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Charles Schwab is a giant financial firm in the United States. Among other services, they offer stock broker services. And through Charles Schwab International, they are open to non-US residents.
Many of my readers have requested that I write about it. Therefore, I will review Charles Schwab International from the point of view of a Swiss investor. We will how much it costs to invest with Charles Schwab International and the advantages and disadvantages.
I am only going to focus on their offer for non-US residents. They also offer their platform for US investors under slightly different conditions.
Charles Schwab International
Charles Schwab is both a bank and a stock broker. The company was founded in 1971 and had a rich history. They serve both retail and institutional clients. They have over 300 branches in the US and the UK. It is a very large banking institution with over 8.5 trillion assets under management. It is the biggest of the discount brokers in the United States.
Charles Schwab International is their division for clients outside of the United States. I will review this division only in this article.
Investing with Charles Schwab International
Let’s look at what you can do with Charles Schwab International.
You can invest in pretty much every instrument:
- Stocks and ETFs
- Bonds
- Options
- Mutual Funds
- Margin Loans
For simple investors like me, this is already more than enough. I only use ETFs and sometimes stocks, but I do not need other instruments.
If you want to open an account with Charles Schwab International, you will need a minimum deposit of 25’000 USD. This minimum is a high amount as far as minimum deposits go. For people that want to test the broker, 25K USD is too high.
With Charles Schwab International, you can only deposit money in USD. For that, you can use a check or wire transfer. This limitation is highly inconvenient if you get paid in CHF.
Fees
When reviewing a broker, the investing fees are very important.
The first major point of Charles Schwab International fees is that they offer zero-fees investments in US stocks and ETFs. These zero-fee transactions are a major advantage of Charles Schwab. You cannot go lower than zero on fees!
They also do not charge any custody fee or inactivity fee.
It is important to note that I mentioned US stocks and ETFs. And this is indeed where the low fees end. If you want to trade an ETF in a foreign stock exchange, you will pay a 50 USD fee. This fee is very expensive and means that you should only consider Charles Schwab International if you have a portfolio with only US ETFs. Otherwise, you should avoid it.
If you need to do a currency conversion, you will have different fees based on which currency you need. For instance, to convert in EUR, you will pay 19 USD per conversion. If you convert with CHF, you will pay a 1% fee (it can be lower if you convert more than 100K).
Overall, if you have USD and only buy US stocks and ETFs, Charles Schwab International has reasonable fees. But if you need to convert currency or want to invest in foreign exchanges, Charles Schwab International will be very expensive. We can easily see that this will not do well for a Swiss investor.
Security
The security of your investments is also fundamental.
Charles Schwab is regulated in the United States, the United Kingdom, Hong Kong, and Singapore.
In case of bankruptcy, your assets are protected by SIPC protection (the standard protection in the US). SIPC protects up to 500’000 USD of your assets. There is a cash limit of 250K in this protection. These amounts are higher than the protection for Swiss brokers.
As for technical security, I have not found anything wrong with Charles Schwab. They are using high standards of security and two-factor authentication.
In 2021, there was an issue at Charles Schwab that led to a lot of personal information being leaked to external email addresses. They did not share much information about this event, but a data leak of sensitive information is still essential to know!
Overall, I think that assets at Charles Schwab are relatively safe. Nevertheless, the fact that there was an important data leak is still concerning.
Charles Schwab International vs Interactive Brokers.
Let’s compare Charles Schwab International with Interactive Brokers (IB), another popular US broker.
As far as fees go for US stocks and ETFs, Interactive Brokers will be slightly cheaper. However, you will pay about 0.35 USD for investing in US stocks and ETFs with IB. This fee is almost insignificant.
And IB will be much cheaper for investing in non-US stocks and ETFs. Also, IB is much cheaper (2 USD) for currency conversion.
On top of that, IB has other advantages:
- You can wire CHF directly
- There is no account minimum
Overall, I do not see any significant disadvantage of IB over Charles Schwab. On the other hand, IB has several advantages for a Swiss investor. Therefore, I would highly recommend IB over Charles Schwab International if you want a US broker.
If you want more info on IB, you can read my review.
Charles Schwab International Pros
Let’s summarize the advantages of Charles Schwab International:
- No transaction fees for US stocks and ETFs
- Extensive range of investing instruments
Charles Schwab International Cons
Let’s summarize the disadvantages of Charles Schwab International:
- Only possible to deposit USD
- Only meant for trading US stocks and ETFs
- High currency conversion fees
- High account minimums
- The website is poorly organized and not very transparent
Conclusion
Overall, I do not recommend Charles Schwab International for Swiss investors. The fact that you can only deposit USD on your account is already a blocker for most investors. There are significantly better brokers that will allow you to deposit CHF into your account.
On top of that, Charles Schwab is only good for US markets. If you plan on investing in any other stock exchange, the fees will be way too high. For many investors, this will be another blocker.
From looking at their website and the data available, I do not feel like it makes any sense for a Swiss investor to go with Schwab.
If you want a US broker, I recommend you go with Interactive Brokers, the broker I am using right. You should read my review of Interactive Brokers to get more information.
If you prefer a Swiss broker, take a look at the best Swiss brokers.
If you want to learn more about this broker, you can head to their website.
What about you? What do you think about Charles Schwab International?
