In the latest instalment of the How To Be A MoneyMagpie Podcast, Jasmine discusses the power of social investing, with Sam North from investing platform eToro. You can watch/listen to the podcast and read the transcript below!
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Hello and welcome to the money Magpie podcast. If you’re watching this podcast, don’t forget to share and like the video. And if you’re listening or watching, just tell everyone you know how fabulous it is because hey, you know it is. I’m Jasmine Birtles. I’m the founder of MoneyMagpie. And I’m joined today by Sam North from the investment platform eToro, which offers users all kinds of ways to get into investing and all kinds of products to invest in from stock market companies in all sorts of stock markets to crypto and CFDs. Thank you so much for joining me, Sam.
Jasmine. It’s a pleasure to be on.
Now, I just went through some of the aspects of eToro. But you know it better than me, so how would you describe the platform and how you can use it?
Well, yeah, I think, if you were to ask the actual users of eToro, they probably give you, you know, relatively similar answer. But they’d also talk about, you know, bits here and there that they prefer to others. I mean, when I go around, and do you know, the webinars or the seminars, you know, I sort of dress it up, it’s a, it’s one of the world’s leading social investment networks and platforms, where, as you said, people can invest in all of those things.
You say, crypto stocks, CFDs, ETFs, whatever it might be commodities, of course, all the craze right now. But we also look to do it in a way where we can enhance investors sort of financial education. So we created I say, We eToro have created this sort of multi asset investment platform, but it’s built on this social collaboration.
Users can share ideas with each other, they can interact, they can bounce these ideas off each other on our user feed, talk about the recent news that’s come out talk about potential ideas that they may have, and they can log in, on their phone, tablet, computer, laptop, whatever it might be, and do that and access all of that information there. Yeah, I mean, we actually just recently, but we now made it in January, we just, we launched stock investments in the US, too. So the companies come on along way and yeah, continuing to grow.
Yeah, so you’ve mentioned that people can learn from each other. And you also mentioned seminars, because you’ve got quite a lot of educational materials on eToro. So what have you got that people can use for free? If they’re just starting out as investors?
Yeah, well, I want firstly, I think it’s important that it is free, right. And I think, you know, we’ve seen over the last, you know, two and a bit years, the rise of the sort of retail trader and retail investor to levels we’ve never seen before, you know, for a few reasons, obviously, the pandemic sort of you want to help people, you know, take control of their own finances as well, we saw that.
But in terms of the the education, you’ve got guides, where people can read about all the different subject areas, you know, that could be as basic as what is a stock? Or what is an ETF? How do I invest in this and that, you know, what is risk management, just loads of written guides. And on the flip side, there’ll be people that, you know, don’t necessarily learn the best way from reading and visually or Audible is the way to sort of go for them.
So we have podcasts, where we talk about them, the main sort of events in the markets, or whatever it might be from the week that’s happened. And then there’s video guides as well, for people that do want to sort of see the visual side of things, webinars, regular webinars, minimum three a week, there’s more on top of that every month to and special webinars, if there’s something going on in, in the market, and then you’ve got the community side as well.
So a lot of information there for free. There’s no sort of expiry date on on any of it, there’s no maximum time a user can read it, listen to it, or whatever. So yeah, there’s a lot of information out there for people to take advantage of.
So it really does sound like it is genuinely a good platform if you’re starting out. Because, you know, I’m always talking about how people can start investing, because that does seem to be the hardest part of all of it, frankly, loads of people want to invest, but they’re scared even to start. So what’s your advice for people who are afraid, honestly, to take the first steps?
Yeah, and I’ve definitely got mates that are like that, or have been like that, and then just maybe recently have sort of taken the steps to get in. I think it’s important for, for anyone that’s doubting it, or thinking about whether to do it, it’s well understand why people do invest, I think is important. Because if you can see why, you know, a certain group of people do it, and benefit from it, then it makes more sense to think you know what, that could be something for me.
