eToro vs Interactive Brokers

eToro and Interactive Brokers (IBKR) are two popular platforms where you can invest your money. But which of the two is the right one for you?

Can eToro compare to an established broker like Interactive Brokers? Is it better to choose a simple one like eToro? It depends.

Why? Because each investor has a different investment goal, preferred asset, and willingness to pay.

eToro USA LLC and eToro USA Securities Inc.

Deposit $100 and Get $10 from eToro USA LLC

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Expires 12/31/2024

For a limited time, you can get $10 when you deposit $100 in your eToro account. Here's how:

1. Sign up for an eToro account
2. Deposit $100

You'll automatically receive $10 directly to your account balance. Offer only applies to US customers. eToro USA LLC and eToro USA Securities Inc.; Investing involves risk, including loss of principal; Not a recommendation

Is eToro or Interactive Brokers Better?

• eToro is better for busy individuals who want to copy the trades of popular investors. It's also ideal for position traders who prefer a simple and intuitive platform.

• Interactive Brokers is better for savvy investors who want access to 150 global markets and IRAs. It's also great for active traders who require advanced trading tools such as stock scanners, API for automation, advanced order types, etc.

Key Similarities

• No inactivity and maintenance fees for US clients
  
• Zero-commission pricing for US stocks and ETFs
  
• Stocks, ETFs, options, and crypto trades are available
  
• Fractional shares
  
• SIPC insured up to $500,000
  
• Paper and virtual trading accounts
  
• Live chat support & online academies

Key Differences

• eToro requires a $100 minimum first deposit while Interactive Brokers requires none.
  
• Interactive Brokers offers a pricing plan without relying on payment for order flow, unlike eToro.
  
• eToro offers social and copy trading but IBKR does not.
  
• Only eToro offers zero commission for equity options.
  
• eToro does not offer retirement accounts, but IBKR does.
  
• Only IBKR provides an API for trade automation.
  
• IBKR offers bonds and mutual funds, which eToro lacks.

Direct Comparison

So which broker should you choose to invest your money in? Let's discuss this more in detail below.

Fees — Winner: Interactive Brokers

eToro and IBKR fees can be complicated due to the various pricing plans offered, but here's the summary:

Both offer zero-commission fees for US Stocks and ETFs. Then for options, the commission is either low or none but third-party fees still apply. Lastly, IBKR has lower crypto fees compared to eToro.

Stocks/ETFs

eToro's zero-commission for US stocks and ETFs is the same as IBKR Lite. But traders who want to avoid the payment for order flow (PFOF) model can opt for IBKR PRO.

Options

Third-party fees are not waived even if you're paying zero or low commissions. Check the drop-down box below for the details on regulatory, exchange, liquidity, and clearing house fees.

Cryptocurrency

It's better to discuss these complex crypto fees through an example:

If you're investing $10,000 in crypto, at eToro you can get charged up to $200. Plus, you have to pay for the spread. But at IBKR, you will only pay $18 in fees for the same $10,000 transaction.

Others

For both brokers, you mostly don't have to pay for deposits, withdrawals, inactivity, and ACATS. The minimum first deposit for eToro US clients is $100.

But there are exceptions: eToro charges up to $75 for ACATS and IBKR will charge $1-$10 if you withdraw more than once a month.

Investment Options — Winner: Interactive Brokers

From BlackRock, to Vanguard, to Fidelity. Interactive Brokers' mutual fund marketplace is arguably one of the industry's best. What you can buy depends on your location, but it has over 48,000 funds available.^[17]

Here are just some of the IBKR investment options you can enjoy, depending on your goal:

• Growth: Invest in high-risk products like stocks, ETFs, options, and crypto.

• Capital Preservation: Choose balanced funds from IBKR Mutual Funds and Bonds Marketplace. Gold is a good safe haven as well. If you want, IBKR can deliver gold to you physically. ^[18]

• Retirement: Choose from its 7 types of IRAs and invest in your preferred fund.

• Tax Benefits: Investing through a Traditional or Roth IRA can reduce your tax burden.

• Hedge Funds: If you have a large amount of capital on hand and have a high-risk tolerance, invest in the hedge funds at IBKR's Investors Marketplace.

Unfortunately, eToro cannot compare since it only offers a few assets for US clients such as stocks, ETFs, and crypto. And for options, you can only trade it through its mobile app.

