eToro vs. DEGIRO: Which Is Right for You?
Choosing the right broker is a crucial step in your investment journey, especially if you're focusing on global index investing. In this comparison, we'll explore eToro (Read Full Review) and DEGIRO (Read Full Review)—two popular platforms with distinct features and fee structures. We'll break down their services, fees, pros and cons, and help you decide which broker aligns best with your investment goals.
Quick Overview
| Feature | eToro | DEGIRO |
|---|---|---|
| Fractional Shares | ✅ | ❌ |
| Fee Level | Low (but watch out for hidden fees) | Ultra-Low |
| Currency Conversion Fee | 0.5% - 1.5% | 0.25% |
| Social Trading | ✅ | ❌ |
| Automated Savings Plan | ❌ | ❌ |
| Regulatory Safety | ✅ | ✅ |
| Available Markets | Limited | European Focused |
| Inactivity Fee | ✅ | ❌ |
| Withdrawal Fees | $5 per withdrawal | None |
Pros and Cons of eToro and DEGIRO
eToro
Pros:
Fractional Shares: Invest in fractions of shares and ETFs.
Social Trading: Copy trading feature allows you to follow and replicate the trades of other investors.
User-Friendly Platform: Easy-to-use interface suitable for beginners.
Cons:
High Currency Conversion Fees: Charges between 0.5% to 1.5% on currency conversions.
Limited Market Access: Fewer markets and instruments compared to competitors.
Hidden Fees: Withdrawal fees, inactivity fees, and higher spreads can add up.
DEGIRO
Pros:
Ultra-Low Fees: DEGIRO offers some of the lowest fees in the industry. Click here to explore how you can minimize your cost on degiro even more.
Wide Range of ETFs: Access to a broad selection of ETFs, including low-cost options.
No Inactivity Fees: DEGIRO does not charge inactivity fees.
Cons:
No Fractional Shares: You need to buy whole shares, which can be limiting for small investors.
No Automated Savings Plan: Does not offer recurring investment features.
Limited Market Access: Primarily focused on European markets.
Fees Comparison
Understanding the fee structures of both platforms is crucial for cost-efficient investing.
eToro Fees
Commission: Zero commissions on stock and ETF trades for certain countries; spreads apply to other instruments.
Currency Conversion Fee: 0.5% to 1.5% when depositing or withdrawing in a currency different from your account's base currency. Also when trading in a different currency.
Withdrawal Fee: $5 per withdrawal.
Inactivity Fee: $10 per month after 12 months of inactivity.
DEGIRO Fees
Commission: Extremely low commissions, with some ETFs available at zero commission plus a small handling fee.
Currency Conversion Fee: 0.25% on currency conversions.
Withdrawal Fee: No withdrawal fees.
Inactivity Fee: No inactivity fees.
Platform Features
eToro
Social Trading: Unique feature allowing users to copy trades of experienced investors.
User-Friendly Interface: Simple and intuitive platform suitable for beginners.
Mobile App: Robust mobile application for trading on the go.
DEGIRO
Wide Range of Investment Options: Access to a variety of assets, including stocks, ETFs, bonds, and options.
Core Selection ETFs: Offers a list of ETFs that can be traded with low or no commissions under certain conditions.
Basic Platform: Simple interface focused on functionality over aesthetics.
Market Access
eToro
eToro offers access to a range of markets but is more limited compared to some competitors.
Stocks and ETFs: Access to major exchanges like NASDAQ and NYSE.
Cryptocurrencies: Supports popular cryptocurrencies.
CFDs: Offers Contracts for Difference (CFDs) on various assets.
DEGIRO
DEGIRO provides extensive access to European markets and some international markets.
European Stocks and ETFs: Wide access to European exchanges.
International Markets: Limited access to non-European markets.
Bonds and Options: Offers trading in bonds and options.
Regulation and Safety
eToro
Regulated by top-tier authorities like FCA (UK) and CySEC (Cyprus).
Provides investor protection up to €20,000 under the Cypriot Investor Compensation Fund.
DEGIRO
Regulated by multiple authorities including AFM (Netherlands) and BaFin (Germany).
Offers investor protection up to €20,000 under the Dutch Investor Compensation Scheme.
Wealthy Forever's Recommendation
Both eToro and DEGIRO offer platforms where you can invest in global index ETFs at relatively low costs. However, after a thorough comparison, DEGIRO emerges as the preferred choice for investors focusing on low-cost investing in European markets. The reasons are:
Ultra-Low Fees: DEGIRO provides some of the lowest fees in the industry, making it highly cost-effective. Others who claim to be cheaper are often not as transparent about their fees.
Extensive ETF Selection: Offers a wide range of low-cost ETFs, ideal for global index investing.
No Hidden Fees: Transparent fee structure without withdrawal or inactivity fees.
While eToro has its merits, especially for those interested in social trading and fractional shares, the higher fees and limited market access make it less ideal for long-term global index investing. Therefore, Wealthy Forever recommends DEGIRO for investors seeking a reliable and cost-effective platform, particularly if you're based in Europe.
If you're interested in how eToro compares with another major broker, check out the detailed comparison of eToro vs. Interactive Brokers.
Frequently Asked Questions
Which broker offers lower fees, eToro or DEGIRO?
DEGIRO generally offers lower fees, especially for stock and ETF trades. eToro may have hidden fees like higher spreads, withdrawal fees, and inactivity fees.
Does eToro support automated investing?
No, eToro does not offer automated savings plans or recurring investment features. DEGIRO also does not support recurring investments.
Can I trade on global markets with DEGIRO?
DEGIRO offers access to a variety of European and some international markets, but it is more limited compared to some global brokers. eToro also has limited market access.
Is DEGIRO suitable for beginners?
Yes, DEGIRO is suitable for beginners looking for a low-cost platform, but it lacks some user-friendly features like fractional shares and automated investing.
Does eToro charge currency conversion fees?
Yes, eToro charges currency conversion fees ranging from 0.5% to 1.5% when depositing or withdrawing funds in a currency different from your account's base currency.
Are both brokers regulated and safe?
Yes, both eToro and DEGIRO are regulated by top-tier financial authorities and offer investor protection schemes.
Does DEGIRO offer fractional shares?
No, DEGIRO does not support fractional shares; you need to purchase whole shares.
What are the withdrawal fees for each broker?
eToro charges a $5 withdrawal fee per transaction. DEGIRO does not charge withdrawal fees.
Which broker is better for social trading?
eToro is known for its social trading features, allowing you to copy the trades of other investors. DEGIRO does not offer social trading.
Can I automate my investments on DEGIRO?
No, DEGIRO does not offer automated savings plans or recurring investment features.