So, I mean, you’ve seen over the years, I mean, at the moment inflation is killing the stock market right now and 2022. But historically, the stock market outperforms inflation over a long period of time. So I think it’s important to understand that it is, you know, medium to long term thing investing. And, you know, if we have a look at some of these facts, and actually I was looking today before coming on.
So I was born in 1991. And the stock market the s&p 500. So the largest stock market in the world most traded stock market in the world has only finished down year on year, seven times in those, how old am I now? 30, in those in those 30 years, it looks like it’s going to be eight, but you never know. So, you know, the history is on your on your side here, I think average returns 7% a year by just investing in that particular s&p.
So, you know, there are questions I think people can ask themselves, you know, do I have maybe like an emergency fund just in case, you know, I need this money? Do I need it in a month, two months? Like, if that’s the case, and you do, then I wouldn’t recommend investing right now. But history is on your side, you can get those returns longer term, certainly when you have that sort of mindset that you don’t need this money becomes a lot easier.
You know, you should probably ask yourself, are you are you committed as well to sort of having this money, you know, for the future, sort of leaving it alone for two, five years, for example? And if you’re comfortable with that, it becomes a lot easier. And there’s going to be ups and downs. So there probably be newer investors that say someone started investing in January this year. They’re panicking right now, probably because it’s the you know, the first time in a while markets have really been sort of aggressively low for a sustained period.
So it’s important to understand there are gonna be ups and downs. But like I said, in 30, last 30 years, the biggest most traded equity market, the world has only been down seven of those 30. So that’s a positive and it helps put things in perspective.
Yeah, and I suppose there’s an argument to say that right now, or at least, you know, in the next year, or however long it takes for the market to bottom out, and nobody knows, but it now is probably one of the best times to buy into the stock market.
Oh, yeah, I couldn’t agree more, I really couldn’t agree more. And it comes down to, as well with this, that people might say, What do I buy right now? Or do I buy and I know, you’re a fan of this as well. So the dollar cost or pound cost averaging approach, and if let’s just say someone had a lump sum now bought right now, and it turned out to be the low, the next few years, you look like an absolute genius, and it would be amazing. But that time in the market is is is knit next to impossible in terms of being, you know, really, really specific about it.
So my view and the way I certainly would be looking to, you know, attack, this market now would be, you know, every month for every couple of months, or every time I get paid look to, you know, sort of dollar cost averaging into these markets, like you said, you know, people have said you make your money in a bear market in a correction. And historically, over time, the market, as we’ve seen does go up.
So, yeah, if the market does come lower, and it can you can afford to, in your mind lose this money, even though history says you won’t, there’s certainly some some good opportunities to be had.
Now, just to go back to eToro. I’m wondering how do you actually set up an account on on your platform? Because again, you know, this is something that stops a lot of people who want to invest? They think, Okay, I’ve got to set up an account, I had my settlement. And had so you know, literally, how do you do it?
Yeah, you’re so right. And and I do you know, what I have this issue with, let’s say, I wanted to set up an account on some website, you know, when it comes to doing that, I’m always like, Oh, God, this is gonna be so long. I mean, with eToro it’s not. But I would say the fact that it’s an easy process doesn’t mean we don’t do all the checks and all the verifications. You know, to keep the account safe, because we do and that’s important.
So this just, you know, take someone a quick journey. So they did want to sign up. And that could be via the app on their phone, or they can do it on a web browser, you’d fill in your, your sort of your details, and you then verify your identity with ID and all of that. That’s checked by all of our sort of internal teams to make sure that the account is safe. Then really, the user from that point, once it’s been verified, they can deposit and that could be as little as 10 pounds at the moment in the UK. Or even if they wanted to just wait a little bit to look at all the information, try the virtual account as well. You can do do that, too.
So it really is and I’m not sure maybe an easy process the right thing because that maybe that seems like the checks aren’t done, but they are is straightforward process I would say and yeah, it’s it’s not too, too time consuming.
