Like many of you, I’ve read countless posts encouraging the move from Swissquote to Interactive Brokers to cut fees.. But after going through all the articles about IB’s safety, I’m still not fully convinced to move everything there, so I’d love to hear your advice here.
To add a bit of context here my current portfolio (~250K CHF):
ETF FWRA 57%
ETF VWCG 15%
Cash CHF 13%
ETF SRFCHA 9%
ETF ZGLD 4%
Crypto 2%
I do Monthly DCA on FWRA (1500.-)
Annual costs: ~216 CHF custody + ~135 CHF trading fees = ~351 CHF/year.
Honestly, for my level of activity this isn’t dramatic, but I know it adds up over time.
My dilemma:
The classic “don’t put all eggs in one basket” advice keeps holding me back. But here’s the catch: if I only move part of my portfolio to IB, I still pay Swissquote’s custody fees on the remaining amount, so the cost savings largely disappear…
Have you considered VAT and Stamp Tax for your transaction cost?
Maybe come away from the all-or-nothing?
For simplification, assuming trading at IB is “free” (not quite true, but close to free relative to expensive Swiss brokers), don’t half the costs disappear if you stop trading at Sq?
Anyhow, my suggestion would be consider “freezing” your portfolio at Sq (but keep what you have there), and starting new at IB, do all new transactions there.
That way the transaction costs disappear at Sq (approx. halves your overall costs) and you don’t have all your eggs in one basket.
No
3 brokers = not all eggs in one basket = so risk is comfortable for me
My worry with having everything with IB is if there is any account freeze asking for KYC documentation and I can’t reach out to the customer service to unblock. There are some reports online that it can happen but hard to know if that’s real or fake. It feels safer and worth the costs to deal with a Swiss entity under local law with that kind of amount. Saxo seems almost as cheap as IB and regulated by FINMA and can be a good diversification.
No need to force yourself to do something you’re not comfortable with. The difference exists but it isn’t make or break.
IBKR would bring your fees down to potentially something like 10-20 CHF/year. Given the costs you provide and your new inputs, that means you’d have ~285 CHF/year more to invest, or 1.6% more.
Why not putting all eggs into 1 basket AND WATCH THAT BASKET WELL?
Plus the egg diverdication arguments seems to stand on the assumption, that all brokers roughly carry the same risk. But do they?
Ibkr is stock market listed, has a rating, is employee owned and very good with risk management (no proprietary trading, changed margin requirements ca. 9 months before the short liquidity trade cratered, by design ruthless in liquidating instead of margin calling).
Compare that e.g. to degiro.
So, do you really lower your risk by adding a second broker? To be provocative, would diversifying from a Swiss bank to an Armenian gentleman you heard about really reduce your risk long-term?
Well, it is not just risk of going bankrupt, but access and disruption risk too. That’s why I also had 2 banks in case ATMs stop working for PF (which they often did), and 2 credit cards (one Visa, one Mastercard).
Schwab also gave you a nice Amex which you could directly spend against your account and withdraw cash against too.
I struggle to quantify this risk. It feels like very rare with a high quality broker. Also, is a second broker really the answer to this? Would money on a bank account not serve this better?
I am aware that this in the end must be a “I sleep better like this” decision. Still, I argue that is a mostly irrational and probably even counterproductive choice.
It’s risk management. Two brokers are less likely to block you from accessing your accounts at the same time than one. So a second account leaves you access to money in the medium term to give you time to solve the situation with the first one. Which is easier under a local jurisdiction if you need to involve a lawyer.
It’s legitimate to account for the risk of losing access to an account with KYC guidelines getting stronger over time.
I think it’s perfectly rational for somebody who is getting close to retiring to minimize risks on lifetime amounts of savings. It’s completely different of course at the start of the career.
I feel that this is pure fear and a bit of a bogeyman. A lower order happenstance. (Edit: Humans are generally terrible at correctly assessing the probability of events.) As to the arguments: First, Switzerland has terrible laws for the protection of consumers and investors. Banks could block you for any reason and not even tell you. Second, if authorities have reason to block, it can happen anywhere and even at once.
They are basically the same everywhere. Juggling accounts and brokers around may just feel better, but this very activity may be unhelpful.
So, again, several brokers of diverse quality may actually increase your risk, not just for economic events, but also exposition to cyberattacks. Bottom line: More is not automatically better. Look closer.
Well, with the banks, I already had the case where one bank’s ATMs stopped working and was happy to have an alternative.
Same with the credit card (and also the more mundane issues of credit card expiry).
But you are right maybe the cases might be quite rare/unusual e.g. system failure on one, rubber hose attacks, KYC glitch, lost token, account closed without specified reason, account hack, etc.
But then again, the cost of a second account is quite minor too. So cost/benefit ratio would seem in favour.
As many of you suggested, moving my monthly DCA to IB seems like a good first step to reduce fees without making a big move all at once..
My main curiosity was really whether people feel comfortable keeping the majority of their net worth with a single broker, specialy for the ones that are close to FIRE
most people in this community have substantial 2nd and 3rd pillars and often one or multiple properties. So it is not “100% of your wealth at one broker”.
Interactive Brokers is older than 90% of this forum’s users (my guestimation).
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