Interactive Brokers - all eggs in one basket?


#6

My plan is to split everything into:

  • 2 x IB (one for me, one for my wife)
  • 2 x VIAC
  • 2 x CT

In all three I’m planning to invest in global market ETFs. For IB it’s VT ETF in USD, for VIAC it’s Global 100 in CHF, and for CT it’s Vanguard ETFs at SIX in CHF. 80% of my investments will go into two IB accounts, rest into VIAC and CT accounts.

It’s too early for this for me anyway, but at some point I’ll start implementing this plan.


#7

Very interesting discussion thread. I have been thinking as well regarding separating my etfs into different baskets. I currently have my stock portfolio with Interactive Brokers. As transaction fees with Swiss brokers are very high, I was thinking to continue buying etfs with IB where transaction fees are low, but then transfer some of the etfs on regular basis to Postfinance (perhaps annual). I asked Postfinance about fees for incoming titles, but they could not really answer. Does anybody here know about transfer fees (IB to Swiss broker, ideally Postfinance)? Many thanks and regards!


#8

Usually brokers apply fees only for outgoing securities. Incoming are free as they want to encourage you to transfer securities to them, so they can later apply deposit management fees (usually a fraction of the portfolio).
This said, you’ll have to check for your particular case.


#9

You should start with 5 VIAC Portfolios right away. It doesn’t cost anything and gives you more flexibility for tax deductions should you retire in Switzerland.


#10

How come? And does it make any difference if I won’t retire in Switzerland?


#11

You can take out third pillar funds starting 5 years prior to AHV retirement age.
You can only take out whole “baskets”.
By taking out 5 smaller chunks instead of one big chunk you save taxes because of the progressive tax (tax deductions was the wrong word, oops).

I believe if you retire elsewhere it doesn’t matter because you kind of have to withdraw everything at once, but I’m not sure about that.


#12

I’ve transferred shares from another CH-based broker to Postfinance & this was free on the Pf side. Sorry, I know this wasn’t your question. Indeed, it wud be interesting to know… Does an international transfer incur fees somewhere incoming side, at least the stamp duty I would imagine, else the tax man is losing out!


#13

And now you won’t be able to transfer them out anywhere without coughing up a fat commission for sale/transfer to postfinance.

Depends on broker

You’re imagining wrong, stamp duty is charged on sales


#14

Sorry I am late on this thread and the discussion has moved on, but

For which scenarios you need another broker than IB? I mean, what do you imagine could happen to my securities at IB?


#15

Well, as I’ve been reading all over to choose ETFs instead of single stocks so to fragment your risks, same should be for the broker you choose. If there wouldn’t be risks, why would they give IB a rating? (If not you could follow Buffett: “Keep all your eggs in one basket, but watch that basket closely.”)

For example as a total ignorant I was wandering about the effects of Brexit on the IB London account.

Also I’ve read in this forum that is the broker who owns the securities:

Or about what could happen to your cash:


#16

@hedgehog , I transferred those shares to Pf 4-5 years ago, long before I had even heard about IB. Yes, I will pay about CHF 100 fees to sell in about 20 years. I can live with that.
Swiss Stamp Duty (I translated it from Stempelsteuer or Transaktionssteuer) is charged equally when buying and selling shares in Switzerland (0.1 for CH shares, 0.15% for foreign shares). That’s why I wud imagine it a loophole to transfer shares from IB to Postfinance and thereby avoid the Swiss Stamp Duty (which is a relic from the First World War btw) and the tax man don’t like loopholes (nor people using them).


The Pillar 3a Tutorial
#17

What if they’d suddenly decide to jerk you around for some compliance nonsense? Happens at banks sometimes, can take months, even years to resolve during which time your money is locked down, and you’d have to find some other means to survive


#18

Hi, I found this site useful for comparing online brokers, in particular the section about ‘INVESTOR PROTECTION’.
https://brokerchooser.com/blog/best-trading-platform-for-europeans


#20

Another informative reading about risks with online brokers (i found it while browsing about IB “street name”) How safe are stock broker nominee accounts?


