I like the product!

Another Crowdfunding Investment

Some of you may recall that when I set my goals in January, I mentioned that I was going to do some ‘trading’ and was on a waiting list for a new app, although by ‘trading’, what I really probably meant was not ‘holding’ long-term.

Five months later, this still hasn’t materialised and while I was waiting, I came across the chance to invest in another app, namely Freetrade via CrowdCube.

The company was looking for an investment of £500,000 – this target was reached in just 12 minutes!

After 28 hours, funding was capped at £3.1m and it became Crowdcube’s most overfunded equity offering ever.

What’s in the Box?

Freetrade has been touted as the UK equivalent of the US investment app Robinhood, which allows you to trade stocks for 0% commission.

Freetrade’s interesting tag line is: “Invest for free, forever.”

Bold words indeed – perhaps the likes of Hargreaves Lansdown aren’t quite quaking in their expensive shoes but I’m sure they will follow the progress of this app with interest.

Its pricing plan is like many of the ‘free’ apps you can download – you get a basic service for free but if you want some bells and whistles, you pay for a premium account – an ‘Alpha’ account in this case.

It’s very competitive though – check out the price list here and it looks like you can buy ‘fractional shares’- not sure how dividends would work in this case though.

There’s been mention that crypto currencies might be available on the app at a later date but I’m not tempted as that’s a gamble too far, even for a gambler like me!

Also, it’ll be interesting to see the app in amongst Monevator’s broker comparison list.

The app is being slowly onboarded (there’s a big waiting list) – my time in the queue will probably be even longer as I have to wait for the Android version of the app but I’ll probably do a proper review once I’ve got my mitts on it and tested it out.

I could be tempted to buy bits of the FAANG stocks (Facebook, Amazon, Apple, Netflix, Google) – why? Just cos it’ll sound ace to my friends – they needn’t know I’ve just got a fraction of a share, haha! Naah, most likely I’ll stick to stocks closer to home.

As you can already gather, I’m likely to just be using ‘fun money’ (ie matched betting profits) for this – right now, I can’t envisage transferring one of my existing ISAs here but I’m excited about the possibility of saving on trading fees for my Dogs of the FTSE portfolio.

Anyway, there’s not a lot more I can say, except that there’s a nifty little Freetrade forum and community building already and I can’t wait to have a play on app!

Enjoy the bank holiday weekend!

[Disclaimer – I have no affiliation whatsoever with Freetrade and this is not a recommendation to download the app (although it is free). There are no referral links in this post, even though I do have a link but all it does is shove me up the waiting list – I think I can wait!]

PS – Everyone GDPR ready?

Here’s a comic strip which sums things up…

12 thoughts on “Wisdom of the Crowds

  1. I’ve not invested in crowd funding as yet but am in P2P. Not sure how Freetrade will make their money if trading is free forever? A good thing for the punters but as a sustainable business model?

    I like that you keep up with these new ways of investing. I am not keen on Apps, not even banking ones as try hard not to use my phone for anything like that. Give me my little Dell netbook anyday!

    • Hi Tuppenny

      As mentioned briefly in the post, Freetrade will use a “freemium business model”, ie the basic service will be free but users will have the option to subscribe to premium services.

      This will be the first time I will have my bank details linked to an app as I don’t use my phone for any banking etc.

    • Hi Jim
      Great to see another Freetrade investor!

      To be honest, I had to read up on EIS as I didn’t know what it was – I have a better idea now, though I’ll probably make sure I do know what I’m supposed to do with the certificate when I come to do next year’s tax return.

  2. I looked at a crowdcube investment earlier in the year, was a insurance quote site alternative to the price comparison sites. Attempted some research to try understand crowdcube, on what generally happens after an investment like how are you updated, what happens to investment on the odd few that succeeded. I didn’t find much out, one I found has had a 5% return after 4 years, lack of information held me back, decided to watch from the sidelines.

    There are predictions of a shakeup in the online stock broker industry due to large drops to income with low interest rates, likely reason behind recent iii/td direct merging. Broker I use offers commission free live trading on European stocks, they’d like to do the same for UK stocks but their costing model depends of higher interest rates. Good to see how others like freetrade are modelling it, the monthly charge elements would turn out expensive for someone not doing many trades.

    • Hi Reckless Saving

      I received an email from Crowdcube confirming my investment but all other info regarding my investment, I’ve been getting via the Freetrade forum from the Freetrade directors, ie they’ve been sharing all Crowdcube updates on the forum. That’s good enough for me but it’s not like I’ve invested a huge amount – it’s more of a gamble than anything else really (a £500 one!).

      I think something like Freetrade will shake up the industry – not that I’m planning to but already, people are mentioning transferring the portfolios they have with HL and Fidelity (for example) so it’ll be interesting to see how much does get transferred away from the ‘big boys’ and what (if anything) they will do in response.

  3. Hi, thanks for highlighting these types of investment opportunity. It sounds risky – but hey, that’s what the “fun” part of a portfolio is all about High risk but a
    very small probability of a stellar return. Keep up the good work

    • Hi Jo

      Yes, it is risky but I’m only risking fun money so it won’t be so devastating if it all goes pear-shaped.

      And loving your alternative answer to being ‘financially independent’ – HAHA! I fancy a bit of dossing myself so may end up stealing your answer! Thanks for stopping by!

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