You can consider many investing platforms: For beginner investors in Europe and Switzerland, DEGIRO is one of the best options. Here you will find essential information on the advantages, use and conditions of DEGIRO for your passive ETF investments.
DEGIRO is a European broker from the Netherlands that offers access to a good range of low-cost investments. Although it does not offer as many options as Interactive Brokers, it is easier to get started and it may be advisable to start with DEGIRO before venturing out with Interactive Brokers. We are personally satisfied and happy customer and are convinced that it is an excellent choice if your domicile is in the European Union and Switzerland.
We propose those clear options to meet the need of beginner investors who often feel overwhelmed by the choices available. Guide Finances does not push any provider and encourage you to shop around and compare prices and other conditions. For Swiss investors, the US Interactive Brokers offers more trading options and a highly competitive platform, but DEGIRO has a more intuitive user interface and a first stock investment appears easier with DEGIRO and comes out cheaper for European investors in many instances.
In comparison, Swiss banks such as Swissquote charge higher fees for trades (and prices for forex transactions are outrageous) and Corner Trader have inactivity fees if you do not trade regularly. Let us hope that Swiss discount banks will improve their conditions soon. Regarding new offering brokerage (neobanks), we would wait it to be established, since a brokerage relationship does not just mean to complete a transaction and exit. If you buy securities to finance your retirement or future health procedures, you want to be able to expect a long-term commitment and an institution with a longer record of accomplishment is preferable. Finally other local brokers do not seem committed to smaller investors like DEGIRO, because DEGIRO seems genuinely willing to adopt the philosophy of granting the retail clients the appropriate tools to control their destiny and get their fair share of markets money.
After having reviewed different options and if you are convinced by DEGIRO, you can create your own account by following this link: DEGIRO (Disclaimer: We like to point out that investing involves a risk of loss and please have a look into the guide before starting investing).
The opening of an account is straightforward, but be ready to provide the following information before you start:
- Your passport or identity card, your retirement number (AHV) and a Swiss telephone number to verify your account.
- The IBAN of the sending bank account.
The procedure is then intuitive, but there are some points to watch out:
- You will have to indicate your tax information, but DEGIRO then manages all this automatically. You just need to indicate your country of tax residence and your AHV number.
- Fill the W-8BEN form to avoid double taxation on your US securities to get automatically a reduction in the withholding tax rate applied by the U.S. tax authorities on dividends received from U.S. securities.
Steps to invest with DEGIRO
How to make your first investment in the stock market by following the steps at the DEGIRO platform illustrated below. You will find actionable steps here in order to help you, but please, double check any information for your individual situation and do not rely solely on this information.
- Choose the ETF – you can choose a free-transaction ETF (e.g., in EUR on the Amsterdam stock exchange). The list includes diversified ETFs
- Insert the ISIN of the ETF;
- Decide the number of ETF shares;
- Insert a limit order with a price close to the bid-ask; the higher your order, the higher the probability that your order will be placed;
- Click on place order: You are now the owner of the chosen ETF !
DEGIRO has two main different accounts: Basic and Custody. If you participate in the share lending program, you can access the basic account scheme. DEGIRO lending your shares should not be a huge concern since every asset management company does it (even Vanguard which promotes low volume but high demand shares in its share lending program). If you opt for the custody account, the fees will be like the basic account, but you will pay fees for each received dividend, which is not advisable. You should thus go for the basic account.
On both schemes, you will be able to trade free on your local stock exchange, but you will pay an annual fee (around 2.5 EUR) for the further stock exchanges trading your shares. You will also pay a fee of 0.10% for forex trading (in case you want to invest in an ETF not denominated in your home currency). Fees are slightly different for each country, with usually slightly (but still reasonable) higher commissions for Swiss clients compared to Europeans.
DEGIRO also offers some standard ETFs, including developed world and emerging markets, which are very attractive for European investors (even though you may have to pay stock market fees if your home exchange does not offer it).
Here are two numerical examples:
Swiss investor will pay pay 2 EUR (2.15 CHF) and 0.03% of the transaction value for each purchase of a Swiss ETF or European ETF (unless the currency is different leading to a fee of 0.10% for forex trading).
A French investor will pay slightly less, with 2 EUR and 0.02% for each purchase of a European ETF, which are excellent conditions for trading EUR-denominated stocks.
You can also Invest globally without transactions costs in the ‘ETF Core Selection’ of DEGIRO.
According to DEGIRO, the most traded ETFs on their platform are either from Vanguard or iShares and are either invested in global stocks or the S&P 500.
Final check list for future DEGIRO clients
In any case you may consider adding DEGIRO to Interactive Brokers since its conditions beats any Swiss or European broker and a second platform may be advisable in order to reduce operational risk, limited availability, risk of loss or hacking of one single platform
If you are trusting DEGIRO for your ETF transactions, please remember the following key aspects:
- Opt for the basic account.
- Trade on your local exchange if possible.
- Use the Free commission ETFs for developed and emerging markets.