Both options are great for investors, but when it comes down to it, eToro wins hands down. It’s cheaper, has a much bigger range of investment options, and the platform experience is far better. The only downside is there’s no ISA.
Keen to get investing and trading (buying and selling investments) but not sure which investing platform (a place to buy and sell) to use? We’ve got you covered.
Let’s take a look at eToro vs Freetrade so you can see which one is best for you. They’re both rated 5 stars by us at Nuts About Money – but are suited to slightly different investors and investing styles.
The key difference is eToro is a trading platform, suited for regular trading and has a huge range of assets (things like stocks, currencies and crypto) and all the tools to go with it. Whereas Freetrade is a stock broker, so a bit simpler and simply a place to buy and sell stocks and shares (small portions of ownership of companies), not necessarily frequently.
eToro vs Freetrade
Let’s quickly run through what eToro and Freetrade are, just to make sure we’re on the same page, and then compare after.
eToro is a super popular trading platform, and for good reason. It’s social trading, so you can view and interact with other traders, and learn from what they’re doing, talk about investments or simply just copy the pros!
But it’s a bit more than that too. It’s commission free (not completely fee free), and has a huge range of investment options. The platform can be accessed by their website and through their app on your phone is awesome too.
It’s great for beginners all the way to experienced traders.
With eToro you can buy stocks and shares directly, but can also trade CFDs (Contract For Differences), which is actually trading the price of a stock rather than actually buying it.
With CFDs you can leverage trade (trade with borrowed money), and trade the price of an asset going down. CFDs can get complicated, if you want to learn more, read our eToro review.
Freetrade is also popular, but for different reasons. It’s been gaining popularity over the last couple of years. It’s solely based on your mobile (an app), and is easy to use.
It’s a stock broker, so a place where you buy and sell the actual investment, such as a stock or a fund (a group of stocks).
Freetrade has a great range of investment options, and it’s commission free. However if you want to trade more seriously, you’ll need the premium paid plan, which costs £9.99 per month. But you can get started for free with limited features. Learn more with our Freetrade review.
eToro wins hands down vs Freetrade. Learn more about eToro and get started on their website.
Here’s where it gets a bit interesting, both platforms are commission free – that means there's no fees to buy and sell investments.
That's a huge bonus for both platforms vs other more traditional investment platforms or stock brokers (such as Hargreaves Lansdown and AJ Bell), who will charge you a fee. Sometimes as much as £11.95 for one trade!
This is why eToro and Freetrade have become super popular, you don’t need to already be rich in order to invest any more. It’s become super low cost.
£4.99 per month – access the full range of stocks (6,000), and open a Stocks & Shares ISA (invest tax-free).
£9.99 per month – all of the £4.99 plan, and able to open a personal pension (SIPP), plus priority customer service, and 3% interest on cash in your account.
So, if you’re a bit more serious about investing, you’ll probably want at least the £4.99 per month plan, which is almost £60 per year. Not quite free.
You’ll also pay a 0.45% foreign exchange fee when buying foreign stocks (such as US based companies). You’ll always pay this fee whichever broker you use, and this is actually one of the cheapest rates.
With eToro, an account is completely free. Whoop! And buying stocks and ETFs (exchange-traded funds, a group of stocks), is completely free too. They make money in a slightly different way.
eToro is all based in US Dollars, even though it operates worldwide. So if you want to deposit from your UK bank account, you’ll be charged 0.5% to convert this into Dollars. Which isn’t actually too bad (Freetrade is just slightly cheaper at 0.45% for a foreign exchange fee).
And there’s also a $5 fee to withdraw, and you’ll have to convert your money back to Pounds when you withdraw too.
If you trade CFDs, which is trading the price of an asset (e.g. a stock) and not the asset itself, they have spread fees, which are small fees hidden into the buy and sell price of an asset.
This one is pretty easy! eToro doesn’t offer a Stocks and Shares ISA. So the winner is Freetrade. However it doesn’t mean Freetrade is the best ISA out there, here’s the best Stocks and Shares ISAs.
By the way, if you’re not sure what a Stocks & Shares ISA is, it’s where everything you make within the account is tax-free! So there’s no Capital Gains Tax, no Income Tax and no Dividend Tax.
You can invest up to £20,000 per tax year (April 6th to April 5th the following year). But you can only add money to 1 Stocks & Shares ISA per year.
It’s a great way to invest, and a common strategy is to let the experts manage your ISA, with an expert-managed investment platform, and use a self-managed platform, such as eToro and Freetrade to make your own investments within a General Investment Account (a standard account with no tax-free benefits, but you can have as many as you like).
eToro vs Freetrade: investment options
The difference between eToro and Freetrade shows with the investment options (investment options are the things you can trade, such as stocks and shares, or ETFs, crypto etc).
As Freetrade is a stock broker, and they only offer stocks and shares and ETFs (exchange-traded funds). There is a great range, over 6,000 actually (on the paid plans), and they cover UK, US and European stocks.
On the other hand, as eToro is a trading platform. That means they can offer a massive range of investment options.
They have all the same stocks and shares, and ETFs as Freetrade, plus more, and then you can trade currencies, cryptocurrencies and commodities (real things like gold and silver).
But even better, you can trade these with leverage (borrowed money to make your trades larger), and trade either price direction (up or down). Not many places can offer this. In fact eToro is one of just a few in the UK (Trading 212 and IG are the others – all great trading platforms).
So, it’s a pretty clear winner here.
eToro vs Freetrade: customer reviews
Finally, let’s take a look at the customer reviews of both. It’s a great indicator of customer service and how they treat their customers, and if they’re customers are enjoying the platform or not.
Let’s use Trustpilot, the popular reviews platform.
Freetrade has a great score of 4.2 out of 5, from over 2,500 reviews.
Most reviews talk about how easy the app is to use and understand, and the free trading, but a few frustrations at having to pay to access some trading features and more stocks.
eToro has an excellent score of 4.3 out of 5, from over 17,000 reviews! You can certainly tell eToro is more popular. Although Freetrade is a bit newer.
Most reviews highlight the ability to trade socially with other traders (and copy their trades!), the great experience using the platform and the customer service.
The overall winner
So there we have it, eToro vs Freetrade. But who wins overall?
When it comes to costs, eToro wins hands down. Even though Freetrade has got free in the name. If you want to invest and trade seriously and regularly, you’ll need to pay for a subscription, at least £4.99 per month.
eToro is actually free, in terms of opening an account and buying investments. You’ll just have to pay an exchange fee to change from Pounds to Dollars.
Freetrade wins if you want to invest via a Stocks & Shares ISA, simply because eToro doesn’t offer one! Although you may want to use your Stocks & Shares ISA for an expert-managed investment platform, such as Moneyfarm¹ and InvestEngine¹, and let the experts grow your money over time, while you trade in a General Investment Account.
When it comes to investment options, eToro wins, it has loads more, you can trade pretty much anything out there! Including currencies and commodities (things like gold), plus crypto. With Freetrade you can only trade stocks, and have to pay for a subscription to get access to most of them.
And then finally, when it comes to customer reviews, eToro just about wins. Customers love eToro.
Overall, eToro wins! It’s a great platform in general and far better for trading regularly. It’s perfect for beginners all the way to professional traders. Plus, you can copy the pro traders too.
Freetrade is great too, so you could actually sign up to both as they are free to get started and have a play, but if you’re keen to get started and learn more about trading, we recommend getting started with eToro¹.
Good luck investing!
eToro wins hands down vs Freetrade. Learn more about eToro and get started on their website.
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