Are you always aiming for the cheapest solution?

One thing I noticed here is that a lot of users are always trying to get the cheapest product or service. Everything more expensive is always overpriced, quality or service doesn’t matter.

Is everybody like that?

I get why people use Swissquote over IB. I get why people are buying swiss meat. I get why people are still with UBS. I get why poeple are spending several thousands on vacation. Price isn’t everything.

I think the whole point of the mustachian way of thinking is getting to understand why you are ready to pay what you’re ready to pay. It gets down to two point (which you’ll see are just one point after all) :

  • do you know why you want to have anyting else than the cheapest ?
  • is the cheapest really the cheapest ?

For the first point, lets use the housing question. Being in couple with no Kids, and having been living in a huge european capital with big commute times, I give a great value to the time spent (or vanished) in transit. I dont need a garden so I prefer to pay more and live 5 min away from my work place. Being conscious of the reason behind the choice displace “the cheapest tipping point” to the point where I make my choice in a new sets of options.

For the second point, the problem can be understood in term of hidden fees (the whole ib vs degiroo vs Swissquote) but applied to every objects in the day to day life. Let’s also use a personnal example : shoes. I love shoes. The one I buy are much more expensive than reason at first. But when you take into account that they last 15ish years if you take good care of them (with the first 10 looking brand new because of the quality), the yearly cost gets reaaaaaally low. Compared to 100 euros shoes that falls apart after a winter. So it’s a quality Investment upfront. Il a there’s à sayong that goes like taht in French : “it’s really expensive to be poor”

When you think about those 2 points (reason to pay more and hidden fees) is in fact one and only question : do you really know what you’re paying for ? Cheap stuff often impact the cost elsewhere, on the intrinsec quality, on the environnement, on society or on yourself. Are you OK whith that ?

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For me, it’s more an optimization for price and quality together. It’s important not to sacrifice too much quality.

There are some things we don’t buy the cheapest. For instance, we always take direct flights even though we could save a few hundreds by adding one stop. Our time and comfort is more valuable than this savings. We are thinking of buying a house and this will definitely not be the cheapest one.

This is the key point. If you don’t know, you might prefer to get the cheapest of the options you consider.

I used to believe marketing ruined everything. You can have an expensive product that’s worth less than the cheaper one just because of marketing.

Also I’m not sure here we aim for the cheapest product. I’ve seen plenty of discussions about varying products. IB is probably an exception since it’s the cheapest and the “best” (apart for those who really really want a swiss company)

How do you define what’s best? If someone isn’t comfortable with having his assets in the US, how would IB be the best option for such a person?

It’s not all about price or fees.

Sorry, english is not my first language, but probably not even yours.

I said IB is the “best” APART FOR the people that want a swiss company. Anyway this was an example. We are going off-topic.

I think it is not always a matter of price, but more a question of how much long term value do you get for your buck.

Maybe value is in the eye of the beholder, but anyway, here is how I think about expenses:

  • Long term consumables (ex: clothes) : this is where i strongly agree with @Gotama: Buy something that you will only have to buy once and still be there in 10-15 years. For instance, I bought my winter shoes in 2011, have worn them every winter and they still look like new. That is so far a cost of £60 per year for top quality. So yes, it is a mix of buy-it-for-life and what-is-my-average-yearly-cost-for-top-quality?

  • short term consumables (ex: groceries, internet, phone abo …): since these are all products that will be short-lived, i will buy the cheapest product that complies with my standard of quality, regardless of packaging. That means minimizing Coop/Migros and favorizing Lidl. The packaging/marketing is incredibly better in Coop/Migros, but that is not what i am interested in: iam interested in the actual food, which is the same quality. Plus, after all these marketing costs, Migros/Coop still make 30%+ margins. Fortunately for them, Swiss people are the most price-insensitive persons i have ever met.

  • Financial services: Here it is more nuanced. There are instances where Swissquote has more advantages than IB (for instance, there was a company i was interested in that was only available at SQ and not in IB) and for the buy an hold investor the costs won’t make that much of a difference at the end.

However, what gets me mad is that people confuse Switzerland’s political stability (which is real, and is a tremendous asset) with quality and trustworthiness of Swiss banks. Anybody having read the financial history of the last 30 years knows that Swiss banks are really not a model in terms of conservative banking. In 2008, who were the last institutions buying shitloads of CDOs when everybody else was trying to get rid of them? Swiss banks. In 1998, who were the biggest investors (and biggest losers) in the LTCM scandals? Swiss banks. If we get any hint from history, those institutions are really not a model of conservative banking.
They had a very good business model in the past where they could offer discretion and secrecy against super-high fees, but with the evolution of the industry this is a thing of the past, and they have not yet adapted.

