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Degiro vs trading212(invest)

Amouar

Hi all,

I have an account with Degiro since they started accepting Irish customers, but i recently came across trading212(invest) which seem to be a much better option as they don't appear to charge any trading fee.

They look too good to be true, therefore I wanted to check if anyone has any experience using trading212(invest) and whether it's worth moving from Degiro to them.

Thanks

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sk8board

Fol20 wrote: »

Does degiro have any guarantee or is it all ok ?

Degiro has a Dutch regulated deposit guarantee of €20k.
Remember the deposit guarantee covers the cash you have on account waiting to trade, not the value of your investments.
If Degiro died (in a relatively orderly fashion) in the morning, you’d have 3 options:
1. Move your portfolio to a broker pre-selected by Degiro’s liquidator
2. Move it to your own preferred broker
3. Liquidate the assets and withdraw (a less likely option - it would have to be a very orderly wind down).

Otherwise it’s regulated and safe as a broker can be, separate client funds accounts etc.

The choices for diy investors in Ireland are broadly limited to two:
Davy and Degiro.

If you prefer an Irish presence, and don’t mind €15 trade fees, I’d pick Davy.
Personally I use degiro and v happy with them.

Supercell

How does Trading 212 deal with dividends on fractional shares, are they split pro-rata?

Despite my earlier protestations I've been thinking of making a manual kind of US ETF (infrastructure stocks - likely to boom if Biden gets elected, cloud and SaaS, renewable power) with a basket of fractional shares and just adding to it monthly with Trading 212. The free trades and fractional shares make this approach quite attractive to me on reflection.

JackieChang

JMMCapital wrote: »

I would not recommend Trading212. They are for trading in CFDs which are an extremely risky form of derivative and highly speculative stick with Degiro.

Do not listen to this guy. While it's true that you can trade CFDs on this platform, you can ignore the CFD section entirely. In fact you can disable it when you sign up and never see it ever again, and focus on investing only. There is a good selection of stocks on Trading 212. I've been using it for a few months now. Moved from Revolut which offers stocks on a very basic level.

I've had no problems with it so far. Plenty of engagement from the devs on the community support forum, happy to take new ideas etc. I just hope they keep the engagement up when the app explodes in popularity. I'm not sure if you've noticed but it seems like every tom dick and harry are investing in tesla / AMD these days.

Supercell wrote: »

I've been thinking of making a manual kind of US ETF

@Supercell they are rolling out a new feature which will allow you to create your own mini ETFs and automatically deposit into them. It's called autoinvest and should be coming out in a few weeks. I think it's in beta stage now for a select few.

One thing I'll add for anybody thinking of signing up... DO NOT TOUCH the "CFD" platform until you've spent ages reading up about what they are. You can loose hundreds of euros in seconds. Once you've read up on them, spend a few months on their practice account if you really want to try it.

Supercell

JackieChang wrote: »

@Supercell they are rolling out a new feature which will allow you to create your own mini ETFs and automatically deposit into them. It's called autoinvest and should be coming out in a few weeks. I think it's in beta stage now for a select few.

Thanks for this, I didnt even know there was a community forum for it. I just read the beta post and have applied to join it. Answers my question too about fractional share dividends too, looks brilliant, exactly what I was wanting to do

JackieChang

Supercell wrote: »

Thanks for this, I didnt even know there was a community forum for it. I just read the beta post and have applied to join it. Answers my question too about fractional share dividends too, looks brilliant, exactly what I was wanting to do

Good stuff. What did they say about fractional dividends?

Supercell

JackieChang wrote: »

Good stuff. What did they say about fractional dividends?

Distributed prorata, to two decimal places which is fair enough to my mind.
Pity its only going to be fractional shares for now, some of the lower prices shares would be nice to add to my "pie" such as BAM for example, though BIP and BEP are fractional which is weird when the parent isnt so to speak.
I'm busy reading up and making a list for my "pie". Absolutely delighted I have to say.
If anyone is interested have a read of this - https://community.trading212.com/t/autoinvest-join-the-beta/6793

Supercell

Just thought I should add here.
The Pie beta is rolling out and is absolutely bloody brilliant in my opinion.

However, of especial interest to Irish investors with the current taxable situation of ETF's, look what these devs are planning to do :

https://community.trading212.com/t/autoinvest-beta-feedback/8860/171

I’ll share one of our future ideas regarding the pies. We plan to connect to a data feed that will allow us to show the exact holdings of each ETF on its instrument page. This data will also allow us to put a ‘Generate Pie’ button there which will create a pie with the same holdings as the ETF’s. Moreover, this pie’s targets will be synced to the real ETF’s distribution percentages.