Assets — Winner: INTERACTIVE BROKERS

Interactive Brokers offers more equities and ETFs than eToro. But eToro has more commission-free ETFs than IBKR.

On options, IBKR is better since there are 30+ market centers and you can trade it on all of their platforms. Meanwhile, eToro's US clients can only trade this in the eToro Options mobile app.

For forex and crypto, both eToro and Interactive Brokers are not great options because:

• eToro does not offer FX trading in the US.
  
• IBKR requires a lot of capital for FX.
  
• You don't own most crypto that you trade in eToro, and
  
• IBKR only supports a few crypto coins.

Other products you can trade in IBKR but not in eToro include bonds, futures, funds, warrants, etc.

Trading Features — Winner: Interactive Brokers

If you're an active trader, you might find eToro's trading platform lacking compared to Interactive Brokers. However, you can only copy trade in eToro.

eToro's CopyTrader™ which enables you to mimic trades from popular investors is unique to their platform. It also has a news feed (just like Facebook, but for investments) where you can discuss your trade ideas with others.

eToro's simple and intuitive platform is great, but not until you require more advanced trading features such as automatic dividend reinvesting, short-selling, and automation.

The features listed in the table are just some of what Interactive Brokers provide. There are more that are not mentioned here including a real-time risk management tool, rollover options tool, and block trading.

Ease Of Use — Winner: eToro

Navigating eToro to buy and sell assets is as simple as shopping online. Both its web and mobile apps are very intuitive.

Trader Workstation (TWS) is IBKR's flagship desktop for trading. It features sophisticated trading tools, but it's not for beginners. Even experienced traders might find it challenging at first.

However, IBKR offers alternative platforms for a friendlier user interface such as Mosaic, Client Portal, and IBKR Mobile.

eToro USA LLC and eToro USA Securities Inc.

Deposit $100 and Get $10 from eToro USA LLC

Deposit $100 and Get $10

Read Review

Expires 12/31/2024

For a limited time, you can get $10 when you deposit $100 in your eToro account. Here's how:

1. Sign up for an eToro account
2. Deposit $100

You'll automatically receive $10 directly to your account balance. Offer only applies to US customers. eToro USA LLC and eToro USA Securities Inc.; Investing involves risk, including loss of principal; Not a recommendation

Account Types — Winner: Interactive Brokers

Unlike eToro, Interactive Brokers can cater to more types of investors due to the accounts they offer. For example:

Retail traders can pick the individual account. Investors planning for retirement can go with IRAs. Parents saving for their kids' future can select trust accounts.

Here's the list of accounts available in Interactive Brokers:^[22]

On the other hand, eToro has a very simple classification for its accounts. ^[23] You can choose from the four it offers:

• Personal: Retail account but leverage is limited
  
• Professional: Retail account with higher leverage
  
• Corporate: For investment using your business capital
  
• Islamic: Special account for Muslim clients; no overnight fees as per Sharia law

Mobile App — Winner: Tie

eToro Mobile looks exactly like its web app, you will not find it difficult to buy and sell assets. But, you have to download another app (eToro Options) if you want to trade options.

IBKR Mobile can be challenging to navigate at first due to its scope. However, you can trade most assets in the app. It even has an Options Wizard that simplifies trading with a step-by-step guide.

Both have biometric login options and document access for your tax and account statements. Although, only IBKR Mobile can scan checks to fund your account.

Client Protection — Winner: TIE

You don't have to worry about licenses and insurance as you are covered by both brokers. Although for account security, Interactive Brokers provides more features compared to eToro.

Compliance

eToro and Interactive Brokers have the necessary licenses to operate with stocks and ETFs trading in the US.

Insurance

Your securities, such as stocks, bonds, mutual funds, etc., are insured up to $500,000 (limit of $250,000 for cash) through SIPC. But not all securities are covered, so you still need to exercise caution.^[24]

Account Security

eToro and IBKR both provide 2FA and SSL encryption. However, IBKR takes client security to another level with its IP restriction, temporary suspension after failed log-in attempts, and automatic log-off during inactivity.

Customer Satisfaction — Winner: eToro

eToro has over 32 million registered users from 100 countries. That's impressive compared to IBKR's 2.43 million global clients.

