At that level of concerns, I’d consider having assets held in street name cause for concern too and limit myself only to shares for which I am a registered owner (which seriously limits the amount of brokers and the actual shares available, including ruling out most if not all ETFs).
I’ve been very near there, I’m now willing to take more risks for the sake of simplicity, with the understanding that my money can disappear “during the night” for a variety of reasons (a 90% market crash being one of them).
Edit: I’m not saying those concerns are not warranted, I have similar concerns that prevent me from using IBKR too (namely not wanting the US to have anything to do with my assets and IBKR UK keeping some of our securities in custody at their US subsidiary), just that following them has a cost that affects the potential rate of growth of capital and that it has to be assessed vs the alternative of a potentially riskier but quicker capital growth with the prospect of a more conservative allocation (that can include physical hard assets), either in the short term already or once a certain wealth threshold has been reached.
Hmmm the market crash idea doesn’t scare me that much because it’s always come back. I saw my 3a drop 20% in 2022 and it’s bounced back. This is to be expected and I do trust myself not freaking and bailing in the lows. Even been buying the dip from time to time!
I do keep a safety cash pillow at all times, giving me 3 month liquidity. Having read through what index ETFs are I just think I’d prefer a mutual fund, but that’s marginally safer in some respects and less flexible in others. My main concern with ETFs is what would happen if I can’t sell them when I want to. No selling now, just buying every month but at some point in the future I’d want to sell, build a fixed income position, drop on some luxury etc. No sense in dying a very rich corpse.
This I find a bit pathetic by the issuers.
All it takes is 1 line of total assets, dividends received and WHT on those, and attaching the pdf with a bit broader details (worked with several cantons, can’t guarantee all).
And these swiss banks/brokers are charging their clients to print a bloody PDF.
Exactly, because that’s the least likely to be messed with.
I think people in the FIRE community, which is not me, have a commendable tolerance for risk. I have some friends who’ve lived on a thread for years and did achieve FIRE very early, it’s admirable but not something I have appetite to do.
For a proper tax report they have to get the information from ICTax. The tax value may be different from the market price and also taxable dividends may not match the distributed dividends in some cases (e.g., accumulating funds, tax-free capital gain distribution, REIT tax discount).
I.e., it’s not as simple as providing the information from the regular broker statements. However, once they have automated this internally, the marginal costs for them are practically zero, of course.
If a broker without custody fees charges something for this, I can accept that. I think it’s ridiculous that a Swiss bank with custody fees doesn’t provide this for free, though.
I second this. There’s a whole lot of funny-money in this space. Even certain Swiss banks that use collective custody service providers could not give me a clear answer about what would happen to my securities if the custody provider were to go bankrupt.
Personally, I find the laws governing street name assets far too vague. For the purpose of risk-assessments, I consider shares which I have not actuall registered in the company’s shareholder register to carry around double the investment risk of non-registered shares.
I’m kind of similar. I’ve always valued tangible assets and physical relationships.
Apart from fees and use of US ETFs, the only major disadvantage of a Swiss vs. foreign stock broker, to my knowledge, is that Swiss brokers have to levy Swiss stamp duties, whereas foreign brokers like IBKR do not. For frequent trading in particular, stamp duties add a substantial expense. But for long-term investing in ETFs, the difference is less pronounced.
It might sound counter-intuitive, but IBKR suspending option trading for GME (and AMC, BB, EXPR, and KOSS) as well as requiring increased margin for securities trading (100% margin for long positions and 300% margin in short positions) for the securities mentioned (see IBKR press release) was actually a Good Thing: it reduced risk both for IBKR and its customers, especially the ones not speculating in these meme stocks.
For those interested in looking under the hood:
DTCC (a Depository Trust & Clearing Corporation) provides settlement and clearing for the vast majority of security transactions (in the US and elsewhere). It performs the actual exchange of securites on behalf of buyers and sellers and functions as a central securities depository by providing central custody of securities.
Because settlement (money exchanged for securities) is not instant but “T+2” (trade date plus two days)* in most cases, there is a counterparty risk for two days to those involved in the trade as well as for the settlement and clearing company. The settlement and clearing company thus requires collateral from market participants (like IBKR) for its own risk management (and to ensure the buyer and seller will receive the security/money). In periods of high volatility the collateral will be high. Those collateral requirements force the market participants (like IBKR) to manage their risk as well, and they do that through restricting margin requirements for long and short positions and sometimes by suspending trading on options.** Careful market participants will perhaps restrict trading on volatile securities or options even before DTCC requires a higher collateral.