So for the for the newbie investor. I mean, I know that a lot of millennials and Gen Zed immediately are going to crypto. I personally wouldn’t suggest that I would go, you know, as you and I’ve spoken about this before, I think always spreading your bets spreading your money across lots of different companies types of investments is good. And course funds are a really good way to do that, because it spreads for you. What types of funds can can people access on the platform, if that’s where they’d like to start?
Yeah, I mean, there’s, there’s, I mean, whatever it might be, if someone might come on to eToro with a view of an area to want to invest in, so there’s like a discover section, and then you can split it up through commodities, currencies, ETFs. And with the funds that are within now, there’s last time I checked, there was 250. So there’s quite a lot to go through.
My sort of personal view is, with these you want to go for the the most traded the most sort of popular ones, the ones that most people were going to do the sort of, when I say most traded, you know, they’re not going to be super, super volatile, they’re not going to swing, like, say a crypto asset might do at the moment, 10% in a day. So I’m like yourself, I’m a fan of the funds, and I will diversify through that. And it might be that it might be a fund that’s dedicated to a certain industry, or a certain geographical area, as well.
So I think each person will have their, their sort of favourites. I mean, I, when I, the first time I ever started investing, the first thing I invested in was an ETF tracker of the s&p 500 and the footsie and European equities as well, and I just every month would, would add to that, and for me, that’s proven over the last 10 years or so to been, you know, a really good thing to do, but there’s gonna be moments where the market moves lower.
And it’s just having that patience and understanding that, you know, you shouldn’t just get in once, before you that lump sum into just one fund, it might be you have an idea, you have the funds that you like, and it might be every month or every quarter, and you’re just getting in sort of regular basis.
And then, you know, as we’re talking about easy, or rather straightforward ways to invest, was probably to me that the greatest thing that eToro has is the ability to copy other investors. So you don’t talk about easy you just pick an investor who’s doing really well and go, Oh, I’ll do that, then. Can you explain how that works?
Well, that’s it right. I mean, some of these, you know, popular investors, we call them at eToro, are amazingly good, you know, consistently beating the market, or even when the market is significantly lower, they’re outperforming it then as well, which is something that’s very good. So a user what they could do, they could again, you can find this on the discover page, but they might click on one of these popular investors and decide that, essentially, they would like their funds managed by this person.
Every trade or investment that these investors do, I’ve essentially would do the same. I could click Copy on, you know, Mr. John Smith, let’s call him and every single new position he takes on would replicate in my account as well. But I’d also you know, if he was originally 5% of his portfolio is invested in Apple 5% of the money that I put in is going to be invested in Apple, and so on and so forth. So they essentially would, would manage your money, just from doing their investments.
And, obviously, the beauty is you can see all of their, sort of their history, what they’ve traded in their monthly returns all of this kind of stuff, as well. And, of course, if you know, after a while, you want to take your money out, one click, and you can sort of get out of that that too.
And they get a little little kickback from that, don’t they? Because, you know, obviously, you can’t just do that sort of thing for free.
Yeah, cuz, I mean, a commission that I don’t think anyone would do that for free in this day and age. But no, and that’s an incentive for them right to keep performing well keep delivering returns, because that if I was in investing with, you know, proper investor, and, you know, it was just month after month of losing money, you know, I’m not gonna stick around, of course, so the fact that they’ve got an incentive to produce these returns and interact, by the way with, you know, the people that do copy them, they have sort of these open forums.
I mentioned before, he told me about sort of a real social place, but it’s got a good community where, you know, if someone does ask question, you know, why did you do this? You know, what’s your plan with this? How long do you usually hold positions? You know, they’re more than happy to answer that.
And then there’s crypto. I’ve already mentioned that, you know, lots of millennials and Gen Xers go straight for it. I personally think it’s something you add on when you’ve you’ve got decent holdings elsewhere, but hey, you know, it’s still massively popular even though it’s right down at the moment. So what can you buy in that area on eToro?
