A complete and detailed comparison of Etoro vs Scalable Capital. Which one is the better broker for you to invest in Germany?
Scalable Capital and eToro are two of the best online brokers in Germany. But which one should you open your depot with? In this article we will help you choose between the two options. Go through the entire blog post for a detailed one-to-one comparison of the stock brokers in Germany!
eToro vs Scalable Capital – An Overview
Before we compare the two brokers, here is a small overview.
eToro is a popular Fintech company that was founded as RetailFX in 2007 in Tel Aviv, Israel. However, the eToro Investment platform only launched in the year 2010. eToro is a highly accessible stock broker in Germany which we can use to invest or trade in the stock market. You must have already come across its ads in one place or the other:
Having launched in the year 2014 in Munich, Scalable Capital is now a leading wealth management platform in Europe. With Scalable Capital’s online broker, you can buy or sell Stocks and ETFs in Germany with ease without relying on any experts to do it for you. Their goal is to ‘democratise’ investing by offering simple investing solutions to retail investers :
When it comes to choosing an online broker in Germany, you are no short of options. However it is important to compare your choices well before making a final decision. Previously, we have compared Scalable Capital and Trade Republic, another popular German investing platform. You can read the article by clicking here.
But for this article, let us begin with the detailed comparison of eToro and Scalable Capital.
eToro vs Scalable Capital – Which is the better broker?
I have used several parameters for comparison. Of course, all of these are based on my personal experience and convenience. Therefore, it is advisable that you also spend some time reading about the two on your own from people who have used both too. Below are the main parameters I have used to compare the two.
1. Acceptance Policy
Firstly, we look at the Acceptance policies of the two brokers. The best broker between the two should also be easy to sign up for. Especially for expats to sign up, the requirements have to be simple. As an expat, which broker would you find more easy to sign up for?
To start investing with eToro you need to have a verified eToro account. Signing up and verifying your account is a simple process. It is completely digital and quick. Therefore you can create your account within a day.
Step 1 : Sign up for eToro with your email, Google or Facebook account
Step 2 : Verify your documents
For the second step, you need two documents. A Proof of Identity, and a Proof of Residence. Copies of your Passport and bank statements would work for this.
In the same way as eToro, Scalable Capital is easy to sign up for. This is mainly due to a completely digital sign up process and simple requirements to sign up.
To illustrate, here are the requirements will have to meet
- You are at least 18 years old.
- If you are not taxable in the USA (not a “US person” under US tax law).
- You don’t live in Switzerland.
- You have a current account in the SEPA area.
In addition to that, you can refer to this video on how to sign up for Scalable Capital !
Subsequently, we move on to the crucial topic of fees! Money is an important subject. So we compare the fees of the two brokers to see which one is a better option. Both brokers have really competitive low prices, but we need to take a deeper look at it.
Firstly, the best thing about eToro is there are no Trading fees. No Account Management fees, No Transaction fees and No Commission. Feels like a great deal right? However there are other fees involved, with the largest fee being FOREX fees. Let me explain.
All of your trades are executed in US Dollars, regardless of your local currency. So everytime you deposit money into eToro, you will have to convert your currency into US Dollars. In addition to that, you also withdraw money as US Dollars which you will have to convert before taking out of eToro. And for both deposit and withdrawal there are specific FOREX Conversion Fees allotted.
However, this is not all the fees included. For every withdrawal, there is an additional Withdrawal Fee if 5 USD. There is also an Inactivity Fee of 10 USD per month. All of these Non-Trading Fees compensate for FREE of Charge Trading offered by eToro.
- Likewise, Scalable Capital has a transaction cost of 0.99 Euro per trade. However there is a lot of flexibility.
- Also you have the option of choosing a FREE BROKER, PRIME BROKER Plan and PRIME BROKER Flex Plan. These plans have respective subscription charges.
- In addition to that, there are also Prime Partner ETFs where you can invest without any in all 3 plans.
- Scalable Capital also offers 1 free savings plan with its FREE BROKER – Find out how to set up your Savings Plan here.
