Disclaimer from [[Investing Playbook]] still applies. :) # What are the main platforms? - There are a lot of available platforms on the market. As usual, I would probably avoid anything that looks too shinny. - Here are some of the main online broker platforms that have been around a long enough time and where you can buy stocks, bonds, ETF, etc : - US-based platforms: - Interactive Brokers - Fidelity - Charles Schwab - UE-based platforms: - DEGIRO - You can usually also open a trading account with your usual bank. I usually wouldn't recommend that, because the fees tend to be much higher and their platforms is usually outdated. - Also, if you want to run different strategies/portfolios or if you have large sums to invest, it's probably better to open several accounts to diversity your risk. # Criteria to decide which platform to pick The main criteria are: 1. **Available assets:** Will the assets I want to buy be available on the platform I chose? If you pick any of the listed platforms above, you should find most of what you're looking for. 2. **The fees:** There can be a lot of fees (inactivity fees, exchange fees, data access fees, flat fees, etc.). 3. **Asset ownership:** Who really owns the assets you're buying on these platforms and is my money separated from the platform's money? - There are 3 situations: 1. You are the owner (or the depositary): That is the best situation. Ideally it should be you. Meaning that if the broker goes bankrupt, it doesn't matter, because it's your name on the shares. 2. The platform is the owner, but the customers' assets are separated from the broker's assets: This is the second best situation. If the broker goes bankrupt, the assets can be recovered because there are isolated from the platform's assets. 3. The platform is the owner, and the platform is not seggregating the customers' assets from its assets: This is the worst option to me. Sometimes to lower the fees for customers, the platform is lending the customers' assets to generate revenue. Sometimes, to be able to provide fractional shares (not having to buy a full share as a customer), the assets are not clearly separated. I personnaly avoid these types of situation and prefer paying slightly higher fees just to have the peace of mind and the security. - 4. **Broker's location:** Where is the broker based? Under which legislation? You probably want to avoid shady or unstable legislations. - 5. **Platform's security:** Is the plateform secure? Has the platform had any leak or hack in the past? Can you enable 2 step verification on your platform? # Two of the cheapest & most-used platforms If you're based in the European Union, you can used one of the two or both. ## 1. Interactive Brokers (IBKR) (US-based) - IBKR has been around for a long time and is a publicly list company, which is a good thing for investors (more audit inside the company). - Who owns the assets you buy? - [What happens if my broker goes bust? - Index Fund (European) Investor](https://indexfundinvestor.eu/2019/07/25/what-happens-if-my-broker-goes-bust/) > Interactive Brokers segregates client money and securities into accounts separate from the IB business accounts. This allows the customer’s assets to not be affected in the event of default or bankruptcy of IB. > It seems that with IBKR, we are the asset depositary, which is a good things. - Fees - Most of the time lower than using the traditional bank. - There are two fees modes in IBKR: Tiered and Fixed. - I would pick Tiered, which most of the time is less expensive. - By default, IBKR is set on Fixed. So, you need to change it manually: Account Settings => IBKR Pricing Plan - More information on this - In English: - [Interactive Brokers Tiered vs Fixed : eupersonalfinance](https://www.reddit.com/r/eupersonalfinance/comments/h9r980/interactive_brokers_tiered_vs_fixed/) - [Interactive Brokers commissions: fixed vs tiered | Merely curious](https://merelycurious.me/post/interactive-brokers-fixed-vs-tiered-commissions) - En français : [Commissions | Interactive Brokers](https://www.interactivebrokers.eu/fr/index.php?f=6655) - Also in July 2021, inactivity fees of 10 USD/mo were removed permanently, making Interactive Brokers more competitive. - Cash Account or Margin Account - You have two types of accounts on IBKR: - Cash account means that you can only buy assets if you have enough cash in the curreny of the asset you want to buy. - Margin account means that you can buy asset even if you don't have yet the money in the given currency. This is more risky and is not for beginners. Your other assets will act as collateral. And you pay interest on the money that is borrowed from IBKR. - More information: [Cash Account vs. Margin Account: What Is the