I imagine a lot of people would have heard of your your bitcoins in your theory and you and you couldn’t you can buy those or one thing that I really likeable, one of many things I really like about eToro is the is the smart portfolio. So we’ve seen a massive rise in thematic investing where people want to invest in a certain theme in the market. So that could be drone technology, for example, that could be cybersecurity.
But also in the crypto side, there are these ready made portfolios, where it could just be down to decentralise finance, or it could just be crypto itself and the portfolios are sort of weighted in favour of different crypto assets so that the sort of the team will traders retiro created them. So it’s a good way of maybe been diversified, because obviously new people that come in, they’re not going to know enough about whatever industry it is.
But let’s say it’s crypto, you might say to yourself, well, rather than just buying one particular crypto asset, I might want to diversify myself by just getting in to a sort of smart portfolio that does all the waiting for me might be comprises of sort of 10 to 15 Crypto assets. So I diversify myself that way. Because of course, what you’re seeing at the moment with with crypto, like you said is some crypto assets are massively down over the last few months. And some of them may not recover.
As if you do diversify yourself and a portfolio dedicated to that can do it, it just means it’s a good risk risk management tool that if one of those assets in the portfolio don’t do well, it’s not going to ruin you. Because the others can sort of hold it up. So that’s not a bad way to go about it. I would say for for those who want a little bit of exposure and want to dip their sort of toes in the crypto world, that’s probably what I would recommend.
So you can just find one of these ready made portfolios, and it doesn’t cost extra you just go again, like copying people go. I’ll do that then.
Yeah, that’s right. So you can go on to the discover page. And there’s, it says smart portfolios, you click on that, and then you can sort it however you like. So some people might say, well, I want to see what’s performed well, over the last 12 months, you know, while past performance, of course isn’t, you know, exactly future results, you might say, Okay, well, it’s done well, recently, you know, maybe the current climate suits here, okay, let me go down that route. Or it might be the opposite. You want to see what’s maybe underperforming? You know, why might that be? When could it start to recover?
You know, you can sort of separate it however you want. But you know, I say to people, you know, when I do, buy, do like a seminar or webinar say, Well, what areas in the market do you think are in the world actually are going to be big in 10 years time, and you’ll get people saying electric cars, you’ll get people saying cybersecurity, so why not actually invest in those themes, and there are portfolios dedicated to that.
Now, if I were to say to these people name me, you know, 10 companies dedicated to cybersecurity there probably be like, I don’t know. And to be honest, I would be the same. But there isn’t. There’s no, there’s ready made portfolio for that. And you can see all the companies that are in there, too, you can read up about them. But yeah, it’s not a bad way to go about it.
Absolutely. Well, give us a final word, Sam, for for somebody who’s really new to investing, just thinking, Oh, I think I might, but I’m not sure about the markets. What’s your final piece of advice?
History is on the side of the investor is what I would say and you got to be patient. When you when you dip your toes into the investing world, you should do it when in a period where if you were to lose that money, you can be okay with it. Now history says you’re not going to if you diversify yourself, right, and you were to just only invest in say the s&p 500 tracker that was pretty proven over time to be a good thing.
There are going to be peaks and troughs, but there’s gonna be more peaks and troughs. So be you know, trust the process as the Arsenal Football manager keeps telling me that yeah, that would be it. For me just had the patience. And yeah, history is on your side.
Thank you. Thank you, Sam for taking the time, really great to have you on and you can sign up to eToro and take some of their tutorials at eToro.com. And it’s entirely for free. Thank you for joining us on the Money Magpie podcast don’t forget to share and like and generally gush about us you know you want to today’s podcast was presented by me Jasmine Birtles and you can follow me on Twitter @Jasmine and on Instagram at @JasmineBirtles.
**eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.**