eToro has become a very popular broker. I use YouTube a lot, and not a day goes by when I don’t see Alec Baldwin’s ad.
eToro is a great broker to invest in stocks. In fact, it is one of my favourite brokerage firms.
In my complete eToro review I am going to tell you all the advantages of investing with this broker, investor reviews, the fees you pay and much more.
Are you ready? Let’s go!
What is eToro?
eToro is an investment platform founded in Israel in 2007. Its management offices are based in Cyprus and in London (UK).
Initially it was born as a visual FX trading platform. It was one of the first companies to incorporate visualisation of financial products, making them easier to understand.
In 2010 they launched their Openbook tool, becoming the world’s first social trading platform. This tool allowed to copy top investors with its Copy Trading feature.
Since then they have not stopped growing, spreading to many countries, adding all kinds of financial products, including from 2018 cryptocurrencies such as bitcoin and ripple.
EToro currently has millions of users from more than 140 countries.
Not long ago I didn’t know what eToro was. I was happy investing with DEGIRO. But after seeing Alec Baldwin 100 times (maybe more) telling me that I could invest in stocks without fees with eToro, I decided to give it a try. And I’m glad I did!
Advantages of eToro
Let’s see the main advantages of investing in the stock market with eToro.
One of the best features of eToro is that you don’t have to pay fees when you buy or sell stocks and ETFs. That’s what got my attention from the ads, and it’s why I decided to investigate this broker.
This is a great advantage if make small purchases or if you buy shares in a foreign company.
Paying lower fees means you have more money available to invest, so the value of your portfolio will grow much faster.
If you want to learn more about the impact of fees on your portfolio, you have a good explanation here.
It is important to note that when you deposit money and withdraw it, eToro charges you a currency exchange fee. I cover this topic and explain you how to reduce these fees in the section “eToro fees”.
Easy to use platform
Since its inception eToro has focused on creating a platform that is simple and intuitive. Users can navigate through its menus with ease.
When you register and start using the platform you realise that it has no mystery. It is very easy to buy shares of companies like Apple and Amazon.
Another great benefit is that its platform is translated to many languages. Apart from English, you can find it in Spanish, German, Italian, French, and many more.
If you have any questions and you need to contact the broker, you can speak to their customer service. eToro offers you an online chat to answer your queries.
Alternatively, you can call them at +44 02038687213.
Many investment products
eToro gives you access to a wide range of financial instruments. If you want to invest in the stock market, eToro allows you to buy stocks and ETFs from any country in the world.
Furthermore, you can invest in complex instruments with higher risk, such as CFDs and cryptocurrencies.
Social trading platform
This broker has put a lot of effort into creating a social investment platform. eToro allows you to interact with other traders and investors, share possible investment opportunities and learn from the knowledge of the community.
We could say that eToro is a social trading platform. Its news feed shows you the trades and ideas of your favourite traders. You can ask them why they bought that company, and if their strategy makes sense you might want to buy it too.
For these reasons, eToro won the award for the best social investment platform in 2013.
Copy the best investors with Copy Trading
One of the biggest advantages of eToro platform is its CopyTrader feature. It allows you to copy the trades of other investors.
eToro gives you access to the top investors, and it shows you the returns they have obtained since they started investing with this broker.
You can choose an investor who has obtained a high return, and copy his portfolio. Thanks to Copy Trading program you can replicate the portfolio of the best eToro investors. And it won’t cost you anything, it’s totally free.
If you are interested, click on “Invest in Copyportfolios” in the main menu. You will see the three different Copyportfolio strategies:
- Top trader portfolios
- Market portfolios
- Partner portfolios
On each section you can see their portfolios, investment profiles and the performance they have obtained since they started investing in eToro.
In the picture above you can see the profile of one of the top investors recommended by eToro. Please remember that past performance does not guarantee future performance.
In my opinion it is better to design a strategy yourself, so you do your own research. In the long run, you are more likely to get better results if you know what you are investing in and why.
Another advantage of eToro is that you can open a demo account. This allows you to try the platform and start investing in assets without real money.
eToro demo account has a virtual balance of $100,000. You can learn how eToro works, gaining experience and security without putting your money at risk.
It is a good way to test your investment strategy, and see if it is profitable.
eToro is a very modern broker that uses technology to make your life easier. Everything can be done through internet. In order to register, buy stocks, put in and take out money, just go to eToro website and follow the instructions.
Please remember that if you open a real account and you invest in stocks/ETFs, your capital is at risk.
