Broker for my situation

Investing / Brokers
#1

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

#2

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.

1 Like
#3

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

#5

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.

#7

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.

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#8

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

#9

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)

#12

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.

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#13

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.

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

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

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#14

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?

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

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.

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#15

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.

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

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/

#16

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.

#18

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!