Cheapest way to buy VWRL at IB

[glina]

@Alvo

When I tested IB today I bought 11 shares for 893,53 CHF and paid 10 CHF commission (1,12%). IB preticted the comission to be 10 CHF no matter if I bought 1 or 11 shares.

Looks like you are on Fixed-fee structure. Switch to Tiered.

[wapiti]

• The SIX has a unavoidable stamp tax of 0.15% on non CH stocks/etfs per trade
  => Only if the broker is CH, no stamp duty tax with IB

[Alvo]

Thanks for your replies guys!

@Joey

If you are in Germany please note that IB won’t help you with taxes, eg. in the way that german brokers do this automatically with the tax office. This may or may not be a deciding factor to use IB, eg. you might want to stay with a german broker.

I´m living in Switzerland and don´t have to do a german tax declaration anymore.

@Joey

Whatever you do make sure you are using the tiered fee’s instead of fixed, you can check this in account settings. tiered is always cheaper

Yes this seems to fix the problem. I switched to tiered and will try again next week.

@Joey

May I ask why you arent considering US based assets like VT / VTI etc.?

As you can see by my 1 ETF Portfolio I like it simple. Vanguard offers a fund that fits my needs and can be bought at a local stock exchange and in compliance with local regulations and (hopefully) less trouble with taxes. I don´t really care about the higher TER as long as the tracking difference is virtually zero. To be honest I don´t even understand why the european Vanguard funds have a higher TER but the relevant tracking difference is nearly identical to the US funds (I think it was really close to 0 when I checked it). Might be worth a own thread? :

@glina

Looks like you are on Fixed-fee structure. Switch to Tiered.

Thanks, I think this was the problem.

@wapiti

The SIX has a unavoidable stamp tax of 0.15% on non CH stocks/etfs per trade
=> Only if the broker is CH, no stamp duty tax with IB

Yes that´s what I think as well. It should only apply for domestic brokers.

[Joey]

@Alvo

The SIX has a unavoidable stamp tax of 0.15% on non CH stocks/etfs per trade
=> Only if the broker is CH, no stamp duty tax with IB

You guys are right, sorry I missed that!

@Alvo

As you can see by my 1 ETF Portfolio I like it simple.

One thing for US based funds:
There is US based “VT” which is a world fund. Even though tracking difference negates the higher TER of VWRL somewhat, US based funds have a 15% tax advantage compared to EU funds when it comes to dividends. VT has a good TR as well last I checked.

15% goes to the IRS, but with US funds you can reclaim that through your taxes (DA-1 Form). EU funds just pay the 15% and its “lost” you can’t reclaim it, there is plenty about this on this forum.

So at a average dividend yield of 2% thats 0.3% more expenses for EU funds to consider, above the already higher TER

[Woodman]

Hi guys - interesting topic.
Thanks for sharing.
I currently have VT but would like to keep that below 60k.
From a Swiss perspective, what is the conclusion to buy VWRL?
In USD from LSE, in EUR from AEB or in CHF from EBS?
Is liquidity much different between those stock exchanges? (were would you look for that)?

I am not looking for a cheap way to buy, but rather to decrease my currency risk (and I have cash in EUR left to invest).

Thanks
Woodman

[Gesk]

You can check the average daily volume on e.g. yahoo finance or other:

USD: Avg. Volume 34,189
CHF: Avg. Volume 4,816
EUR: Avg. Volume 40,969

i.e. VWRL in CHF is less liquid

There is no difference in currency ‘risk’, it does not exist.
For the rest: https://forum.mustachianpost.com/t/tax-optimisation-for-etf-investing/67

[Bojack]

@Woodman

I currently have VT but would like to keep that below 60k.

why? estate tax shouldn’t be your concern

[ma0]

Speaking of that wrong information of the estate tax…

why bothering with 60k invested? 60k is nothing (in the grand schemes of FIRE of course)

[tarioch]

It’s true that you can go above the 60k without having to pay us estate tax (for CH citizen). But you will have to fill out the us tax forms on inheritance which can get (depending on your assets/situation) quite complex. So that might still be a reason.

