A growing trend in trading, whether in stocks and shares or cryptocurrencies, has led to investment platforms like eToro and Freetrade* also gaining in popularity. In this article we compare the two options, looking at their similarities and differences to help you decide which is the better option for you.
We also show you how to get a free share worth up to £200* with our reader offer with Freetrade (capital is at risk).
eToro vs Freetrade - which is better?
|Services||Investing in shares, ETFs, commodities, currencies, CFDs and cryptocurrencies
|Investing in shares, ETFs and investment trusts
|Products||No ISA or SIPP accounts available
eToro CFD trading account
eToro Money account
|ISA, GIA, SIPP|
|Minimum investment||$10 USD||£1|
|Fees||Buying and selling - free
Currency conversion fee - 0.50% for every deposit
Inactivity fee - $10 USD per month after 1 year of inactivity
Withdrawal fee - $5 USD per withdrawal (minimum $30)
|Basic account buying and selling - free
Freetrade Plus - £9.99 per month
ISA with basic account - £3 per month
ISA with Freetrade Plus - free
SIPP - £9.99 per month
|Customer reviews (Trustpilot)||4.2/5.0||4.3/5.0|
|Money to the Masses offer||n/a||Receive a free share worth up to £200* when you sign up for a basic account.|
eToro vs Freetrade - services
Both eToro and Freetrade offer low-cost ways to trade in shares, ETFs and investment trusts. eToro also allows investors to access commodities, currency and cryptocurrencies, as well as CFDs. While Freetrade has a useful user forum, eToro has its eToro Academy, which provides education and guidance, which is appropriate considering the riskier nature of some of the asset classes it offers. It also has CopyTrader and CopyPortfolio options, which, in effect, let you mimic the choices made by experienced and successful investors. These popular features are particularly good for beginners, who may be overwhelmed by the level of choice available.
eToro vs Freetrade - products
If you are looking for a tax-efficient way to manage your investments, Freetrade has the upper hand over eToro as it offers both ISA and SIPP wrappers. Meanwhile, eToro only offers a standard account, or upgrades that offer CFD trading or a Money account to make withdrawals from. There has been no suggestion to date that eToro plans to include ISAs or SIPPs within its range in the foreseeable future.
The ISA and SIPP from Freetrade do come at a cost, with a £3 monthly fee for the ISA and £9.99 monthly fee for the SIPP. The charge for the ISA is waived, however, if you upgrade to a Freetrade Plus account, which costs £9.99 per month.
eToro vs Freetrade - minimum investment
While Freetrade allows investors to open an account with as little as £1, eToro requires an initial minimum deposit of $10 USD. It is also worth noting that while Freetrade doesn't charge a withdrawal fee, eToro has a fee of $5 USD for each withdrawal, with a minimum withdrawal of $30 USD.
eToro vs Freetrade - fees
Freetrade and eToro have both designed their business models around the concept that they provide commission-free buying and selling, keeping costs to a minimum for investors. However, in addition to eToro making money from the spread between the offer and bid price on assets, each also makes money in other ways. For eToro that is through additional charges, such as inactivity fees and withdrawal fees, while for Freetrade it's through its charges for ISAs and SIPPs and the fee to upgrade to Freetrade Plus.
eToro vs Freetrade - customer reviews
According to customer review site Trustpilot, eToro is ranked "great" overall by its 13,000 reviewers, while Freetrade is "excellent" based on its 2,600 reviews. Many of the positive reviews of eToro centred on the fact users are assigned an account manager and this helps with navigating the available features and resolving any problems. Freetrade, meanwhile, was praised for its low cost and usability.
Summary: eToro vs Freetrade
eToro has become a popular option for those looking to invest in "alternative" asset classes, such as cryptocurrencies and CFDs, who like the extra support they get from the eToro Academy and, crucially, from the feature that allows them to copy other investors' portfolios. A large proportion of that audience is perhaps willing to overlook the lack of an ISA or SIPP and the fact there are additional fees, including $5 USD to make a withdrawal.
While Freetrade* doesn't have as much investment choice available, it does have both an ISA and a SIPP, which makes interest and dividends tax free. While both the ISA and SIPP do attract a fee (although this can be avoided with the SIPP if you upgrade to Freetrade Plus), there aren't the additional charges for withdrawals or currency conversions as there are with eToro.
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