Is Trading 212 Safe
A question I have been asked multiple times, is Trading 212 safe, is Trading 212 legit. Often from new investors who are scared of what would happen is they went bust.
Trading 212 is safe, fear not. They are regulated by the FCA. Here is a quoted post from AlexK who is part of the Trading 212 team. It should settle the most anxious of you.
Here’s a summary of things to consider regarding the protection of your funds:
How is Trading 212 regulated?
We are headquartered in the UK. All our clients are onboarded in our FCA-regulated entity. We don’t have any operational entities outside the UK and the EU. Balances of cash and equity, capital adequacy and transactions are reported to the regulator on a daily basis.
Are my funds protected?
Yes, up to £85,000 by the FSCS.
Where is my equity?
When you invest with Trading 212, your equity is held in custody at Interactive Brokers. They are the biggest broker in the world by the number of daily trades. They hold $160B in client assets.
Where is my cash?
Your money is held at Barclays Bank in a segregated account which means that we can’t touch it.
Does the company have solid financials?
- Trading 212 has been profitable every single year since its founding 16 years ago.
- We have no debt.
- We have solid cash reserves
- It’s very cost-effective for us to offer free share dealing because over the years we’ve already invested a lot in infrastructure and platform development for our CFD business.
- Our existence does not depend on VC funding or crowdfunding.
Trading 212 Is Safe Do Not Worry
If that does not put your mind at ease I am not sure what will. Once your portfolio reaches the protection limit of the FSCS currently £85,000 then and only then would I worry about putting some of your eggs into another basket.
Just because you are over the limit does not mean you will only get paid out the £85,000 anyway, more often than not you would get the full amount back, that is what the FSCS themselves cover you upto.
As Trading 212 state they do not hold you equity or have access to your cash directly.
If you are still worried, then all you need to do is open up another account with a different broker when you hit the limit of protection.
Want a nice way to track your investments and dividends? Checkout my Dividend Tracking Spreadsheet
Gain some crucial knowledge and broaden your mind with some of my top recommended books.
New to investing? See my Trading 212 for beginners guide.
Hopefully, that eases your mind and puts the concerns to rest of is Trading 212 is safe. Worry no more friends, Trading 212 is legit.
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None of the above should be used as financial advice, I am not a professional. Always do your own research.