Disadvantages of eToro
In my opinion, the main disadvantages of eToro are the following:
- Account is in dollars: This means that you will pay a fee when depositing and withdrawing money (unless you have a bank account in dollars). I cover it in the fees section
- It does not have mutual funds
- Accounts allow leverage by default
Leverage consists of using debt to finance a trade. By reducing the capital invested, the return obtained (both positive and negative) increases.
Leverage means taking a bigger risk on your investment, and I do not recommend that you use it.
Many retail investors lose money rapidly due to leverage.
That is why I believe that it is a disadvantage that by default the accounts allow leverage, because this implies a high risk of losing money.
When you are going to invest your money, you need to make sure you understand where you are putting your capital, and confirm you are not using leverage.
When you are buying stocks, it is important for you to confirm that the leverage field is set to “x1”. I have highlighted it on the image above. You will then you buy real stocks.
Is eToro safe?
This is a very important question to ask before you are going to invest in a platform. You have to make sure that the broker is regulated by official institutions.
eToro UK is regulated by the Financial Conduct Authority (FCA) of the United Kingdom and eToro Europe is regulated by the Cyprus Securities Exchange Commission (CYSEC). eToro is also licensed to offer its services in the member states of the European Union.
On the picture below you can see eToro UK limited is Authorised as per the FCA register.
This means that in the unlikely event eToro goes bankrupt and your assets cannot be recovered due to fraud, your investments of up to £50,000 are protected by the FSCS (Financial Services Compensation Scheme) and the CYSEC.
Whenever you invest in a broker you must confirm that it is regulated by an official institution. Unfortunately there are many scams on internet, so it is important to invest only in regulated platforms to protect your money.
When you invest in a platform, your capital is at risk, so you must confirm that your money is in good hands, that the platform is not a scam.
This is one of the great advantages of eToro.
eToro does not charge any fee for buying and selling stocks and ETFs, it is completely free.
eToro even covers the tax that must be paid in some countries for buying stocks. For example, in the UK you have to pay 0.5% in taxes when you buy shares. This is known as Stamp Duty. Well, if you use this broker, eToro covers this cost for you!
Buying stocks and ETFs with eToro will save you a lot of money in fees. This will make your money grow faster thanks to compound interest.
Although eToro does not charge any fee for the purchase/sale of shares, it does charge other commissions that you should be aware of.
Depositing and withdrawing fees
Since eToro account is in dollars, if you transfer money in a different currency (which is very likely if you are reading this 🙂 ), eToro will apply a commission for the currency change.
This fee will depend on the currency you use, it is not the same to transfer money in GBP than in EUR. It will also vary depending on the way you use to make the deposit (bank transfer, credit card, paypal).
If your money is in pounds, you can top up by credit card, paypal or bank transfer, the fee will be the same, close to 0.4%.
But if your currency is the euro and you use a credit/debit card the fee will be 2%, so it is important that you avoid it. In that case you should use bank transfer, where the fee is roughly 0.4%.
When you withdraw money, eToro charges you $5 for each withdrawal, and the minimum amount you can withdraw is $30. This fee has been lowered recently (previously it was $25), so I hope that in the future they will cut it again 🙂
The cost of the currency exchange will also be added when you withdraw money.
The spread is the difference between the price to buy and sell. When you are about to buy a stock there is always a small difference between the buy price and the sell price.
The image below shows the differences between the “sell” column and the “buy” column.
The spread is a cost that all brokers charge, including my favourite broker DEGIRO.
If we make a comparison between DEGIRO and eToro spread with the price of the company Microsoft, we see that the difference is very small. eToro applies a slightly higher spread, close to 0.08%.
This means that eToro spread fees are small.
These fees are also known as swap, and you won’t pay them if you invest in stocks or ETFs. These fees are only charged when you open positions with leverage. So you will pay them if you buy CFDs.
If you operate with leverage, eToro will charge you a night fee. That happens because when you use leverage eToro lends you money.
If you close the position on the same day, there will be no swap cost. But if you keep it until the next day, the broker will charge you an interest for lending you the money.
You can see all the information about eToro fees here.
Example of eToro low fees
Let’s see an example of the cost of investing 400 pounds in Facebook shares with eToro and with popular the UK broker iWeb:
In the table above you can see that with eToro you pay a fee 6 times lower-> You save 9 pounds
The commission charged by iWeb is 3%, while eToro only charges you 0.4% for the currency exchange when you deposit the money.
Investing in stocks and ETFs with eToro is a great way to save as you pay 11 times less in fees.
Financial products to invest with this broker
Etoro is a very popular and prestigious international broker. It has received several awards, such as the Best of Show award at Finovative Europe in 2012, and the award for the best social trading platform in 2013.
