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I have talked about several brokers on this blog. But I have not yet answered the question of which one is the best broker in Switzerland!
This article answers this important question. There are several Swiss brokers, and most Swiss banks have their broker service. But some international brokers are also available in Switzerland.
You need a broker account if you want to invest in the stock market. So, before investing, you need to choose a broker account. You need to choose carefully since changing brokers is neither easy nor free. Therefore, it is essential to pick the best broker possible.
By the end of this article, you will know which broker you should use as a Swiss passive investor in ETF!
How to choose a broker?
Choosing a broker is not very difficult, but it is a very important decision.
You are likely to use it for many years. You can always switch to a new broker. But moving your shares to a new broker is not free and not straightforward to do. So, it is better to start with the right decision directly. Ideally, you want to start with the best broker for your needs.
You first need to ensure that you only trade with a reputable broker. You will entrust your investments with this broker. So you want a broker with a good reputation and excellent security.
Mainly, you must ensure that the broker will hold your assets separately from the broker’s legal entity. If the broker defaults, you can still reclaim your assets through the secondary entity. This separation is called asset segregation, something that any proper broker will do.
The second thing you should check is whether the broker gives you access to the exchanges you need. For instance, if you want to trade in Swiss stocks, you will need access to the Swiss Stock Exchange (SWX).
Due to a bad set of laws, it is currently challenging to access Exchange Traded Funds (ETFs) from the U.S. Indeed, European investors cannot currently invest in these funds.
And only Interactive Brokers (among the affordable brokers) will offer Swiss investors access to these U.S. ETFs. So, your choice is highly limited if you want to invest in these funds.
Finally, you need to look at the prices of transactions. Price is the main issue with most Swiss brokers. They are expensive. As we will see later, there can be a vast difference in fees between different brokers. Most people do not realize this! When you compare brokers, you will see that the difference is too big to ignore!
Out of these three criteria, the third one is the one that requires the most research. Finding reputable and safe brokers is not very difficult. But finding an affordable broker giving you access to the stock exchanges you need is not always easy. If you research correctly, you will directly start using the best broker for your needs.
The best brokers in Switzerland
As I said before, there are many options. You can probably trade directly with your bank. But Swiss banks are costly for trading. It would be convenient to trade directly with your bank. Unfortunately, they are too expensive. So, you should not trade with your bank.
In Switzerland, we have few good options for online brokers. My favorite Swiss online broker is Swissquote (my review of Swissquote). FlowBank (review) and Corner Trader (review) also have acceptable prices.
These are already much more interesting than trading with your bank. But they are not cheap either. Finally, there are several international online brokers available for Swiss investors:
These two brokers are the best options available for Switzerland. They are significantly cheaper than all the other options available in Switzerland. They may not be Swiss, but they offer their services to Swiss investors. This makes them the two best brokers in Switzerland.
To see that it is the case, we will compare the fees of the different brokers. We can also consider that you do not have to pay Swiss Stamp Tax with them.
Comparison of the brokerage fees
We can quickly compare the fees of some of these brokers for some operations.
I cannot compare all the brokers available because there are too many. So I picked the most popular brokers in Switzerland. I included two bank brokers, two online swiss brokers, and two international brokers.
This should be a good set of brokers for comparison. This should help to show what are the best brokers in Switzerland.
For information, I am using the Tiered pricing of Interactive Brokers for this comparison. It is generally cheaper than the Fixe pricing.
