It finally happened. We now have an ETF broker that’s easy to use, with free automated savings plans, a flat 1€ trading fee and fractional shares!
I’m talking about Trade Republic, which finally expanded beyond Germany and Austria to a total of 17 countries across Europe.
Trade Republic is based in Germany, where it is strictly regulated and supervised by the Federal Bank and the German BaFin, not some remote island with questionable regulative oversight.
Ultimately, I tested Trade Republic quite a bit over the past few weeks and even set up a monthly ETF saving plan for my 3-month old daughter to give her a head start on her investment journey.
As a result, combined with my six years of experience in the stock market so far, during which my wife and I were able to grow our ETF portfolio to over 186.000€ in value, I now feel ready to give you an honest review of the broker, with all its pros and cons.
After all, I’ve used a lot of different brokerage accounts over the years.
What you should know about Trade Republic
Trade Republic was founded in 2015 in Berlin, Germany as a mobile-first broker. Don’t worry, they have a web interface as well!
As I mentioned in the intro, the broker is regulated and supervised by the Federal Bank of Germany and the BaFin.
They currently have 1 million customers and 6 billion euros in assets under management.
All the cash you keep on your Trade Republic account is protected up to 100.000€ per investor via the deposit guarantee in Germany (Solarisbank and Deutsche Bank) or Ireland (Citibank Europe).
Meanwhile the securities, so your stocks or ETFs, are always held separately from the broker at the custodian bank HSBC Germany in your name. HSBC is the largest bank in Europe by assets under management.
Your shares remain your property even if Trade Republic or HSBC where to ever go bankrupt. In that case, they can simply be transferred to another brokerage account of yours.
As for the basics, there are no account fees, no exchange connectivity fees or anything similar on Trade Republic. So you’re not wasting any money on fixed fees as a buy and hold investor.
Let’s have a look at a few features that make this broker stand out from its European competition:
Fractional shares for stocks & ETFs (finally!)
You can buy fractional shares of stocks and ETFs as well. Both when placing an order directly and via a savings plan.
This means you can fully invest whichever amount you choose right away on Trade Republic.
Here’s what I mean: Let’s say you have 500€ you want to invest into the accumulating Vanguard FTSE All-World, which is our personal favorite ETF.
Now you can place a buy order by simply entering 500€ as the amount you want to invest and then the broker will not only buy full shares, as is usually the case, but even partial shares:
In the example above, you’re getting 5,32 shares, meaning you’re able to fully invest your funds at once!
Normally, you would only be getting 5 full shares and then the remaining amount (in this case 30,25€) would stay in cash uninvested, so this is a great feature.
What is more, with Trade Republic you only pay a flat 1€ fee for your orders, no matter which amount.
The one thing I would keep in mind is that you’re placing a market order, so you’re paying the current price that your stock or ETF is traded for at that moment on the German L&S exchange.
This means, I would still make sure you place your order on workdays between 9:00-17:30 CET, as that’s when the largest European exchanges are open, so that you limit the risk of over-paying for your shares due to low liquidity.
If you’re investing a larger amount at once, I think it still makes sense to place a limit order instead.
Here you’re setting the maximum you’re willing to pay per share based on current market prices, to protect yourself from short, sudden moves upwards in price for the shares you’re buying. The one downside is you can only buy full shares via a limit order:
No matter whether you place a market or limit order, you’ll be paying the same 1€ transaction fee.
Free savings plans for stocks & ETFs
The second feature that sets Trade Republic apart is that it offers free savings plans for thousands of stocks and ETFs. With these, you’re even saving yourself the 1€ trading fee, they’re completely free of charge.
In this case you’re getting partial shares as well, so the amount you set will be fully invested each time.
When you create a savings plan, you can choose the frequency yourself:
- Twice a month
You can then select if you want it to be executed for the first time at the start or in the middle of the month.
But wait, here’s the best part: You can enter an amount starting from as low as 1€ that you want to be invested each time.
In my opinion, this is a game changer. So if you’ve been looking for way to dollar-cost-average into the market at regular intervals without needing to actively place orders each time, now you have an easy, automated way to do that.
Of course you can also cancel your savings plan any time.
Not only that, at least in Austria and Germany and only when using the mobile app, you can even set up your savings plan so that Trade Republic automatically collects the amount you’re investing from your own, external bank account beforehand instead of you needing to wire the money to Trade Republic manually.
I haven’t been able to test this for other countries, so please let me know if you live outside of those two and have that option as well!
Then again, you probably don’t mind keeping some cash for upcoming investments on your Trade Republic account, here’s why:
2% Interest on Euro deposits – What’s the catch?
Recently Trade Republic started paying 2% interest per year (paid monthly) on the uninvested euro funds on your account, up to a max. balance of 50.000€.
You can see the details in the app:
There is no catch – the money is secured up to 100.000€ per investor via each bank’s deposit guarantee scheme and you can withdraw it any time.
If I had to guess, Trade Republic probably knows that people are more likely to trade when they already have the money sitting on their account than when they don’t. And if that happens, the broker makes money.
So just keep that in mind and don’t start investing or trading more than you were planning to initially. Stick to your investment strategy.
