Global Investment Platform eToro Is Not a Legal Taiwan Securities and Futures Firm, and the FSC Has Deemed It Illegal
The post warns about account risks at eToro and Robinhood and stresses safety, legal compliance, and proper investment channels.
[Risks of eToro and Robinhood accounts] Easy Investment Chat CLEC Investment Channel. Post date: July 13, 2020
eToro is not a registered member of U.S. securities firms and does not have SIPC insurance protection.
Robinhood is a registered member of U.S. securities firms, but cash does not have SIPC insurance protection.
With SIPC insurance protection, if your account is hacked and you suffer monetary loss, SIPC insurance protection will compensate the loss to your account within two or three days.
eToro, Robinhood, and other non-standard online brokerages without SIPC protection leave you with nowhere to seek help for account losses.
Although many online brokerages now claim zero commissions, your cost is actually in the trading spread, and that hidden cost can be much higher than you imagine.
In the United States, you should open accounts and trade through larger, formal, legal securities firms.
Non-U.S. persons should open accounts and trade through securities firms in their own countries. Although there may be some fees, safety comes first in investing. Nothing in investing is more important than safety. Taiwan investors should use sub-brokerage to directly buy U.S. index funds, or open accounts with Franklin Templeton Investments to buy Franklin funds, and with FundRich to buy funds from other fund companies. This can avoid fee issues.
Non-U.S. persons who open overseas accounts or use eToro or Robinhood should seriously consider overseas income, how to remit it back to Taiwan or their home country for use in the future, and estate-tax issues. The best way is still to trade through formal, legal, compliant platforms in your own country, because investing puts safety, legality, and compliance first.
Always remember: all tax avoidance has a cost, and everything free is the most expensive.
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