Vanguard vs eToro

(November 2024)

In This Article

Our Verdict

Choose the investment platform that best aligns with your financial goals and trading preferences by considering Vanguard and eToro, two distinct options catering to different investor needs. Vanguard is ideal if you’re a long-term, passive investor who prioritizes low-cost index funds and ETFs, while eToro will appeal to you if you’re an active traders interested in cryptocurrencies and social/copy trading features.

If your focus is on long-term retirement savings and passive index investing, Vanguard remains the gold standard with its low fees and extensive range of low-cost funds. However, if you’re interested in active crypto trading or social investing, eToro offers a unique and engaging platform. Vanguard stands out as the better option overall for most investors. Its strength lies in providing low-cost, long-term investment solutions.

Why Choose Vanguard

With Vanguard, you benefit from some of the lowest-cost index funds and ETFs in the industry. This platform is designed for buy-and-hold investors with a long-term perspective, especially if you’re saving for retirement. While Vanguard’s platform is straightforward and lacks advanced trading tools, this simplicity supports its philosophy of discouraging frequent trading in favor of a steady, long-term approach.

Who Vanguard Is Best For

Read below to determine if Vanguard is the right choice for you:

  • Consider Vanguard if you are a long-term, passive investor, as its platform and fund offerings support a buy-and-hold approach.
  • Explore Vanguard for retirement savings with its low-cost index funds and target-date retirement funds, ideal for IRAs and employer-sponsored plans.
  • Opt for Vanguard if you are cost-conscious, given its industry-low expense ratios on mutual funds and ETFs, leading to potential long-term savings.
  • Choose Vanguard if you are an index fund enthusiast, as it offers a comprehensive range of index funds covering all market segments and asset classes.
  • Benefit from Vanguard’s perks if you have a large account balance, including lower fees and access to its Personal Advisor Services.
  • Invest in bonds with Vanguard, which now features new issues from over 170 banks as of 2024.

Who Vanguard Is Not Right For

Do you think Vanguard is not the right choice for you? Check if any of these reasons tick your box:

  • Avoid Vanguard if you are an active trader, as its platform lacks advanced trading tools and real-time data, discouraging frequent trading.
  • Consider alternatives if you are an options trader, as Vanguard’s fees are higher compared to many competitors and lack advanced options analysis tools.
  • Skip Vanguard if you are a forex trader, as it does not offer forex trading.
  • Look elsewhere if you are a cryptocurrency enthusiast, as Vanguard does not offer direct cryptocurrency trading, though they do have some crypto-related ETFs.
  • Reconsider if you are a margin trader, as Vanguard’s margin rates are less competitive compared to many other brokers.

Why Choose eToro

Conversely, eToro offers a modern, social media-inspired trading experience. Renowned for its cryptocurrency offerings and innovative social trading features like CopyTrader, eToro attracts younger, more active traders who want to follow and replicate successful traders’ strategies. Although eToro provides access to stocks and ETFs, its selection is more limited compared to Vanguard, particularly for U.S. users.

Who eToro Is Best For

Go for e Toro for the following reasons:

  • Choose eToro if you are a cryptocurrency trader, as it provides a broad range of cryptocurrencies and a user-friendly trading interface.
  • Explore eToro’s CopyTrader feature if you are a social trading enthusiast, allowing you to automatically mimic the trades of successful investors.
  • Start investing with eToro if you are a beginner, thanks to its intuitive design and social features that make it approachable.
  • Engage in frequent trading with eToro’s platform, designed for active traders seeking more regular trading opportunities.
  • Benefit from eToro’s international reach if you are an international investor, as it offers a wider array of assets and features in other countries.
  • Utilize eToro’s mobile app if you are a mobile-first trader, providing a seamless trading experience optimized for smartphones.

Who eToro Is Not Right For

Avoid eToro if you relate to any of these:

  • Avoid eToro if you are a long-term retirement saver, as it lacks retirement account options and doesn’t offer low-cost index funds.
  • Skip eToro if you are a conservative, hands-off investor, since the platform’s social and copy trading features may encourage more active trading.
  • Reconsider eToro if you are an advanced trader seeking sophisticated tools, as it lacks some of the advanced charting and analysis features.
  • Look elsewhere if you are a mutual fund investor, as eToro does not offer mutual funds on its U.S. platform.
  • Consider other platforms if you seek a wide range of asset classes, as eToro’s U.S. offerings are primarily limited to stocks, ETFs, and cryptocurrencies.

Vanguard vs. eToro: Main Differences

Vanguard stands out for its broad market coverage, low-cost index funds, and extensive range of retirement and bond offerings.