This is freaking awesome for us in Ireland especially!
Have to say I have decided to stop putting more funds into degiro and am using Trading 212 from here on in for further investing, they really are ahead of the game in Europe.

dotsman

Supercell wrote: »

Just thought I should add here.
The Pie beta is rolling out and is absolutely bloody brilliant in my opinion.

However, of especial interest to Irish investors with the current taxable situation of ETF's, look what these devs are planning to do :

https://community.trading212.com/t/autoinvest-beta-feedback/8860/171

This is freaking awesome for us in Ireland especially!
Have to say I have decided to stop putting more funds into degiro and am using Trading 212 from here on in for further investing, they really are ahead of the game in Europe.

Sounds like a nightmare of epic proportions when it comes to cap gains tax!:eek:

iAcesHigh

dotsman wrote: »

Sounds like a nightmare of epic proportions when it comes to cap gains tax!:eek:

Yeah, doesn't sound much easier on the paperwork then declaring ETF holding on a buy and on a sell...

Supercell

dotsman wrote: »

Sounds like a nightmare of epic proportions when it comes to cap gains tax!:eek:

iAcesHigh wrote: »

Yeah, doesn't sound much easier on the paperwork then declaring ETF holding on a buy and on a sell...

Not really, actually it's easy :

https://helpcentre.trading212.com/hc/en-us/articles/360008145758-How-to-get-a-Tax-Statement-for-the-financial-year-

If you would like a Tax Statement, you can write us an email at info@trading212.com and we’ll send you over the tax statement for the previous financial year.

Supercell

Hrrm, just had a lok at the revenue pages on CGT, the FIFO and four week rules are going to make this a total nightmare without some kind of software chomping through it all. Bugger it, our tax system really penalises investors in this country, an average cost as in other countries would be nice, ISA's would be even nicer!
Ok, i'm getting rid of my pies, feck it

iAcesHigh

Supercell wrote: »

Not really, actually it's easy :

https://helpcentre.trading212.com/hc/en-us/articles/360008145758-How-to-get-a-Tax-Statement-for-the-financial-year-

statement won't help you in calculations when selling against each "minor" buy. I would really like this to work and have majority of my money in ETFs, but Irish policy on that will need to change before that makes sense for me, especially taking into account FF is considering lowering CGT to 25% which would make it 16% cheaper than ETF tax...

Supercell

iAcesHigh wrote: »

statement won't help you in calculations when selling against each "minor" buy. I would really like this to work and have majority of my money in ETFs, but Irish policy on that will need to change before that makes sense for me, especially taking into account FF is considering lowering CGT to 25% which would make it 16% cheaper than ETF tax...

Thanks god I only created my pies yesterday. I have turned off auto invest on them and will just let them sit, unless a miracle happens they wont hit the CGT limit this year as I was only testing various profiles so all very small.
Its very frustrating I have to say the whole ETF situation (as many people here have said many times before).
The four week rule is a massive PITA too, I honestly wasn't aware of it before, thankfully through luck more than anything else it wont affect my last years return either.
The Irish taxation system really needs to catch up with the times, it seems geared towards old fashioned pen and paper investing.

sk8board

dotsman wrote: »

Sounds like a nightmare of epic proportions when it comes to cap gains tax!:eek:

Have to agree, having filed both ETF and CGT returns every year for a while.
Its like driving to a garage 10 miles down the road to save €0.02 on petrol.

I’ve always hoped the increasing popularity of ETFs with amateur/DIY investors would make the Revenue clear the complexity. In another few years you’ll see thousands of small investors not even realising there is an 8 year deemed disposal, and/or will be filing incorrectly, if at all. It’ll be a mess.

That said, I’ve said the same about my rental tax situation for the last 15 years!

JackieChang

Supercell wrote: »

Hrrm, just had a lok at the revenue pages on CGT, the FIFO and four week rules are going to make this a total nightmare without some kind of software chomping through it all. Bugger it, our tax system really penalises investors in this country, an average cost as in other countries would be nice, ISA's would be even nicer!
Ok, i'm getting rid of my pies, feck it

What 's the four week rule? Couldn't find anything on google.

I did find this though "If investing in Irish Domiciled ETFs one will pay approx 41% tax on dividends & will pay 41% on overall gains. You will have to pay any tax due on growth every 8 years (even if not selling them). This inhibits on the potential compounding." Sounds like investing in ETFs is as good as throwing money down the toilet.

Supercell

JackieChang wrote: »

What 's the four week rule? Couldn't find anything on google.

I did find this though "If investing in Irish Domiciled ETFs one will pay approx 41% tax on dividends & will pay 41% on overall gains. You will have to pay any tax due on growth every 8 years (even if not selling them). This inhibits on the potential compounding." Sounds like investing in ETFs is as good as throwing money down the toilet.