People feel like having their money in Swiss banks is “safer” (and i have some cash in here as well). However, they should realize that those banks are more catering to their emotional needs than their financial needs. If they were really worried about safety, they would investigate the balance sheet of their financial providers, and not rely on a shortcut “swiss/not swiss”. UBS/Credit Suisse may benefit from government bailout, until they won’t. But my money will never go to them.

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I think you’ll have to check your broker’s business model to judge independent of the country: And a universal or investment bank that offers broker services “on top” will always inherently have more risk. I prefer a rather “clean” broker that is transparent and where I would now what happens and how to act in case of actual issues / bankrupcy arising (which then comes down to countries I’m familiar with basic law). Swissquote does that for me, despite IB beeing cheaper.

Back on the topic: I prefer quality in most aspects, and am willing to pay for it, sometimes even to the extent that could be considered absurd high prices. Instead, I rather cut back on my spending by being thoughtful about what I really need and want.

…or people who want an easy-to-understand interface and pricing.
…or people, who aren’t proficient in English.
…or people who want to spend least time and effort with their tax return.

There might be a certain tendency here or there.

For me it depends. I strive to get good value, especially where I have rather good knowledge or I am taking an interest in.

That would be true for IB. They are both powerful and inexpensive. However they have too high rather high barriers of entry (minimum deposits and upkeep costs, language) and a steep learning curve to recommend them to many friends. As I am personally interested in investing, I don’t mind.

Were it for something else, the purchase of a car maybe (something of little interest to me), I would rather pay more to have the peace of mind of someone else taking care of things.

PS: Forgot to mention: I am keeping the “other half” of my savings / investments in a securities account at another bank which I trust and intend to keep a long-term customer relationship. I am actually paying a small percentage of my assets as yearly custody fees.

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I don’t. Retail banking services are a commodity to me. Even if I wanted to just walk into a bank instead of using an ATM I would go for Postfinance as they are open on Saturdays.
But I am happy to hear from you what’s the pros of an UBS account

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Good E-Banking and apps. Free cash withdrawals from any ATM in Switzerland.

I also don’t get why anybody could use Salt over Swisscom and Sunrise. Their network is garbage.

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Use the mobile app or webinterface. If those are still to complicated they may be better off with a hands-off solution like truewealth.

Fair enough, however there are not that many of those here.

Unless some other broker has a way to directly import the transactions into the tax declaration and you have an unholy ammount of transactions, I do not see how you would be able to save more than a couple minutes per year on that. Printing the statements takes longer than inputing the transactions. I am genuinely interrested how this could be even easier.

At least we are on the same page on this one XD.

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I’m still on Degiro because IB looks so complicated. I mean I know how to write in Java and stuff…but this interface is just unusable for me. I’m afraid that one wrong button will destroy all my assets. It’s like a MS DOS program with mouse support.

I know I’m paying more fees. I know I’m losing on dividends with IE ETFs. But it’s not all about that. Investing with IB isn’t fun. It’s a pain in the ass.

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Hello,

I saw quite a few people mentioned that they still use Swissquote, instead of IB. Can anybody point me to any price comparison between those 2 brokers, with some example case of person with ETF buy & hold main strategy?

Nope. I do use IB because there’s little value add at my current levels of wealth. If/when I get closer to retirement I would consider repatriating my funds for better protection (at least the portions that I’m going to hold as opposed to selling to cover my lifestyle costs).

I do buy Swiss meat/milk/eggs etc. for a complicated variety of reasons. (I may not eat meat all too often, but I’d rather make sure it’s good when I do.)

I even fly business class if I do fly.

I don’t feel that I have “an unholy amount of transactions”, but it certainly takes quite some time if you (correctly) report them all individually. Manual input only seems reasonable if you really just buy the same ETFs once per month, else it becomes a burden.

Quoting myself from this thread you may want to look into:

Swissquote fees to be precise:

  • Account fee of 0.1077%/year on securities (min. 64.64 CHF/year, max. 215.40 CHF/year)
  • Trading cost for ETFs are…
    • 9.85 CHF/trade fixed
    • 0.075% (CH) / 0.150% (foreign) Swiss stamp duty
    • 1.50 CHF/trade + 0.015% SIX exchange fees (min. 2 CHF, max. 150 CHF)
    • = for example 27.85 CHF for a 10’000 CHF trade of a foreign ETF
  • FX spread is 1.7 PIPS (0.017%) for a forex account. Might be higher for a trading account, e.g. for selling received USD dividends.

USD CHF FX fee is 1%

Their smartphone app (IB) is quite straightforward and nicer to use than the one from degiro in my opinion. I never used their java app and I don’t think I would ever need it. (I tried both degiro and IB and switched everything to IB)

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And with swissquote you can import them?

Would you even need to do that?
Doesn’t Swissquote issue a tax reports for Swiss tax purposes that you could use as-is?

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