Lightyear Investing App Review | 2024 | Sumlad (2024)

By far, Lightyear has the easiest account opening experience of any investment platform we have reviewed. The process takes place through the Lightyear app and you can have your entire account set up in minutes.

Here are the steps for opening an account with Lightyear:

1. Download the mobile app
2. Provide your phone number and email
3. Create a Pincode
4. Take a picture of your ID and verify your identity through a biometric scan
5. Add face ID
6. Verify your email
7. Create a password
8. Fund your account to start earning interest / investing

Funding your Lightyear account is as seamless as the account opening process. You can choose from:

• Standard bank transfers (traditional banks)
• Instant bank transfers (digital banks like Revolut / N26)
• Debit card / Google Pay / Apple Pay
• SWIFT transfers (international accounts)

For bank transfers — instant, standard, or using SWIFT — there are no fees. The best option is the instant bank transfer. You can send money to your Lightyear account in 30 seconds by using Revolut:

1. Choose the amount
2. Follow the redirect to Revolut via the Lightyear app
3. Confirm your transaction
4. Done. Your account will be funded in seconds

The instant funding alternative is using Apple Pay, Google Pay, or a debit card to fund your Lightyear account. The first €500 deposited is fee-free, with no charges whatsoever. After that, a 0.5% fee will apply.

If you want to withdraw money from Lightyear, you just need to tap the withdraw button. It will autoselect the account you used for funding. Select confirm. Your funds will usually arrive the same day, or no more than two business days later.

Lightyear pays interest on any cash balances held in your account. For Euros, the interest rate paid is 3.25% per annum. Cash held with Lightyear is protected up to €20,000 under the Investor Protection Scheme.

Here are the interest rates for EUR, USD, and GBP on Lightyear.

If you are an Irish resident using the Lightyear app, you must pay 33% DIRT on any interest earned. You will need to declare DIRT with Revenue yourself.

For related tax queries, you can refer to this guide.

If you are considering converting EUR to GBP or USD to avail of higher rates, it’s important to be aware that there is a currency conversion fee of 0.35%. So, if you convert EUR to USD, that will be a 0.35% initial charge. Then, when you want to withdraw your cash, you’ll likely want to convert it back to Euros. Then there will be another 0.35% fee — 0.70% in total — so it’s just something to be aware of.

Lightyear can pay high interest because your uninvested cash is put in either a Money Market Fund (MMF) or an institutional bank account that pays interest.

Lightyear holds cash in one of three ways. It is with:

1. Blackrock Money Market Funds: AAA-rated (best investment grade) by Moody’s, S&P, and Fitch, the credit rating agencies
2. ABN AMRO Bank: Long-term A rating from credit rating agencies which indicates high-quality investment grade and low credit risk
3. AS LHV Bank: Long-term Baa3 rating which indicates medium investment grade and moderate credit risk

Money market funds, or MMFs, are seen as a relatively risk-averse investment product for parking cash. That’s because MMFs invest in government bonds or corporate bonds of companies with high credit ratings.

There is a selection of about 3,000 stocks on the Lightyear app. Users of Lightyear can buy stocks and shares from the US, Canada, the UK, Europe, and Asia. In Europe, you can buy stocks from countries such as Ireland, Germany, the Netherlands, France, and Belgium.

The table below shows how many stocks you can invest in from different countries and continents:

There are more than 150 ETFs to invest in on the Lightyear app. Here is a selection of popular ETFs that users may be interested in buying:

There one downside to ETFs is fractional investing. You cannot buy fractional shares of ETFs on Lightyear. However, there are a wide variety of ETFs that you can buy for less than €100, so it’s still relatively easy to get started even if you don’t want to invest too much. For investors with a long term regular investing strategy into ETFs, you can set up recurring buy orders on a daily, weekly, or monthly basis.

What you’ll be happier to find out, is that ETFs are free on Lightyear. There are no costs to buy or sell. That’s the long and short of it, but you can find out more in the fees section.

You can buy and sell fractional shares of stocks on Lightyear, but it is not available for ETFs. Fractional shares are limited to particular stocks currently but Lightyear does aim to expand it to a wider range in the future.

Any dividend payouts will be paid fractionally too, rounded to the nearest cent.

Crypto assets are not supported by Lightyear.

You can’t buy gold, silver, or other financial products that track the price of commodities on Lightyear.

You can buy bond ETFs for exposure to both government and corporate bonds on Lightyear.

Below, we are going to break down the costs of investing if your main currency is Euros.

Here’s how much it costs to invest €100, €1,000, and €10,000 in different investment products on Lightyear:

Euro ETFs

GBP ETFs

Euro stocks

US stocks and UK stocks

There are two costs for buying US stocks and UK stocks on Lightyear, the FX fee and the commission. For the sake of simplicity, we won’t use actual EUR/USD conversion rates because the two fees are in different currencies.

