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I think on the contrary that it would be simpler. Foreign brokers are not informed of your death, unlike local banks that block your account as soon as they have the information that you gave your last breath. So, if you have informed your partner where you have the accounts and you have given her access, she will have time to repatriate the money to your Swiss account.
IB also has an advantage on this side, because they ask you if you wish to designate a trusted person in case of need, like this one.
So my first impressions:
– opening an account is easy and fairly quick
– money transfer to Swiss IBAN takes a good business day, so quite fast (but less than IB)
– the graphical interface is pleasant and easy to access
– in terms of security it seems to me less armored than IB. Double authentication is not activated by default, you have to go to the settings and you have to use Google authenticator. No native solution in DEGIRO.
– in terms of the choice of shares, what I see for the moment is that we do indeed find Japanese small caps there, unlike Corner Trader for example. On the other hand, we do not find them all, unlike IB.
So for now my first impressions confirm what I thought: fairly clear advantage to IB. On the other hand it is certainly a good plan B and a good possibility of diversification in terms of brokers.
It's hard to say more for now, but I'll keep experimenting...
I don't know about Degiro yet because I just applied to open an account. I'm going to transfer just enough money to do one of my usual transactions and I'll give you a rundown.
Bankruptcy of a foreign or Swiss broker is the same problem. In any case, in both cases, there must be a separation between the brokerage activity and the deposit activity. This is in any case what Degiro and IB affirm for example. There is also the SIPC guarantee in the USA (IB) up to 500,000 dollars (of which 250,000 in cash). In Europe they are less generous because the guarantee is 100,000 euros in cash and only 20,000 in assets.
Of course, you'll tell me that all this is theory, because in the event of a breakdown, you can have all the guarantees in the world, but it's going to be complicated. Even in Switzerland. Except that there you can always go play tennis in their branch to get noticed. So the important thing is always the same, you have to diversify. And also stick to renowned establishments, because you can diversify as much as you want, but in the event of a financial crisis, several companies can have a bad time at the same time. From this point of view, IB has a certain historical foundation.
If there is a change in tax arrangements, well if it becomes too problematic, you just have to repatriate the funds.
The exchange rate risk is the same whether your institution is US, European or Swiss. It is determined by the assets. The only notable difference is that currently if you are invested in CHF cash in Switzerland you do not pay negative interest, whereas outside of Switzerland you are taxed. You just have to transfer the CHF to CH as soon as they are too large.
As for the risk of hacking, I am not an expert, but I still find that security is quite robust on the IB side for example.
You're talking about 25 balls of transaction, it's true that it's acceptable. And it's also true that compared to twenty years ago the amounts have dropped significantly. However, I sometimes trade large positions via Postfinance, and it really pisses me off when I see several hundred francs of brokerage + federal stamp going through it. On the IB side it amounts to tens.
But hey I understand your point of view too. With a strict buy & hold, this is much less important, that's true.
Yes, with IB there is no federal stamp and no withholding tax either. Of course, you will have to declare your income, but it is still a lot simpler for the tax return!
Totally agree. No federal stamp, ridiculous commissions, instant and free tax statement (at least at IB), huge choice of products, quality of platforms... in short, foreign brokers are really cheaper while being of a much better quality than Swiss intermediaries.
I am also surprised that this foreign competition does not have more of an effect on the Swiss market. Perhaps we should understand that ordinary Swiss investors are reluctant to invest their money outside our borders. It must be said that the traditional image is rather that foreigners come to hide their money with us, so why would we do the opposite... The other possible explanation is the gigantic fees for transferring positions, which makes clients captive to their bank/broker.
I still have my Postfinance account because the management is free and there are no custody fees. I still have a few large positions there. But I have to say that when I see the amount of transaction fees, it really hurts. So I try to limit myself to stocks that I plan to keep for as long as possible. Sometimes these fees seemed so dissuasive that I almost wanted to feed even more IB but I didn't do it for the sake of diversification. A 3rd broker, via Degiro, will therefore be welcome.
The worst thing is that Postfinance is by far not the worst in Switzerland. All inclusive, it is even relatively cheap compared to what is done in this country. I have seen UBS fees for example (custody + transactions). It is a real scandal. When you think that almost everything is managed automatically by computer and that you are charged several hundred francs just for a click… Nonsense.
So in the end I opted for a model at 449 fr! It's hard to change your nature when you're a real frugal person!
Dying of laughter. The other day I bought a second-hand almost state-of-the-art laptop on Ricardo for 270 bucks.
Well I bought myself a Christmas present and after much thought I still fell back on Degiro as an additional gateway, in order to diversify the risks. On paper it doesn't reach the level of IB but I will keep you informed.
I must say that I am also in the same thoughts, looking for a third broker and nothing suits me. In any case compared to IB it is difficult to keep up. Even for degiro. And corner offers almost nothing on the Japanese market.
Hi Soon. All your thoughts are perfectly correct. ETFs, contrary to popular belief, can be riskier than stocks. I have already mentioned this many times on this blog and in my e-book. Their construction (swaps, securities lending), their exposure (mostly US big caps), and the style of the indices followed (capitalization - favoring growth stocks to the detriment of value) create systemic risks. As you say, this can recall 2008 with subprimes. As you also mention, if they are domiciled in the USA, there is a tax risk that is added in the event of death, but this is not specific to ETFs.
This does not mean that we should do without them completely, because in some cases they are very useful. I am thinking in particular of:
– for beginners: allows diversification despite low capital
– for the more experienced: allows you to quickly take a position on an asset class representing a minority position in the portfolio and therefore to diversify
– for all: allows you to buy asset classes that are more difficult to trade or for which you have less affinity or skills (gold, real estate, bonds, emerging country stocks, etc.)
The important thing, again and again, is to DIVERSIFY. Not just ETFs, but also (and above all) all approaches. As soon as you have passed the beginner stage and have capital of several tens of thousands of francs or euros, the portfolio must therefore include shares, in addition to a few ETFs.
These ETFs should be considered as an asset class in their own right. They are not completely equivalent to the assets that make up the indices tracked. They have their own risks.
Yes I actually thought you were talking about this company :)
Keep us posted, these tax parentheses are always instructive.
Thanks for the clarification Will.
Well, your story doesn't seem all that simple to me. In any case, there's a lot of work to do. I might get down to it in a year, when I've finished setting up my side business and I'm no longer an employee. I'll then have more time to devote myself to this idea. Or another one.
Hello Will
And welcome to you. You are right to plan ahead because despite all that is said about it, the pension system in Switzerland is far from being a panacea. Moreover, since you have about twenty years left, you will most certainly be able to retire earlier.
You are right to have used your 2nd pillar to buy your house (as long as you bought it at a good price of course).
Hey, there's someone who's still investing in oil, it's not really trendy and you're not going to make any friends 😉
I must say that you have piqued my curiosity a little with your investment company story. Given how you explain it, it seems interesting. However, it still raises a lot of questions (anonymity, double taxation, complexity to create and manage, etc.)
In short, we look forward to reading your experiences on this subject, it may interest more than one person.
With IB I only have a European value since this year, so not taxed yet. However, I really wouldn't see why IB would do things differently than they usually do.
For Japan, they typically tax me 15%. I report this during the annual taxation via the tax service software (which completes the DA1 form). It then goes into flat-rate imputation and, as for the CH withholding tax, the amounts withheld are deducted from the income tax.
