The Two Minute Review
PROS
- 😍 Beautiful user experience makes it a joy to use.
- 💵 Very low fees, including no fees for investing in ETFs (other fees may apply).
- 🧩 Can trade US fractional shares.
- 👩🔬 Great analysis of stocks.
CONS
- 💵 Intro of a one pound/euro fee for trading stocks in those currencies might be prohibitive if you do frequent low-volume trades in those markets.
- 👴 Doesn’t offer ISAs, LISAs or SIPPs.
- 📈 Lacks the advanced features that some advanced day traders might require (but more than enough for everyone else).
What The Experts Say
What Users Say
4.8/5
When you exclude reviews the company itself invited and look only at organic reviews the average score is 4.64.
Some Interesting User Comments
We spend hours reading user comments to see what feedback people are giving. Here are some positive and critical comments that stood out to us:
Positive
5/5
This is probably the best beginner-friendly trading app in the UK, and certainly much better than Freetrade. Opening an account is easy, deposits are instant and most importantly withdrawals only take a few minutes to see the money in your bank! The UI is very sleek and the app is easy to navigate. I wish there was a stop-loss feature which I rely on to limit my losses. Otherwise an excellent app. Well done.
5/5
Lightyear has everything. Low FX fees, dividend calendar, 1000+ ETFs multiple currencies, Apple Pay deposits. The list goes on. Thank you so much lightyear!!
5/5
The UI is very intuitive. The only thing I can say that’s lacking is the number of stocks is lower than other platforms. They are adding regularly so that should be sorted. And the other thing is, maybe it’s just me, but you can’t see how much you bought and sold a specific stock for. It’s all in one list. But really, the negatives are just if I’m being picky. I would highly recommend it.
Critical
3/5
ETFs are not fractional. I don’t want to be charged £1 every time I buy a 10 stock.
4/5
The Deep Dive
Overview
🤳 A low-cost, modern app-based investment platform.
Lightyear is an app-first investment platform that launched in 2020. Despite being new, its sleek and modern design, low costs and rapidly expanding feature set have gained it a lot of attention.
It has a great heritage too, being founded by Martin Sokk and Mihkel Aamer, who both came over from Wise from the respective positions of Head of Product and Head of Engineering. For those who haven’t come across it, Wise (formerly known as TransferWise) is a fintech company that offers international money transfer services with transparent, low-cost fees and real exchange rates.
More recently, Lightyear has raised $25 million in funding from illustrious backers such as Richard Branson and the investment firm Lightspeed.
Account Opening
🚪 It took us less than ten minutes to open an account and start investing.
We were actually surprised by how easy it was to open the account. You’ll need to give the standard details like your name and address but you will also be asked for your National Insurance number if you’re in the UK, or a similar tax identification number if based internationally.
If you need to verify your identity, you’ll be asked to take a picture of a photo ID (a passport, national identity card or driver’s licence) and then asked to take a selfie to check you are indeed who you say you are. The checks are automatic and approval usually only takes a couple of minutes.
Once approved, we were prompted to add in money (see the screenshot in the middle of the picture above). We went with Google Pay but you can also choose to use Apple Pay, a bank transfer or your debit card.
Account Types
😐 We’d like to see a greater range of investment account options.
Currently, Lightyear only offers one type of account – a general investment account.
There is no ISA available which we found disappointing as this allows people in the UK to invest up to £20,000 a year tax-free. However, Lightyear has commented that this is “definitely on our roadmap”.
There are also no Lifetime ISAs no and SIPPS (Self-Invested Pension Plans).
Range of Investments
👉 An average selection of stocks and funds.
Lightyear offers 3000+ individual stocks. These are focussed on the US but you can also buy UK and EU stocks.
When it first launched it only had 1,000 stocks and these were restricted solely to the US. This gives you some idea of how rapidly the platform is expanding.
Fractional shares are a handy feature in the world of investing. They allow you to own a part of a stock, even if you don’t have enough money to buy a full share.
Here’s how it works: Imagine you want to invest in a high-priced stock like Amazon, which can cost hundreds of dollars for a single share. With fractional shares, you can invest as much or as little as you want, and you’ll own a piece of that Amazon stock proportionate to the money you put in.
So, if you have $100 to spare, you can use it to buy a fraction of an Amazon share, and you’ll still benefit from its price movements (either up or down). You also keep any dividends and gain any voting rights in proportion to the money you put in.
We find this makes investing much more accessible as it means expensive stocks, like Berkshire Hathaway, are no longer just the preserve of the rich.
Do note that fractional shares are currently only available on US stocks through Lightyear.