Its here - https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/selling-or-disposing-of-shares.aspx

Shares sold within four weeks of acquisition
Shares bought and sold within a four-week period cannot be offset against other gains.

You can only deduct the loss from a gain made on a subsequent disposal of same-class shares acquired within the four weeks.

Basically they are penalising you for taking a loss quickly, or are strong believers that "time in the market beats timing the market". Rebalancing pies will be a total nightmare with these rules as would adding to or selling them. I have left my pies and am just not gong to touch for a while.

iAcesHigh

JackieChang wrote: »

What 's the four week rule? Couldn't find anything on google.

I did find this though "If investing in Irish Domiciled ETFs one will pay approx 41% tax on dividends & will pay 41% on overall gains. You will have to pay any tax due on growth every 8 years (even if not selling them). This inhibits on the potential compounding." Sounds like investing in ETFs is as good as throwing money down the toilet.

well even with extra 7% compared to shares (atm) it's probably still more profitable for most people who aren't willing to spend time to assess companies before investing... Tax on shares div's aren't any better btw

JackieChang

Supercell wrote: »

Its here - https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/selling-or-disposing-of-shares.aspx

Jesus what a massive headache.

NickSantigo

sk8board wrote: »

Have to agree, having filed both ETF and CGT returns every year for a while.
Its like driving to a garage 10 miles down the road to save €0.02 on petrol.

I’ve always hoped the increasing popularity of ETFs with amateur/DIY investors would make the Revenue clear the complexity. In another few years you’ll see thousands of small investors not even realising there is an 8 year deemed disposal, and/or will be filing incorrectly, if at all. It’ll be a mess.

That said, I’ve said the same about my rental tax situation for the last 15 years!

It is unnecessarily complicated. I can't help but feel it's on purpose.
If you are investing in etfs for example chances are they are for American or foreign companies. It's like they feel you are taking money out of the economy to invest in foreign companies even though chances are you will bring that profit back into the Irish economy to spend.

For an amateur investor dollar with no time to do research and study markets dollar cost averaging into an S&P 500 etf is a very good and fairly safe way of investing and they have it so complicated it's not worth your while. Whole thing is so frustrating

iAcesHigh

NickSantigo wrote: »

It is unnecessarily complicated. I can't help but feel it's on purpose.
If you are investing in etfs for example chances are they are for American or foreign companies. It's like they feel you are taking money out of the economy to invest in foreign companies even though chances are you will bring that profit back into the Irish economy to spend.

For an amateur investor dollar with no time to do research and study markets dollar cost averaging into an S&P 500 etf is a very good and fairly safe way of investing and they have it so complicated it's not worth your while. Whole thing is so frustrating

I agree this should be easiest thing around to accommodate "amateur investor" (which in essence we all are). Also, I don't see reason why they don't charge usual CGT rate for it, but have different and "complicated" formula for these...

That being said, to be honest it's not that bad, is it? If you make sure you buy EU domiciled ETF you only need to do 2 things: report when you buy it and then report and pay tax when you sell it (with exception if you hold it for longer than 8 year in which case you need to report it post-8 years).

Obviously, dollar cost averaging makes this much more complicated, but if you simply save your money throughout the year and buy once or twice a year, paperwork isn't that bad....

Saudades

I was looking into Blackrock iShares S&P 500.

Degiro have this listed under ISIN IE0031442068, trading under Euronext Amsterdam as Euro Currency (which seems correct as it's an Irish domiciled ETF).

Trading212 have this listed under the exact same ISIN IE0031442068 but traded as British Pound on the London exchange.

So if I invested with Trading212, am I subject to currency risk?

Useful thread by the way. Are there any other differences, fees , hidden fees, or otherwise, between Degiro and Trading 212 that haven't been covered on this thread?

Saudades

sk8board wrote: »

Am I correct to assume:

1. If you’re only buying ETFs, then the shorting of shares isn’t an issue and a basic a/c is just as safe as a custody one

2. The bank guarantee scheme protection of €20k on DEGIRO is only for cash left in the a/c uninvested, and doesn’t mean your investments are unprotected above that amount.

3. You still own your investments irrespective of the broker going bust - their book of business would simply transfer out to another broker, or you’d get the option to move it yourself

I read through the thread and I see nobody answered your three very good questions; were you able to obtain answers elsewhere?

sk8board wrote: »

I’ve always hoped the increasing popularity of ETFs with amateur/DIY investors would make the Revenue clear the complexity. In another few years you’ll see thousands of small investors not even realising there is an 8 year deemed disposal, and/or will be filing incorrectly, if at all. It’ll be a mess.

How does the tax compliance work exactly; do Degiro/Trading212 send your details to Revenue, who in turn I presume they keep this record on your file, wait for your tax-return, and then match them off for accuracy?

