Swissquote Vs. Interactive Brokers

Investing / Brokers
1

Hi Guys

Im new here and informing myself alot at the moment about the possibilities to invest in ETF’s and sometimes also stocks. It seems like everybody is saying IB is best in terms of fees. However, i’m having a hard time to compare it directly to SQ, which is where I have my account at the moment.

Lets say i would invest an amount <50k at once and then quarterly around 5k. How are SQ fees so much higher than IB? As far as I can see IB has a custody fee of 10$ per month wheras SQ only has custody fees of 15 CHF quarterly (minimum fee) and a flatrate 9 CHF for Leader ETF’s like vanguard.

It also seems that SQ is more convenient in terms of Withholding Taxes as it is a QI.

Can someone please shed some light on why IB is so much cheaper and better than SQ?

Cheers

2 Likes
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Shall we do the math for you?
OK I feel kind today as it’s Friday, so here it goes.

A. IB
4x 5k CHF --> USD exchange: 4x 2 USD = 8 USD
4x VT purchase: 4x 0.33 USD = 1.32 USD
1x 50k CHF --> 2 USD forex + 0.33 USD trade = 2.33 USD (or a bit more)
Custody fees (transaction fees not bigger than 10 USD / month so no addition) = 120 USD

B. SQ (source: https://en.swissquote.com/online-trading/pricing)
4x purchase worth 5k CHF: 4x 30 CHF/USD/EUR = 120 CHF/USD/EUR
1x purchase worth 50k CHF: 135 CHF/USD/EUR
PLUS: Quarterly custody fees, stamp duty, forex exchange in case you wish to buy non-CHF --> case closed.

Edit: Oops, wait, I see a flat 9 CHF fee for some ETF Leaders, my bad.
Just adjust the numbers based on whether what you want to purchase is within them

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Interactive Broker is cheaper - end of story. I am with SQ and I am fine with that for now. Reasons are not in line with frugality. Do buy Vanguard ETF’s in CHF at SWX and this is what I would pay with a 5k investment.

https://imgur.com/mxmFlka

And this is what I pay for a 5k investment, when I buy at Nasdaq or other US exchange in US$. For the forex transaction, SQ will give you not the best rate, if you need to change CHF into USD.

https://imgur.com/nUAPM8z

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Plus stamp duty, which is alone already more expensive than IBKR’s whole commission.

Forex exchange about 1% at SQ. 1-2 pips spreads that they advertise on their forex page is just for CFD betting products, not actual currency exchange

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Thanks guys, very interesting. Sorry for the noob - questions but why do i don’t have to pay Stamp duty when I go over IB?

and @oogie boogie: Is there any disadvantage to buy the Vanguard ETF at SWX compared to US?

And how is it with the witholding taxes on dividends?

Why would someone prefer SQ over IB anyway if IB is cheaper in any case?

6

The bid/ask spread might be a bit broader than on the US markets and it is in CHF (which is a plus for me).

Pure personal decision

  • SQ is a Swiss bank
  • I can call them (and did) anytime
  • support felt professional towards my requests
  • do like the web solution and the mobile solution
  • can easily add my equities into the “Aktienregister” online

I am not hardcore frugal and those points above are important enough for me to stay with SQ for now.

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SQ has pretty bad FX rates compared to IB.

All costs are covered with the monthly fee of 10$/month. As soon as you get over 100k, it’s basically for “free”.

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For me Swissquote is a great solution if you:

  • Invest in sponsored ETF (Vanguard, Blackrock, Amundi, Comstage, UBS, …) and pay only the flat rate per transaction.
  • Work only in one currency (CHF) and buy ETF that are traded in CHF (Like Vanguard for example)
    This way you minimize the problems which are:
  • 1% spread on Forex
  • Relatively high fees (0.3 - 0.5%) on stock transaction for shares or bonds or not sponsored ETF.
9

Only swiss brokers have to charge it. IBKR is, technically, british.

Double taxation by the US.

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This is a big topic where the correct answer depends of your personal situation. Please read this topic completely in order to get a view of all the options.

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There’s nothing there that’s contradicting my reply that you’re quoting.

You will get ripped off and double taxed by the US by going with Irish funds. Except if you’re taxed at sourced low earner (and a few other rare cases), in which case yes, it depends.

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He talked about Vanguard ETFs. SQ offers US ETFs too.

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They are not traded “at SWX”

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Going through the blog and the forum has been really helpful for me in the last few days.

I am quite new to investing and want to start soon. I am still not sure of the broker yet. IB seems a good option but is it still better for investments <100k
Also, what about tax declarations?

I plan to start with US based ETFs

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Currency exchange alone makes it worthwhile. You need $$$ to trade those US ETFs, everyone else will rip you off on the exchange.

Tax declaration is same like with every other brokers, you still have to enter all your positions and trades by hand into tax software. For small accounts you can try declaring just the depot and total of dividends, but they may scrutinize and demand itemization anyway, this could be more likely with a self-prepared summary vs. broker prepared but I wouldn’t sweat over it.

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Thanks for the response. I agree the exchange rate fee would make up for the difference in fee.

Also, comparing IB with a US based broker like TD? Does IB still wins for Swiss residents?

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Most american brokers work only with $$$! No $$$ => you’ll get ripped off on currency exchange when transferring your CHFs to them. IBKR will change your currency for 0.002%, most banks will take 0.3-1%.

Trading on US exchanges with IBKR, while not free (unlike a few other US brokers, I don’t know about TD, but Schwab is free today except for small SEC fees), it’s so cheap, it’s basically negligible. I pay about 30-40 c/trade - this cost hardly matters if you’re just investing in a few select ETFs.

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Honestly, you’ve been pretty loose at throwing the “rip-offs” around lately (see also the VIAC thread). :wink:

Currency exchange costs something (virtually) everywhere. And we all pay some taxes and fees here and there. There’s nothing wrong per se with optimising one’s choices and taxes and going with a lowest-cost option. But there’s large enough a grey area of more vs. less expensive and other factors preferences to consider in choice of funds and brokers. In my opinion, we don’t need to blatantly call everything - except that oh-so holy grail of investing in US ETFs through IBKR held so highly in this forum - a straight-up “rip-off”.

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You know what’s another rip off? This forum - a rip-off of my time. Same old topics rehashed over and over again. I’m out.

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Guys

if anyone is willing to help me on my below 2 basic questions please
i have a Swissquote account for years - and i consider switching to IB

  1. how does it work with the tax report with IB ? so i can declare my investments /dividends etc to my local canton ?
    with Swissquote - i get a tax report for 100 swissies which makes my tax filling a lot easier. (in theory i can do it ‘manually’ and save the 100 )
    how do you manage that point with IB ?

  2. if i was to switch to IB - how does it work with the Automatic Exchange of Information ? the account would technically be in UK (not in US if my understanding is correct).
    the UK authorities will pass my data to the Swiss Authorities ?

https://www.sif.admin.ch/sif/en/home/multilateral/steuer_informationsaust/automatischer-informationsaustausch/automatischer-informationsaustausch1.html

http://www.oecd.org/tax/automatic-exchange/international-framework-for-the-crs/exchange-relationships/

many thanks for your comments