Broker for my situation

[Robben]

Hi Everyone,

I have read a lot of thread on this forum about the choice of the broker but still can’t decide between DEGIRO and IB for my spécificité situation. I am going to buy VT or WVRL (on DEGIRO) every month.
My strategy consist of investing 1500.- each month. I can put a lump sum of 7-8k at the beginning.

I know that IB is more attractive for big investor ( inactivity fees) however they have more product, and good fx exchange.

What would you do in my case ?

• start with DEGIRO custody account and change for IB latter ( seems more complicated)
• start with IB and stick with it

I know that there are a lot of comparison on this forum but just need honest opinions from members of this forum

Best regards
-start with IB

[San_Francisco]

@Robben

I know that there are a lot of comparison on this forum but just need honest opinions from members of this forum

Honest answer: Probably not IBKR (yet), since you’re asking to begin with. And if you’re only interested in a single-fund portfolio, and don’t plan to use IBKR for anything else. IBKR is still relatively complicated and there’s a certain learning curve - and will be more expansive for a while to come, probably.

Personally, I’m with one of the big German banks, which has been around forever, is owned by one biggest government-owned banks, and support has been good to me so far. As an added bonus, it provides me with a EUR SEPA account and a great Visa Credit Card (if you’re eligible and can “get in”). Paying 1.50€ flat per monthly ETF order in a savings plan, though at the moment discounted to 0.49€.

I opted for the accumulating counterpart (VWRA) to VWRL.

[Woodman]

Hi everyone!
A friend of mine - Italian tax resident - is looking for a broker to buy VWRA (Accumulating VWRL). Unfortunately Derigo only offers the VWRL (distributing) for free (due to the high tax on dividends in Italy of 26% not preferred).
Alternatively I am thinking of Derigo + iShares Core MSCI World UCITS ETF USD (Acc).
So far I was not successful with google research…
Any recommendations?
Thank you for your help!
Woodman

[ProvidentRetriever]

Hi Robben!

My answer may not match your question exactly, but being in Switzerland, I stick with Swiss brokers, subject to Swiss regulations. The geopolitical situation is a bit uncertain and I want to remain on the safe side; for example Brexit had some impact on some brokers.

For a buy and hold investor with a low position turnover, the fees of Swiss brokers are not that much higher compared with IB and Degiro. And at the end of the year I get a tax certificate that the tax office accepts.

[mabi]

@ProvidentRetriever

My answer may not match your question exactly, but being in Switzerland, I stick with Swiss brokers, subject to Swiss regulations.

Out of curiosity may I ask which Swiss broker do you use? I guess the cheapest for ETFs? which would be Swissquote as far as I know.

[ProvidentRetriever]

Yes, Swissquote is one of those I can recommend.

For example, if you buy or sell an ETF on SIX online (at least last time I checked), it’s a flat 9.85 CHF plus Börsensteuer and Stempelsteuer (they are not flat, but small: around 5 CHF if you invest around 2000 CHF). If you prefer doing it over the phone, then the transaction fee is not flat. The hotline is very friendly and helpful.

Flat fees can seem high if you consider small amounts, but since they are flat, you can also accumulate savings over several weeks or months and then do fewer, larger transactions. In fact, I would even say that having a flat fee at 9 CHF helps me, because it gives me an incentive to not do too many transactions and stick to my buy and hold strategy.

Note that I do not work for Swissquote, just have some experience as a user.

[xorfish]

Depending on your age IB might be a bit cheaper.

You can’t buy US ETF with Degiro. The difference between VT and VWRL is quite big if you also look at the withholding tax. The breakeven is at around 40’000-60’000 chf invested. Only 20’000 for someone below 25.

[kilyn]

@Woodman

A friend of mine - Italian tax resident - is looking for a broker to buy VWRA (Accumulating VWRL). Unfortunately Derigo only offers the VWRL (distributing) for free (due to the high tax on dividends in Italy of 26% not preferred).

That’s less than what I pay in Switzerland! Take the deal. Or are you saying they don’t tax accumulating etfs at all whatsoever, not even postfactum? But you will still get taxed 15% at source by the US in them anyway

[kilyn]

@ProvidentRetriever

For a buy and hold investor with a low position turnover, the fees of Swiss brokers are not that much higher compared with IB and Degiro. And at the end of the year I get a tax certificate that the tax office accepts.

In my experience swiss brokers are all 10-1000x more expensive than IBKR and yet offer pretty mediocre service, there’s no reason to bother with any of them

Legal/bankruptcy risks with a serious well established brokerage are minimal. I currently keep quite a bit more money than FSCS/SIPC protection limit at IBKR and I sleep just fine (in Switzeralnd the equivalent protection limit is zero, btw)

[ProvidentRetriever]

@kilyn

In my experience swiss brokers are all 10-1000x more expensive than IBKR.

Yes, these things happen when the other fees are close to zero Again my motivation is not to optimize the fees here. It’s knowing it’s all in Switzerland.

Also I’m pretty sure a lot of traders lose a lot more than the fees they save, when they buy and sell too often at no fees.

[ProvidentRetriever]

@kilyn

Legal/bankruptcy risks with a serious well established brokerage are minimal. I currently keep quite a bit more money than FSCS/SIPC protection limit at IBKR and I sleep just fine (in Switzeralnd the equivalent protection limit is zero, btw)

I understand your reasoning. In the end it’s really a personal decision.