 

 

Vanguard

eToro

Ideal For

Vanguard is ideal for long-term, passive investors focused on building diversified portfolios using low-cost index funds and ETFs. It caters particularly well to retirement savers and those with larger account balances who can benefit from additional services and lower fees.

eToro is better suited for active traders, particularly those interested in cryptocurrencies and social trading features. It appeals to a younger demographic who appreciate the platform’s modern, social media-inspired interface and the ability to follow and copy other traders’ strategies.

Pricing

●       $0 commission for online stock and ETF trades

●       $0 commission for Vanguard mutual funds

●       $1 per contract for options trades

●       No account minimum for brokerage accounts, but some mutual funds have minimum investments

●       $20 annual account fee for accounts under $1 million in Vanguard funds (waivable)

●       $0 commission for stock and ETF trades

●       1% fee for cryptocurrency trades

●       $5 withdrawal fee ($30 minimum withdrawal)

●       $100 minimum deposit for stocks and ETFs, $200 for CopyTrader

●       $10 monthly inactivity fee after one year of no login activity

Integrations

●       Limited third-party integrations

●       Some compatibility with financial planning software like Quicken

●       API access for institutional clients

●       More modern API offerings for developers

●       Integration with TipRanks for research

●       Mobile app integrations for easier account access and notifications

Standout Features

●       Extremely low-cost index funds and ETFs

●       Robust retirement planning tools and resources

●       Personal Advisor Services for accounts over $50,000

●       Strong bond offerings

●       Automatic investment plans

●       CopyTrader feature for social/copy trading

●       User-friendly cryptocurrency trading

●       Social network-like features for sharing trading ideas

●       Practice accounts with virtual money

●       eToro Money cash management account

Vanguard vs. eToro: Standout Features

Vanguard wears the crown here.

Vanguard

  • Benefit from Low-Cost Index Funds and ETFs: Leverage Vanguard’s industry-low expense ratios, such as the S&P 500 ETF (VOO) with just a 0.03% expense ratio. This means you’ll pay only $3 annually on a $10,000 investment, enhancing your long-term returns.
  • Utilize Robust Retirement Planning Tools: Explore Vanguard’s comprehensive suite of resources, including calculators, worksheets, and educational materials. It’s retirement income calculator and “when to retire” tool are invaluable for effective long-term planning.
  • Access Personal Advisor Services: For accounts with $50,000 or more, tap into Vanguard’s financial advisors. Enjoy professional management combined with Vanguard’s low-cost approach, costing just 0.30% annually for accounts up to $5 million.
  • Set Up Automatic Investment Plans: Streamline your investment strategy by automating recurring investments into Vanguard’s funds, promoting disciplined, long-term investing.
  • Explore Extensive Bond Offerings: Take advantage of Vanguard’s expanded bond selections, featuring new issues from over 170 banks. This provides a broad range of options for fixed-income investors.

eToro

  • Use CopyTrader to Mimic Successful Investors: Automatically replicate the trades of top-performing investors on eToro. Review the performance history of potential “Popular Investors” and allocate part of your portfolio to follow their strategies.
  • Trade Cryptocurrencies with Ease: Enjoy a user-friendly interface for trading a diverse range of cryptocurrencies on eToro. In the U.S., access 24 different cryptocurrencies, including Bitcoin, Ethereum, and Dogecoin.
  • Engage with the Social Trading Network: Connect with other traders on eToro’s platform, share insights, discuss market trends, and learn from one another’s strategies, much like a social media network for trading.
  • Practice with a Virtual Portfolio: Start trading risk-free using eToro’s demo account with $100,000 in virtual funds. This allows you to test strategies before investing real money.
  • Manage Funds with eToro Money: Utilize this cash management account, which includes a Visa debit card and the ability to handle fiat currencies alongside your investments. Easily transfer funds between trading and spending.

Vanguard vs. eToro: How to Open an Account with Vanguard

  • Go to Vanguard’s Personal Investor homepage and click on “Open an account”
  • Choose funding method
  • Indicate new or existing client status
  • Gather necessary information
  • Select account type
  • Provide personal information
  • Review and verify details
  • Add a bank account
  • Decide on funding timing
  • Enter employment information
  • Answer required questions
  • Review and confirm

Vanguard vs. eToro: How to Open an Account with eToro

  • Go to eToro’s website and click “Join Now” or “Trade Now.”
  • Fill out the electronic form with your personal details. You can also log in with Facebook or Gmail.
  • Review eToro’s Terms & Conditions and privacy policy, then agree by checking the box.
  • Submit the form by clicking the “sign-up” button.
  • Complete the KYC process by providing a Confirmation of Residence (e.g., a recent utility bill) and Proof of Identity (e.g., passport).
  • Fill out a questionnaire to help eToro tailor services to your profile.

Vanguard vs. eToro: Pros and Cons

Despite some limitations in trading features, Vanguard’s low fees, broad market coverage, and retirement planning tools make it the better option overall.

