Next move? Looking for advice

Investing / Brokers
#1

Hello Mustachians, at this moment me and my GF we have 2 Degiro Basic account invested 17k chf in each account (total of 34k) on the ETF VWRL EUR Amsterdam. (free when bought once per month as we do).

From January 2021 we will start invest in each account 3125.- (total of 6250.- chf) per month in both.At the end of December 2021 we will have invested the total of 109k chf.From January 2022 we plan to continue invest monthly the minimum of 1500.- each one (total of 3000.-) per month.

My question is, in terms of costs is a good strategy for long term? Because Degiro charge 0.10% to convert CHF to EUR. Can we optimize better?

In the future we plan diversify the assets between at least 2 different brokers, maybe Degiro and Interactive Brokers.( seems the better option to swiss investors)

What do you think about this strategy for long term?

Thank you

#2

If you want to invest with IB (which I also now would recommend, after taking a lot of time to take the step), then open an account right now.
At this moment you can still buy the US based equivalent of WVRL, VT.
This is more attractive, but we all may lose the opportunity to buy in from Switzerland as from 1.1.2022.

IB has fixed costs until you reach 100K USD = 90K CHF, but it seems you will be there quickly enough.
So dump everything in IB until it reaches your personal comfort zone limit, then start over again with Degiro if you want would be the idea.

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#3

0.10% * CHF 1’500 = 1.50 CHF.
That’s about the price for a bottle of Coca-Cola from the supermarket (or the other).

0.10% * CHF 3’125 = 3.13 CHF.
Less than the average price of a cup of coffee in a café (or to go).

And they are, at least for the time being, only one-time costs, incurred when buying funds.
Are you really, really worried you’d need to optimise that further?

…of 10 USD or approximately 9 CHF a month. For two accounts: him/her and his/her girlfriend.

Even once they’ll have reached the 100k minimum, which is likely three years away, they still have to convert funds into USD each month. Which costs a minimum of 2.00 USD at IBKR. So slightly more than the 0.10% at DeGiro (though I don’t know and am not inclined to research the rates DeGiros uses).

If anything, this might hold reasonable potential for optimising and/or be a sensible reason to prefer IBKR.

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#4

There is a big IF at the beginning of my post which I cannot and do not want to answer. That’s for the OP.
Personally I use both IB and DeGiro - if DeGiro is going to stay free is another question.

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#5

Next move is to get a high paying job

Optimizing peanuts will leave you with peanuts

#6

The question is, when will Degiro cost you more than 120$/108CHF a year?

Degiro charges you 3% of your dividends, that’s 0.08% of your returns assuming a 2.6% dividend yield. VWRL has a 0.14% higher TER than VT. So that’s 0.22% in total. You can also get 15% of the taxes back from US dividends with VT with DA-1 form, that’s another 0.18%. Combine dividend fees, higher TER and lost dividends and you get to 0.40%/year.

108 CHF / 0.40% = 27’000 CHF.

I ignored the 0.1% FX fees and that dividends will be charged 2 CHF additionally each time (not only 3%). If you include that, Degiro will be more expensive than IBKR with even less than 27k in assets.

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#7

Seriously some people here seem to be out of touch with reality. They are saving more than 6k per month - that’s awesome.
Sure a better job will have way more leverage than reducing already low costs, but with 6% returns per year they will have one million in 10 years.
I wouldn’t call that peanuts.

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#8

That’s quite an arrogant response from you. (Like many others you provided elsewhere)

Not everyone can (or wants to) work for Google or banking and similar top-1-percentile-paying companies.
And you being “fortunate” that you do doesn’t entitle you to shit on other people’s plans.

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#9

Congratulations, thats a good number. Keep it up as long as you can. Degiro+VWRL and IB+VT are both mustachian routes. A few early years of regular investments will have sizeable effect on your portfolio size. Much bigger effect than differences well illustrated by @San_Francisco As your portfolio size increases, you might be tempted to have accounts with multiple brokers for peace of mind / risk-diversification.

Don’t let the last mile optimisation options paralyse / delay your investments.