[Bojack]

@tarioch

But you will have to fill out the us tax forms on inheritance which can get (depending on your assets/situation) quite complex. So that might still be a reason.

It will not be your problem, you will be dead. And on a portfolio of 1 million, owning VT vs owning VWRL saves you 3’000 on dividend withholding tax and then a few hundred on TER and market spread, and there is also the stock exchange fee 0.1% in Europe. Then compound it all over years and you will eventually arrive at a difference of over 100k. I think that should be enough to pay someone to help your heirs with the paperwork.

[San_Francisco]

@Bojack

1 million, owning VT vs owning VWRL saves you 3’000 on dividend withholding tax

How so?

Vanguard has a dividend yield between 2 and 3 percent
(and U.S. equity, taking S&P 500 for instance, has a below average yield of around 2%)

[Bojack]

Well, if you own $1’000’000 VOO (USA domiciled), you get $20’000 dividend. 15% of it, $3’000 is withheld. With DA-1 you can reclaim it. If you own VUSD (Ireland domiciled), you cannot reclaim the withholding tax, because it is withheld not from you, but from the ETF.

And if you trade on NYSE ARCA, you almost pay no fee to the exchange. LSE or SIX charges 0.10%.

So theoretically, if in 1990 you bought $1’000’000 of VOO instead of VUSD (imagine they existed), and each year you would save and reinvest the $3’000 withholding tax, today you would have saved up this much:

[San_Francisco]

@Bojack

Well, if you own $1’000’000 VOO (USA domiciled)

Yes - though that’s conveniently speaking about U.S.-only VOO, not the aforementioned VT / VWRL.

I think there’s a danger of creating and perpetuating this myth that U.S. ETFs are always magically 15% withholding tax “less expensive” - which isn’t true (again, with the exception of investing in U.S. only)

[wapiti]

Most people will buy a world ETF. In these ETFs, the US is between 55%-60%. So it makes sense to highlight that US ETFs are better for withholding tax.

[Bojack]

Well, for VT vs VWRD it is a bit harder to calculate. Bogleheads wiki has an article that tries to answer that question for people who reside in countries without the tax treaty with USA.

But there is one more thing I forgot. The US-based ETFs are based on indexes, which track many more companies. VTI 4000 + VEA 4000 + VWO 5000 = 13’000 companies vs VWRL 4000. You have more exposure to small caps, which gives you a little bit more market penetration.

[Gesk]

So according to your link that’s still 1280.- advantage for VT over VWRL on withholding and 1400.- advantage in TER.
And even slightly higher TER advantage if you split VT.

[pierrealex]

Hi,

So, what’s the best way to buy VWRL on IB for a Swiss investor? CHF at SIX or USD at LSE?

Knowing that there’s no stamp tax with IB and that the VWLR dividend are paid out in USD, am I better off with USD at LSE?

Thanks!

[San_Francisco]

@pierrealex

So, what’s the best way to buy VWRL on IB for a Swiss investor? CHF at SIX or USD at LSE?

I believe there’s no definite answer.

I depends on volume, frequency and costs (broker’s commission, currency conversion, etc.). Also, costs for the broker may depend on assets held.

But what would be the difference anyway? The cost of a cup of coffee or what? And it’s non-recurring (you’ll pay it only once for added shares).

[wapiti]

You can always check the spread for SIX under https://www.six-group.com/exchanges/funds/security_info_de.html?id=IE00B3RBWM25CHF4.
Currently, around 0.17%

[rolandinho]

@wapiti

Currently, around 0.17%

I always thought the spread was the difference between buying for - selling for (geld-brief) which would make it a little over 1% in the screenshot.
So what is the time-average spread of 0.14%, or probably 0.17% when you looked?
Does the market maker step in and “settle” at this spread or something?