My Portfolio on DEGIRO (alternative to VT)

Hi folks

I plan to invest soon in ETF’s. Regarding the fees I’ll start with DEGIRO, as I will probably not reach CHF 100’000 in the next years. As it is not possible to buy VT at DEGIRO and unsure if in the future we’ll be able to buy US ETFs at IB, i built my own “Total World” Portfolio with the following positions:

10% iShares Core SPI (TER 0.1; CH market)
50% Vanguard FTSE North America (TER 0.1; US market)
15% iShares Core MSCI Pacific ex-Japan (TER 0.2; Pacific)
15% Vanguard FTSE Developed Europe (TER 0.1; European market)
10% iShares Core MSCI EM IMI (TER 0.18; Emerging markets)

That results in a TER of 0.123%, which is not as good as VT, but better as VWRL.

Any thoughts or comments are welcome :slight_smile:

0.1% difference in TER on 100k is 100 CHF/year. Are you sure it is worth the hassle for all the re-balancing funds in mixed currencies and added transaction costs?

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How much do you plan to invest ? Because with the wittholding tax I’m quite sure that IB will still be better.
IB: VT is 0.08% + 120.- as IB cost - witthoding tax
Degiro: Your mix 0.123% + wittholding tax

Also check the liquidity of the ETFs.

I agree. It’s overcomplicating things. And who is to that DEGIRO or purchasing the mentioned funds won’t become more expensive in the future?

Splitting the portfolio into these 5 different funds isn’t necessarily wrong. If you were to equally weigh all 5 funds at 20% each or something, why not? I wouldn’t go through all these hassles though, if in the end you end up (pretty much) replicating what you could get with one single fund.

If he/she will not “probably not reach 100’000 in the next years”, if we assume even half of that (a portofolio size of 50k), 120 CHF would translate to approximately 0.24% in additional costs (though of course they would be credited towards purchases fees/commissions).

Going with VT, savings on withholding tax on U.S. distributions would amount to roughly
2% expected dividend yield * 50% portfolio share of U.S. securities * 15% difference in WHT (for U.S. securities only) ≈ 0.15%

There will be probably be at least some countries where Ireland has a more favourable double taxation agreement than the U.S. (maybe the European countries?)

I’ll repeat myself:

I think there’s a danger of creating and perpetuating this myth that U.S. ETFs are always magically 15% withholding tax “less expensive” - which isn’t true.

Yes, VT might be less expensive and more tax-efficient in the end, but the “+/- withholding tax” is a bit oversimplifying things.

Moreover, claiming back the 15% withholding tax through DA-1 might not necessarily lead to a refund, this depend on the personal tax situation as I’ve shown here…

This alone is mostly an invalid argument, as has been mentioned multiple times in multiple threads.
Yes, IB has 10USD/month fees, but they go towards all your transactions (CHF-USD conversion, buy/sell) - thus effective “custody” fees are much lower, if not 0 in certain cases.
Personal math differs of course in terms of how often and what (which currency too) you want to be purchasing - you have to do it for yourself and your plan.
But Degiro might win in 5% of individual cases…

thanks for your valuable input! didn’t think about the re-balancing effort

in the first hand I’ll invest CHF 10’000 and then 2’000/ month. I tried to calculate fees/costs and loss of withholding taxes accoring to the information I found in this forum - but still unsure about which is better for my situation now:

  • going with IB and VT
  • or going with DEGIRO and my 5 ETF portfolio

the goal is to loose the least amount of money through fees/costs and taxes…

thanks for your thoughts! the challenge for me is, as a beginner, I know pretty much nothing about which transactions are gona cost me how much money (as you mention currency exchange, buying positions, withholding tax on dividends and so on). Isn’t there an excel-template out there where you can put in your strategy, ETF’s you want to invest and out comes the cheapest broker for you - I really don’t want to open an account at the wrong broker :wink:

You can use this to compare the Swiss ones:
https://www.moneyland.ch/en/onlineTrading/index

For the non-CH ones you will need to run the simulations yourself.


Here is an example for you for IB, under assumption you buy VT once a month, and don’t have 100k yet:

12 x 2 USD to convert CHF --> USD
12 x 0.33 USD to purchase VT
== 28 USD transaction fees

12 x 10 USD
= 120 USD commissions

Total expense = commissions - transaction fees == 92 USD / year

Note: you need to take into account additional stuff like WHT on dividends, (no) stamp tax duty, TER of the ETFs you buy etc. if you want the full-fledged comparison.

Thanks for your input! I did the math including nearly everything. I’ll go with VT and IB, because the 5 ETF Portfolio with DEGIRO would cost me nearly CHF 90 of fees a year and really a lot of time rebalancing the portfolio and taking care of not doing too much trades. hope we as swiss residents will continue to be able to buy US ETFs in the future…

Would someone here try to do the maths for maybe top 10 countries for VT vs VWRL?
I do not understand enough to do it myself, but here are i think all the informations needed:

https://www.revenue.ie/en/tax-professionals/tax-agreements/rates/index.aspx

https://taxsummaries.pwc.com/united-states/corporate/withholding-taxes

https://www.justetf.com/servlet/download?isin=IE00B3RBWM25&documentType=MR&country=CH&lang=de

https://investor.vanguard.com/etf/profile/portfolio/vt

Looking at the dividends paid within each fund and foreign tax withholding (at the fund level), VT is definitely more interesting than VWRL

A quick comparison below based on the last annual report available for each fund.

VT - Source: https://advisors.vanguard.com/funds/reports/q6280.pdf

Page 18 shows net dividends received and page 19/172 foreign withholding taxes

Dividends net of taxes: 431’106’000
Foreign withholding taxes: 24’279’000
Gross: 455’385’000

Average foreign withholding taxes: 24’279’000 / 455’385’000 = 5.3315%

VWRL - Source: https://www.vanguardinvestor.co.uk/rs/gre/gls/1.3.0/documents/959/gb

Page 63/468

Foreign withholding taxes: 7’444’601
Gross: 64’119’281

Average foreign withholding taxes: 7’444’601 / 64’119’281 = 11.6105%

US dividends have clearly an impact. The US allocation is approx. 55% in each fund.

US dividends within VT are paid gross, for VWRL a 15% tax at source applies (Ireland-US tax treaty).

There is an interesting comparison between VT and VWRL written by a FIRE investor from Singapore (Singapore has no double tax treaty with the US).

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Shouldn’t the difference be bigger? US is 55%, 0.55 x 0.15 = 8.25% advantage.

Rather than going to the fine print in taxation, I’ve tried to calculate a rough practical figure here for VT vs. VWRL, from the point of an individual investor (over a sample period).

In the end, I estimate it to be a difference of approximately 1% over 6 years so.

I’m not going to bother too much or overworry about that.

May remain a mystery unless receiving the Excel spreadsheets with the breakdown by country from Vanguard US and IE :slight_smile:

IE fund may have some advantages in claiming a double tax treaty rate with UE stocks.

However, I don’t believe the difference is material. German, Swiss and French stocks represents only 3% (or less per country) of the total fund allocation.

Couldn’t you combine that? VTI for US and a IE-domiciled ETF for Europe, Pacific and EM?

Thank you very much :+1:

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