“Noob” => don’t go IB if you want to “keep it stupid and simple”, there’s nothing wrong with that IMHO
You said optimization to the cents is not your priority, that’s another reason to KISS.
When you move back to Germany, having US ETF like VT at a broker like IB might involve lots of unusual move and change you don’t want to deal with.
So while this does not constitute an investment advice, I would go the simplest way that makes life simple today, and tomorrow.
Irish UCITS all-world ETF Acc denominated in EUR, set and forget. If you dare to risk lump sum (invest at once), that’s one action forever. Less vol with DCA, but more involvement in time. See @Your_Full_Name answer to get an idea about that one.
We’re talking 200K. In the context of FIRE where we’re aiming at a stash of multiple millions I don’t get how things should get so complicated for such an amount. Maybe if you want to build up a strategy that takes currency-, broker-, country-, regulation, whatever- risk into account and build up on that: fair enough. Careful, you’re all-in vanguard
Here, we’re talking one-time investment for someone in his fifties who wants to retire in 10-15 years and sounds like having little experience in investing -with all due respect, and wants to keep it simple, while seeing a potential for this money to grow more if invested and be a nice bonus for their retirement.
Only if OP wants to skill up and spend more of his time with investment strategies and risk management, there is plenty to explore, and to be scared of, but I read he wants to keep things simple.
Not that the suggested simple strategy is not risky, full equity is, but at least it’s cheap (at least in time consumed), fast, easy to implement and to understand.
That should not happen as long as they know you are a Swiss tax resident. I have a German Degiro account where at least I can say it was never a topic.
It probably makes a bit more financial sense to go with VT in IBKR rather than VWCE with DKB since TER and withholding on dividends makes VT more favourable while you are in Switzerland, and if you move to a eurozone country later on and at that point VWCE makes more sense you can just sell your VT holdings and buy VWCE (since there is no capital gains tax in CH). That’s what I would do.
BUT: you said you want to keep things as simple as possible. I would just go with whichever option seems like least work for you.
One of the failure modes with investing is that you get so overwhelmed with the complexities of choices that you don’t do anything and just keep in cash forever. If you have decided with certainty that you want to invest now, then I would pick whichever feels best to you, and reassess in a year if later on you think you might be better of changing things.
No, cost in general, trading costs. There are free brokers but there is no such thing as a free lunch; as they sell order flow you may end up paying a lot more.
TER does not depend on the broker. But IB gives you a big choice of instruments for relatively low commissions, that is why I like them.
In addition, if you use a German broker while living in Switzerland they will deduct the so called “Abgeltungssteuer”, a tax that was added when East Germany joined Germany. May be complicated to get rid of that, even I think DKB is quiet easy, you have to bring proof of residence.
You mean Solidaritätszuschlag. Abgeltungssteuer is the withholding tax levied on distribution by German securities. Has nothing to do with broker’s domicile, you will be hit by it everywhere. Solidaritätszuschlag is added to it.
Though I have some vague memory that Solidaritätszuschlag should be cancelled by now .
They did to me, had to send some form of proof that I live in Switzerland. I have a free DKB account for Euro Cash. A long time ago they did even pay interest…and deducted “Abgeltungssteuer” until I did provide proof of residence. Never got back the (few Cents) of Abgeltungssteuer, not worth the trouble.
Seems to confirm what you said, that they don’t establish tax residency when you sign up, and that they will assume German tax residency by default. So one needs to inform them separately.
Yes, I think you are right. I was fooled because in GB there is no such deduction, so I supposed it has something to do with the banks residence (I don’t use DKB as a broker, just to get Euro cash for free).
I had google translate “Abgeltungssteuer” and it said “withholding tax”. So I suppose it depends on the domicile of the entity that pays out the interest or dividend. But isn’t the Abgeltungssteuer taken out of capital gains too in Germany, but not in other countries?
My input here is more cautionary than anything else. I only share it as a hard lesson learnt that I wouldn’t wish on others.
I was in exactly the same situation, with the same intent: minimal risk, maximal security provided that it outlasted inflation.
Fast forward 2 years, and it’s gone. Or at least it seems to be. I may get it back, but it’s not certain.
If I’d simply held it and put it in a 4% basic interest account, I’d still have it; and the not inflation beating interest.
But, due to the scale of the money involved, I’d be a heck of a lot better off and be able to use it to do many of the things that are needed in life; for myself and (as I’d intended all along, for my hopefully future children).
So, my only input is remember it’s better to have this and at least be secure than it is to lose it and lose a lot more in long term plans.
If I do the jump from DKB to IBKR to enjoy the lower TER of the VT (0.07%) compared to SPYY (0.12%), what are the steps? Open an account with IBKR, transfer 200k EUR from DKB to IBKR, convert EUR to USD and buy VT? Am I missing something?
Learn IBKR and its numerous interfaces. Also opening the account is not as easy as the other retail platforms.
You may have to produce some forms to justify being taxed optimally, with IBKR and/or with your kanton.
You may face US security risk, foreign broker risk (uk subsidiary of a us broker), us estate risk for inheritance, no local Swiss support, no German speaking support, no finma protection for what it’s worth (uk equivalent), no tax assistance and diy tax report, and then your 400k VT in 10 years, hopefully, more trouble if you leave to Germany. You’d have certainly to sell it, close your account, and provide proof of source of funds and whatnot to your European broker/bank where you transfer funds to.
Absolutely nothing impossible and little risk if you add it all.
You may as well avoid everything I just said with other solutions matching your keep-it-simple criteria.
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