This broker offers you many investment products, and allows you to invest in markets around the world.
eToro is an excellent broker to trade stocks and ETFs due to its low fees
The products it offers are:
- Stocks: eToro is specially good with stocks. It allows you to invest in international companies without paying fees. Plus, it covers the costs of buying stocks some countries apply, like UK Stamp Duty
- ETFs: follow the indices with the best fund managers such as iShares and Vanguard
- Bonds: access to European and US bonds through their ETFs
- Commodities: you can invest in the most popular commodities, like gold and silver
- Currencies: access Forex market and invest in all major currency pairs
- CFDs: a cfd allows you to use leverage and short all the products offered by eToro. CFDs are complex instruments
- Cryptocurrencies: you can buy Bitcoin (BTC), Ethereum, Ripple (XRP) and many more, keeping them in your eToro wallet. Due to this, eToro is also known as a crypto broker
eToro does not allow you to invest in options or futures. If you want to invest in futures, you may be interested in CFDs, since they work in a similar way.
I personally do not recommend investing in CFDs or using leverage since the risk of losing money is much higher. In fact, 62% of retail investor accounts lose money trading CFDs.
In my opinion eToro is a great broker to invest in stocks and ETFs, and that’s what I recommend it for. You can create a multi-asset portfolio with the best companies and ETFs in the world. That’s why I invest my money with eToro.
ETFs are one of the best ways to invest since they are very similar to index funds. For example, the index S&P500 achieved a 30% annual return during 2019. You just had to invest in a S&P500 ETF to achieve this remarkable return.
You can learn more about them in my complete guide about ETFs.
How to open an account with eToro
Opening an account with eToro is very easy, just follow these steps:
- Sign up in eToro with this link
- Enter your personal data: name, email, etc.
- Confirm your email by clicking on the email they send you
- Accept eToro terms & conditions and you already have an account with them!
Once you have completed these steps, you will have your account up and running, and you will be able to start investing in the stock market.
The process is very simple, and takes no more than 10 minutes. It is comfortable, since everything is done online.
If you don’t know where you should invest, I recommend that you take a look at my investment portfolio.
Remember that when investing in ETFs/Stocks your capital is at risk.
How does eToro platform work?
eToro platform stands out for being intuitive and easy to use.
The first thing is to sign in to eToro website. When you access your account, you enter the wacthlist menu. Here you will find the products you are following and their recent price movements.
If you click on portfolio, you will see the companies you have in your portfolio and the returns you have achieved so far.
It is very easy to know how your assets are performing. As you can observe on the picture above, currently my positions are losing money due to the stock market downturn on the Covid-19.
In order to choose the asset you want to invest in, go to Trade Markets. There you select what interests you (ETFs, stocks) and you look for your investment product.
The picture above shows you the list of Vanguard ETFs that you can invest in with eToro.
On the right it indicates the percentage of eToro investors that are currently long and short on this product. As you can see, 99% -100% of investors are betting on a rise in Vanguard ETFs.
In order to buy an asset you just need to click on the B (buy). Then you choose the number of shares you want to buy (units) and hit Set Order.
When you buy stocks, you can also configure stop loss, take profit and leverage.
I recommend that you do not use leverage (by setting leverage = x1) to avoid unnecessary risks. I also always deactivate both stop loss and take profit.
If you invest long-term, you shouldn’t have a level at which you sell stocks, regardless if it’s high or low.
An additional benefit of eToro platform is its educational section, where they provide advice on technical analysis, fundamental analysis and trading tools for their clients.
eToro has an app for mobile devices that allows you to access all eToro services with your phone.
You can download it in the App Store and Google Play, depending on the device you have. Once installed you can connect to eToro web page from anywhere.
It is very useful if you want to buy stocks but you are not at home, or if you like to know how your investments are doing at any time.
eToro app allows you to connect to your investments whenever you want. This app is simple and intuitive.
I think that eToro is one of the best brokers to invest in the stock market. It allows you to access markets all over the world with low fees.
eToro is recommended for all kinds of investors, beginners and experienced. In my opinion it is better than other similar brokers like Plus500.
Furthermore, eToro’s attractive social investment platform allows you to copy the investment strategies of top investors. You can learn from these investors, analysing the trades they carry out.
After investing with this broker for a while, I am happy to say that I am very satisfied. They have earned my trust.
If you want to try this wonderful broker for yourself, sign up here!
Remember that when investing in stocks/ETFs your capital is at risk.
More articles about investing in stocks
If you want to learn more about investing in the stock market, I recommend you to read the following articles from my blog:
- DEGIRO guide, the best broker to invest in the stock market
- Index funds, the best way to invest
- Analysis of my investment portfolio in April 2020
If you have any question, please use the comments section below. I will be happy to help you.
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.