ETFs
Lightyear also started offering ETFs or “Exchange Traded Funds”. These are investment packages that contain a bunch of different assets, such as stocks, bonds, or even commodities. They’re designed to make investing easier and more diversified.
One cool thing about ETFs is that they can be themed. Imagine you’re interested in a specific sector, like technology or renewable energy. There’s a good chance there’s an ETF that focuses on just that. These themed ETFs group together companies related to that theme, so you can invest in the whole sector without picking individual stocks. There are also ETFs that follow entire markets, such as the Vanguard S&P 500 (actually the most popular ETF on Lightyear at the time we tested) which just invests in the 500 biggest listed companies in the US.
The main benefit of ETFs is that they spread your risk. Since they hold many different assets, a bad performance by one company won’t sink your entire investment. Plus, they’re usually managed by professionals who keep an eye on things, making it a bit like having an experienced guide along for your investment journey.
How does Lightyear’s range of stocks and ETFs compare to other providers out there? Here’s a quick breakdown of what some other popular providers offer:
So Lightyear is catching up with competitors, but if you’re currently looking to invest in semi-niche areas then you might have to look elsewhere. For example, we looked for the UK property company “On The Market” but were not able to find it listed.
Costs
😀 Fees are cheap…but not as cheap as they used to be.
Lightyear is really transparent with its fees. Currently, you are only charged a small fee when buying shares and a relatively low currency conversion fee when you buy stocks that are not listed in your base currency (e.g. if you are based in the US and you want to buy a stock that is listed in Euros). Here’s how it breaks down against competitors.
On top of there being no platform fee, you also don’t pay for deposits and withdrawals nor do you pay any Lighytyear execution fees when investing in ETFs (other fees might apply).
This makes Lightyear a very cheap trading option indeed. This is especially true if you compare it against larger, more established brokers such as ii and Hargreaves Lansdown.
However, many users are unhappy about the fees because Lightyear was originally even cheaper still. When it first launched FX fees only applied to transactions over $3,500 and they didn’t charge the 1$/£/€ for trading stocks. Indeed, if you are buying a UK stock for £10 then the £1 transaction fee can seem disproportionate. However, a $10 US transaction would only incur a 10-cent trading fee. You therefore have to look at the sort of trading you will be doing to decide how much of a burden these fees will be.
Overall, we think Lightyear represents one of the cheapest trading options on the market right now and while the fees have changed they have also introduced a cool new feature that lets you earn some high interest on cash balances.
Interest Payments
📈 High interest on cash balances is a lovely bonus.
Lightyear has recently introduced some pretty high rates of interest on any uninvested cash you have sitting in your account. You can earn this on euros, British pounds and US dollars. The calculation for each currency is as follows:
Central bank interest rate – 0.75% = Interest passed to you.
At the time of writing, this comes to 4.5% APR for pounds and dollars and 3.25% APR for euros. This is then calculated daily and paid monthly.
Even the top easy-access savings accounts are currently only paying just over 5% so we think this is a pretty significant feature.
The App
Woah. This is where Lightyear really surpasses the competition. Great research that doesn’t feel too overwhelming and a sleek UI make this our favourite investing app hands down. Let’s walk you through the features.
Note: Lightyear has launched a beta Web version of their product, which can be used as an alternative to the app.
When you log in you have three screens to choose from:
Explore Page
The Explore page has various features:
- Search: Look for any stock and find out information on it (more below on this) or add it to your “watchlist” – a list of companies you are interested in following.
- Lightening updates: One-sentence updates about the latest news on the biggest moving stocks over the past day. This feed will bias towards stocks you have put on your watchlist.
- Popular this week: A selection of the most bought stocks and ETFs.
- Discover and collections: Thematic lists of stocks and ETFs so you can get inspiration about what you want to buy. Examples of lists include “Pharma”, “Real Estate”, “Dividend Yield” and “ESG”.
- Investment calendar: At the moment this just gives you a feed of when dividends will be paid by companies in your watchlist.
- Your top stories: A news feed of the latest stories about the companies you have on your watchlist. They tend to come from the likes of Barrons, CNN Business and Reuters etc.
Portfolio Page
The main feature here is a graph that displays your current portfolio value. You can also tap to see a breakdown of your investments, including the sectors and countries they are in, plus any cash you hold and the interest you are earning on it. We really liked the beautiful way this info was displayed.
Account Page
Here you can see the balances of your GBP, EUR and USD wallets plus convert money. We also liked that you can see a feed of all your activity on the app.
The Individual Company Page
When you dive into any individual company you get a lot of financial information, but it is presented in such a clean way that it doesn’t feel too overwhelming.
