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.
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
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.
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…
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
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…