Lightyear review: read this before you start

Pros and cons of using Lightyear

The story of Lightyear

Lightyear, founded in 2020 by former Wise employees Martin Sokk and Mihkel Aamer, is a EU and UK based investment app. It launched to provide a straightforward, low-cost solution for European investors, making trading and investment accessible through a user-friendly app.

Built with a focus on reducing complexity and fees, Lightyear’s approach caters to new and everyday investors, offering access to stocks and ETFs from multiple global markets. They've raised just under €30m in funding from venture capitalists in order to build a similar model to Robinhood or Trade Republic.

Let's take a look at their offer and if the hype is worth it.

Fees

Fee structure

It's free to create an account. Also, there's no membership fee. So in most cases, you'll only pay a transaction fee for whenever you buy or sell something.

Lightyear's fee structure is fairly standard which is based on a commission of each purchase:

You pay a currency conversion fee

Even though you're most likely going to use Lightyear from the EU if you're reading this, they offer the possibility of buying US stocks. The conversion rate between € and USD is 0.35%. Your currency is always converted at the live interbank rate - the rate at which banks convert currencies with each other.

Interest on uninvested cash

At the time of writing, Lightyear is providing a 2% interest rate. This is the cash which remains uninvested in your balance. However, double-check where you're based and what the current Lightyear offer is as it varies between countries.

Fees for ETFs

Having no fees for ETFs sounds great. However, they are limited in their options for investors. The selection features only 165 ETFs. For example, if we take the S&P 500, they only offer iShares and Vanguard versions so you're limited in your choice.

Convenience

Targeted for active investors

Although Lightyear doesn't have advanced trading options yet like options and futures, you get a sense that they want you to actively trade. Being a buy and hold investor in ETFs instead super interesting for their business model so they do push you to make some trades in individual stocks. Here's their selection of 12 stocks you can buy of Belgian companies:

Automated savings plans

No. Lightyear doesn't offer any saving plans or any type of automation for their customers. You'll have to manually send money towards your account to top it up and then make the trades. Note that you have a limit of €500 for deposits with your debit card (also with Apple or Google Pay). Otherwise you have to pay a 0.5% fee. Bank transfers for deposits and withdrawals are free.

Fractional shares

A popular investment strategy is euro-cost averaging, where you invest periodically instead of investing large lump sums in one go. You invest at fixed times, for instance every month, regardless of how the markets are performing. Most people are paid monthly, so it makes sense for their investments to follow the same pattern. Unfortunately Lightyear does not offer fractional shares for ETFs. They are only available for US stocks.

Customer support

Lightyear has good customer service in comparison to other neo-brokers. Their help centre covers most of your queries. Their email support is pretty fast with responses too. Some downsides is that there's no live chat and there's no phone service either if you encounter some issues with the app.

🇧🇪 TOB ("beurstaks" / "taxe boursière")

There’s a tax on the transaction every time you buy or sell a security in Belgium. The rules concerning the tax rate are complicated, also for ETFs. Depending on the characteristics of the ETF, the transaction tax varies between 0.12% and 1.32%.

Unfortunately Lightyear does not help you with this.

🇧🇪 Dividend tax

Lightyear doesn't help you with the dividend tax. In Belgium, any dividend you perceive is taxed at 30%. Accumulating funds, which directly reinvest dividends, are a way around this tax. On the other hand, distributing funds distribute their dividends, which means they're taxable.

🇧🇪 Reynders Tax

For ETFs that consist of at least 10% bonds, there is a 30% tax on the profits made when selling. For example, if you bought a bond ETF at €100 and end up selling it later for €130, your net profit will only  be €21. The other €9 will go to the Belgian state through this tax.

Unfortunately Lightyear doesn't withhold this tax for you. You will have to calculate and declare it yourself.

🇧🇪 Does Lightyear require declaring the account to the NBB?

Yes, as Lightyear is a foreign account based in Estonia which means you have to declare to the National Bank of Belgium as well as on your tax returns every year.

Opening an account

Let's dig into the details of setting up your Lightyear account for the first-time.

Time to open an account

Setting up an account through Lightyear is really easy. You can choose to sign up wither with the app or via your computer. You have to register with an email and confirm it.

Then you'll have to confirm your phone number through a four-digit code whilst continuing to add your tax information. Verify yourself via an ID or passport and you'll be almost ready to create your account.

