Degiro best/easiest option? Safety and other questions
Posted: April 18th, 2019, 5:32 am
I've been looking around this board (very helpful!) and other places for a good way to invest some of my savings that are sitting in the UK and earning very little interest. Since most of the cool robo-investors and fintech apps aren't available to non residents, it seems to basically come down to Degiro or Interactive Brokers.
I looked at IB a couple of years back, but never actually got around to doing it because it was complex and because I wasn't keen on the idea of inactivity fees. So, at first glance, Degiro seems perfect.
Background info: Been in Japan for 10 years, but don't have many investments here. Have lots of savings in the UK in things like ISAs that aren't very efficient anymore. Paying UK pension. Not sure if/when come back. Initial investments would probably be quite small, but want to get something started before more time passes.
So I was thinking something like Vanguard-ish ETFs on Degiro would have low fees and be pretty 'set-and-forget' and flexible. Plus easy to set up.
Questions:
1 - Is Degiro safe and reliable?
It seems to be well known and have pretty good reviews from reputable places, but there also seems to be a lack of info about the companies behind it and operations.
AFAIK it's covered by Dutch/EU Government schemes up to 20,000 Euros, which is lower than the UK but I'm unlikely to hit that limit soon. But also they do something with a separate holding company and with possibly lending out your shares which is a bit confusing to me. Just wary because there was another company in the UK that went under recently where people *thought* they were covered and it turned out they weren't.
If I understand correctly, if i buy ETFs and Degiro goes bankrupt, those are still mine and still on the exchange, right? (Unless they lent them out?)
2 - ETF locations?
I'm a bit confused on this as it seems they offer ETFs based in the UK, Ireland, EU, etc..
Income in the UK up to 10,000 is tax free now, right? So would it be best to invest in UK based funds to avoid issues such as exchange rates, etc?
Ireland also seems popular, but if i invest in an irish based fund does that mean it's in Euros, even if it's tracking the FTSE or SP-500?
Do non-UK based funds have any tax benefits/drawbacks?
3 - Currency exchange fees and changing rates?
At first glance their fees seem great, and they offer fee-free ETFs as well. But looking closer, those fee-free ones are all in Euros, so there'd be a currency exchange fee both when investing and when withdrawing. That'd push up costs. Would that make UK based funds more attractive?
Given how volatile currencies can be, I'm a bit wary about that wiping out any profits.
Can someone clarify how exchange rates might come into play if, for example, I have a UK Degiro account, and I buy an Irish-based ETF tracking the UK stock market? How about an Irish based ETF tracking the US stock market?
4 - Very newbie question: How is Brexit likely to affect / not affect all this?
Any other advice, recommendations or suggestions would be much appreciated.
Thanks in advance!
I looked at IB a couple of years back, but never actually got around to doing it because it was complex and because I wasn't keen on the idea of inactivity fees. So, at first glance, Degiro seems perfect.
Background info: Been in Japan for 10 years, but don't have many investments here. Have lots of savings in the UK in things like ISAs that aren't very efficient anymore. Paying UK pension. Not sure if/when come back. Initial investments would probably be quite small, but want to get something started before more time passes.
So I was thinking something like Vanguard-ish ETFs on Degiro would have low fees and be pretty 'set-and-forget' and flexible. Plus easy to set up.
Questions:
1 - Is Degiro safe and reliable?
It seems to be well known and have pretty good reviews from reputable places, but there also seems to be a lack of info about the companies behind it and operations.
AFAIK it's covered by Dutch/EU Government schemes up to 20,000 Euros, which is lower than the UK but I'm unlikely to hit that limit soon. But also they do something with a separate holding company and with possibly lending out your shares which is a bit confusing to me. Just wary because there was another company in the UK that went under recently where people *thought* they were covered and it turned out they weren't.
If I understand correctly, if i buy ETFs and Degiro goes bankrupt, those are still mine and still on the exchange, right? (Unless they lent them out?)
2 - ETF locations?
I'm a bit confused on this as it seems they offer ETFs based in the UK, Ireland, EU, etc..
Income in the UK up to 10,000 is tax free now, right? So would it be best to invest in UK based funds to avoid issues such as exchange rates, etc?
Ireland also seems popular, but if i invest in an irish based fund does that mean it's in Euros, even if it's tracking the FTSE or SP-500?
Do non-UK based funds have any tax benefits/drawbacks?
3 - Currency exchange fees and changing rates?
At first glance their fees seem great, and they offer fee-free ETFs as well. But looking closer, those fee-free ones are all in Euros, so there'd be a currency exchange fee both when investing and when withdrawing. That'd push up costs. Would that make UK based funds more attractive?
Given how volatile currencies can be, I'm a bit wary about that wiping out any profits.
Can someone clarify how exchange rates might come into play if, for example, I have a UK Degiro account, and I buy an Irish-based ETF tracking the UK stock market? How about an Irish based ETF tracking the US stock market?
4 - Very newbie question: How is Brexit likely to affect / not affect all this?
Any other advice, recommendations or suggestions would be much appreciated.
Thanks in advance!