(Disclosure: Some of the links below may be affiliate links)
If you want to start investing in the stock market, you will need a broker account. DEGIRO is a good broker for European investors.
In this article, we will see in detail how to open an account with DEGIRO. Once these steps are done, you will be ready to trade Exchange Traded Funds (ETFs) on DEGIRO.
DEGIRO is a cheap broker for European people. It is well priced and offers a great choice of investment products.
Choosing a broker
The first thing you have to do is to choose a broker. Your broker will give you access to various stock exchanges. And from them, you will be able to buy and sell ETFs.
There are a lot of options for brokers. The choice will depend on your investing style, of course. You need to know in advance how often you are going to trade. You also need to know which stock exchanges you are going to invest in. Some stock exchanges are more expensive than others. And not all brokers offer the same price for each exchange.
The main points for comparing brokers should be:
- The availability of your products. You want to make sure you have access to all the ETFs you need for your portfolio.
- The price per year for your investing style. Check the fee for each order you will use and make an estimate per month and year. You want to spend as little money as possible on your broker.
- The ease of use. You are going to use it regularly, so you want it to be simple. But since you are not going to use it every day, this is not a deal-breaker.
- The security of the broker. You do not want to have issues because you are using an unsafe broker.
- The reputation of the broker. If there is anything shady about a broker, you should avoid it.
These are the main points that most people should use to compare brokers. Based on your situation, you may have different points for comparing them.
In the end, do not forget that choosing a broker is a personal choice.
DEGIRO as a broker
DEGIRO is a good European broker from the Netherlands. For European investors, it is an excellent choice.
If you want to learn more, you can read my review of DEGIRO.
With DEGIRO, a few of the ETFs are free of transaction costs. If you already know your portfolio, you can take a look a the DEGIRO list of Free ETFs.
In this article, we will see the different account types at DEGIRO and how to open an account with them. After that, the next step will be to start trading with DEGIRO.
DEGIRO Account Types
Before you open an account at DEGIRO, you need to know the several types of accounts from DEGIRO.
There are two types of accounts: Basic and Custody. The default option is the Basic account. In the Basic account, DEGIRO can loan your securities to other users, and this is how they can keep the fees low.
On the other hand, the Custody account means the securities are held separately, and they cannot lend them to third parties.
But, there are a few disadvantages of having a custody account:
- You cannot trade short. It should not be an issue for passive investors.
- You do not have access to credit or buying on margin. It should not be an issue unless you want to use leverage.
- You cannot trade turbos, speeders, and sprinters. Once again, this should not be an issue.
- You have to pay if you want real-time prices
- You cannot trade derivatives
Overall, I do not think these limitations are a big deal for passive investors that are in for the long term. But if you want to do some active trading on the side, it may not be enough for you.
And finally, you will be charged 1 EUR and 3% for each dividend you get. This fee is a bit high as your portfolio grows. If you got a yield of 2%, this fee is a 0.06% fee overall. Moreover, if you get only accumulating ETF, you should not have this issue.
If you do not want DEGIRO to lend your securities, you should opt for the Custody account. However, you need to be aware of the fees that you will be putting on your dividends, and this fee is not negligible. For a large account, a Custody account can be several times more expensive than a Basic account.
I do not think the risk is high by lending your shares. When investors are borrowing shares, they are providing collateral. So this collateral will protect you. But there is an additional risk. You have to decide if you are willing to take it or not.
In the end, it is entirely up to you. If you do not want to pay the extra fees on dividends, then go for the Basic account. When they ask if you accept your securities to be loaned, you can say you want a custody account instead.
Open a DEGIRO account
It is now finally time to describe how to open a DEGIRO account. The process is straightforward.
First, you go to the DEGIRO website. And then, you use the big “Open An Account” green button on the top right. From, there you will have to fill in standard information for an account:
- Email, username, and password
- Your address
Then, you need to activate your account from your mail. And then again, answer a bunch of questions about you and accept the conditions.
During this process, you will have to choose the account type: Basic or Custody. You need to pay attention to this because you will not be able to change it afterward. I would like DEGIRO to make it possible to change the account type. But currently, you have to create a new account and transfer your shares (with a fee) if you ever want to change your account type.
Finalize your DEGIRO account
Then, you need to make the first deposit to validate your account number. You can either make it instant with SORFORT or make a regular bank transfer. I chose to deposit 100 CHF with an instant deposit (SOFORT).
Finally, your DEGIRO account is ready. Once you are there, I strongly recommend you turn on two-step verification. You can use a Google Authenticator or any other authentication service. It is essential to improve the security of your online broker account.
Opening a DEGIRO account is very simple. With the instant deposit, you can get your account ready in less than one hour. You can then start trading directly. The procedure is straightforward and fast, and it is easily the most simple broker account I have ever opened.
If you want to transfer more money later on, it will take more time for the funds to reach your account. DEGIRO is a bit slow in processing the money. Once the money reaches them, it can take more than one day for it to appear on your account. But wire transfers are still better than paying for instant deposits.
If you are a Swiss investor, there is a better broker: Interactive Brokers. This is the broker I am using myself an I am very satisfied. If you are interested, you can also read about Interactive Brokers, a broker even cheaper than DEGIRO.
What do you think about DEGIRO? Which broker do you use?