Here are the fees for these six brokers for a few examples of operations on Swiss and American stock exchanges. I used the share prices of April 16th for the comparison. Here are all the data I have collected:
|Custody Fees||90 CHF / year||0.23% / year
Min 50 CHF
|35 CHF / quarter
|0.025% / quarter
Min 15 CHF
Max 50 CHF
|0 CHF||0 CHF|
|Buy 10 CHSPI shares||25 CHF||40 CHF||20 CHF||9 CHF||2.35 EUR||5 CHF|
|Buy 100 CHSPI shares||50 CHF||40 CHF||23 CHF||9 CHF||5.55 EUR||5 CHF|
|Buy 10 NOVN shares||15 CHF||40 CHF||20 CHF||20 CHF||5.42 CHF||5 CHF|
|Buy 100 NOVN shares||35 CHF||40 CHF||20 CHF||30 CHF||9.23 CHF||5 CHF|
|Buy 10 MSFT shares||35 USD||40 CHF||25 CHF||25 USD||0.54 EUR||0.35 USD|
|Buy 100 MSFT shares||70 USD||40 CHF||25 CHF||80 USD||0.90 EUR||0.36 USD|
Or, if you prefer, here is the data in graphical format:
As we can expect, the traditional Swiss brokers are in a poor position. Swiss online brokers are already significantly better. For instance, Swissquote is quite affordable in most cases. The worst would be Migros since they do not have a maximum on their custody fees, which is a terrible drag once you have a large portfolio.
In most cases, Interactive Brokers is the cheapest broker. It is followed by DEGIRO. So our two online foreign brokers are significantly cheaper than the others. In the worst case, IB is hundreds of times cheaper than Swiss brokers!
On average, if you are doing big enough transactions, DEGIRO and IB will be much cheaper than the other brokers. They are consistently among the most affordable and are never among the most expensive options. For me, this shows that DEGIRO and IB are the best brokers available in Switzerland.
If you would like to have more brokers included in this comparison, let me know, I can extend the list if many people are interested. I understand that some people want to have a Swiss broker. For them, I have an article where I compare the best Swiss brokers.
Swiss Stamp Tax and brokers
In Switzerland, there is a tax called the Swiss Stamp Tax (or Swiss Stamp Duty). This tax is also called the Swiss Securities Transfer Tax. This is a federal tax.
This levies a tax on each transfer of securities when a Swiss securities dealer is involved. By Swiss securities dealers, the tax means Swiss banks and Swiss brokers.
The amount of the tax depends on the exchange:
- Swiss securities: 0.075% fee
- Foreign securities: 0.15% fee
This tax only applies to Swiss securities dealers, not foreign securities dealers! Choosing a non-Swiss broker will save on the Swiss Stamp Tax! Since this tax is levied in both directions (buy and sell), you are effectively losing 0.30% of your transactions by using a Swiss Broker! Over the years, this can quickly add up to a large amount!
This tax effectively moves people away from Swiss brokers. This law officially makes foreign brokers the best brokers for Switzerland.
For more information, read my article on the Swiss Stamp Tax Duty.
The two best brokers in Switzerland
As we can see from the comparison, the choice is relatively easy. From a fee point of view, only Interactive Brokers and DEGIRO are good choices. All the others are too expensive. Interactive Brokers is the cheapest of the available brokers.
For me, Interactive Brokers is the best broker available in Switzerland. Even though DEGIRO is cheap, it cannot thoroughly compare with IB.
There is one big difference currently between these two brokers. Only Interactive Brokers currently offers access to U.S. ETF. So, if you want to invest in U.S. ETF, you must use IB. This is only the case for ETFs. Both brokers are giving access to all other U.S. securities.
Aside from these two differences, they are both excellent brokers. DEGIRO is a bit more expensive for currency exchange. This makes it a bit more expensive for a Swiss investor.
On the other hand, DEGIRO is cheaper for European securities. So it makes DEGIRO interesting for European investors. And European investors do not have access to U.S. ETFs anyway, so they have more choices of brokers.
IB is a bit cheaper and offers excellent foreign exchange trading. And it offers tons of features and analysis tools. This comes at the price of complexity. At first sight, Interactive Brokers is quite intimidating. But it has become better and better over the years. As a simple investor, you will only need a small portion of all the features of IB.
Interactive Brokers – The best broker
As mentioned before, Interactive Brokers is the only one of the two best brokers to give you access to U.S. ETFs. So, if you plan to invest in them, IB should be your choice. It is my favorite broker, the one I use and recommend!
