Is this PostFinance Depot the Mustachian way?

Investing / Brokers
1

Hello wonderful people,

I am somehow overwhelmed by the sheer amount of information here.

Last year I read «The Simple Path to Wealth» from JL Collins and I wanted to invest in Vanguard. But didn’t saw a good option for me as a Swiss guy. I found the Pictet - USA Index Fond over at PostFinance, which is my bank. This fond seemed really similar to Vanguard so I invested all my money into this fund.

It has a TER of 0,75% (which seems high compared to what I’ve read here).

I had to pay 0.50% + 0.15% commission on the invested sum, the payout is free. Are these commissions calculated into the TER?

Is this fond even the Mustachian way? What should I do?

Open a E-Trading at PostFinance and invest in individual EFTs? Or move completely to InteractiveBrokers for example?

I am looking forward to your answers. Thank you for taking your time to read and maybe answer, appreciate that!

2

Hi!

Vanguard S&P 500 ETF (VOO) has ER of 0.04%.

CornerTraders charge you 0.2% commission (min CHF20) + 0.5% for currency exchange.

Example:
Commision: CHF10000 * 0.2% = CHF20
Currency exchange: CHF10000 * 0.5% = CHF50
In total: every time you invest 10k they will charge you CHF70.

Interactive Brokers charge you about 0.1% commission + $2-$3 for currency exchange + $10 - commission fees a month if you haven’t invested more than $100k

Example:
Currency exchange: $3
Commision: $10000 * 0.1% = $10
Monthly payment: $10 - commissions = $10 - $10 = 0
In total: every time you invest 10k they will charge you ~$13.

As far as I know - no. TER is fund’s costs. Your broker is another cost.

It’s pretty far from cost-efective, mustachian way.

Opening and operating IB account is overwhelming in the beginning (you can see history of my frustrations on this forum), but basically it’s the most cost-effective way to buy ETFs - especially Vanguard funds on American exchanges - the cheapest option.

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3

Hey @1000000CHF,

thanks a lot. So I payed way to much commissions compared to other brokers. It was just convenient to use PostFinance, because I had the money already there.

I am at this point not sure if my best option is to payout the money from the fund at PostFinance as fast as possible and move to another Broker?!

And are there any indicators when the best time is to payout the money and move. Or is it more like, the sooner the better?!

Sorry if I maybe ask some beginner questions here. I’ve still a lot to read and learn.

4

I had similar dilemma as I started with CornerTrader and eventually switched to Interactive Brokers. Currently I keep my old investments at CT, as I don’t have much there, and I just started investing new savings at IB. Eventually I’ll move it from CT (without selling/rebuying) - somebody on this forum already did that as far as I remember.

PS. No worries, most of us are beginners. That’s part of the mustschian lifestyle​ - learning new ways to grow your stash.

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5

besides what other stuff was mentioned already, i would definately NOT hurry on a time scale of a few months, but calmly make up your mind in a profound way. only then take action. 0.75% is quite high but the cost of short sighted activism is probably much higher :wink:

I myself took 2 years to make up my mind, just as a comparison.

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6

What is the reasoning behind this potential move? Or did you mean moving from CT to IB?

Agree. Good point. Will educate myself the next month or two and will then make a move!

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I meant moving from CT to IB. There two reasons:

  • faster get to 100k so that IB stops charging me 10 bucks a month
  • selling these investments and exchanging money back to CHF is way cheaper at IB
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8

I just read in the other thread about the Vanguard Total World Stock ETF and the one fund solution was mentioned. Is there anything that speaks agains just investing into VT?

9

in the big picture, no.

with regard to you 0.75% fund, i strongly doubt there is any reason against :slight_smile:
but again, look thoroughly into it befor taking action. like really^^

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10

I just looked into IB. Do I get it right, that I have one transaction per month for free, and apart from exchanging the money form USD to CHF there are no fees when I wan to withdraw some money?

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According to their website that’s correct:

Withdrawals
IB allows one free withdrawal request per calendar month.

I’m not only sure if it’s a problem for them if you make a withdrawal to a Swiss account. Normally Europeans are served by IB UK branch, but this branch has an account in Zurich in Citibank, so maybe they won’t charge your for an international payment. I hope so, but I haven’t checked. I guess we have to send them a message and ask them what is the procedure. But even if they charge you for international payment, in overall it will be still much cheaper than investing with any other Swiss broker or bank.

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12

Hmm, another question just popped into my mind. Why would I choose CHF as my base currency in IB instead of USD? I could transfer the money in USD from PostFinance or are the exchange rates on IB better?

13

You can transfer USD to IB even if you choose CHF as base currency.
CHF as base currency is imho better “also” for tax reasons (easier to declare as the documentation you download and attach will be displayed in CHF)

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14

Ahh, valid point. Thanks!

15

You can. It’s up to you. Although most ETFs listed on Swiss exchange in CHF are just exchanging currency and buying the shares in USD anyway or they are CHF-hedged, but this is not effective in long term anyway.

A lot better. Especially in comparison to PostFinance and other banks.

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As far as I know, there’s a nasty US estate tax: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/Tax/us-tax-us-estate-and-gift-tax-rules-for-resident-and-nonresident-aliens.pdf

If I’ll move to another country (with less nice US tax treaty than Switzerland), I think I’ll sell VT at IB and buy Europe-based ETFs (World MSCI + EM + Small Cap + Global Agg Bonds). Also I’ll stay in CH and when I stash more than $5M, then everything that is above $5M I’ll invest in Europe.

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17

No. You get one free withdrawal per month for free, and account maintenance is free once you keep $100k+ with them, everything else costs money. But a lot less money than any swiss broker, or even most US brokers, would charge you

$10/month account maintenance fee also works as a sort of free allowance for trading, you’ll pay max($10, trading costs) per month so long as you have under $100k invested. $10 buys you actually quite a lot of trading in US - as I recently pointed out, i changed franks and bought $100k worth of VTI paying in total a bit less than $5 in commissions and fees

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18

But that is just relevant if your domicile is in the US right?

I am just in the process of creating an IB account to see how it looks inside.

Which account type should I choose? It looks like «Cash» is enough. But in the description for the «Margin» account they mention something about currency conversion. Is that not possible with the «Cash» account?

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there is reason to believe this is no problem for us mustachians, i did put together the info here

however i did not have this checked by a lawyer :wink:

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20

Most of your questions @dalliard were already answered in other threads. I recommend reading the posts of @hedgehog and @nugget and other smart guys in this forum. Super useful stuff. I read archives of that forum almost every evening. :slight_smile:

I recommend also - obviously - reading Mr @_MP’s blog. Invaluable source of Mustachian knowledge. :slight_smile:

PS. This is a super important thread for IB investors:
http://forum.mustachianpost.com/t/transferwises-borderless-account/296/13
It discusses how to transfer money to fund IB account via domestic transfer from PostFinance.

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