My query concerns the safety and dependability with trading broker…
I have a joint account in IBKR with 200KCHF of investments on ETF’s and stocks
As i embark on this RE journey I expect to move more in coming months, nevertheless, i am quite worried on the reliability aspect, as every piece of my life savings will be tied through one broker from UK.
I’m sure the veterans here might crossed that bridge at some pt, hence I would like to hear from you on how you strategize yours, and upper limit you have with a trading broker.
I’ve got Swissquote as my only broker with > CHF 500k invested and less than CHF 100k cash at all times. Once I’ll pass CHF 1mn I plan to move the non-active part of my portfolio (VWRL ETF) to another Swiss broker, potentially even a brick and mortar bank (looking for one that offers a maximum yearly fee in case anyone has a tip; trading costs are irrelevant). Despite planning to do so, I am not actually worried regarding my exposure to my broker. I did however once look into insurance possibilities that would cover fraud cases in case I myself get attacked, but no cyber-crime insurance policy covers something like that (again, if anyone has a tip, happy to hear).
In case you really refer to technical reliability, I believe they are all about the same. Swissquote is not great, but at least so far acceptable (just so). Once you cross CHF 500k you get the VIP support so you can trade without much time delay even if the app is down temporarily.
I think I’ve raised this issue already with @Alvo (who also does not own VT). Are you not concerned that your dividends are taxed twice? 2% * 15% = 0.3%. I know, it’s not all US, so maybe it’s 0.2%. Still, that’s 1000 CHF annually on 500’000 CHF invested. Don’t get me wrong, I would love the simplicity of opening a broker account at PostFinance, where I already have a regular account. It just seems like a lot of money to pay for this convenience. Could you give me a bit more rationale behind this decision?
Just to be precise, is this your current order of play?
Transfer CHF locally from a Swiss bank to Swissquote
Purchase VWRL in CHF at the SIX exchange
That’s how I began my investing journey with CornerTrader, but later on I got convinced to start using IB.
I’d estimate the tax impact to be not much more than 0.1%, but with the higher TER I agree the impact of VWRL vs VT is pretty much 0.2%. On top, I probably could save > CHF 1k in trading fees at IB vs Swissquote (didn’t calculate, don’t know much about IB’s fee structure).
So why not capture > CHF 2k in savings per year? You said it: Simplicity, convenience and most importantly, the peace of mind of having a Swiss broker (that advantage might in fact be imaginary, but I do feel more comfortable and that’s what counts). As mentioned in other recent posts of mine: I focus much more on increasing my income, than squeezing out the last bit of cost.
Given that you seem to in fact optimize to the last decimal: Are you buying VT, or are you splitting it, to have a clean US ETF, and an Irish one for the rest of the world (best tax treaties)?
Crossing CHF 100k for the first time gives you a warm, fuzzy feeling Nothing else besides that tough that I’d be aware of.
Is that a requirement for you? Aren’t you working for one of the big banks yourself (with only implicit state guarantee at best)?
That is an approach that I appreciate a lot! I often get slightly annoyed by some people in this forum (no hard feelings ) who want to save a couple of CHF. But I often fall victim to this game as well and get into endless discussions on pointless saving topics (I guess it’s mostly for fun).
An example of a ridiculous optimization that I’m not proud of: I needed to use one app once or twice and there was no free alternative, but the app was $100, so I looked for a “free” version on the internet for far too long.
Since in one hour of my work I can pocket around 100 CHF net income, I do try to save time and NOT optimize. Simplicity and peace of mind are important. That’s why recently I went with PostFinance 3rd pillar and not VIAC. I don’t want another login…
I hold VTI & VXUS. There is no exUS Vanguard ETF in Ireland. I just like that IB provides you with flexibility: you can exchange currency practically for free, and be in full control. At other brokers there is an implicit conversion, or you need to open an account in each currency that you need.
Since we’re talking about 1000 CHF savings (which will only increase in the following years as the portfolio grows), it’s about a day’s worth of work savings for me. So it’s a question of: is it better to work 1 day more per year and have a peace of mind, or invest in US stocks & IB at a slight risk that something unexpected might happen.
In a way it is like the Haftpflicht insurance. You pay 150 CHF per year for something that you will never need in your life, just in case you do. I guess if I was starting from scratch, I would not bother with US and stick to a Swiss broker and the Swiss exchange…
I do admit so. If there would be a equally convenient Swiss broker where I could save CHF 1000, I’d probably switch immediately.
To add as a sidenote: I of course could buy VT (or VTI + VXUS) with Swissquote too. The decision to buy VWRL instead is independent of the broker, and driven by the FX fees and again simplicity (don’t care too much about US estate tax concerns).