Where to find the absolutely lowest-fee index funds in Switzerland (as of August 2019)?

[FIREstarter]

@mmm

Then you ask, but why dont you use IB? The answer is simple: there are cost comparisons showing IB is only better than DeGiro for portfolios larger than 100k

Even then, Degiro is cheaper if you go for the Basic account.

I don’t know why people are always referring to the >100k rule for IB. Yes, you pay 10$ per month if your account has less than 100k on it. BUT: the commission for trades is deducted from those 10$. Hence, you are paying 10$ if you do nothing, but also only pay 10$ if you are doing some trades.

To give you a real world example:
For three buys at DEGIRO (AllWorld, EM, SmallCap), I had to pay ~10.50CHF. Then, for selling the same, another 8CHF. Plus 3CHF for transferring money back to my normal bank account.
In total: 21.50CHF for buying and selling three ETFs

IB instead: buying three ETFS (US, DevelopedWorld, EM) was 3$, changing currency from CHF to USD was 2$. Didn’t sell any of those yet, but it will also only be 1$ most probably.
Those 5$ were deducted (included) from the 10$ monthly account fee, so for 10$ per month I could buy 8 ETFs and change currency.

From my point of view, IB is better even for accounts lower than 100k. You can change 10k CHF to USD for 2$. Good look trying that one with DEGIRO (they don’t have a fixed rate).

[San_Francisco]

@flenker

Is that still true when you take into account expense ratios and withholding-tax complications due to lack of non-EU funds?

There’s nothing „complicated“ about withholding tax with Irish ETFs. To the contrary, as we’ve seen some reports (and also depending on canton), it’s the reclaim of US ETFs bought at IBKR that can occasionally get a bit „complicated“ with withholding tax - though this might result in slightly lower overall tax burden on distributions of US companies.

[miriade]

@FIREstarter

the commission for trades is deducted from those 10$. Hence, you are paying 10$ if you do nothing, but also only pay 10$ if you are doing some trades.

Fair enough, but imagine the scenario where I am only buying my VWRL once or max twice per year… no other activities…

[flenker]

@San_Francisco

There’s nothing „complicated“ about withholding tax with Irish ETFs. To the contrary, as we’ve seen some reports (and also depending on canton), it’s the reclaim of US ETFs bought at IBKR that can occasionally get a bit „complicated“ with withholding tax - though this might result in slightly lower overall tax burden on distributions of US companies.

Most Kanton’s handle it without issue.

And that still leaves the expense ratio aspect unanswered.

[chca]

Also, VWRL on the Dutch exchange is a free trade with Degiro. You just pay 2.5€/yr for holding positions on that exchange. For simple buy and hold with a single or few etf’s, degiro is clearly cheaper than IB for <100k USD.

[Gesk]

If you take into account the higher TER of VWRL compared to VT (that you can’t buy at Degiro), and extra tax on dividends, Degiro is only cheaper under around 25-30k.

[slive]

Thank you all for your insight. Having looked at the options, I chose to go with Swissquote for now; I figured that I will pay a small premium for the security of an established Swiss company managing my money.

Just to chime in on the unrelated discussion in the last few comments: I really agree that growing income is more important than cutting expenses. But I also think it may be harder than it sounds for many earners and that we should show empathy, not condescension, to those who are less privileged when it comes to talents and opportunities.

[FIREstarter]

@miriade

Fair enough, but imagine the scenario where I am only buying my VWRL once or max twice per year… no other activities…

Of course you are right. I was, wrongly, assuming that everyone is trading on a monthly basis.
If you only buy VWRL once or twice a year, it’s cheaper to go with IB.

@Gesk

If you take into account the higher TER of VWRL compared to VT (that you can’t buy at Degiro), and extra tax on dividends, Degiro is only cheaper under around 25-30k.

0.25% VWRL vs 0.09% for VT = 75’000.- at IB to break even (no taxes, fees)
15% withholding tax on dividends for VWRL = 40’000.- if you calculate with 2% dividends (800.- * 15% = 120.-)
So depending on the number of buys per year, IB is indeed cheaper from 40k

[dbu]

@FIREstarter

IB instead: buying three ETFS (US, DevelopedWorld, EM) was 3$

And this can actually go down to 1$ for all 3 purchases together.
Use tiered pricing.

@Julianek

Then it takes 19 years to reach FIRE (happy to provide the Maths if needed). Most of us are in our mid-thirties, that is just too long to wait for.

Depends on personal level I would still say.
Being FI (and maybe RE) with 50 is still way better than with 65+.

[miriade]

@Gesk

If you take into account the higher TER of VWRL compared to VT (that you can’t buy at Degiro), and extra tax on dividends, Degiro is only cheaper under around 25-30k.

Now, let’s say I’m starting my savings into my chosen ETF from next year (2020). VT is no longer accessible for Swiss residents. So, why should I plan/take it into considerations on my calculations?

[Joey]

@miriade

VT is no longer accessible for Swiss residents.

Thats not 100% certain I think? It looks like IB might still be able to offer it to swiss residents, we will have to see here: US-ETFs (VT for instance) not available anymore in Switzerland?

[Gesk]

I’m just saying that if you have 30k today Degiro is not so much cheaper as it seems. Obviously if you are just starting now from 0 it is not the case. As for next year we will see how things turn out.

[Cortana]

What will change next year?

[flenker]

@miriade

Now, let’s say I’m starting my savings into my chosen ETF from next year (2020). VT is no longer accessible for Swiss residents. So, why should I plan/take it into considerations on my calculations?

Fake news. It’s been disproven time and time again.

[San_Francisco]

@flenker

Fake news. It’s been disproven time and time again.

I think it’s certainly possible they will discontinue their access to it. Even if they don’t strictly have to do it or if it’s a grey area legally, to just be err on the side of caution (and no, that one e-mail from the tax authorities quoted here on the forum proves neither point, though I commend the forum user for actually asking the question to the relevant authorities).

On the other hand, IBKR is probably big and professional enough to not just lump in Switzerland in with the rest of the EU, and due their due diligence on what they can offer here.

In any case, I’d question if all the thought and discussion that goes into this is all that worthwhile.

1. You don’t have to sell previous purchases
2. You can continue to make investment in VWRL instead of VT with the same broker at IBKR
3. If you’re really on the fence which one to buy, it’s just 4 more months till that ominous Swiss law comes into force and we’ll definitely see IBKR’s reaction (or its lack thereof)
4. Even if you err on your choice of the U.S. ETF, and you feel or actually had to switch to the IE ETF, how costly would your mistake be? I mean, how much does IBKR charge? Half a cent per share? Wouldn’t that just some 70 USD per million dollars invested in VT?

If IBKR did discontinue access to VT, I’d have no qualms about buying it til then (only question would be, if a small position that I can’t add to, is worth the hassle in the tax declaration).

[flenker]

@San_Francisco

I think it’s certainly possible they will discontinue their access to it. Even if they don’t strictly have to do it or if it’s a grey area legally, to just be err on the side of caution (and no, that one e-mail from the tax authorities quoted here on the forum proves neither point, though I commend the forum user for actually asking the question to the relevant authorities).

Again, Fake news. It’s not a grey area. The laws are crystal clear.

[Kaps]

Apparently not that clear since IBKR recently stated that they will “most probably” apply in Switzerland the same restrictions that were set forth with PRIIPs regarding investments in ETF, ETNs and Mutual funds for EEA based clients.

[Joey]

Do you have that statement?