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#10

If i invest via IB i think i would prefer buy VWRL in swiss francs (SIX/EBS) for keep it simple (no need convert francs in USD manually and then buy VT in USD).
Thank you

#11

Hello, we use a Degiro Basic account so we aren’t charged on our dividends.Thanks

Yes is true, in my field of work (sport/fitness) industry is not that easy get a high paid job, but at least i have a good saving rate.

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#12

I see USDCHF at 1 mid to long term. SNB is keeping CHF low. (But who knows). I see the USD risk hedged with my crypto hodlings. Reading here around VT is the holy grail, you should be invested in.
Disclosure: I’m switching from SQ to IB… so right now I buy only VT on IB.

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#13

The savings from using a U.S. ETF regarding dividend withholding will very quickly be more significantl than the savings of 2 CHF for each currency conversion.

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#14

So… Interesting stuff.
If is understood with VT in IB I have some benefit with tax & dividends? If we compare with vrwl or iwda?
But VT is in $ isn’t? VRWL in € or CHF

Maybe switch to IB VT and not continue with Degiro is the best optimize way to long term investing ?

But with IB I’ll pay 10$ charges /month…

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#15

So you are risking losing all your assets with securities lending?

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#16

That’s why I’m asking your opinion/advice for the best next move concerning investment/broker.Thanks

#17

So you’re thinking of placing your money in a US broker, a country whose politics resemble a banana republic?

I’ll keep my money in the Netherlands, thank you very much.

#18

This comment is very emotional. I don’t know if it’s accurate, though. First of all, you’re not placing “money” with a broker. You quickly buy some shares and that’s what you hold. And the money itself is held at IB UK, right? Not in the US. Then what do you mean by politics? You mean Trump? He’s on the way out if that’s your concern. What else? Last I checked, the US had the most developed financial market in the World. If you don’t use their brokers, you might as well stop investing in their stocks. Or what does your logic tell you?

I find this generally an interesting topic, because my boss also said “I’m happy with Swissquote, I would not trust the Americans with my money”. So there is the general sentiment that something can go wrong, which would put our savings at risk, but no idea what that could be.

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#19

In my view, swiss people like to use their home solution because they feel more confortable to deal with the provider support in their native language or just to promote home solution. In the other hand, they could also think that maybe a foreign provider could shut down the access to non resident without any reason… I don’t know.

I’m asking myself if I want to start investing with IB or with Swissquote/Flowbank. I would like to promote a swiss solution, but the cost are not interesting at the moment, maybe in a few years they will have to reduce their fees to be more competitiv against other solution like IB or DeGiro or new challenger coming in Switzerland like FlowBank today ?

But indeed, it’s a an interesting topic !

If you are not planning on using a swiss broker and because you will reach the 100k USD by the end of the year, I think that using IB should be a better solution for you and your wife, because if you have to transfert 100k of VWRL to IB, it will maybe cost you a lot instead of buying it directly in IB ?

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#20

Well, this is what you get from me when I am writing on my phone between changing trains. I wont’ do that anymore.

My comment, which was knee-jerk, should have been elaborated. I just attacked the weak points of a US broker that I feel it has to mock the comment about DeGiro, which was phrased in a similar way.

I think that just pointing out a random risk that you have at a certain broker does not enrich the debate. You could also argue that depositing your money in any broker is risky in ways that you can’t even imagine. Who knows who’s gonna be around in 3 or 5 years?

Swissquote? Only 20 years in the market. Only in Switzerland. Too small. Will be bought by god know who anyway.
IB? Based in the US. How will you pay for a US lawyer in the unlikely event things go south when all your money is there?
DeGiro? It’s very cheap, there must be something wrong with it. Ooh, they’re lending out your stuff to others. Sounds dangerous.
Random cheap broker [Insert prejudice here]

I think that broker risk would deserve its own thread and possible risks of specific brokers should be discussed in detail. Maybe they have been discussed and I don’t know.

IMHO all of these points can be made, but since you really don’t know how any of these are going to affect you or the OP, pointing out a random weakness and declare it the boogeyman is not the way to go. Probably spreading about several brokers is the way to address this insecurity.

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