Interactive Brokers is a broker from the United States. But if you are in Europe, you will use its United Kingdom subsidiary. But this remains the same broker. It is a very well-established broker, funded in 1978. It has many customers all over the world.
Although it is a low-cost broker, it offers many features. They offer access to almost all instruments available in many stock exchanges. You can trade in stocks, contracts, options, and other derivatives. And they have an excellent platform for FOREX trading. For passive investors, you will have many more features than you need.
The biggest disadvantage of IB is that it is sometimes a little obscure to use. IB has many different user interfaces; in the beginning, it is unclear which one you should use.
Other than that, IB is an excellent broker!
If you are interested, I have a guide on opening an account at Interactive Brokers and a guide on trading ETFs with Interactive Brokers.
DEGIRO – The simplest broker
DEGIRO is the broker I have started with. It is a good and cheap broker. It is relatively simple to use. However, they are much less professional than IB.
DEGIRO is a broker from The Netherlands that is available to most countries in Europe. It started in 2008, and they have been growing fast since then. Now, they are one of the major brokers in Europe.
One disadvantage of DEGIRO is that it does not offer proper FOREX trading. You cannot hold different currencies in your account. Your cash is converted automatically when you trade in a foreign currency.
And you will have to pay fees for these transactions. This makes it a little more expensive than IB when your base currency is not the currency of your primary ETF.
On some transactions, it can also be a bit more expensive than Interactive Brokers. But this should not be a big difference unless you are doing substantial transactions.
A significant limitation is that DEGIRO does not let Swiss investors invest in U.S. ETFs. This is probably fine for starting investors and people who do not plan to invest a large amount of money. But with a large portfolio, you can save significant money investing in these U.S. ETFs.
Finally, you need to be aware that, by default, DEGIRO will lend your shares to other investors. You can avoid this by opting for the Custody account, but you will pay some significant fees on dividends.
If you are interested, I have a tutorial on how to open an account with DEGIRO.
What if you want to use a Swiss broker?
As you can see, Swiss brokers cannot compare with these international brokers. Using Interactive Brokers or DEGIRO will let you some money. And I do not think we will see any Swiss broker cheaper than these two anytime soon.
However, Swiss brokers are not all bad. Some Swiss brokers are bad and only try to get money out of you. But that is not the case for every Swiss broker. They are more expensive for several reasons:
- They have to obey different regulations
- They have to pay Swiss employees (they cost more)
- They have to deal with Swiss banks (they cost more)
There are several good Swiss brokers. So, if you are uncomfortable having your shares in a foreign broker, you can check out the best Swiss brokers. I would personally use Swissquote if I were to use a Swiss broker. You can check out my review of Swissquote for more info.
You can still invest successfully with a Swiss broker, but that will be more costly. If this brings you peace of mind, you should accept the price. Peace of mind is better than optimization!
Interactive Brokers is the best broker available in Switzerland. They are both reputable and safe brokers. And they are the cheapest brokers available in Switzerland. Moreover, you will save on the Swiss Stamp Duty that you only have to pay with Swiss brokers.
Swiss brokers are working fine, and they have nothing fundamentally wrong. But they are much more expensive than online foreign brokers.
And when you add the Swiss Stamp Duty on top of that, the difference is significant. You do not want to waste your returns on fees when you invest. So, you need to minimize the fees. And for that, you need to choose the best brokers.
I firmly believe that Interactive Brokers is the best broker for Swiss investors in all cases. There are a few cases where DEGIRO is slightly cheaper than Interactive Brokers.
And IB is a much more complete solution for investors. It also has a better reputation. Finally, given that they offer access to U.S. ETFs, IB can help you save a lot of money. If you want, here is a guide on how to get started with Interactive Brokers.
And again, if you want a Swiss broker, I got you covered with my comparison of the best Swiss brokers.
What about you? What is the best broker for you?