See this article for how DTC describes their approach to risk management.
* As alluded by @nabalzbhf there’s efforts to move to “T+1” settlement, but as mentioned this comes with its own challenges.
** Options come with an additional set of challenges as the contract size (for US style options) is 100 and they can be exercised at any time. This leveraged nature makes risk management, especially counter party risk, even more challenging. The CME (Chicago Mercantile Exchange) Group is the world’s largest operator of financial derivatives (including options) exchange. It runs CME Clearing, which serves as the counterparty to every cleared derivative transaction.
It will - independently of DTCC - require collateral from their counterparties (like IBKR), which in turn leads to those counterparties to require more margin from their customers or to even suspend trading for options with very volatile underlyings (which the epic short squeezes in the securities mentioned above caused).
Fun fact which I heard from a collegue with lots more experience and knowledge in the nitty gritty details of derivatives trading: CME has apparently always been able to settle all derivative contracts traded on their platform (there are examples of other exchanges that have botched this, famously the LME (London Metal Exchange) cancelling a $12 billion nickel trade.
Pretty sure that as a customer you have to explicitly agree to your broker lending out your securities. IBKR and Swissquote require you to opt into this.
Maybe there are shady banks that include your opting in in their initial contract clauses when you open an account, but neither Swissquote nor IBKR are among those.
See above my reply to @nabalzbhf 's reply to your post for a little peek under the hood of how these things work if you’re interested.
If the WallStreetsBets crowd decided to meme trade on your good ol’ Swiss bank, I guarantee you the Swiss bank would restrict trading on meme stocks and their options as quickly as the US banks that were affected. It’s just simple risk management enforced both at the bank level as well as at the level of the settlement and clearing corporations that facilitate these trades.
And maybe on a higher level … for all the eventful history of the traditional financial markets, here’s a good thing about them: many mistakes over have been made and lessons were learned and lots of regulation was written and institutions like the SEC (or the FINMA) or central banks were created that traditional banks have to adhere to and are audited on. Does this prevent all future glitches? No. Does it prevent past glitches? Probably.
(I am sometimes reminded by all fun catastrophies happening in the crypto world that they’re going through all the mistakes that were made in traditional finance … but I won’t open that can of worms now)
I don’t think I’ve ever paid for a tax declaration document for any of my brokers. I just download the year end statement available (e.g. with Swissquote I use the “Portfolio Entwicklung” which nicely lists all holdings per Dec 31) and attach that to the tax filing. Has worked just fine with the ZRH tax authorities for over a decade.
I am aware of the possibility to request a tax statement (e.g. “Auszug bestellen” in Swissquote) that costs money, but I never understood why I would do that when the free statement available are sufficient for filing taxes.
Don’t want to derail discussion, but apart from attaching this document - were you also filling manually relevant fields in tax declaration, with all the securities and dividends, transactions etc. listed? Or just listed all the securities with their value on 31.12 and didn’t care about these additional details hoping that the authorities will just look into the file?
TL;DR: I file all the transactions and for most positions it automatically calculates the dividends received, the tax withheld (if applicable) and the year end value.
This is what I do:
First I import the previous year data which the online tax form let’s me do with one click.
Then for 99% of the positions I just add the deltas (buys or sells) for the new year and the tax form calculates automatically the dividends / coupons received based on ex dates it know and it calculates the final value based on the price data it has.
For the remaining 1% of the positions that it doesn’t have in its database, I have to fill in the dividends received manually as well as the price data at year end (which I take from the Swissquote Wertentwicklung sheet that nicely show this in CHF).
Then I attach all the corporate actions related to the dividends received as well as the mentioned “Wertentwicklung” document.
Declaring all the dividends received is super important to me as most have withholding tax etc which I only get back if I declare them.
I print out the statement (I saved a template on the webversion of IBRK) and add it to the tax statement.
In the list of securities I refer to the IBRK statement, therefore one position.
For the lists of debt I state only the interest, the debt itself is included in the net declaration on the list of securities.
btw it’s actually 0.35% fee + the 0.2% fee for securities abroad (which these funds are to my knowledge)! + high TER of the ucits funds, that adds up to a lot…
put that in a compound interest calculator over 30 years and suddenly it’s a gigantic number.
As a UBS shareholder I would like UBS to keep collecting those custody fees (and pay me nice dividends from that income: from your pocket @mirager paid in fees to UBS to my pocket filled with dividends from UBS), as a loyal forum participant I would like my forum colleagues to make the right decisions.
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