Degiro Auto FX and which Bond to choose?

Investing / Brokers
1

Hello everyone

I’dlike to get your help on two topics:

  1. I have a Degiro Account and buy in the moment Monthly for about 2000CHF worth of VWRL at the Euronext Amsterdam stock exchange.

Now since Degiro uppered the fee for currency exchange to 0.25% it got expensive to buy the VWRL over Euronext Amsterdam. (In total its 0.5 if i am fire because I have to convert it back to CHF later)

Now i thought about buying VWRL over the Swiss Stock Exchange. To only downturn is that the spreads are higher. But it’s still way less then the 0.5% vor currency exchange.

Do I miss something here? Higher taxes, currency risks or something like that?

  1. I want to change my asset allocation as follows:

70% VWRL / Vanguard FTSE Allworld Distributing CHF

20% Bond traded in CHF / Is it smart to hold it in CHF? I’ve read something about currency hedging but didn’t got the point :slight_smile:

10% SMIM / UBS ETF Distributing (30 middle sized companies) CHF

I want to choose a Bond that keeps a high value when the market’s crash, so I can rebalance during a downturn. I thought about a G7 Bond?

Thanks in advance for any help!

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2

The 0.25% work out to be CHF 5 per buy. I am just putting the number there. Make sure it’s worth your time fretting over that.

There are ways to optimize your currency conversion:

  1. If you stay with DeGiro: Go with VWCE, which is an accumulating version of VWRL. This way you eliminate the conversion fees on the dividend payments.
  2. When you eventually want to sell your ETFs to FIRE, transfer it to a different broker of your choice that allows you to pay out in EUR. Or maybe DeGiro will allow it in a few years.
  3. Some people have opened a DeGiro account in Germany or Ireland, where the default currency is EUR. You can exchange the money yourself before sending money there. Same interface, different country. You may have to close your Swiss account.

You don’t have free buying on SWX. It’s at least 6 CHF per buy + the worse spread (Was sind die Kosten einer Anlage? | Gebühren | DEGIRO).
You’ll pay more unless you switch to investing every two or three months.

Can’t help you with this, it would be better IMHO to split your question. Read the threads about asset allocation on this forum and the repost the question there.

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Thanks for your answer!

For a bit more of context, in he moment I invest 2’000CHF a month but this will change, this or next year to about 5’000CHF. So this will higher my monthly cost to around 12.50CHF and with adding the selling cost’s its 25CHF. I mean it’s not so much but I think of it as it would add 0.5% to the TER of VWRL and if I can avoid it, I will.

As far as I can see the cost of buying an ETF on Degiro on any stock exchange will cost me 3 Euros. I tried it in the App so it should be correct.

I want to make the right choices now so I can avoid any switches between brokers/currency’s/ETF’s while I am in the accumulation phase.

  1. That’s a point but I like the distributing one’s because I think it will help me later when I have a few 100’000CHF invested to stay the course. I mean this is just a psychological thing but I like the payout’s, it’s like a salary raise :sweat_smile: And I can use it to rebalance.

  2. It can also go the opposite way maybe they higher the exchange/transfer costs. And I don’t want my future me to fix this when I can avoid it now.

  3. Maybe that’s a good idea for me. Is there any downside to have an account in Germany or even Ireland? But in the other hand I have a custody account and I think I will lose it when I change to Germany because you can only open basic accounts for now.

I just wanted to know if I do something stupid when I buy it in CHF over SWX. I don’t want to have a few 100’000CHF invested and realize at the end of my accumulation phase that I did a big mistake.
But maybe I switch to IB anyway when my Investment’s reach a 100’000CHF.

For my second question I will open an other thread in the right section.

4

Why not already today? :slight_smile:
There is no fee for under 100K anymore.

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5

OK, it’s a 1 % tax, but if it’s worth it to you, go for it.

You deal with the law of the country, not Swiss law.
You might not get a nice tax statement that you submit to Swiss authories.
I’ve never bothered to look it into Custody vs basic.
But they have a price list for Custody, so it should be available. It’s usually better to ask the company itself and not in some forum.

Well, then switch Interactive Brokers now, as @Luk_nuts suggested.

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6

One time costs have a way lesser impact on long term prospects than recurring ones.

On a one time CHF 5000 investment, kept invested for a short 10y at a theoretical 5% annual growth, that would result into:

CHF 8099 with a one time fee of CHF 12.50 upon buying and another one time fee of CHF 25 when selling, or a CAGR of 4.94% per yer (impact on a theoretical ER of +0.06%)

CHF 7765 with a 0.5% ER, or a CAGR of 4.5% per year (impact on a theoretical ER of +0.5%).

The gap widens the longer the amount stays invested.

I tend to not fret one time fees too much. I mean, I try to reduce them to as low as I can, but that’s seldom a deciding factor in my investing decisions (other factors have a higher impact). I try much harder to avoid recurring drags, that compound over time.

Of course, things are different for traders who incur those costs repeatedly but for buyers and holders who’ll hopefully go through the process only once in each direction, the impact is minimal.

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