#21

All brokers keep your securities “in the street name” at least in the US, that’s how modern electronic finance works

Unless you got a few B’s to join an elite club like this and deal with a central securities depository directly


#22

So if IB defrauded you, you would only get back 50`000 pounds for sure?
(https://the-international-investor.com/investment-faq/international-investor-protection-rules-compensation-scheme-limits)

If that were so, would the risk of somehow losing the rest (even if the chance is very small) have to be taken into account?
E.g. if you pay slightly more with CT over IB, it might still be wise to go with CT because switzerland compensates up to 100´000CHF.


#23

It makes sense to have several brokers as long as it doesn’t increase your costs (that means no custody or inactivity fees).


#24

Complicated legal topic, maybe 500k of SIPC would also apply in addition to FSCS, but maybe not

They don’t - that 100k coverage is for cash balance only. Bank/broker goes bust, sure, esisuise will cover the small cash leftovers you had on your account, securities go missing - no, that’d be fraud/criminal case and you’re at the mercy of the justice system as to whether something and how much of it would be recovered.


#25

Reading all your very useful commentaries I reached important (for me) insights.

In finance (and everywhere) emotions are very dangerous if ignored/unconscious.
Every time I imagine to send all my financial possessions to IB, so far away (England) and in a virtual space (do they have a physical office?) I get very anxious.

Till now all my money/securities were in banks which I could visit (and did), I knew the front men, contacted them regularly. All this felt so reassuring.

Few nights ago, some thoughts that were floating around for a long time condensed as follows.

All their nice offices, all their reassuring employees have to be payed. The number of relatively reliable banks from which to choose are so many (for me at least: I have some possessions in Italy too). So for banks: high expenses and a lot of competitors with whom to share the pie.
Also, I believe more and more people are switching to online brokers.
Swiss banks: I heard at the radio some days ago that the banks firmly declaring that they are never going to ask their smallest customers to pay negative interests are now only 35 (they were much more sometime ago). What is going to happen when they will?
Conclusion: very difficult times are awaiting banks institutions (or more dramatically: has the time of their sunset arrived?)

Online brokers and specifically IB. Obviously less expenses. Much less competition: as I wrote introducing the topic, when you search for opinions about the best online brokers (both for European and american investors) the names that pop out are always the same and IB at the top most of the time (for reliability and prices, which I think are the two most important criteria to be taken into account).

So, going back to emotions: mine tell me to stick with my banks but in reality, which is more at stake? IB or them?

(Funny story: last year I did an experiment: bought via dollar-cost averaging the same amount of ETFs in a Swiss bank and an Italian one to really find out the expenses differences - fees, taxes. Results: both cheated adding expenses not included in the initial agreement - which after long negotiations I got to be the same for both of them. I got my money back but lost my already poor remaining trust. Now I think with IB this would never happen because fees are automatically charged and they would never risk their reputation in such a stupid way. But why banks do (and they all do)? Maybe because they already navigate in murky waters?)

Finally. If you believe there is a ranking in financial institutions where you could put your possessions as regards safety, and you also believe that the first one is way better than the rest, where is the logic in putting your money also in the less safe ones just for the sake of differentiation? Wouldn’t this choice in fact be more risky? Isn’t this again an example of emotions guiding us towards bad decisions?
That was the main question that prompted me to start this topic.

Because of my above mentioned reasons now I think the opposite: that banks are less safe than online brokers and more so in the future.

Please show me if/where my arguments do not hold water.


#26

I did some analysis on this topic some time ago. A good option would be Schwab through their UK branch: https://www.schwab.co.uk/. The minimum required to open an account is 25K
They offer multiple free comission ETF: https://www.schwab.com/public/schwab/investing/investment_help/investment_research/etf_research/etfs.html?&path=/Prospect/Research/etfs/overview/oneSourceETFs.asp (I’m not sure if this apply also for UK customer).
I also not sure concerning the currency fees.