But it's worth noting that the total investments IBKR manages for its clients amount to $373.8 billion, while eToro has peaked at around $10.7 billion (based on its 2021 press release).

eToro received more favorable user reviews in Trustpilot however, IBKR received better ratings in the mobile app reviews.

Either way, both receive flak for trouble with customer support. In eToro, there are complaints about the transfers and fees. While for Interactive Brokers, they are criticized for their complicated user interface.

eToro USA LLC and eToro USA Securities Inc.

Deposit $100 and Get $10 from eToro USA LLC

Deposit $100 and Get $10

Read Review

Expires 12/31/2024

For a limited time, you can get $10 when you deposit $100 in your eToro account. Here's how:

1. Sign up for an eToro account
2. Deposit $100

You'll automatically receive $10 directly to your account balance. Offer only applies to US customers. eToro USA LLC and eToro USA Securities Inc.; Investing involves risk, including loss of principal; Not a recommendation

Customer Support — Winner: Interactive Brokers

Both eToro and Interactive Brokers have mixed reviews in terms of customer support. But, IBKR provides more channels to address their customers' concerns.

IBKR has a 24/5 customer service reachable via phone and live chat. Even on Sundays, chat support is available from 13:00 to 19:00 US Eastern Time. As for email, inquiries are generally responded to within 24 hours.

eToro doesn't have any phone support. But it does have a 24/7 chatbot and live chat support from 8:00 to 20:00 EST (Mon-Fri). Then, the tickets raised in the help center are checked within 48 business hours.

Educational Tools — Winner: Interactive Brokers

The IBKR Campus is a comprehensive platform that covers 13 free courses including investing, economics, and even taxes. There are written and video resources that can guide you.

eToro also offers free courses through its eToro academy. However, the topics are quite limited. Mostly, it serves as a guide to the products within their platform.

What is eToro?

Founded in 2007, eToro rose to fame as the world's first social investing platform. It has a simple and intuitive platform that enables anyone to trade and invest easily.

As of 2023, it now has over 32 million registered users. It currently supports stocks, ETFs, crypto, and options for US clients.

ETORO PROS & CONS

To sum it up, let's go over the pros and cons for a final comparison.

Pros:

• CopyTrader system
  
• Easy-to-use platform
  
• Social trading environment
  
• Highly rated platform by users
  
• Zero-commission fees for stocks, ETFs, and equity options

Cons:

• Costly crypto fees
  
• Basic training materials
  
• Lacking customer support
  
• Not yet available in all US states
  
• Crypto ownership limited to 8 coins only

Choose eToro if: You want to copy trades from others, favor an easy-to-use platform, and prefer simple long-term trading.

What is Interactive Brokers?

Interactive Brokers, launched in 1977, is one of the world's leading securities firms. Its main clients are experienced investors, day traders, and institutions.

IBKR currently manages assets for its clients that are worth more than $373.8 billion. It's a popular choice among traders for low rates, a wide range of assets, and advanced trading platforms.

Interactive Brokers Pros & Cons

Pros:

• Retirement accounts
  
• Advanced trading tools
  
• Zero or low-cost fees, flexible pricing plans
  
• 24/5 live chat and phone customer support
  
• Large mutual funds and bonds marketplace

Cons:

• Not beginner-friendly
  
• Forex trading only for institutions
  
• Crypto trading limited to 8 coins only
  
• Complex user interface, challenging even for experienced traders

Choose Interactive Brokers if: You are looking for a great mutual fund and bonds marketplace, want to open Traditional and Roth IRAs, require advanced trading tools, and are fine with the steep learning curve.

Alternatives To eToro And Interactive Brokers

If you're looking to buy crypto and currencies, eToro and Interactive Brokers might not be a good fit for you.

Instead, you can check out OANDA for forex. It's one of the premier forex brokers in the world and it's regulated in the United States.

As for Crypto, Coinbase is a good alternative. It's the best-known crypto exchange in the US.

BOTTOM LINE

eToro and Interactive are good choices as to where you should invest your money. However, they do not cater to all types of traders. So you need to identify your investing goal and trading style first, then decide which platform to use:

• If you want to copy trades, engage in social trading, and buy assets for simple position trading, choose eToro.

• If you do not mind the steep learning curve for its advanced trading features, want access to its 150 global marketplace, and prefer day trading, choose Interactive Brokers.

References