[1742]

@kilyn

I currently keep quite a bit more money than FSCS/SIPC protection limit at IBKR and I sleep just fine (in Switzeralnd the equivalent protection limit is zero, btw)

You are indicating that FSCS/SIPC protection is better than Swiss equivalent. But isn’t the main difference that with a Swiss broker, regulated by FINMA, your assets are always your assets. You simply need no protection, because the will always be hold in your name. In case of bankruptcy, you may lose temporary access, but never the underlying asset. And with cash you have esisuisse that should cover CHF 100k (vs both FSCS/SIPC that are limited regarding your total assets).

I am with Swissquote, and I believe as long as I hold less than CHF 100k there is nothing more safe than that. Or am I missing something?

Going to stay with Swissquote anyway. For one I agree with your assessment that risk is mimimal anyway, and I am also willing to pay (ultimatly irrelevant) higher fees to have my broker in a jurisdiction I understand.

[kilyn]

Your assets are your assets in every other first world country. US, UK, EU all have segregation requirements for customer assets. CH is not unique here.

(Also, if by “your assets” you mean that you would be the shareholder on CSD records, sorry to disappoint but no, that’s not the case in switzerland, your securities are held “in the street name” here too. This actually depends more on the CSD you’re dealing with than the broker and broker’s country. SIX SIS is a street name CSD)

The main thing that can go wrong is broker fraud: what happens if at the time of bankruptcy, the broker actually carried less shares (according to central depositories’ books) than what it told its customers? That’s why you stick with well established, highly respected names like IBKR. And not some fly by night operations. Actual chance of broker bankruptcy if they are sticking strictly to brokering, commissions cover their operating expenses, and they are not doing anything shady on the side (prop trading etc) is very small. Brokering is very low risk activity.

@1742

I am with Swissquote, and I believe as long as I hold less than CHF 100k there is nothing more safe than that. Or am I missing something?

100k esisuisse coverage only applies to cash balances, not securities. So, pretty much irrelevant unless you use your swissquote account for banking rather than investing

@1742

I am with Swissquote, and I believe as long as I hold less than CHF 100k there is nothing more safe than that. Or am I missing something?

IMHO, IBKR is much safer choice. The reason is pretty simple - follow the (smart) money. Swissquote from what I could find, with difficulties, has maybe $25B AUM, IBKR - $237B. Huge number of professional investors and smaller hedge funds use them. If they ever have a fraud problem, you’d be in a very good company. They’re subject to US security regulations, one of the best / most well known in the world, unlike swissquote who are just a regional player

[1742]

@kilyn

Also, if by “your assets” you mean that you would be the shareholder on CSD records, sorry to disappoint but no, that’s not the case in switzerland, your securities are held “in the street name” here too.

Maybe I do not understand the term CSD correctly, but are you sure? I am registered with every company I own stock. Their registry will have my name associated with my assets, how else would they be able to invite me to AGMs?

@kilyn

100k esisuisse coverage only applies to cash balances, not securities

Clear, that is what I meant. I hold my aseets in my name and on top less than CHF 100k cash.

@kilyn

unlike swissquote who are just a regional player

I quite like that fact too. IBKR in my opinion is big and complex enough that no auditor and regulation authority really sees through it all. The business of Swissquote is comparatively simple, and I believe this makes it much more transparent for any oversight body, limiting the fraud exposure.

[kilyn]

@1742

Maybe I do not understand the term CSD correctly, but are you sure?

Central securities depository. In case of swiss shares that’d be SIX SIS. Their records will have just your broker’s name. And i’m afraid it’s their records which are the ultimate source of truth for who owns what exchange-traded shares, not the company’s shareholder register even if you get on it somehow in parallel (probably just as a fyi beneficial owner note or something?)

It’s quite simple actually - as long as you have the ability to trade the shares at a moment’s notice through your broker, you are not protected from broker fraud.

I am registered with every company I own stock. Their registry will have my name associated with my assets, how else would they be able to invite me to AGMs?

Are you sure it’s not just swissquote forwarding you the materials they get on your behalf?

@1742

The business of Swissquote is comparatively simple

Not so sure about it. They are also active in banking, gambling(spread betting with CFDs), crypto, mortgages and roboadvisory.

The gambling arm of the firm is not quite risk free, e.g. suffered 25M+ loss in 2015 - https://insideparadeplatz.ch/2015/07/24/swissquote-entzieht-kunden-saemtliche-rechte/

[Woodman]

Hi Kilyn,

Italy does collect tax on both realised gains and dividends with 26%. Therefore I read that investing in an accumulated fund is better…
I think it is worse than Switzerland: for example I buy VT via IBKB and only pay 15% on the dividends.
Unfortunately Degiro does not offer VWRA on its free ETF list.

[Yanikuza]

Swissquote is clearly more expensive than IBKR, as has been proven many times on this forum.

Now, let’s not forget two things about IBKR:

1. Europe will no longer be covered by the protection of the American SIPC of USD 250,000 because all european account (and swiss account) will be transfert in a european entity (Ireland, Luxembourg or other). So your “cash” will only be guarantee to EUR 25,000.

2. In the event of bankruptcy, do not forget that the procedure to recover your assets will be carried out according to American law, in the USA. You will have to fill administrativ sheet, maybe take a lawyer and go in front of an american court to pledge your right. I don’t know about you, but I don’t know a lot of thing of american procedure law and their administration.

In the other hand, I feel confortable to do the same in Switzerland.

This is my opinion regarding the use of a foreign or Swiss broker. Even if in the cases of IBKR or Swissquote, I doubt that a problem would arise,

[dbu]

Anyone had experiences with eToro?
I am exploring some “simple” options for some of my friends/family (not in CH), so curious to find out what your network is using in other EU countries (sending EUR around).
I have IB and Degiro on mind, but Degiro is not available everywhere apparently.

Thanks!