Are you looking for a way to get more involved in social trading? If so, you have probably heard about eToro and Robinhood. Both options have become popular among social investors; however, you need to think carefully about which one is right for your needs. Take a look at our detailed comparison below, and make sure you choose the right platform for your investing style.
At a Glance: eToro vs Robinhood
Overall, eToro is a stronger platform because of its diversity of products and lower fees; however, the two platforms are very different.
If you want to trade forex and CFDs, consider using eToro. If you want to trade crypto, consider using Robinhood. Both platforms also offer commission-free trading on stocks and ETFs.
Keep reading to learn more about the differences between these two platforms.
Next: Our complete eToro review
An Overview of eToro
Founded in 2007, eToro has a long track record of success. They have headquarters buildings in Cyprus and the United Kingdom, and the platform has a minimum deposit of $10. This is a platform that has been specifically designed to help users trade CFDs, but you can also use this platform to trade a variety of other stocks and ETFs as well. The platform gives you commission-free trading on stocks and ETFs, but you should be prepared to pay a withdrawal fee when you want to convert your account balance into cash.
The Pros of eToro
There are several benefits you will enjoy if you decide to use eToro. They include:
- The platform offers commission-free real stock trading. Keep in mind that this is only for real stock, not CFDs, so you do not get access to leverage.
- If you purchase stocks that are not traded in USD, the platform will automatically convert your shares into USD without taking a commission.
- An account is very easy to set up, only taking a few minutes. The platform is very intuitive and easy to use.
These benefits have made eToro one of the most popular social investing platforms in the world.
The Cons of eToro
There are a few drawbacks you will face if you use eToro. They include:
- Even though you do not have to pay a fee when you trade stocks and ETFs, you will need to pay a fee if you trade forex and CFDs.
- It can take a long time to withdraw your money from the platform, and you need to pay a fee to do so.
- If your account is inactive for a while, you will pay an inactivity fee.
If you are looking for a commission-free way to trade stocks and ETFs, then you may want to use eToro. On the other hand, if you plan on depositing and withdrawing money frequently, you should be prepared to encounter significant fees.
Next: Top eToro alternatives
An Overview of Robinhood
If you are looking for a platform you can use to trade stocks, ETFs, and cryptocurrency, then you have probably heard about Robinhood. This has become a popular trading platform among members of the younger generation because it does not require a minimum deposit. Therefore, there is a lower barrier to entry when compared to traditional brokerages.
Even though the platform is easy to use, the platform has also crawled into the crosshairs of regulators during the past few years. As a result, the platform has come under a significant amount of fire. What are some of the benefits and drawbacks you need to note regarding Robinhood?
The Pros of Robinhood
Some of the biggest benefits of using Robinhood to trade stocks, crypto, and ETFs include:
- There is no minimum balance you need to maintain. If you want to start trading with a single dollar, you can do so.
- Unlike many of the other platforms, you can trade cryptocurrency on Robinhood. Some of the most popular digital coins are available on this platform.
- The interface is very easy to use. The mobile app is streamlined, and everything works quickly.
Because of these benefits, the platform has become very popular during the past few years.
The Cons of Robinhood
On the other hand, there are a few drawbacks that come with Robinhood as well. Some of the issues you might encounter include:
- You will not have the ability to create a retirement account on Robinhood.
- Even though you can trade stocks and ETFs, you do not have the ability to trade mutual funds or bonds, limiting your ability to diversify your investments.
- If you need help, customer support is lacking. You will have a difficult time finding someone to help you out.
For all of these reasons, you need to think carefully about whether Robinhood is right for you. Even though a lot of younger investors have fallen in love with Robinhood, it is not necessarily for everyone. That is why it is beneficial to compare the two platforms directly.
Next: eToro vs. Interactive Brokers
Comparing the Funding Methods of Each Platform
First, it is important to take a closer look at what you need to do to fund your accounts. If you decide to use eToro, you can find your account in a number of ways. You can use credit cards, bank transfers, PayPal, Neteller, or Skrill to fund your account. Therefore, it is very easy to get money into your account through multiple methods.
On the other hand, if you want to fund your Robinhood account, your options are much more limited. The only way you can put money in your Robinhood account is through a direct bank transfer. Even though you can find your account relatively quickly, you cannot use PayPal, credit cards, cryptocurrency, or any other option if you want to put money in your Robinhood account. Therefore, it is much easier for you to put money in your eToro account.
Next: eToro vs XTB (trading platform comparison)
Comparing the Fees of the Two Platforms
Next, you might be curious about the fees of the two platforms. One of the major benefits of both platforms is that you can trade stocks and ETFs without paying a commission. On the other hand, eToro has other areas where you have to pay a fee. For example, if you plan on trading CFDs, you should expect to encounter fees. You also need to pay a fee if you want to withdraw money from your account. Robin Hood also charges an ACAT outgoing transfer fee, which you pay if you want to move money from Robinhood into your account. The fee is significantly higher on Robinhood, so eToro wins again.
Comparing the Product Portfolio
Both Robinhood and eToro have a diverse portfolio. On eToro, you have access to a variety of stocks and ETFs, just as you do on Robinhood. On the other hand, Robin Hood gives you access to cryptocurrency, but not bonds and mutual funds. eToro gives you access to a narrower list of stocks and ETFs, but also offers forex and CFDs. While the two overlap slightly, they have different portfolio options.
eToro vs Robinhood: The Winner
Ultimately, eToro is the winner due to its simplicity, low fees, deposit methods, and ease of use; however, Robinhood might be the better option if you want to trade crypto or are interested in more stocks and ETFs. eToro is better if you want to explore CFDs and forex.
If you would like to learn more about these two platforms, consider signing up for eToro and Robinhood on the website.
Next:
eToro vs Coinbase (our analysis)
eToro vs Binance (our analysis)