Is eToro Legit?

Is eToro LegitI’ve been using eToro since 2012.  Recently I’ve been investing in US shares (like Apple and Tesla) through eToro.  So if you’ve been wondering if eToro is legit, I’ve put together this post with some details about who’s behind the company and what you need to watch out for.

Who’s Behind eToro

eToro is a multi-national trading company that was originally founded in Israel.  eToro isn’t a new trading platform – they’ve been operating since 2007 and now have over 13 million users.

eToro has offices in the Israel, The UK, The U.S and Australia.  And they offer products targeted towards Australian investors.

I’m always wary of newer financial companies, but eToro has been around for a long time.  This means they’re more likely to have a sustainable business model and won’t suddenly disappear.    eToro is regulated an in Australia, eToro operates in accordance with ASIC.

Is eToro Safe?

eToro is a trading platform.  Like all investments, it’s possible to lose money.  You could make a series of bad investments through eToro.  It’s not like investing through your superannuation which is designed to be low risk.

In terms of security eToro has a good record I’m not aware of any major issues.  Funds on eToro are stored securely by tier 1 banks.    I’ve never experienced any problems withdrawing funds.  eToro has 24/7 support to help if you do run into any issues.

Is eToro a Scam?

No.  eToro is just a trading platform.  Some people will lose money trading.  That’s not the fault of the platform.  Unlike some platforms, I believe that eToro genuinely wants customers to succeed.

What to Watch out for:

  • Currency Fluctuations – On eToro you are buying US shares in USD.  If the AUD rises in value you may lose money even if a stock goes up.  Obviously you could also make money if the AUD drops.
  • CFDs – while you can buy and sell real shares through eToro, you can also trade CFDs.  Unless you’re an advanced trader, don’t invest in CFDs.  eToro will warn you before you invest in a CFD.
  • Withdrawal Fees – eToro charges a $5 withdrawal fee.  eToro doesn’t charge any commissions when you buy or sell shares.  So you’ll save money on commissions but just look out for the fee when you withdraw.

Why I like eToro

I’ve been using eToro on and off since 2012.  This past year I used it quite a bit to trade US shares.    You can see my performance here.

  • Zero Commission Trades – A few years ago if you wanted to invest in a company like Apple from Australia it would cost you $19+ per trade.  On eToro it’s free!  There are no commissions to buy or sell US shares.
  • Fractional Investing – You don’t need to buy a full share, instead you can invest any amount over $50.    This makes it easier to build a diversified portfolio of multiple companies.
  • Multi-Asset Platform – As well as US shares I also use eToro to trade crypto (remember crypto is a high-risk investment so never invest more than you can afford to lose).  I like being able to trade crypto alongside my more traditional investments.

What can you trade on eToro

eToro is a multi-asset trading platform.  That means you can trade a variety of assets through eToro.  While it’s possible to trade forex, crypto and commodities through eToro, these can be CFDs.  A more risky type of investment.  Most people should stick to trading shares on eToro.

On eToro you can buy US shares like Apple, Amazon, Tesla etc.  These are real shares and not CFDs.  This means you are buying the underlying asset.   Platforms like Plus500, only have CFD trading.  Many people sign up to these platforms thinking they are buying real stocks, and without really understanding what they are doing.   And most people lose money trading on platforms like Plus500.  If you stick to investing real shares on eToro, and not trading CFDs, you’ll reduce your risk.

You can also invest using copy trading on eToro, however I consider this to be higher risk compared to just buying and holding a diversified portfolio of stocks and etfs.  Check out my complete eToro review to see all the different ways you can invest and trade through eToro.

Testing eToro for yourself

The best way to test eToro is to sign up for free and use the virtual trading account.  When you join eToro you’re given a virtual trading account with $100k of virtual funds that you can use to trade under real world conditions.  So if you want to see how eToro works and what the platform is really like, I recommend just signing up for free and testing it out yourself.

So is eToro Legit?

Yes eToro is a legit trading platform.  Since adding real share trading eToro in Australia, it’s now a legitimate investing option for Australians.  Many other platforms like Selfwealth, IG, Stake, and ThinkMarkets have added similar US share trading products.  While investing in US shares won’t be for everyone,  having the option to cheaply buy shares in companies we use everyday is very appealing.

This post is for educational purposes and should not be considered as investment advice. This post is based on individual experience and journalistic research.

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