[Broker Choice] Details on brokers

How can I check the transaction costs for iShares Core MSCI World UCITS ETF? I couldn’t find it here:

Is it already included in the TER?

You go on the “Listings” tab where you can see stock exchanges, currencies and tickers.
Once you’ve chosen the currency / exchange you use the corresponding ticker to buy.
The ticker for LSE/USD in this case should be IWDA.

I’m buying in USD on SIX currently. Not sure about the transaction costs. It seems that it’s CHF 1.50. At least here I found such information:
http://www.six-swiss-exchange.com/rule_book/08-DIR07/en/27021598094424075.html

It’s expensive to trade on european exchanges, most of the time fees will be a percentage, like 0.1-0.2% or so even with inexpensive brokers. Look at your brokers’ fee, not exchange’s, because you’re customer to the broker, not exchange. In addition, some countries will charge stamp duty, UK’s stamp duty is in particular a bloody ripoff, 0.5% to the buyer!

If you have a choice, better trade on american exchanges. No f-ing stamp duty and trading costs pennies. It makes it even worth to buy european stocks as american ADRs rather than directly on their native exchanges.

The UK stamp tax has been abolished since April 2014 on ETFs

But it’s still there if you’d buy normal UK stocks

Hi Guys, one more question regarding investing via IB. If I’m starter with CHF 15’000 and I can stash about CHF 3’000-4’000 a month, then how often should I invest to minimise the costs? I can see at the IB’s website that they have required minimum monthly activity fee:

Monthly Activity Fee = 0 if monthly commissions are equal to at least USD 10.

If monthly commissions are less than USD 10,
Standard Activity Fee = USD 10 – commissions.

Do I understand correctly then that I should invest every month to minimise the costs? That’s kind of a pain in the butt. Has anyone managed to automate this somehow?

PS. Two more questions: Which account type should I choose - Cash or Margin? Which commissions type - Fixed or Tiered?

You could try captrader or lynxtrader instead, which don’t have minimum monthly fees. Under the hood they both use IB’s platform, but charge somewhat higher transaction fees.

In margin account you’ll be able to loan cash from the broker with the collateral of your stocks. It makes things generally a bit more flexible even if you’re not going to use this facility. You could for example first buy a bunch of stocks and then convert currencies to cover exactly the prices you’ve paid. Or buy the dip before you get your next monthly salary or wire transfer arrives at the broker. Or request a withdrawal without waiting several days for a trade to settle. The interests are actually pretty reasonable, 1.5% p.a. for CHF currently.

Which commissions type - Fixed or Tiered?

Tiered is often cheaper, even at small volumes. With fixed IB charges you a relatively high commission to cover worst case scenarios. With tiered you’d pay a smaller commission to IB plus exchange’s commission, which depends on exchange, type of product traded, whether you add or remove liquidity from exchange. Some exchanges (e.g. BYX) even pay you for removing liquidity, so net it can cost less than IB’s commission.

2 Likes

Thanks @hedgehog once again for your help!

Oh man! I knew I should have asked before opening the account. I’ve chosen the Cash account with Fixed commissions. I hope it’s still possible to change that.

I think I’ll stick to IB - $10 a month is somehow a lot for a Mustachian, but I’ll try to minimise that by trading every month part of my salary and get to $100k as fast as possible. Other brokers will only shift that cost to different areas, but it won’t be cheaper than IB.

I just opened a Custody Account with DeGiro after becoming fed up with Postfinance high costs.
I have evaluated IB as well but after trying the interface and their website I gave up. It has very good pricing and it is very powerful (I like a lot the idea of public APIs) but definitely not for me. I do not understand half of what I see in the main screen and I would always fear of clicking the wrong button :wink:

Degiro is exactly the opposite: the interface is super simple and you can do very few things (even less if - like me - you choose a custody account) but they are exactly what I need.

Some random tidbits:

  • you can send only CHF to a CH IBAN (i.e: no cost involved in the transfer)
  • if you need to buy stocks/ETF in a different currency, there is a markup of 0.1% from Degiro
  • 15 mins delay on all stock markets except the Swiss one
  • some ETFs are for free, for the others it’s 2EUR+0.02%
  • if you have a custody account, you have an additional fee on dividends (1,00€ + 3,00% du dividende (maximum 10,00%). Nothing if the ETF is accumulating
2 Likes

I tried opening a test account on interactive brokers but it only crashed my computer so that’s not feasible. I will probably have a look at Degiro. At the moment I use the Swissquote dynamic savings account quarterly. But the others seem to have more choice.

1 Like

does anybody have experience with transferring positions out of Cornertrader and/or into Interactive Brokers? what are costs?

I try to assess the costs i will have for moving to IB.
closing each position at CT will be CHF 30-40 to CHF 100, for CHF and USD dominated positions.

I transferred my holdings at CT (VWRL:swx) directly to IB, no costs with that operation. Assuming all your holdings are also available at IB, you shouldn’t have to sell anything (actually you’ll be better off selling while at IB, since you avoid the stamp tax).

thanks for this info! great!
i am fully aware of the severely decreased costs of IB^^

i guess you contacted the customer support for that? i have not found any baccording buttons or such

I went to IB’s Account Management Home page, ‘Funding/Position Transfers’ and started the process there. Then, as advised, I contacted my account manager at CT to let him know I’d be transferring my positions to IB and that he’d be contacted by IB soon.

@Mobius how quick was the process?
(At Simplewealth, we have clients asking us for full transfer but we are a bit hesitant to mention this option until we know the process is quick!)

It took longer than usual because apparently CT dropped the ball and I had to remind them, but looking at the records it took 3 days to become available after I delivered the transfer form to CT.

2 Likes

Hi @hedgehog, in 2018 I’m thinking about buying US ETFs which invest in non US markets (i.e. VEA).

In this case, according to your experience, does US withhold 15% taxes like - say - VTI ? If so, are these also reclaimable filing DA-1 ?

if, after reading this post, you still have the same question, then let me know what should be improved about this post

I know your wiki topic, which improved over time and which I find a valuable resource. I usually try to do my homework before asking but I didn’t find an answer to this specific question; maybe you can point me out to the right chapter ?
In this case, as I’m still struggling to decide - for the exUS portfolio part - if going with an IE or US ETF (the latter being cheaper to buy and broader diversified) I’m especially interested in real life experiences (as I also asked here: Tax optimisation for ETF investing )