You get the following for most stocks:
- Price history: Displayed on a graph.
- Price alerts: A very useful feature. You tap the bell in the right-hand corner of the screen and can request a notification when the stock hits a certain price.
- Key metrics: Like market cap, revenue etc.
- Analyst ratings: Buy, hold and sell recommendations from analysts at third-party brokers. These are then aggregated into a simple chart. However, you should never use these as an alternative to investment advice!
- Analyst price targets: Analyst price targets are their projection of a stock’s future price. When setting a stock’s price target, an analyst looks at a number of factors including the financial health of the company, management, earnings releases, sector trends and the company’s future plans. They then use this information to determine what the stock will be worth in 12 to 18 months. Again, these should not be seen as an alternative to investment advice.
- Financials: They extract key metrics from the company’s income, balance sheet and cash flow statements. If you click on “Earnings” you will often be able to listen to the actual audio from the most recent quarterly earnings call from the company – a cool feature and one that allows you to get a feel for a company and its management team.
- News: A feed of the latest updates on the company from reputable news sources.
- About: General info like CEO name, ticker etc.
Note as well how the page has a blue or red background depending on the way the price is trending. It’s little details like that which make this app such a joy to use.
Each individual stock page has a big blue “Buy” button (see the screenshots above). Once you tap it, you have the option to buy a cash amount of the stock (e.g. give me $50 worth) or to buy a number of shares. You then have three ways to execute the trade.
- Market order: You buy at the best price available when the market is open.
- Repeat order: You can set up a recurring purchase of stock for a fixed amount daily, weekly or monthly.
- Limit order: You can automatically buy a stock when it reaches a certain price (not available for fractional shares).
- Stop order: You can set a price on any whole US stock which – when reached – will automatically trigger a buy or sell transaction.
When selling you can also place a market order to sell immediately or a limit order to sell when the stock reaches a certain price.
One slight annoyance is that we could not find a way to implement a stop-loss order – i.e. to instruct Lightyear to sell your shares if the price hits a minimum.
Deposits and Withdrawals
Both depositing and withdrawing money were easy and quick.
Education
They don’t really offer any education on how to start trading. You will need to read up on this elsewhere and then just use their app for analysis and actual buying and selling.
How good is customer service?
Their help section is really good – but, as is common with many of the newer investing start-ups, you can’t speak to anyone on the phone. There is however email support. They state that
“(O)ur team works Monday to Friday during normal business hours and we generally respond within 1 business day of receiving your request.”
We decided to test this out. We emailed Lightyear at 4.41 p.m. requesting to change the email address on our account. They emailed back at 9.07 a.m. the next day to say this had been done. We were impressed by the speedy turnaround and the friendly tone of the representative (Dan) who helped us.
Is it good for beginners?
Lightyear is very good for beginners. Yes, it lacks educational resources but there are plenty of places to get these online. However, its ongoing analysis of the market and individual companies is comprehensive and detailed but somehow doesn’t feel too confusing for a newbie. If you’re starting out we reckon this is a great option.
Lightyear vs. Trading 212
Trading 212 wins in a few ways. It has lower fees, it has more advanced features for advanced traders and its desktop experience isn’t an afterthought. Its education section is better too. In addition, it provides an investment ISA which means you can invest £20,000 a year in the UK and not have to pay any tax on the money you make. Lightyear just has such a brilliant user experience though that we’d say you still have to check it out, especially for analysis (where it comes out on top).
Is it safe?
Lightyear itself isn’t registered with the FCA – but it is an AR (Appointed Representative) of RiskSave Technologies Ltd who is. It appears to be a temporary position as they are working to get FCA approval directly. Essentially, Lightyear will still have to adhere to FCA rules but the burden is on RiskSave to ensure this.
For US stocks you are protected by the Securities Investor Protection Corporation up to $500,000 and for EU assets by the Estonian Investor Protection Sectoral Fund up to 20,000 euros. However, for extra security, we would like to see Lightyear become part of the FSCS (Financial Services Compensation Scheme).
Despite this though, Lightyear has to hold any uninvested funds separately from their own funds and your stocks are held with authorised custodians. In the event of bankruptcy, they would remain your shares and Lightyear could not use them to pay off their debts.
So in conclusion, is it a good platform?
Yes, the combination of low fees, slick design and insightful analysis make it a winner.
Disclaimer: Capital at risk. The provider of investment services is Lightyear Financial Ltd for the UK and Lightyear Europe AS for the EU. Terms apply: lightyear.com/terms. Seek qualified advice if necessary.