[Jerome]

Frankly, these taxes on dividends are disconcertingly opaque and complex. I think that this was designed like this by the IRS officials so that no one would claim them! I looked into where this rate of 28% could come from but it doesn't make sense. If they taxed you as a US resident it would normally be 30%. As a Swiss it would normally be 12.8%. Maybe they do consider you as a legal entity... Weird. Maybe write to IB to ask them.

I also looked at my Japanese dividends and it doesn't match either. I'm taxed at 15% when it should be 20% (at the same time I'm not going to complain).

In short. Frankly, I don't bother too much with these details. In any case, you have to apply for a deduction from your income tax in Switzerland. To do this, the DA-1 form (application for a flat-rate tax deduction) must be completed when you file your tax return. This allows you to avoid being taxed a second time on the entire amount already deducted (in the end, it's like the Swiss withholding tax).

Except for Finland, you can get at least half of the extra tax back this way. For the Netherlands, it's even the whole amount.

The question that arises is for the balance to be recovered. Here it becomes not only complicated, but also quite expensive. For dividends from certain countries, it is mandatory to go in person to the financial institution. For other countries the procedures can take several years. In addition, these requests generate additional administrative costs from the bank and public administrations which often exceed the balance amount that could be recovered! This means that for it to be worth it, a large dividend amount would have to come from the same stock and the portfolio would not be too fragmented. It is therefore difficult to apply when the portfolio is somewhat diversified, across several stocks and countries.

So recover in flat-rate tax via the DA1. And for the rest, it's up to you to see if you want to fight to recover them and especially if it's worth it. I don't know for France if you can recover the whole thing or only half via this means.

And then if you don't want to be bothered with withholding tax on dividends, you can buy British stocks which are not taxed.

 

[Jerome]

Thank you soon

This article is really excellent. If it wasn't so long, you'd have to make a poster out of it to put up somewhere in your house. It sums up everything I think: the manipulation of the markets by the FED and its low interest rates over time, growth stocks vs. value investing, Tesla, the analogy with previous bubbles, the Buffet ratio, the PE Schiller ratio, COVID, etc. Everything is said and perfectly said.

The author is betting on emerging countries and value, as well as avoiding US growth stocks. I feel well positioned and I think many here are too. I hope that we will finally have a real return to the forefront of value stocks soon. The circus of mediocrity has gone on long enough.

[Jerome]

All my best wishes to you too 😉

[Jerome]

Ah ok. Don't forget to filter according to average daily volume of securities >100,000 dollars (see ebook "With what volume"

Ok.

For margin accounts, the big difference is that when you place a purchase order, it draws cash in the currency of the security in question, even if you are at zero (and you go into the red in this currency). So you have to rebalance the cash from one account to another, either immediately, or a little later if you want to play a little on the exchange (but not too long anyway because negative interest).

[Jerome]

On FT you can also create multiple portfolios, representing multiple accounts. You can also view dividends paid and their dates. You also see asset classes, countries and sectors.

Only Bitcoin is missing, but I make a Bitcoin tracker entry for a corresponding amount when I buy some directly.

In short, it meets my expectations and I certainly don't have the courage to do everything again elsewhere 🙂

So I don't think I'll test it but I'm always listening if you make new discoveries.

[Jerome]

Hello Xavier

It must be the residue of the end of year celebrations but I don't follow you on the first part of the message.

Surprising for Norway. I think I could trade there even with the cash account. But that was quite a while ago… Are you sure you enabled that country in the settings. For Finland I never bought anything there and I can't find it in the settings.

Yes I have the margin account (Portfolio Margin). Which one did you take?

 

 

[Jerome]

Hi Xavier

thanks for the link. What advantages over FT and/or which of your expectations were not met compared to FT's portfolio?

Thank you and have a nice day

Jerome

[Jerome]

I don't know Lynxbroker. The rates seem reasonable but still more expensive than DG, right? Compared to IB, we should see, as you say, according to the frequency of trades and the size of the portfolio. However, even for small b&h portfolios, there is a certain margin in favor of IB, it seems to me, even if we had to count the monthly penalties for no trades. Indeed, the minimum transaction fees at Lynxbroker are relatively high.

Regarding the stock exchanges, I am not an expert on European stock exchanges, but I believe that BATS Europe and CHI-X Europe are now one entity, where a very large quantity of European stocks are traded. SWX is simply the Swiss stock exchange. Turquoise CH, no idea, I don't know. VIRT-X I think it no longer exists, but at the time it belonged to the Swiss stock exchange and you could trade European blue chips there.

 

[Jerome]

Well, I just placed my first order with DG, twice as expensive as IB, but still reasonable (20 bucks).

Indeed, Mystik, the transfer fees for securities in Switzerland are a scandal. You almost have an interest in reselling, transferring the cash and buying back right after.

[Jerome]

She doesn't necessarily have to sell them. She can transfer the shares as they are, at least with IB. I don't know the price though. With DEGIRO I haven't found this option yet. Maybe because I haven't bought any shares yet.

 

[Jerome]

Yes, it will be blocked, but in Switzerland. And as soon as the papers are sorted, she can benefit from all the fruits of my labor… 😉

[Jerome]

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.

[Jerome]

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...

[Jerome]

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.

[Jerome]

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!

 

 

 

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