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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 discuss how much it costs to invest with Charles Schwab International and the advantages and disadvantages.
I only 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 has a rich history. They serve both retail and institutional clients. They have over 300 branches in the US and the UK. Charles Schwab is a huge banking institution with over 8.5 trillion assets under management. It is the biggest discount broker 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. 25K USD is too high for people who want to test the broker.
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, investing fees are essential.
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 constitute a significant advantage of Charles Schwab. You cannot go lower than zero on fees! However, you should sometimes be careful about zero-fee brokers.
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).
If you withdraw money, you will pay 25 USD per wire transfer. However, if you have more than 100K in assets, you can do one wire transfer for free per month.
Charles Schwab International has reasonable fees if you have USD and only buy US stocks and ETFs. 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 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 use high standards of security and two-factor authentication.
In 2021, an issue at Charles Schwab 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 a major 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.
Regarding fees for US stocks and ETFs, Interactive Brokers will be slightly more expensive. 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 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.
FAQ
Can you deposit CHF to your Charles Schwab International account?
No, you can only deposit USD in your acount.
Charles Schwab International Summary
Charles Schwab is a bank and broker from the US. They are offering brokerage services in the world.
Product Brand: Charles Schwab
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Charles Schwab International Pros
Let's summarize the main 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 main 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. You can only deposit USD in your account. This limitation is already a blocker for most investors. Some better brokers will allow you to deposit CHF into your account.
On top of that, Charles Schwab is only good for US markets. The fees will be too high if you plan on investing in any other stock exchange. For many investors, this will be another blocker.
From their website and the data available, I do not feel 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, 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?
Hi
I use Schwab International for my wife who is a tax resident of Switzerland but an EU national.
1. We need to complete a W-8 BEN form, a US tax form used to determine the foreign status of non-resident aliens for the purposes of taxation. This exempts her from all US taxation except for the 15% on dividends which is unavoidable. She also benefits from the double taxation treaty between Switzerland and USA so she is not subject to US estate tax.
2. She is paid in CHF which I convert through Wise (formerly Transferwise) at a great rate so funds arrive in her Schwab account in USD.
3. I only buy cheap US ETFs (iShares, Vanguard) and manage a simple, efficient portfolio for her.
4. I like the Schwab platform. I find it easy to use. Customer Service is excellent – email response is 24 hrs or less.
5. I have opened an IB account for her to allow her to transfer some Euros she has sitting in a bank account. I want to invest these in EU-domiciled funds denominated in Euros, likely one of the Vanguard LifeStrategy funds.
Comments? Criticisms? Suggestions?
Best,
JP
Hi JP,
A few comments:
* If you are transferring large amounts of money, you would save money by transferring CHF to IB and then converting it there, for 2 USD each conversion. The IB conversion and IB transaction fees would be cheaper than Wise conversion fees after some amounts.
* If you use IB for the EUR, why not buy US ETFs as well? You could convert the EUR to USD, at once and then buy US ETFs instead of EU-domiciled funds
Thanks for sharing your strategy, it seems well optimized already.
Thank you for your excellent blog!
I’m a dual citizen USA/CH based in CH and suffering from FATCA as well as being denied Swiss investment products.
I’m new at investing and seeking an international broker to invest 200k in US ETFs and other mainly US products. Are Interactive Brokers still the better choice and which branch would apply in my case?
hi Therese,
In your case, a US broker would indeed be the best choice, I think. Now, I am not a US citizen, so I don’t have practical experience with that. But they should give you access to US products.
As for the branch, since you are in Switzerland, I would say that IB UK is the one, but again I cannot factor in your US citizenship.
Nice post!
I’ve researched Charles Schwab in the past, while IBKR was assigning EU users to the Hungarian branch. But that seems not to be the case anymore.
I agree with the conclusion. At the end, Interactive Brokers seems to be the right option for most people, Swiss or not – it’s globally available, low-cost, more than sufficient for long-term investing.
Hi
Thanks for sharing your point of view as well :)
I am not sure about the EU, but CH investors should go to the UK branch. I believe that EU investors have the choice between several branches.