3. Web Trading Platform and Mobile App
Flexibility is important. This may not be the most important feature of all, but I prefer to have a simple and efficient user interface. I also prefer it if the brokers have a detailed website and a Mobile Application. Let us compare the two here.
Mobile App and Website are both available. eToro’s biggest advantage is the accesibility of its website. Not only does it have a user-friendly design, it also has a wide range of languages in addition to that.
Scalable Capital has a great website and an even better Mobile App to offer. I personally think the Scalable Capital app is the best broker app in Germany. I cannot express how easy it is to manage my portfolio of over 200k EUROS on the app.
However in comparison to eToro, Scalable Capital does not have the same range of accessibility.
4. Products and Services
Firstly, it has to be said that eToro is more of a CFD and Forex Broker, than a Stock Broker. But you are also able to trade Stocks, ETFs and Cryptos. Due to high non-trading fees, eToro is not the best choice of broker for the long term. It should also be noted that the stocks you buy on eToro is not held by you, but eToro itself. For instance, you will not have voting right privileges that come with certains stocks.
But there is one particular feature on eToro that is absolutely incredible. The CopyTrader.
It is a social trading feature where you can access portfolio’s of other eToro Traders. Their portfolio has publicly accessible information. There are so many useful statistics and metrics. For instance, you can view their monthly & annual performances, trades per week, average holding time and so on. Each Trader will also have a risk score attached to them. This allows a beginner to easily learn trading with the help of fellow eToro traders!
Unlike eToro, Scalable Capital is exactly what it looks like – the Best Broker in Germany. The primary services of Scalable Capital are trading and investing in Stocks, ETFs, Funds, Crypto, and Derivatives.
- Trade over 6,000 shares from all the world’s major indices and invest in savings plans with no commission and as little as €1 savings rate
- 1,900 ETFs from all available providers permanently available. Create any ETF savings plan without commission and from as little as €1.
- Diversify your portfolio with over 2,000 funds without initial charges!
- Trade Bitcoin, Ethereum, Litecoin and other cryptocurrencies unlimited and invest monthly for as low as €1!
- Trade your view with over 375,000 derivatives from the PRIME derivatives partners Goldman Sachs, HSBC and onemarkets Hypovereinsbank.
5. Customer Support
I find this category to be very important. Good Cusotmer Support can make such a difference with a broker service because of how valuable it can be. Let us compare the Customer services of eToro and Scalable capital!
Customer support is definitely the biggest drawback with eToro. Reviews online suggests that the quality of customer service from eToro is below average. However that is not the worst part.
eToro is not accessible for Customer Support easily. There is no Phone Support. There is no 24/7 support available. A live chat feature is available but it is exclusive to Club Members. The lowest tier of eToro Club membership is the silver one, which one can reach by having more than $5,000 in equity. Not accessible by all!
You can only contact eToro’s customer service via a web-based ticketing system
On the contrary, I am very satisfied with the customer support of Scalable Capital.
- Efficient and prompt responses
- Accessible 24/7
- Emails, Chat bot, Live text, Call Service available
For expats and beginners, Scalable Capital is the better choice!
eToro vs Scalable Capital – In Conclusion
We have compared the main features of the two brokers. Now is the time to decide the best one to proceed with. Based on my experience alone, I would suggest that Scalable Capital is a better option. This is simply because Scalable has an edge over eToro in a few key areas.
eToro vs Scalable Capital – Key Factors
- Despite both brokers being cheap, eToro has high non-trading fees. Scalable is the cheaper option here.
- Scalable Capital is a German Broker. This is an important point. German Brokers will make your life easier. The automatic tax withholding feature in German Brokers ensures that your taxes on stocks are taken care of by the broker. The tax which is withheld is automatically transferred to the Finanzamt.
- Having good customer support is crucial. This gives Scalable Capital a big advantage.
Both the brokers are good choices, but when compared with each other, Scalable Capital seems like a clear winner. If you want to focus purely on investing and trading stocks, Scalabla Capital is my pick for you!
At the end of the day, I am not a financial advisor. I wrote this blog from my experience. The comparison is of my opinion. You must do your research before making the choice!
Feel free to share your thoughts in the comments below!