how would you convert a million CHF to USD to invest it in a number of ETFs (multi-currency account being held at Swissquote)?
a) directly buy the ETFs
b) convert CHF to USD first
c) same as b) but contact SQ for best possible rate
d) transfer CHF to a low-rates broker, convert, transfer back
e) some other way
and yes, it’s just about the currency conversion, i know there are lower-cost brokers
thanks for your inputs
Transfer to Interactive Brokers.
This will be the winner, both for FX exchange and trading commissions.
For 1M pass through they definitely won’t be happy if you open an account just for cheap FX conversion.
Edit: if you want to go through a low cost broker like IB (which will prob reduce fees by 3-5k), at least do your ETFs buys there and close/transfer the positions after some time (eg 6 months)
you think the cost savings would be 0.3-0.5% for the conversion?
Currency exchange fees at Swissquote when requested by phone based on an inquiry a year ago (for major currencies):
Even higher tiers than 500k might exist. Via web or mobile app it’s always 0.95%, as far as I can tell.
Have you already checked whether any of the ETFs are also traded in CHF at SIX?
that matches the ‘up to 0.15%’ i read about here
i plan to buy the us market with us etf’s for dividend tax efficiency
And for this you have to keep them at a US broker
No, there is no need for that. Any broker that is an IRS qualified intermediary is equally tax efficient. Swissquote included. Swiss brokers have to withhold an additional 15% of gross dividends on behalf of Switzerland. However, you get a credit for that after filing your taxes, of course (and independent of your tax rate).
At a 0.15% fee, I’d exchange at Swissquote (if you intend to buy the shares through them as well).
I suppose they don’t have an additional spread on top of that, do they?
agree - it’s pretty much the acceptable limit, taking into account the hassle / extra work being saved.
1500 vs. 20 chf commission for FX exchange only?
Negligible as a one-time cost, when you invest in ETFs anyway.
When your ETF yields an average of 6% and you’re out of the market for an additional 1% of a year (3.5 days) due to the delay in external currency conversion, you’re already looking at an additional opportunity cost of 0.01 * 0.06 * CHF 1’000’000 = 600 CHF. Before taxes. Theoretically.
And if you don’t already have a low-cost brokerage account (say at IBKR) in good standing and with substantial turnover, I am wondering how smooth the plan of
- open new account
- transfer in
- immediately transfer out again
…is going to work on a whole million of Francs. On a newly opened account.
If it is a million, maybe it’s worth calling Swissquote up ahead and see if you can negotiate special terms?
it’s more, and yep, planning to do that soon.
just fyi: sq offers me 0.10% for a 1.5-2m transaction
update: probably gonna give ibkr another try. total costs down and broker diversification up (i already have a second one, small part tho) is basically a no-brainer.