The Cash Diaries

My experiments investing and copytrading

A long term investing strategy for eToro

For this post I wanted to share a strategy for investing in eToro that reduces risk and aims for longer term sustainable growth.  With this strategy you don’t need to rely on copying people and instead are investing in a a huge portfolio of diverse assets.

This is a good strategy for those who don’t want to use eToro as a copy trading platform and instead trade on their own.  You can open manual trades, but still rely on expert knowledge.

Index ETFs on eToro

ETFs (exchange traded funds) are a great way to buy into a diverse group of assets.    eToro currently has 58 different ETFs that you can invest in.    Today I’m going to be focusing on index funds.  These funds are designed to track the investment results of an index that is composed of popular equities in various markets.  In layman’s terms basically if the stock market goes up, these funds will go up too.

There is a general belief that overtime the value of the stock markets around the world will increase in value.  Sure there will be dips, even crashes, but over time the value will increase.  These funds are designed to take advantage of this philosophy.  Note, there are funds on eToro that are designed to do the exact opposite of this.  For example, there is a fund that will increase in value when the market crashes!  So unless you know what you’re doing, stick to the index funds that track mid to large cap stocks.

All of these funds are put together by experts.  So you’re still taking advantage of expert financial knowledge while opening trades yourself!  This is a much better option than trying to randomly pick stocks on your own.

Buying ETFs on eToro

You can open both long and short positions on ETFs through eToro, but for the sake of this strategy you should open long positions.  Long positions have lower fees and in my opinion a little less risk.  You’d have to be a talented trader to short trade.  Unfortunately you can’t open a ETF position on eToro without 1x leverage (no leverage).    I would recommend starting with the lowest leverage you can – there are no overnight or weekend fees on 1x ETF long positions.

ETFs you should consider:

These are just some of the funds i’ve invested in before.  But there are a huge range on eToro and you should look at them yourself and pick the ones that match your own investment goals.

SPY – This fund tracks an index of large and midcap US stocks selected by the S&P committee.   It’s the oldest and most recognized ETF in the world.

DIA – This fund tracks 30 large cap US stocks selected by the editors of the wall street journal.

EEM – This fund tracks emerging markets.  While considered to be of slightly higher risks, it has potential for great growth.

Alternatives to eToro ETFs

If you’re in a Australia or the U.S, then I would consider using something like Acorns.  Although you won’t be able to choose which funds your money is invested in, it will be invested into a broad range of ETFs.  And the upside is smaller fees than you would find on eToro.    You could also buy ETFs through a broker, however, the fees are going to be quite large.

Find out more about eToro ETFs here


1 Comment

  1. Etoro lacks any comparison options, further information on those ETFs and their performance (annualised over several years, Treynor, Sharpe…) Why are they promoting such an inferior interface? Furthermore, I cannot find the way to compare the ETFs on sale at etoro via an external platform because I would have to manually copy and then retype those 80 something funds. What a disapointing service!

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