We will share the top 4 Robinhood alternatives for UK investors in this post. Robinhood has revolutionised the way that individuals like you and I can access the stock market. Once only accessible by high stakes investors and the rich, the Robinhood model has opened up the market and made it possible for small-stakes, ‘ordinary’ people to grow their wealth and capital through the stock market, especially since ETFs made diversified entry into the stock market a reality for the small scale investor.
How can we leverage similar benefits and convenience in the UK? We’ve hunted down the best UK alternatives to Robinhood for you.
What is Robinhood, Anyway?
Robinhood is perhaps the best-known commission-free investing platform app for US stocks globally. They act as a FINRA-regulated broker-dealer, founded in 2015. The platform allows you to trade in EFTs, stocks, and even cryptocurrencies. They also have a US-based savings and bank account system and have over 13 million active users.
What’s so special about that? Firstly, this makes it one of the most competitive among very few modern and easy-to-use investment apps. And when it comes to people like you and me, versus the high-asset-value rich and brokerage firms, that’s essential. Eliminating high commission fees makes investing- and thus growing your wealth holistically towards financial freedom can make a reality.
Is Robinhood Coming to The UK?
So, if Robinhood offers such an awesome opportunity to invest, is there a UK alternative to Robinhood?
Robinhood itself made motions to open in the U.K in 2020, but this was postponed indefinitely due to the global pandemic. There’s been no further word of any plans to resume this anticipated growth. In fact, they confirmed they had no intention to revisit this plan in April 2021, so it’s best to assume we won’t see a UK Robinhood any time soon.
It’s understandable. Regulated, legitimate broker sites have to be registered with a wealth of financial bodies and regulators in each country in which they do business, and it’s a lengthy process. Not to mention that last year was not the easiest time for any stock market-related service.
With the markets the most volatile we’ve ever seen, they had an app outage or two that got them into hot water with their investors. Another issue was the debate around the payment for order flow which is the main revenue source of Robinhood. This means that Robinhood sells its customers’ orders to market makers to execute them. However, this business model is actually how Robinhood can offer commission-free trading. Combined with some bad press and the platform’s decision to limit trading during the meme stock craze, it’s understandable that they’re focusing on their home market for now.
Luckily, that doesn’t mean zero brokerage trading is off-limits for U.K residents!
What to Look For in Robinhood Alternatives?
So, before we look at some of our top choices, what makes a good alternative trading app platform?
Part of the appeal of Robinhood is that it is registered with the relevant US financial authorities. In the UK, the equivalent is the Financial Conduct Authority. Being registered with this means that clients’ investments, up to a set limit, are protected under law. All the Robinhood app alternatives we mention below are FCA registered.
An established history is also a good thing to look for. Robinhood has been around since 2015. While many years on the market isn’t always a sign of reliability, it’s a positive indicator and can increase trust that you are not dealing with a fly-by-night.
A clean, concise interface that makes it clear what you are doing and how to do it is important to the user experience. You want to see similar transparency around fees (including for deposit and withdrawal).
Lastly, make sure your chosen platform has access to the types of stocks and ETFs you are interested in. This includes whether fractional investing or cryptocurrency access is important to you.
We would always advise taking one that offers global exposure to diversify your portfolio, but it’s up to your risk appetite.
What is Fractional Trading?
Fractional trading is one of the biggest appeals of Robinhood and a key part of what makes it accessible for an average citizen. Buying even a single stock of a large and well-established company on the stock market can run to hundreds or even thousands of pounds. Amazon, for example, trades at over $3000 per share. For many people, this sort of exposure is out of the question- and who wants to put all their eggs in one basket, anyway?
Fractional trading means the low-budget retail investors can invest an amount of their choosing and own part of a share of the company. While it means you own a (quite literal) fraction of a share in that company, it enables you to benefit from the stock growth and grow your investment.
Let’s move on to the apps similar to Robinhood. (Capital at risk. Other charges apply.)
Top 4 Robinhood Alternatives for UK Investors
Stake offers a huge range of US stocks and ETFs, over 3800 at this point. It is exclusive to US stocks, however, so there’s no UK exposure. It’s an app-only platform, with a clean and intuitive design. You can use fractional share investing. There is a small deposit and withdrawal fee charged.
This platform allows access to free stocks and ETF trading. It also allows you to learn through ‘mimicking’ other traders and investors. The interface is slick and modern but remains pretty intuitive to use. It currently has 20 million users.
Freetrade is probably the closest UK alternative to Robinhood. It allows you to trade US stocks in the UK, as well as ETFs, and it has an ISA plan, too. Currently, there are over 1600 individual stocks on offer, and fractional share investing is possible. Many of the features overlap with Robinhood, and it has the same model- commission-free trading. Freetrade has been regularly voted as the closest UK analog of Robinhood, for what that’s worth.
4) Trading 212
Here you will have access to over 6500 global stocks and ETFs. There are no foreign exchange fees, and you can still leverage the power of fractional shares. Their customer base has topped 15 million customers. They have an ISA on offer. Platform allows to practise with virtual £50000 for the beginners.
And there you have it! These apps are our top choices for UK alternatives to Robinhood, and we hope you find the perfect platform to invest in the stock market and grow your wealth. Have you found another interesting choice? Let us know in the comments below!