PassiveEarning

eToro Platform Review

eToro Platform Review

Recently I have been thinking a lot about how to invest my earnings. After reading some books on investing I found a couple of similarities between them. Every book that I read said that at the start of the month we should pay our necessities calculate the money that we need to survive for that month and try to invest from 7-20% of our income in some kind of investment.

First I thought that I might invest via a Bank. But I am a bit greedy and I want to earn more than 1.5% interest rate a year. This is where my journey started with investing platforms. Since I live in Europe there are not so many platforms that offer a nice experience while trading. Here is where I found eToro. Looking at the reviews of the platform it sounded to me like the easiest one to start with. The main features that were appealing to me were social trading and the 100k virtual account.

Social trading is a form of investing that allows investors to observe the trading behavior of their peers and expert traders and to follow their investment strategies using copy trading or mirror trading. In simple terms, you open an account on eToro put some money into the account (minimum $200). Then you search through traders and find the ones that have a positive review and positive profits on eToro and you follow that person. What does this do? Well you copy the actions of that one trader without knowing what he does. The bad side is that you have no idea why he is doing something and you just pray that he knows what is happening. My personal experience here is not fantastic. I invested $600 in 3 traders. At the start of the year they all made a profit and in May they all lost some of my money. I think that the difficult thing here is to distance yourself from the money, you have to have a loss in order to gain some money at the end. I would say that it is a great way to start trading and see what the potential here is.

The second benefit that eToro offers is the virtual portfolio. If you were clueless like me and wanted to see how does the market work, you can use the virtual portfolio to play a bit. Here is where I saw how difficult it is to trade on a daily basis. Even with investing virtual money I felt the stress of loosing money. But after some time and reading a couple of books (The Intelligent Investor) I started to invest into stocks with a high intrinsic stock value and low market price. It turns out that making money fast on this trading network is quite hard. But if you have some patience and know how to value companies you can make a profit.

Now to go to the bad sides of eToro. You have so many fees on eToro. When you deposit funds you pay a fee depending on the currency, when you withdraw funds you have to pay a fee, when trading commodities or currencies you have to pay fees. Here is a page that describes these fees in details Just to give you a glimpse into the fee fun. I pay €2.5 on every €100 I deposit to eToro, the withdrawal fees are $25 per withdrawal. When a company pays dividends you get only 75% for the US market and 85% for the European market. But over the course of 12-15 months you can be profitable if you invest properly and think at least 12 months into the future. By being profitable I mean you can get your money back when you pay the fees and have a bit of a profit.

Just once more quickly, in order to be positive on eToro if you invested €1000, €2000 and €10000.

Investment(€) 1000 2000 10000
Withdrawal Fee(€) 22,38 22,38 22,38
Conversion Fee 1(€) 25 50 250
Conversion Fee 2(€) min 25 min 50 min 250
Break Even(€) 1072,38 2122,38 10522,38

I wrote Conversion Fee 2 as minimum because it would be €25 if you were converting €1000, but in order to reach the break even point you have to make more than €1000. I would estimate the break even point to be at €1100 for €1000.

Disclaimer: This is not financial advice. I am not a financial advisor. I am not affiliated with eToro. The intention of the post is just to share my experiences.

eToro Disclaimer : “66% of Retail CFD Accounts Lose Money”