Degiro discussion

Investing / Brokers
22

Yuh :slight_smile: Or DKB, but they started to introduce account fees.

23

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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24

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? | GebĂŒhren | 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.

2 Likes
25

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.

26

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

2 Likes
27

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.

1 Like
28

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.

4 Likes
29

I got an Email from Degiro. It states that according to new PRIIP regulations certain Funds and ETFs are now required to have a KID in all local languages. The email seems to have been triggered by some positions in my Swiss account. The topic is also discussed on Reddit.

Degiro states you can check that for a products in its “Documents”-tab on their website. But I found ETFs that do have KIDs in every language on their own website whilst Degiro doesn’t show (have?) any.

Additionally I think they are closing the loophole where you exercise options to get banned ETFs. I can’t find a reference at the moment.

The changes are effective immediately (so yesterday, 16.03.2023).

30

Can’t buy VWCE anymore.
Such a bother. I’ll write support

31

An update reg. VWCE would be appreciated :slight_smile:

32

I haven’t gotten a reply yet. I’ll keep you posted. It would help if several people did it. The email address is Kundendienst@degiro.ch.

You can write in D/F/I/E

33

Apparently, Vanguard will not produce translations for less mainstream languages.

— Email from Vanguard posted on Reddit

So people registered in Greece or Czech Republic will be locked out permanently on Degiro.

On the other hand, IBKR and others solve this problem with a “I understand English” checkbox.

I’m still put off by the USA’s estate tax with IBKR. But I remember vaguely that it doesn’t apply to all products. I’ll have to do some digging.

34

The estate tax filing requirements do not depend on the broker but on the funds being bought (US domiciled funds). If you’re buying European ETFs it won’t matter at all.

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35

I think back when I opened an account with Degiro, IBKR still had an inactivity fee of 10 USD/month for accounts below 100k.

Do you remember any other shenanigans going on that would make Degiro more advantageous?

36

Nothing is more advantageous than IBKR now. There isn’t any inactivity fee and their fees (also for IE domiciled funds) are cheap.

Also in the last 3 years, it seems, from what I’ve seen based on Degiro members of this forum that Degiro has changed his policy and fees often and not for a better experience for customers.

In the meantime, IBKR becomes more friendly (website, app, no more fees).

2 Likes
37

I’m not sure if Degiro is correct in their decision and their interpretation of applicable law. But they surely think that they had do impose that restriction.

This is another example what I dislike in the European Union so much, and why I hope Switzerland is never going to join. There’s all this talk about common market, free movement of people, blablabla. On the one hand, they’re removing these hurdles to enable companies to base themselves in favourable jurisdictions and conduct their business cross-border. On the other hand, they’re instituting requirements that require so much regulation and red tape that ultimately end up costing ordinary consumers.

These KIID regulations (that were brought about by the EU) do not only run contrary to the principle of free movement of people, goods and services. They also cause service providers to institute what is effectively geo-blocking (based on a consumer’s residence) - something the EU themselves claims to be fighting.

The irony is that it doesn’t reliably serve its purpose of ensuring the information of investors.

Not only can a customer in Greece or Czechia perfectly understand English. Even a German or French investor can move to Greece or Czechia - despite speaking not a single work of Greek or Czech. And still be cut off from access to the funds he has been investing in in his home country. Though KIID documents may have been translated into his mother tongue for the DE/FR market.

9 Likes
38

I have exactly the same behavior on CornerTrader, actually less the email. One of those days I continued buying VOO only to get a message about missing KID, preventing me from purchasing
.
No info so far

39

Indeed, the interpretation of applicable law is questionable for Swiss-based customers of degiro.ch. Different regulations apply here (FIDLEG/FinSA et al.). Seems like Degiro has chosen to have a very simplistic view about the Swiss market and treats it - to a certain degree - the same as an EU country. From a compliance/business perspective this may indeed have some benefits.

Personally, I’m not convinced this ban they enforced should even be an issue if you consider relevant Swiss legislation according to Art. 8 par. 4 of FinSA:

“No key information document need be made available [by the financial service provider such as Degiro] if the service is provided exclusively in the execution or transmission of client orders, unless a key information document has already been produced for the financial instrument.”

Since Degiro is offering execution-only services, they could still service CH-based clients (i.e. executing orders for financial products even without key information documents at all, not even considering the language point). Swiss law is also more “relaxed” regarding the language point, requiring the key information document to be provided either in an official language or in English or in the language the client wishes to use, cf. Art. 89 FinSO, if interested.

I still haven’t received an update by Degiro with regard to my query on this. Looks like I will have to review my foreign broker situation (not very enthusiastic about it).

40

FYI: At least for VWCE I was able to execute a trade today. In the Documents section a local DE KID is now available.

Edit: Degiro’s customer support answer is in, in essence confirming what we already know (German only):

"Vielen Dank fĂŒr Ihre E-Mail.

Wir verstehen, dass die Änderung der PRIIPs-Gesetzgebung (Packaged Retail and Insurance-based Investment Products) fĂŒr Ihre derzeitige Anlagestrategie eine Unannehmlichkeit darstellt und dass Sie einige zusĂ€tzliche Fragen dazu haben.

Zuallererst möchten wir betonen, dass diese Änderung nur die Eröffnung einer neuen Position oder die Vergrösserung Ihrer aktuellen Position(en) betrifft und nur fĂŒr Produkte gilt, fĂŒr die wir derzeit kein KID (Key Information Document) auf Deutsch, Französisch oder Italienisch haben. Es ist weiterhin möglich, Positionen zu halten oder zu schliessen, die Sie bereits in einem betroffenen Produkt haben.

In der Zwischenzeit sind wir stĂ€ndig auf der Suche nach neuen KIDs der Emittenten dieser Produkte. Wenn Sie zufĂ€llig auf ein KID in einer der oben genannten Sprachen stossen, das die Anforderungen zu erfĂŒllen scheint, können Sie uns gerne die URL schicken. Wir können es dann ĂŒberprĂŒfen und die VerfĂŒgbarkeit des Produkts neu einschĂ€tzen. Weitere Informationen darĂŒber, wie Sie die Aufnahme eines Finanzprodukts in unsere Plattform beantragen können, finden Sie in unserem Help Center.

Wir danken Ihnen fĂŒr Ihr VerstĂ€ndnis. Sollten Sie noch weitere Fragen haben, zögern Sie bitte nicht, sich an uns zu wenden."

41

Here we go again: New increased fees for DEGIRO, announced as usual on very short terms (15th of May).

Main changes:

  • New 1€ “Service fee” for every transaction, including ‘free’ ETFs
  • Revision of the free ETF list, new contents unknown.
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