Note that if you're registering from Belgium, Lightyear will most likely email you asking for a verification of details and a proof of address:

Ease of use: 2/5

There is no minimum deposit on Lightyear which is neat. As it's purely a trading app, Lightyear shows many details that aren't very relevant to most investors, especially for buy-and-hold index investors. The app feels very fresh and modern. Unfortunately there's a limit of ETFs available which makes it frustrating if we're looking for a specific fund to purchase. Also the fact that you have to handle all the tax declarations yourself if you're a Belgian or Italian user means we're rating it a 2/5. It's a lot of hassle especially with the TOB declarations in Belgium. You don't want to get a fine for a missed or incorrect declaration.

Children accounts and joint accounts

You're unable to create a child or joint account through Lightyear.

However, you can create a business account on Lightyear. They claim 3,000 companies are using their product across the EU.

Is Lightyear safe?

Who is the regulator?

Lightyear is a regulated entity in Estonia and the UK. Therefore, as a European investor, your assets are under the supervision of the Estonian Financial Supervision Authority (EFSA).

Have they had any issues with the regulator?

Based on our research, we can't find any information that Lightyear has had any issues with any regulator.

How much of your assets are protected by the investor protection scheme?

Your assets are protected by the standard €20,000 European investor protection scheme as they are based in the EU.

Is your cash protected by the deposit guarantee scheme?

No it doesn't have that protection. This is because your funds are held in a mix of AAA rated BlackRock money market funds and cash in authorised commercial banks. Your money is always kept separate from Lightyear's though.

Does Lightyear do securities lending?

Lightyear does not participate in securities lending.

Does Lightyear do payment for order flow?

No, They do not do payment for order flow (PFOF). It is an important source of revenue for many new brokers, including German provider Trade Republic. This practice involves routing your orders to certain market makers, who then pay the broker for the right of executing these orders. PFOF can work at your detriment, as brokers may prioritise payment over executing the best possible trade for you.

We have also compared Lightyear with other brokers if you want to dig deeper.

The easier way: Curvo

Brokers push you to trade and to pick individual companies to invest in. Rather than picking individual stocks such as Amazon or Tesla, index funds are a way to buy the whole market, across all sectors and regions of the world. Essentially, you own a small portion of thousands of companies throughout the world. Instead of betting on a particular company, you are placing a bet on the global economy.

Rather than having to pick the right stocks or ETFs among the hundreds available through a broker like Lightyear, you invest in a portfolio that is tailored to you and your goals. These portfolios are composed of globally diversified index funds, meaning you earn a piece of the growth of the global economy, and they're best suited to make the most of your savings long term. And they're secure as they're under supervision of the regulator in the Netherlands (AFM).

We believe that investing is an important tool for our generation to improve our financial well-being and to prepare for our future. We are building Curvo to fulfil that vision, by making good investing easy and accessible to all:

• Diversified portfolio set up for you: The best portfolio for you is built based on your time horizon and financial goals. Simply answer a short questionnaire and you’ll get everything set up for you.
• Automated savings plans: Through Curvo’s app you can set up a monthly contribution from €50. That means that money is automatically invested for you in your portfolio. Put your savings on autopilot!
• Fractional shares: All the money you send towards your portfolio is fully invested. No cash is left on the side.
• No TOB: Significant savings as the portfolios aren’t liable for the Belgian transaction tax (or "TOB"). This saves you between 0.12% and 1.32% for every time you buy or sell!
• Sustainable investments: Your investments focus on one guiding principle: don’t invest in companies that are considered destructive to the planet. This means that sectors like non-renewable energy, vice products, weapons and controversial companies are all excluded.
• Project yourself into the future: Through Curvo you can see how much your portfolio is expected to be worth in the future. You can answer questions like “how will increasing my monthly contribution by €50, €100 or €200 affect my long-term savings?” to give a concrete idea for the “future you”.

Learn more on how it compares to investing through a broker.

Summary

Lightyear offers a sleek and modern app for trading stocks and ETFs, with transparent fees and no minimum investment. However, its limited ETF selection, lack of automated savings plans, and the need for Belgian investors to handle taxes themselves may be drawbacks for some. While it's a decent option for active traders interested in US stocks, it might not be the best fit for passive index investors or those seeking a hands-off approach.

If you're looking for a more tailored, passive investing solution that handles the complexities for you, consider exploring Curvo. With diversified portfolios, automated savings plans, and no TOB for Belgian investors, Curvo offers a simpler way to invest for your long-term financial goals.