Bob24

Saudades wrote: »

I was looking into Blackrock iShares S&P 500.

Degiro have this listed under ISIN IE0031442068, trading under Euronext Amsterdam as Euro Currency (which seems correct as it's an Irish domiciled ETF).

Trading212 have this listed under the exact same ISIN IE0031442068 but traded as British Pound on the London exchange.

So if I invested with Trading212, am I subject to currency risk?

Useful thread by the way. Are there any other differences, fees , hidden fees, or otherwise, between Degiro and Trading 212 that haven't been covered on this thread?

The ETF isn’t currency hedged and all the securities it contains are priced in USD.

So regardless of which version you buy, your currency risk is with the USD.

JackieChang

Twould make you want to fiddle the system.

woodturner

Sorry for jumping in here but I was just wondering if any of you have the ability to send a referral? I can't access the free shares by referring family or friends as I think I need to receive a referral from an Irish user.

JackieChang

woodturner wrote: »

Sorry for jumping in here but I was just wondering if any of you have the ability to send a referral? I can't access the free shares by referring family or friends as I think I need to receive a referral from an Irish user.

It's not available to Irish residents.

JackieChang

Supercell wrote: »

Basically they are penalising you for taking a loss quickly, or are strong believers that "time in the market beats timing the market". Rebalancing pies will be a total nightmare with these rules as would adding to or selling them. I have left my pies and am just not gong to touch for a while.

I've just found out about a thing called an investment trust. They are not taxed like ETFs, but they are almost the same thing.

For example, Scottish Mortgage (confusing name) investment trust has holdings in Tesla, Amazon etc.

As far as I can tell there's none of the 8 year deemed disposal bullshyt like the ETFs.

Probably a better way to invest. There are a few of them on Trading 212.

Check out Scottish Mortgage, Smithson and Allianz Technology.

Detailed info on them here: https://www.theaic.co.uk/aic/find-compare-investment-companies?type=Filter&sort=10sptr&az=&country=&region=&objective=&sector=&manager=

They all seem to be in GBP. Couldn't find any euro ones.

Bob24

JackieChang wrote: »

I've just found out about a thing called an investment trust. They are not taxed like ETFs, but they are almost the same thing.

For example, Scottish Mortgage (confusing name) investment trust has holdings in Tesla, Amazon etc.

As far as I can tell there's none of the 8 year deemed disposal bullshyt like the ETFs.

Probably a better way to invest. There are a few of them on Trading 212.

Check out Scottish Mortgage, Smithson and Allianz Technology.

Detailed info on them here: https://www.theaic.co.uk/aic/find-compare-investment-companies?type=Filter&sort=10sptr&az=&country=&region=&objective=&sector=&manager=

They all seem to be in GBP. Couldn't find any euro ones.

Investment trusts are almost always actively managed rather that passively tracking an index, so I would not call them almost the same thing as ETFs. And another key difference is that they are close ended meaning they can’t issue new shares at will and their market cap isn’t necessarily tracking the NAV of the trust.

But having said that, yes I do think they are a good investment vehicle, especially in the context of our stupid deemed disposal tax (I have read on another forum that Revenue attempted on some people to argue investment trust should be taxed the same as ETFs, but they eventually relented and accepted that they are publicly listed companies and thus should be taxed as per the usual CGT rules).

Also the reason you noticed they are all listed on the LSX in GBP is because they are a U.K. specific investment vehicle which goes back over 100 years. The first one which was created is called Foreign & Colonial (F&C) and goes back to 1868 - it still exists and you can still buy shares in it! (although in the same category Scottish Mortgages which you mentioned has been performing much better in the past few years, but it also has more adventurous holdings and less diversification compared to F&C)

JackieChang

Bob24 wrote: »

Investment trusts are almost always actively managed rather that passively tracking an index

And another key difference is that they are close ended meaning they can’t issue new shares at will and their market cap isn’t necessarily tracking the NAV of the trust.

Are the above points a bad thing? I'm an investment n00b so I can't tell.

Jim2007

JackieChang wrote: »

Are the above points a bad thing? I'm an investment n00b so I can't tell.

Not necessarily, it just means that you need to understand exactly how they work so that you can make an informed decision. Paying a fee of 2% on a managed fund delivering 7% is better that paying 0.5% on an ETF delivering say 2%...

The motivation for the suggesting that you are better of buying a tracker with a low fee on it versus a fund, assumes that the managed fund is using an index as the benchmark.

These days it is not so black and white, because most people have got the idea of an index fund (ETF) being better than a managed fund doing the same. So most managed funds try to do something else to attract clients.

You need to go slowly check the stuff out and make sure you understand what you are getting into before you part with your money.

I doubt many people who are invested in Fundsmith are complaining about the fees, with an annualised return of 18%