IB Fees really better for DCA?

Investing / Brokers
1

Hello folks

I do not understand the advantage given to IB on fees compared to DeGiro
IB = 0,002 % of transaction, with 2 USD minimum.
It means 2 USD until 100’000 USD de transaction.

With DeGiro, it is 0,25% of the transaction amount, it means that the ~2USD fees are reached at a 800 CHF transaction.

That is clear that on big transactions IB is easily better

But for a DCA Strategy of 500 CHF/m on an ETF (listed by DeGiro for example HSBC World ETF, so with reduced fees), for example, it means that DeGiro is better ? (compared to 500 CHF/m on the VT on IB)

2

Assuming you are on pro and buying US shares:

  • Minimum $0.35 fee
  • Cap of 1% of trade value
  • $0.0035 per share

fees vary by country and product. I think ETFs are free in some cases.

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3

If you have a cash account at IBKR, you can use auto-fx, i.e., let IBKR exchange currency as part of the buy transaction. Auto-fx has a markup of 0.03% without a minimum, so is always better than DEGIRO.

That said, if you invest in UCITS ETFs, DEGIRO is likely a reasonable option as well but I don’t remember all the details of the DEGIRO fees.

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4

To avoid exchange fees with DeGiro, we have to search for CHF-ETF, but there is not so much possibility…

If I well understand, if I directly buy a 100 USD ETF with a CHF cash account on IB, the exchange fees will only be of 0.03% ? without minimum (it is quite better than DeGiro)

To conclude, excepted the interface a bit more sophysticated, is IB better than DeGiro for a little DCA strategy (3-500 CHF/m)

5

For UCITS ETFs, both are quite cheap because you can buy CHF denominated ETFs like SPDR ACWI

For US ETFs, IBKR is cheap because of low forex charges

6

Yes, that’s correct.

Yes, buying VT shares at IBKR is cheaper than buying ETF shares at DEGIRO when investing CHF 300-500 at a time, as far as I can tell.

Large trades of CHF-denominated shares might be cheaper at DEGIRO than IBKR as the cost at DEGIRO seems to be fixed at CHF 6 while it can get more expensive at IBKR.

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7

For the custody account I think they still charge you for dividends paid. This is why I stopped using Degiro.

8

As someone who’s using PostFinance by choice, their fees prevent me from playing because they quickly add up to a few hundred CHF if I want to shift my portfolio around, so I don’t it. Also as PF has bands for charging it makes sense to make trades just under your band, and smaller trades can become moronically expensive (eg I bought a single share of KMLM for testing, for $28 or something and the fee was $9, while if it was $499 the fee would still be $9).

IBKR is so cheap it’s practically free.

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