For the currency conversion section, we’ll show the cost of converting €100, €1,000, and €10,000. For the commission section, we’ll show the cost of investing $100, $1,000, and $10,000.

1. Currency conversion for US / UK stocks

2. Commission for US / UK stocks

3. Summary of total fees for US / UK stocks (approximately)

Lightyear charges a 0.35% foreign exchange (FX) fee. If you are funding your account with Euros, you will pay 0.35% when you buy US stocks (USD) or UK stocks (GBP). The same is true if you want to convert EUR to USD to earn a higher interest rate on your cash.

There are no deposit fees for bank transfers to your Lightyear account. If you use a debit card, Google Pay, or Apple Pay, there are no fees on the first £/€500 you deposit with Lightyear but a 0.5% fee is charged from there on.

The £/€500 limit is not a per-deposit limit, it is a lifetime limit.

There are a few negatives to the interface of Lightyear’s app. There might not be infinite resources relating to market news or educational resources, but that’s not always what’s needed from an investment app.

If you just want to passively invest in stocks and ETFs or earn interest on your cash without all the bells and whistles, Lightyear meets that criteria. When you need more information on an investment, it’s there too. Just select a stock or ETF and you’ll find all of the basic information alongside it.

Lightyear has three tabs:

1. Explore (the main investing menu)
2. Portfolio (your investments)
3. Cash (your balance that earns interest)

All of these are plain, neat, and easy to use. Everything can be found within a few clicks.

The Lightyear investment app is regulated in two jurisdictions, the UK and the EU. In the EU, Lightyear is regulated by the Estonian Financial Supervision Authority (EFSA). In the UK, Lightyear has an appointed representative (RiskSave Technologies) supporting and supervising FCA-regulated activities. Lightyear doesn’t yet have full FCA approval.

As a newer provider, this is a common tactic to speed up a company’s go-to-market strategy. Lightyear has filed its application to get official FCA approval but this process can be time-consuming, which may be the reason for the appointed representative route for now.

There is no deposit guarantee scheme for Lightyear accounts. If you’ve opted in to earn interest on your uninvested cash, it’s held in a money market fund or an institutional bank account.

ABN AMRO Bank and AS LHV Bank (Lightyear’s partner banks) do not provide a deposit guarantee scheme for Lightyear customers. AMRO states that “investment companies [are] not covered by the deposit guarantee scheme.” Similarly, AS LHV states that “financial intermediaries” fall under the list of “deposits [that] are not subject to compensation.”

As defined by the European Central Bank, one of the categories of financial intermediaries is a monetary financial institution. This is defined as “credit institutions and non-credit institutions (mainly money market funds) whose business is to receive deposits from entities other than MFIs and to grant credit and/or invest in securities.”

Let’s make no mistake about it. Lightyear is a new, young company so it’s important to know your money is safe with them. As we do with all of our broker reviews, we look at the published financials. Here’s what you need to know about Lightyear.

Lightyear Europe AS, the company behind the Lightyear investment app, is not profitable. But, it’s a startup that needs to get the word out and scale first — it’s understandable why it isn’t turning a profit yet.

And Lightyear has raised the capital to do just that. A total of $25 million was raised in the company’s Series A which has allowed the company to invest heavily.

In its published financial statements, it’s clear that 2023 is the year for that push. Marketing expenses have grown to €472,000 in the 12 months from April 2022 to May 2023. In a nutshell, the marketing budget is 300 times the size it was from May 2021 to March 2022. It’s important to note Lightyear has only recently arrived in EU markets, so the company is going to be spending a lot.

What we can also see, however, is a positive trend in its financials. Total revenue increased by about 320%, attributable to UK revenue that almost quadrupled and EU-based revenue going from 0 to €40 million.

As of March 2023, Lightyear held client assets totaling €32.6 million, approximately €22.8 million in securities, and a further €9.8 million in cash. These sums are held in segregated accounts.

As it stands, Lightyear has more than enough cash to cover its financial obligations with more than €3 million in cash and only €697,000 in total liabilities. Another positive sign is that Lightyear is more than able to meet its minimum capital requirements. It has 38 times the regulatory minimum it needs.

There is always a risk with unprofitable companies but we do not foresee any issues for Lightyear. The company is well capitalised, it offers some of the most competitive interest rates in the markets it is operating, and it’s in hyper-growth mode.

Having raised €25 million in its Series A, Lightyear will likely be able to raise more money if it needs to, given that risk appetites in capital markets don’t change substantially.

It’s also worth noting that the management team and its stakeholders have an abundance of experience in the fintech industry with previous connections to Revolut, Wise, and Robinhood.