Investing has evolved into a more accessible and nearly universal activity, thanks to online platforms such as DEGIRO and eToro. These brokerages have democratized trading by offering user-friendly platforms and a wide variety of investment options. Yet, when we compare DEGIRO and eToro, differences emerge, shaping the decisions of investors depending on their preferences and trading goals.
This review delves into a comparative analysis of DEGIRO and eToro, considering crucial aspects like fees, trading platforms, investment options, and user experience to help investors make informed decisions.
Originating in the Netherlands in 2008, DEGIRO has rapidly expanded its footprint across Europe. It prides itself on providing low-cost trading solutions without compromising on the quality of its platform or the range of financial instruments available. Over the years, DEGIRO has continually enhanced its platform to cater to both new and experienced traders. Its intuitive platform design and many educational resources make it easier for individuals to navigate the financial markets.
DEGIRO offers various financial instruments, including stocks, ETFs, bonds, options, and futures, enabling investors to diversify their portfolios effectively. Moreover, DEGIRO’s competitive fee structure is a major draw for cost-conscious investors. Its transparent pricing model ensures that traders are fully aware of the costs associated with their trades, thus promoting a fair trading environment.
Additionally, DEGIRO places a strong emphasis on security, ensuring that client funds are held in segregated accounts. This demonstrates the platform’s commitment to adhering to regulatory standards and protecting investor assets. Furthermore, DEGIRO offers a range of research tools and market insights that assist traders in making informed investment decisions.
Despite its advantages, DEGIRO’s customer service has room for improvement. The absence of a live chat feature and the lack of 24/7 customer support can be hurdles for traders requiring immediate assistance. Nonetheless, DEGIRO’s low trading fees, secure platform, and extensive range of financial instruments make it a compelling choice for European traders.
Established in 2007, eToro has become a leading social trading platform globally. It’s not just a place to trade but a community where investors can share insights, learn from seasoned traders, and copy the trading strategies of successful investors. eToro’s pioneering social trading feature allows traders to interact with each other, share trading ideas, and even replicate successful trading strategies by copying top-performing traders.
eToro offers a user-friendly platform with a clean design and intuitive interface, making it suitable for both beginners and experienced traders. Providing educational resources, webinars, and an interactive community further enriches the trading experience on eToro. These features not only help in fostering a learning environment but also in building a strong sense of community among traders.
Furthermore, eToro provides access to various financial instruments, including stocks, cryptocurrencies, commodities, forex, and ETFs. This diversity allows traders to explore different markets and develop a well-rounded portfolio. Additionally, eToro has incorporated innovative features like CopyPortfolios, where investors can invest in fully managed portfolio strategies, further simplifying the investment process for those lacking the time or expertise to manage their portfolios actively.
However, eToro’s fee structure, which is based on spreads, can be higher, especially for small trades. Additionally, withdrawal fees and inactivity fees are something traders should be wary of. Despite these costs, the rich social trading experience, a wide array of financial instruments, and a user-friendly platform make eToro a popular choice among traders globally.
Pros and Cons
- Low-Cost Trading: Competitive fee structure catering to cost-conscious investors.
- Wide Range of Financial Instruments: Offers a variety of assets, including stocks, ETFs, bonds, options, and futures.
- Educational Resources: Provides a plethora of resources for new and seasoned traders.
- Customer Service: Lack of 24/7 customer support and live chat feature.
- Platform Sophistication: May lack some advanced trading tools compared to competitors.
- Social Trading: Pioneering social trading features fostering a community of traders.
- User-Friendly Platform: Intuitive interface suitable for both new and experienced traders.
- Diverse Asset Range: Offers various assets, including stocks, cryptocurrencies, commodities, forex, and ETFs.
- Innovative Investment Features: CopyPortfolios and copy trading features simplify the investment process.
- Higher Fee Structure: Spread-based fee structure can be higher especially for small trades.
- Additional Fees: Withdrawal and inactivity fees can add to the cost.
- Platform Performance: Some users may experience platform lag during peak trading hours.
DEGIRO has garnered a reputation for being one of the low-cost trading platforms in Europe. The platform employs a transparent and straightforward fee structure. For example, trading fees for stocks listed on Euronext Amsterdam, Brussels, or Paris start at €3.90 per trade. However, the fees vary for stocks listed on other exchanges. It’s also notable that DEGIRO has a low fee structure for ETFs, options, and futures, which can appeal to investors looking to diversify their portfolios.
On the other hand, eToro offers zero commission trades on stocks. This can sometimes make eToro more expensive for trading certain assets, especially for smaller trades where the spread can take up a significant portion of the trade value. Moreover, eToro’s spread fees on cryptocurrencies and other assets can be on the higher side compared to other platforms.
DEGIRO’s non-trading fees are quite low. They do not charge any account, deposit, or inactivity fees, which is a major advantage for long-term investors or those who trade infrequently.
eToro, in contrast, has a $5 withdrawal fee and a $10 per month inactivity fee after 12 months of inactivity, which could add up over time, especially for infrequent traders. These fees are important to consider if you plan to hold investments long-term without frequent trading or if you plan to trade in small volumes.
Currency Conversion Fees
Currency conversion is another area where fees come into play, especially for those trading assets in a different currency. DEGIRO charges a currency exchange fee, which can affect the cost of trading assets not listed in your account currency. The fee for automatic currency conversion is 0.25%, while the manual currency conversion is €10.00 + 0.25%.
eToro also charges conversion fees when you deposit or withdraw money in a currency other than USD. The fee is based on the prevailing market rate, and can be quite steep, especially for smaller account balances. This is something to consider if you will be trading international assets or if your account currency is different from the assets you plan to trade.
In summary, both platforms have their own set of fees that can impact the cost of trading and the overall profitability of your investments. DEGIRO tends to be more cost-effective for trading fees, especially for those who trade frequently or in larger volumes, while eToro may have higher non-trading and currency conversion fees. It’s crucial to consider how these fees align with your trading strategy and frequency before choosing between these two platforms.
Choosing between DEGIRO and eToro involves personal preference and your trading goals. For those seeking a low-cost, straightforward trading experience, DEGIRO may be the better choice. However, if you value a social trading environment, a user-friendly platform, and a wider range of educational resources, eToro could be the more appealing option.
Both platforms have proven to be reliable and have a significant user base across Europe, demonstrating their credibility and appeal in the competitive online trading arena.
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