Trading 212: Best broker for beginner investors?

Today's article will focus on the analysis of a broker called Trading 212. In my opinion, this broker has many qualities, but also a few shortcomings, which we will discuss in this article. Again, we will go over the main points - security, financial stability, fees, advantages, disadvantages and features that every investor might appreciate. Finally, I'll evaluate and conclude with whether Trading 212 is the best possible choice for beginners, or even advanced investors.

Trading 212

Trading 212 is a broker that is based in London. This is despite the fact that it is a broker originating from Bulgaria. I think that if I were to ask investors (and especially newbies), we would find an absolute minimum of people who are not familiar with TT212. However, I consider it a negative that many investors are lured to this broker only at the expense of using a promo code and getting a free share, which is not to say that the broker is bad, but an investor should care about comprehensiveness, not gifts 😄

Classically, let's go through my basic list of criteria, which I discussed in one of my previous articles - link here.

Safety first

The broker was founded in 2004, which isn't that many years of existence (compared to, say, Interactive Brokers, which was founded in 1977). However, this is not a major issue.

Segregated accounts - Nowadays this is perhaps commonplace, Trading 212 is no exception and offers this option (protection in case the broker goes bankrupt).

EU brokers are required to have investor deposit insurance of at least 20,000 euros. It has often happened in the past that brokers have only met this minimum legal requirement. Trading212 is special in this respect, as it offers investors additional insurance in addition to the basic deposit insurance with the British insurance company Lloyds of London in the amount of 1 million euros. Which actually shows that you don't have to worry about investing larger sums.

Financial stability of the broker

If we look into the past, we won't find any problems here either, as TT212 shows great results, which is another sign of stability. The big boom in retail trading has helped Trading 212 to earn decent fees from its clients' trades, leading to a 75% increase in revenue for the fiscal year ending December 31, 2021.

Revenue from online trading jumped to £94m compared to £54.2m in the previous year. However, with robust revenue growth comes rising costs, which is the logical thing to do here - expanding the business, growth in headcount, raising staff salaries, etc.

T212 has seen incredible levels of growth in recent years. Revenue has grown from £2m in 2019 to £54.3m in 2020 and then to £94.1m in 2021.

Fees

Trading 212 doesn't charge any fees for depositing money into a trading account, that is if you deposit it via bank transfer. For credit cards and e-wallets, the platform does not charge fees until your total deposits reach €2,000 (after which it charges 0.7% of the deposit amount).

TT212 also does not charge withdrawal fees (note that this is a benefit, some brokers normally charge a fee for this). Withdrawal of funds via credit card is usually settled within 24 hours (according to TT212), but my experience is that it often took 2-3 days (but I don't consider this a big problem either).

  • In the case of TT212, you don't even pay for inactivity on your account.
  • What I must point out though is the 0.5% currency exchange fee if you are buying with foreign currency.

What can I invest in?

You can trade physical shares (Europe, USA), but you will not find Czech shares here. You will find thousands of different stocks from these markets, including the most famous ones, but also the less popular ones. In the past, I have even found some stocks here that other brokers did not offer, for example (a Bulios fan asked about Enovix stocks, which I have only found here and at a few other brokers).

CFD trading - Use these to speculate on the fall and rise of currencies, stocks, indices and commodities. There are hundreds of assets available.

ETFs - Included are index ETFs tracking the German DAX as well as the US Nasdaq, S&P 500 and Dow Jones. However, you can also invest in commodities and precious metals through ETFs.

Highlights and highlights

The broker offers two types of accounts, there is an INVEST account and a CFD account .

  • In the case of Trading 212 INVEST, there are two instruments, namely stocks and ETFs.
  • In the case of Trading 212 CFD, the user has the rest, namely CFDs on stocks, indices, futures, commodities, forex and ETFs.
  1. The broker also offers a demo account, which is such a small plus for newbies and inexperienced investors who can try trading for real.
  2. Pie making is a tweak that many investors appreciate. The creation is almost unlimited and you can track your chosen stocks, ETFs and more with ease.
  3. Influencers also often partner with TT212, which allows them to have a promo code that gives you one randomly selected stock up to €100 when you sign up.
  4. For dividend investors, there 's also the W-8BENform, which avoids double taxation (15% basic tax).
  5. The minimum deposit and minimum withdrawal is 200 CZK, or 10 € or 10 $. For INVEST accounts, the amount is just $1.

Advantages of TT212:

  • Trading 212 is one of the brokers where you can trade stocks, ETFs and difference contracts on assets (indices, stocks, Forex, commodities and futures).
  • The broker also offers a mobile app.
  • It stands out for its account in Czech crowns, low fees and a rich portfolio of instruments.
  • The minimum deposit of CZK 30 is also an advantage, but on the whole insignificant, as I expect your deposits to be higher. In addition to traditional bank transfers and credit cards, you can also deposit money into your Trading 212 trading account via Google Pay, PayPal, Skrill and other methods.
  • Payment by card or through an online wallet is processed instantly, which I take as a benefit.
  • With its long-term financial results and additional insurance, we can thus say that Trading212 is a very reliable broker and a relatively safe place for your money and investments.
  • There is the option of investing in fractional shares (you don't have to buy the whole share of the company).

Disadvantages of TT212

  • It is blamed for the absence of cryptocurrencies.
  • The app is not in English, as well as you can't communicate with customer support in English (personally, I don't take this as a disadvantage, but it may bother some people).
  • Broker may temporarily suspend or limit orders for some instruments.
  • Fees are zero, but spreads are quite high and unpredictable (Spread is: The difference between the buying and selling rate of a currency or other asset).
  • The broker also does not allow transfer of shares to its platform, but neither from it to another broker.

Conclusion

Trading 212 offers investors minimal or zero fees, plus a very clear web-based trading platform that even a beginner can navigate. If you are planning to take your first steps in the stock market and you know at least basic English, then Trading 212 may be just the broker to meet your expectations. I have personal experience with TT212 and I certainly cannot complain, I would recommend it to beginners with a clear conscience.

Please note that this is not financial advice. Every investment must go through a thorough analysis.

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