Today I opened an account in etoro, which is the third brokerage I use. I started investing on DEGIRO platform, later got annoyed by the 30% tax on dividends, and created an account on trading212, which I am very happy with! But today I created and funded an account with etoro, in this article I will explain why I want to have 3 brokers, maybe even more in the future and why I don’t think that is a bad idea.
Etoro is very competitive broker
First and most important, etoro is a very good broker for what I need. I created a spreadsheet to compare brokers in EU, mostly focused on dividends. Etoro has very competitive parameters, but I don’t like 30% tax on dividends. AFAIK they will handle it within a few months/years, as investors are complaining about it. On top of that, Etoro as the only broker in EU introduced a 1 000 000 eur insurance (for EU brokers, 20 000 eur is common). With no commissions, it seems a very good option for long term investing. What I don’t like is the inactivity fee and withdrawal fee, but the former can be avoided just by 1 trade per year and later by getting a higher tier of account.
Copy investor functionality
I saw today on youtube, that you can get paid if enough people follow you. I really think that copy trader is very good feature, which attracts more investors and creates that social element to it, which makes investors stay on etoro. Now, that I learned you even can get paid by etoro for that, I find it a good opportunity to create a portfolio there and maybe some people will follow me. I don’t have a big audience, but I think the limits there pretty low and few people with few thousands of dollars are doable even for not that active investor. I am in it for the long term, few decades.
I started investing in dividend stocks in December 2015, and I don’t plan to stop. I don’t plan to move the dividend portfolio to etoro, as they still have 30% tax on dividends. But in February 2017, I thought that limiting myself to dividends only is too boring, and once a while I wanna support a cool growing company, that does not pay dividends. It’s a long-term bet on company’s future, where it can be in 10 years. So I try to focus on companies, which I think are innovative and have a good idea, that might not be understood now, but in 10 years they should leverage from their futuristic thinking. I named the portfolio “Growth portfolio” and I track it on digrin. It has 63% XIRR, but that is mostly thanks to Tesla I bought in 2017. I want to continue with monthly buys in growth stocks, that I want to start buying in etoro. It’s a long-term portfolio, with a buy and hold strategy. Here is my profile on etoro.
Why I don’t mind having 3 brokers?
Most people want to have just 1 broker and do everything there. Then they complain if something is not up to their expectation and move the whole portfolio to another broker.
I understand that every broker has some upsides and some downsides. Every broker makes money in a different way and focuses on a different type of client. And I want to leverage that, not complain on a single broker that does not offer everything. You have different instruments on different brokers, for example, etoro added ARKK ETF recently, which is not available on trading212 and DEGIRO. So by having more brokers, you have access to more stocks/ETFs. Sometimes brokers temporarily block stock trading (robinhood blocked GME, degiro blocked O, etc)
It can happen that a single broker can go bankrupt, I feel like having 3 brokers is safer – low chance all 3 will go bankrupt at the same time, different insurances, etc. So I don’t mind having multiple brokers, because to move a portfolio is still very expensive in Europe (10 eur per stock on degiro). Where it might get problematic is inactivity fees, if you have more brokers, there is a lower chance you will be active on each of them. But trading212 and degiro do not have an inactivity fee, etoro has one, but I believe I won’t be inactive for a whole year plus I expect they will cancel inactivity fees in the future.
Negatives of using multiple brokers
I assume it’s more complex to keep it simple. Taxes might be harder to do, but since brokerages generate exports it should not be a dealbreaker. And with my mostly buy and hold strategy, It should be manageable. Any other negatives come to mind?
So I am looking forward to using Etoro now, I like the social features they have and we will see how long will my excitement last 🙂