Since I don’t like to hold all my assets at a single broker (IB), I’ve been using Schwab as my second broker. The way I use it is that I do all of my trading and currency conversions at IB and on a ragular basis, I transfer positions (Stocks and ETFs) using ACATS from IB to Schwab, which is free, to achieve a 50-50 split between brokers.
Hi P,
Thanks for sharing your strategy. It’s very interesting that ACATS transfers are free between IB and Schwab! So, you pay nothing with Charles Schwab?
Many brokers (including Schwab) encourage folks to switch to them, so they don’t charge fees for incoming transfers, but they do for outgoing transfers. Some brokers (Schwab not officially, but sometimes on request) even reimburse the outgoing transfer cost that new customers incurred on the other side. I guess that part doesn’t apply here though, where you keep both accounts open and only transfer some positions on a regular basis.
IB, on the other hand, has the general opinion that all fees should be low, and it makes them zero in this case, and conversely also doesn’t reimburse anything.
This leads to the fortunate situation that IB=>Schwab transfers are free, just the opposite direction is not.
Thanks for sharing the details!
I do exactly as you’re doing, I think is not a good idea to put all your eggs in one basket, chances are you’ll regret it.
I like Schwab much more than IBKR, and I’m considering moving the investments that I have with IBKR to Fidelity International. So I would keep 50% with Schawb and 50% Fidelity.
I don’t like IBKR to be honest, their customer service department sucks, the platform is not nearly as user friendly as Schawb’s or Fidelity’s.
IBKR was great when they were only based in the U.S., I used to have an account back then as I was living in the U.S., but they’ve grown too much and they are no longer nearly as good as they used to be.
How about using Charles Schwab as a second broker after reaching 500k USD in IBKR in order to keep the SIPC protection over the whole portfolio value? Could CB be a good option as a second broker if one is holding VT only (>500k USD) for example or would you recommend a different setup in this case?
Hi Mikasa
That’s a good idea. I think there is value in having multiple brokers once we reach a very high portfolio value. However, I am not sure SIPC would cover 500k in practice if one of these brokers would fail. They are just too big. On the other hand, they may be bailed out (like we bailed out UBS).
It would take a devastating event to break these companies.
Personally, I am thinking about using a Swiss broker once I reach about 500K on IB.
One other thing you could do is have one account for you and one for your spouse, so two different names for double the SIPC protection.
Hello
You write in the summery: “As far as fees go for US stocks and ETFs, Interactive Brokers will be slightly cheaper.”.
That should be Charles Schwab instead of IB.
Hi Rony,
This should be fixed, but you may have to refresh your browser.
Thanks for letting me know.
Good afternoon,
Thank you very much for the review. I am currently with IB but I am looking for another broker to diversify to.
I mainly invest in US domiciled ETFs so I would be ok with Charles Schwab’s restrictions.
However, I was not able to find on the site the withdrawal options and the costs for withdrawal. Do you know anything about those?
Do you have any recommendation of brokers to difersify to (except degiro because it is not available in the country I want to retire to)?
Thank you and have a wonderful day!
Hi Viorel,
I have not found the details from Charles Schwab International, so I am going to assume they are the same as Charles Schwab’s default entity.
You can only do bank transfers and it costs 25 USD per wire transfer.
If I were to diversify, I would go with a swiss broker, but it’s obvsiouy not ideal if you want to retire in another country. I do not have any other international broker recommendation.
One wire transfer per month is free if your assets are > 100k.
Thanks for the info!
You can try Fidelity International, Tastywooks, First Trade, Trade Station, there are others just as good or even better than IBKR.
I opened an IB & Swissquote account after reading your blog the problem I face Issue with Both accounts is although it accepts CHF the USD conversion for investments in US stocks, there is an issue – I don’t get a good exchange/conversion rate !
Any work around thats possible for CHF to USD conversion and depositing into IB or Swissquote accounts ?
Hi Kumar,
I am not sure I understand the issue.
IB has top-notch conversion rates from CHF to USD. You should deposit CHF on the account and then convert it using IB features. It will cost you 2 USD per conversion and the conversion rate will be excellent.
Swissquote is not as great with a 0.95% conversion fee. Again, you should deposit CHF and then convert it using SQ.
Hello!
Can you prepare the same comparison for a new neo broker called Trade republic?
Hi Viola
Is Trade Republic already available in Switzerland? The last time I checked, it was not available.