Vanguard

  • Offers broad market coverage across various asset classes and sectors.
  • Provides extensive resources and tools for long-term retirement planning.
  • Offers personalized guidance for larger accounts.
  • Lacks advanced charting tools and features that active traders might need.
  • Incurs higher options trading fees
  • Do not offer these popular asset classes for trading.
  • Charges account fees for smaller balances: ($20 annual fee for accounts under $1 million in Vanguard funds, though waivable)

eToro

  • Provides user-friendly interface: Intuitive platform design makes it easy for beginners to start trading.
  • Allows users to automatically mimic successful traders’ strategies through CopyTrader
  • Gives strong cryptocurrency offerings
  • Allows new users to test strategies with virtual money before risking real funds.
  • Offers a consistent experience across multiple countries.
  • Limits asset selection in the U.S.
  • Charges higher crypto fees
  • Lacks availability in all U.S. states
  • Lacks retirement accounts in the U.S.

Vanguard vs. eToro: Customer Reviews

Vanguard generally receives positive reviews from long-term investors who appreciate its low-cost approach and simplicity. While eToro’s innovative features attract younger investors, the positive feedback and overall satisfaction with Vanguard’s services and reputation make it the winner in this category.

Vanguard generally receives positive reviews from long-term, passive investors who appreciate the company’s low-cost approach and focus on index investing. Many customers praise Vanguard’s retirement planning tools and the overall simplicity of their platform. The company’s investor-owned structure and reputation for putting clients first are frequently mentioned as positives. However, some Vanguard users express frustration with the basic nature of the trading platform, citing a lack of advanced features and real-time data.

eToro tends to receive more polarized reviews. Many users, especially younger and newer investors, praise the platform’s user-friendly interface and innovative social trading features. The ability to easily trade cryptocurrencies alongside stocks and ETFs is frequently cited as a positive. Negative reviews of eToro often focus on withdrawal issues, with some users reporting delays or difficulties in accessing their funds. The platform’s fees, particularly for cryptocurrency trading, are sometimes criticized as being higher than specialized crypto exchanges.

Vanguard vs eToro: Competitors

  • Fidelity: Fidelity is a major competitor to both Vanguard and eToro, offering a more comprehensive suite of services than either. Like Vanguard, Fidelity is known for low-cost index funds and strong retirement planning tools. However, Fidelity also provides a more robust trading platform with advanced research tools, making it suitable for both passive investors and active traders. Fidelity offers a wider range of account types than eToro, including retirement accounts, but lacks eToro’s social trading features and crypto focus.
  • Charles Schwab: Schwab competes directly with Vanguard in the low-cost investing space, offering its own line of index funds and ETFs with competitive expense ratios. Schwab provides a more comprehensive trading platform than Vanguard, making it suitable for both long-term investors and more active traders. Like Fidelity, Schwab offers a wider range of services than eToro but doesn’t have the same focus on social trading or cryptocurrencies.
  • Robinhood: Robinhood is a major competitor to eToro, especially in appealing to younger, mobile-first investors. Both platforms offer commission-free stock and ETF trading and cryptocurrency trading. Robinhood’s interface is similarly user-friendly, but it lacks eToro’s social trading features. Robinhood has faced controversy over its order flow practices and platform reliability during high-volatility periods.
  • Coinbase: For cryptocurrency trading, Coinbase is a significant competitor to eToro. As a specialized crypto exchange, Coinbase offers a wider range of cryptocurrencies and more advanced trading features for serious crypto traders. However, Coinbase doesn’t offer stocks or ETFs, making eToro more versatile for users wanting to trade both traditional securities and cryptocurrencies.
  • Betterment: As a robo-advisor, Betterment competes with Vanguard’s Digital Advisor and Personal Advisor Services. It offers a more modern, digital-first approach to passive investing compared to Vanguard’s traditional methods. However, Betterment lacks the self-directed trading options of both Vanguard and eToro.

Pro Tips

  • Understand your investing goals
  • Consider your investment style
  • Don’t neglect fees
  • Diversify wisely
  • Use educational resources
  • Start small with new strategies
  • Regular rebalancing
  • Be cautious with leverage
  • Take advantage of tax-efficient options

Recap

Vanguard and eToro cater to different types of investors, with Vanguard being ideal for long-term, passive investors who prioritize low-cost index funds and ETFs. Vanguard’s strengths lie in its low fees, robust retirement planning tools, and extensive bond offerings.

On the other hand, eToro is better suited for active traders who value social trading features and a wide range of cryptocurrencies. eToro’s standout features include CopyTrader, a user-friendly crypto trading interface, and a social trading network. Ultimately, choose Vanguard for retirement savings and cost-effective investing, and opt for eToro for a more dynamic, social trading experience.

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