As for me, I decided to move some of my cash reserves, which I need to easily access for upcoming tax and social insurance payments, to my Trade Republic account to earn a bit of interest on them without taking on additional investment risks.
Before doing that, I also tested how long withdrawals from Trade Republic take. In my case, it took exactly 72 hours, so 3 business days to have the money back on my bank account.
On February 1st, I received my first monthly interest payment. Here’s what that looks like:
Alright, here are a few more important things you should know:
Does Trade Republic lend out your shares?
I’m happy to report that there is no share lending on Trade Republic, so you’re not exposed to counterparty risk from lending activities. Unlike Degiro or Trading212 for example, where you sadly can’t opt out of the share lending policy.
Can your shares be transferred?
Yes, you can transfer your shares from Trade Republic to another broker whenever you want. It’s an extremely important feature that should never be missing from a brokerage account you’re planning to use long-term. You can also transfer your stocks or ETFs to Trade Republic.
Only fractional shares can’t be transferred. Thus, if you own 103,4 shares of an ETF or stock you’ll be able to transfer the 103 full shares and then you can either keep the remaining 0,4 shares on Trade Republic or sell them. Another option could be to buy 0,6 more shares, which would then enable you to to transfer all 104 shares.
Only one exchange (L&S)
In my opinion, Trade Republic only has a single limitation if you’re a buy and hold ETF investor like me. All orders are executed using a single exchange: Lang & Schwarz in Germany.
For directing all the orders exclusively to the LS exchange, Trade Republic receives payment for order flow (PFOF). In case you’ve been wondering, that’s how the broker is able to offer free savings plans and order fees of only 1€ each.
You can’t choose another exchange. If you want to do that for whatever reason, you would need to first transfer your shares to another broker where that’s possible (eg. Interactive Brokers), which you’re luckily able to as we just discussed.
That being said, if you place your orders from Monday-Friday 9:00-17:30 CET, which is when you generally have the most liquidity and the tightest spreads, you should’t be paying any more for your shares over other large European exchanges.
According to Trade Republic and an independent study they commissioned, you even save 0,52€ per 1.000€ invested compared XETRA, the largest exchange in Germany. And that’s not even taking the lower transaction fees into account.Link to the study
I’ll have to test that a bit further myself, but from what I’ve seen so far, the share price my ETF orders were executed at wasn’t higher compared to other exchanges.
Trade Republic – Pros & Cons
Ok, now you’re probably wondering – this all seems a bit too good to be true, what are the downsides?
So let’s have a look at the pros & cons when using Trade Republic:
|✓ No account fees
|⨉ Mobile-first design
|✓ Free savings plans for stocks & ETFs
|⨉ Single exchange (L&S)
|✓ 1€ order fee
|⨉ Payment for order flow (PFOF)
|✓ Fractional shares
|⨉ Relatively slow withdrawals (3 days)
|✓ No share lending
|✓ Stocks & ETFs can be transferred
|✓ 2% interest p.a. on € cash balance
|✓ 100.000€ protection via deposit guarantee
on € cash + segregated assets
|✓ Based & regulated in Germany
Trade Republic vs. Competition
Trade Republic vs. Degiro
Here’s the deal: I think with Trade Republic expanding within the European market, we now have a better option than Degiro for new, inexperienced investors.
They’re easier to use, you have free automated savings plans, a flat 1€ fee for orders, fractional shares, no yearly exchange connectivity fees and most importantly (at least for me), your shares are never lent out. They’re always exclusively yours.
Trade Republic vs. Interactive Brokers
Meanwhile, Interactive Brokers will still remain my personal #1 choice, especially for large portfolio amounts, I just trust this broker the most based on its long history and its strong financial position. Interactive Brokers also has a lot more features and statistics I like to use on a regular basis and gives you access to 150 financial markets all across the world, not just a single exchange.
I just wish Interactive Brokers wasn’t so complex. It’s definitely in need of a redesign, as the broker can be quite overwhelming at the beginning.
On the other hand, Trade Republic has done an excellent job at making its interface and the investment process as easy as possible. With everything that it offers, it’s very easy to recommend. The features I appreciate the most are the fractional shares and the free savings plans, which I’ll also take advantage of.
When it comes to direct orders, especially of amounts above 2.000€ I’m still planning on placing those on Interactive Brokers. So when the market drops for example and I want to buy more right away, as I did a lot last year.
That’s because of its smart routing system when placing orders, which gets you the best price across all available exchanges. I’m confident that for those, IBKR is still the better choice.
Trade Republic Review – Conclusion
Just like we did for our daughter, I set up an ETF savings plan on Trade Republic for myself. I really appreciate the convenience of having my money invested automatically and being able to get fractional shares as well for the full investment amount.
I’m even going to try a weekly frequency, since that option is available:
Additionally, I moved a large chunk of our cash reserves here to earn 2% interest for as long as they have the offer.
All in all, I’m very happy that Trade Republic expanded beyond German speaking countries. We finally have another excellent broker to choose from, which even offers a few unique features over the others.
Before you take off, if you found this review helpful and you’d like to support me, you can do that by using my link to check out Trade Republic for yourself.
How do you like Trade Republic? Feel free to share your experience in the comments!
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