Is eToro good for investing?

Investment expert's opinion

*This is the view of investment expert Holly Mackay based on her first-hand customer experience as a test account holder. This does not constitute regulated advice. You can read more about Holly's investments here.

Who is eToro?

eToro is a trading platform which was founded in Israel in 2007 with the mission to “to change the crypto trading and stock trading landscape”. The platform has a large following with over 30 million registered users worldwide and 3 million users in the UK. Traders have access to over 5,000 different financial assets - including stocks, ETFs, currencies, commodities and cryptocurrencies – and these can be invested both with and without leverage. eToro has made a name for itself as a social trading platform with a thriving online community. For people new to investing, or interested in taking inspiration from others, eToro allows users to follow and replicate the strategies of other traders (also called ‘copytrading’). Customers also have the option to open a virtual account and practice making trades, familiarising themselves with the platform before committing real cash.

Pros and cons

Pros

Interesting and engaging

Broad range of investments including crypto

Lots of experienced traders in the community to follow and watch

Cons

Potentially intimidating

Could persuade users to play with fire and be 'too exciting'

No ISA or pension tax wrapper

Investments

eToro users can access a range of over 5,000 different investment options that include:

eToro offers an exclusive range of Smart Portfolios – a selection of ready-made portfolios curated by eToro analysts designed to offer “a convenient and diversified way to access major market trends shaping our world”. These tap into themes such as the AI revolution, gold, and renewable energy.

There is a minimum $100 investment as part of an eToro GIA (or $500 if you choose to invest in a Smart Portfolio).

Accounts

eToro does not offer ISA, pension, LISA or JISA accounts – unlike the majority of other investment platforms on the market. Most customers will be content with a GIA. You can ‘test’ this account for free with a virtual Demo Account (more on this below).

Depending on your level of investment experience, customers who meet certain criteria may also be able to apply for Professional Client status after opening a standard GIA.

Lastly, eToro offers an Islamic account. This follows Sharia principles and will suit investors seeking options that adhere to Islamic finance guidelines. It means interest and overnight charges are removed. The Islamic Account offers similar features to the GIA and includes access to social trading.

Fees and charges

eToro doesn't charge any account fees or trading fees on regular stock trades. However, it does have fees for actions such as withdrawal, currency conversion, and CFD transactions.

eToro's fees are both simple and complicated, depending on what you're doing. For those looking to buy and hold shares, there is no holding fee and trading is completely free. Where you will feel the pinch however is the foreign exchange fee, which comes in at 1.50%.

Some of the relevant fees include:

There are also overnight fees for CFDs and leveraged trades.

If a user does not log into their account for a full year, they will begin incurring a monthly charge of $10.

It’s also worth noting that the eToro platform trades only in US dollars (USD). This means that UK customers will pay currency conversion fees when paying money into their account or withdrawing money. Conversion fees can vary depending on location, payment method, and Club level.

eToro offers smart portfolios which require a minimum of $500 initial investment.

Customer reviews

The customer reviews paint a picture of a platform that is both modern and user-friendly. Many users appreciate its ease of use, with a simple setup and management process. The social trading features, which allow users to copy trades from successful investors in real time, are particularly beneficial for beginners. The platform offers a wide range of trading assets, including cryptocurrencies and foreign stocks, and provides free commission trading.

However, there are some areas for improvement. While some users find the customer service satisfactory, others believe it needs enhancement, citing issues with withdrawing funds and the need for better support. Additionally, some users feel that the fees and charges are a bit high. Despite these concerns, the platform is generally seen as reliable and trustworthy, with fast and reliable services, although there are mentions of delayed figures affecting profit and occasional glitches.

Overall, the platform is praised for its innovative features and ease of use, but users suggest improvements in customer service, fee structure, and the addition of more advanced technical analysis tools to make it even better.

Most asked questions

Is eToro safe?

eToro is regulated by the Financial Conduct Authority (FCA). If a fund fails due to fraud or mismanagement, you may be eligible for compensation from the Financial Services Compensation Scheme (FSCS). The FSCS protection is capped at £85,000 per person, per fund manager (not per individual fund). However, if your investments lose value due to normal market conditions or your investment choices, this is part of the normal risk of investing and is not covered by FSCS compensation.

How do I open an account with eToro?

Opening an account with eToro is free and you can start the process on the eToro website or app. There is an online form to fill out where you will need to enter your personal details. You can download the eToro app from the App Store and Google Play Store.

Opening a new account requires you to answer a questionnaire with a series of questions about your financial and investment experience. This is designed to “ascertain how eToro may custom-tailor a service package ideally suited to each investor’s individual profile”.

Examples of questions you may come across include your profession, the extent of your investing knowledge, your financial security, your investment goals and how much risk you are comfortable taking on.

Does eToro pay dividends?

eToro does pay dividends if you’re trading shares, ETFs or indices – regardless of whether you are manually trading or they are received as part of a Smart Portfolio.

Who owns eToro?

eToro is owned by its founders Yoni and Ronen Assia and David Ring. Yoni Assia is currently the Chief Executive Officer and Ronen Assia is the Executive Director.

Glossary

Risk warning

As is always the case with investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Tax treatment depends on your individual circumstances and may change in the future.

All information in this review correct as at 01/01/2024.