eToro review
8
(our review)
eToro is a popular platform for online investing. It gives investors access to stocks, cryptocurrencies, commodity ETFs and CFDs. It has a unique user interface, with some social media features. In our review, we rate eToro with an 8.
Content:
Investing comes with risks. By trading on eToro, you can lose (some of) your investment.
What characterizes eToro?
eToro is an international multi-asset investment platform. This means that you can buy and sell stocks, as well as trade in ETFs, crypto or gold and silver. On this platform, you make all your investment decisions on your own. However, you can also copy investment portfolios of other users, and copy their decisions.
For stock or ETF trading, eToro is a safe and reliable platform. However, the trading platform does not offer any advice. Users should do their own research to make informed decisions when choosing an investment opportunity. The platform also offers several products known for their high risks, such as CFDs and cryptocurrencies.
eToro is an international multi-asset investment platform
Usability
New users can get started with eToro’s free demo account. After creating an account, they can select Virtual Portfolio in the menu. In their demo account, users are credited with 100,000 dollars to build a virtual portfolio. This way, users can practice investing with a variety of assets and strategies, without any risk.
The platform also offers an Academy, with step-by-step guides, tutorials and courses for new users. As a novice user, it is advisable to take the time for this demo account and the extra guides, as eToro’s product range can be somewhat overwhelming.
Thanks to the search function, regular stocks, ETFs or crypto stocks can be found quickly. Trading on the platform is also easy, just like copying other users’ portfolios.
Offering
eToro offers several ways to invest. If you are mainly interested in ETFs, crypto or certain shares, then there are other online brokers with a larger range. This platform’s strength is the fact that it offers a combination of all these products. If you want to build a diverse portfolio, you can do that here. The platform is not suited for trading in bonds.
Crypto trading on eToro is relatively expensive. Crypto brokers are usually cheaper, so that could be a better option if you only want to invest in that. If you want to invest in stocks in dollars, eToro is a very cheap option. Due to currency fluctuations, trading in European stocks a bit more expensive. The platform also offers fractional investing.
As a novice investor, it is difficult to assess the risks of investment products.
It does not offer any investment advice. However, the platform does feature advice from other users. In these posts, there is little distinction between high risk products like CFDs and safer options like shares or ETFs. This makes it more difficult for novice investors to assess the risks.
High risk investments
On eToro, you can trade in CFDs (Contract for Difference). With this investment product, you do not buy the actual underlying asset, but earn money on a certain price change. This does come with a high risk: 76 percent of retail CFD accounts lose money on eToro. With retail accounts, we mean non-professional investors.
Additionally, most crypto investments are high risk. These assets are highly volatile and there is no consumer protection or regulation from a watchdog. This means that you are not protected as an investor. You can lose your investment in crypto easily. Take two minutes to learn more.
Costs
Compared to other platforms, eToro often emerges as one of the cheapest online brokers. It does not charge transaction or fixed fees. Sometimes it does incorporate spread costs into stock prices. The platform is set up entirely in U.S. dollars and charges exchange rate fees for euros.
The most important costs of eToro are:
- Transaction fees: none (except for cryptocurrency)
- Currency fees: 0.50 percent on incoming cash and cash withdrawals
- Withdrawal fees: 5 dollars
- Spread costs: varying between 0 to 5 percent
- Inactivity fee: 10 dollars
If you mainly want to trade in ETFs from the US or shares like Apple or Tesla, it is indeed a cheap platform. But if you are actively buying and selling European products, then you keep exchanging currencies and the exchange rate fees will add up.
The platform is also expensive when you are trading cryptocurrencies. It charges 1 percent on every transaction, while also charging spread costs on top of that. Furthermore, the withdrawal fee of 5 euros is notable. The platform also punishes inactive traders. It charges 10 dollars per month if you have not logged into the platform for 12 months.
If you are trading in euros, the platform charges currency exchange fees
Review score: 8
In our latest review, we rated eToro with an 8 out of 10. Depending on your investment strategy and horizon, it is an affordable and user-friendly platform compared to other brokers. It also offers a good mobile app with a lot of features.
Millions of users from more than a hundred countries trade stocks on this platform, as well as commodities, currencies and various cryptocurrencies. For new users, it offers an Academy with comprehensive guides about the platform and its products. eToro targets people who enjoy (active) trading and reading up on financial products.
For people who are primarily seeking advice, or who want to invest passively, eToro offers user profiles that can be copied. That way, you are automatically investing in the same products. However, you still need to be careful with what you invest in. With the wrong products, you can quickly lose your investment.
