Trade republic's hidden trick: dodging fees on small investments

For years, Spanish investors have been chafing under the high fees levied by traditional banks – custody charges, maintenance fees, execution costs – all eating into potential returns before a single trade is even made. The arrival of neobrokers like Trade Republic promised a solution, but a closer look reveals a subtle snag: a €1 transaction fee that can sting small investors. However, a legal loophole, cleverly exploited by savvy users, offers a way around this.

Automated savings plans: the key to zero-fee trading

The €1 fee applies to what Trade Republic calls “market orders” – instantaneous purchases executed at the current market price. It's essentially a premium for immediacy. But the platform, recognizing the importance of financial education and long-term customer retention, introduced a smart alternative: automated savings plans. Setting these up is entirely free.

The concept is simple: instead of manually buying shares each time, users schedule recurring investments – perhaps €20 or €50 a month into an S&P 500 ETF. Trade Republic incentivizes this behavior by waiving the transaction fee on these automated plans. This is where the clever workaround comes into play.

The trick? You use the savings plan feature to make a one-off purchase, then promptly cancel the recurring schedule. The process, though seemingly convoluted, is remarkably straightforward.

Here’s how it works:

1. Select Your Asset: Navigate the app and identify the stock, ETF, or cryptocurrency you wish to acquire.
2. Bypass the ‘Buy’ Button: Resist the temptation to click the standard “Buy” button at the bottom of the screen.
3. Create a Savings Plan: Instead, select the “Savings Plan” (or “Create Plan”) option.
4. Configure Your Investment: Input the exact amount you intend to invest—for example, €50.
5. Set Frequency and Date: Choose your investment frequency (monthly is typical) and select the nearest execution date offered by the system (often the 2nd or 16th of the month).
6. Confirm and Wait: The system will schedule your order. On the designated date, it will automatically purchase your assets, deducting the funds from your balance—without the €1 fee.
7. Cancel the Plan: Crucially, after the purchase has been executed, return to the Savings Plan section and delete the plan. This final step ensures you’ve completed a one-off transaction and avoided future fees.

Repeated consistently, this technique can save investors hundreds of euros over time, allowing those returns to compound.

Is this legal? absolutely.

Trade Republic explicitly offers savings plans as a free alternative. The legality of exploiting this feature to avoid the transaction fee is beyond reproach. And while some may question the ethical implications of gaming the system, the platform's own design facilitates this practice – a testament to the power of understanding the fine print.

The bottom line? In an era of increasingly sophisticated financial tools, a little ingenuity can go a long way towards maximizing returns. Trade Republic might present itself as a low-cost brokerage, but mastering this simple trick unlocks its full potential for the budget-conscious investor.