How Do Commission-Free Platforms Make Money?

With an increasing number of platforms eliminating trading commissions and platform fees, many investors are left wondering how these businesses stay afloat. This video unravels the economics behind commission-free investing platforms and explores what it means for our investment strategies and portfolio growth.

What PensionCraft Offers:

Timestamps
00:00 Introduction
00:32 Revenue Sources for Investment Platforms
07:55 Trading Commission
09:09 Platform Fees
11:20 Platform-Managed Portfolios
12:52 Interest on Uninvested Cash
14:30 Currency Conversion Fees
16:15 Stock Lending
17:59 Contracts for Difference
18:47 Payment for Order Flow

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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

[mattgoodwin-king]

I've noticed the buy price on T212 is slightly higher than elsewhere, and then increases again on settling the purchase. It feels like they're scalping

[Vijinger]

good breakdown of HL costs and revenues. Thanks

[mateuszgoab]

Interesting video, great to see your channel approaching 200k subscribers :)

[mhoward]

Does anyone know when IE going to allow pension transfers. It’s been saying coming soon for months now.

[shellyperera]

Excellent informative video, thank you.

[TMZ-jr]

Most are buying usd, so they have exchanged trading commission fees for much higher fx fees.

[julienhamon]

Do we know if Trading 212 uses payment order flows for EU clients since they are clients of the Cyprus entity, not UK?

[yesmarioo]

If it's free, you're the product.

[MARTINA-gctq]

They buy shares at over market price and sell them at below market price and pocket the difference.

[HectorHughMunro]

This is one of the most useful videos that you have done. Thx.

[sohux]

Very comprehensive video. I was about to write that you forgot payment to order flow but heard it 😂 robinhood made hundreds of millions in PTOF in 2021.

[venil]

Am I right in thinking that csh2 is taxed at capital gains rate, and not dividend/income tax rate, as it just simply grows in value?

[I_Was_Chrispy_Kreme]

I always thought stock lending was particularly janky. So I am long on say BT and my pension provider loans out my share to someone who is betting against me, how this is fiduciary to me I don’t understand

[anthonybrown]

There are many ways that the companies mske money my pension provider serm to keep holding on to my contributions fir 20 days pending before it hits the fund.

[MrXplanepilot]

is there an etf or fund i can invest in to utilise my 3000£/year capital gains allowance to prevent taxes? or another strategy? ive maxed out my ISA, SIIP and Personal savings allowance this year and i need to park some cash for a few months for a mortgage deposit. im i higher rate tax payer. cheers

[davideyres]

Provided they don’t change and start charging for holding on to the shares I don’t care how they are free so long as they stay free.

[patchpeek]

So, all these business models collapse when interest rates fall back to Enjoy the free lunch whilst it lasts. I recommend a plan to move to a fee paying platform well ahead of the classic 'bank run' on these unsustainable platforms.

[vv-cvud]

It’s rip off from the retail investor or trader . There’s always a difference in the price moment between the send n fill order . More we trader more they make money out of this .

[thesolitarybee]

Is it safer not to invest if you don’t know what you’re doing ? I’ve tried really hard to start my investing journey but I can’t get going, I now feel like I’ve taken on too much information to make a simple investing decision. I only want to invest so I can try to reduce my new mortgage from 19 years to 10. I’m 50 with £8000 to invest and can only put an additional £200 a month into my investment. What I have to work with is simple but choosing a starting point is very difficult 😞

[coderider]

HL has Massive overheads, can see why private equity want it.