Difference?](https://www.investopedia.com/ask/answers/100314/whats-difference-between-cash-account-and-margin-account.asp) - Experience - Base on experience, new stocks (like IPO) are available a few days before other platforms like DEGIRO. - Is it possible to have sub-accounts in IBKR to run different strategies/portfolios? - "Account Settings" > "Create, Link or Partition an Account" > "Create a New Individual, Joint or IRA Account that will be Linked to My Existing Account Under a Single Username and Password" > "Individual" > "Cash account" (or Margin Account) ## 2. DEGIRO (UE-based) - Who owns the assets? - [DEGIRO - FAQ - Safety](https://www.degiro.co.uk/helpcenter/faq/safety/1112) - "At DEGIRO you can rest assured that your investments are held securely. DEGIRO uses a separate custodian entity to hold your assets, this means they are completely segregated from the assets of DEGIRO. The sole task of the custodian entity is to administer and safeguard your investments. By law it cannot perform any commercial activities. In the unlikely event that something is to happen to DEGIRO, your investments will not be treated as recoverable assets to DEGIRO's creditors, but will remain in the safeguarding of the custodian entity." - "The Dutch Investor Protection Scheme (Beleggerscompensatiestelsel) is applicable, as DEGIRO is a licensed investment firm authorised by the Netherlands Authority for the Financial Markets (AFM) for the provision of investment services. This scheme protects individual clients up to €20,000." - [What happens to my stocks when broker goes bankrupt? - Personal Finance & Money Stack Exchange](https://money.stackexchange.com/questions/86924/what-happens-to-my-stocks-when-broker-goes-bankrupt#:~:text=If%20Degiro%20shuts%20down%20unexpectedly,instruments%20belonging%20to%20the%20clients.&text=SIPC%20also%20oversees%20the%20liquidation,or%20by%20directly%20contacting%20clients.) > - Here is my perception of the situation, obtained from reading Degiro's [Client Agreement](https://www.degiro.ie/data/pdf/ie/Client_Agreement_Investment_Services_Terms_and_Conditions.pdf "Client Agreement"). > - If Degiro shuts down, it will notify you about the fact at least one month in advance, and you will have enough time to order a transfer of your positions to a different broker. > - If Degiro shuts down unexpectedly, your assets will remain to be held at SPV, a separate legal entity which Degiro uses to hold the financial instruments belonging to the clients. Since SPV does nothing else but holding the assets, it is very unlikely that something bad will happen with it on its own. With some help from Degiro and/or the regulator ([AFM](https://www.afm.nl/ "AFM")) you should be able to transfer your assets from SPV to a different custodian and broker and thus regain control over them > - If you have a non-Custody account, you have slightly higher chances of losing your assets, because Degiro can borrow your securities held at SPV. If both the client for whom Degiro borrowed a security and Degiro itself go bankrupt at the same time, the lent security will not be returned to SPV, there will arise a shortage, which will be proportionally distributed among the accounts of the clients holding this particular security. > - However, then the [investor compensation scheme](http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:31997L0009 "Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes") should kick in and help you recover up to 20000 EUR of your losses. - [Degiro and safety : eupersonalfinance](https://www.reddit.com/r/eupersonalfinance/comments/cduaeh/degiro_and_safety/) > Speaking of particular brokers, I found what I read on DEGIRO's website and IB (Interactive Brokers)'s website rather OK from a security/client segregation standpoint. Many consider IB safer because it is a broker that has been around for a while and is a public traded company. - [Degiro stock ownership : eupersonalfinance](https://www.reddit.com/r/eupersonalfinance/comments/eticcj/degiro_stock_ownership/) > "Degiro operates an ultimate beneficial ownership structure in which shares are registered in a "street name" as opposed to your actual name. Under a UBO structure all rights flow to you however you're not the legal owner of the shares. At the end of the day your name is not on the shares but you technically control them. I've been doing a lot of research into this and seems kind of sketchy but apparently it's common practise. It's actually how they keep their fees so low. " - [DEGIRO Review (Updated July 2020)](https://marcoschwartz.com/degiro-review) > Let's now see what happens if the company actually goes under. The nice thing is here is that stocks & ETFs on the platform are exchange-traded, meaning that even if DEGIRO goes bankrupt, your assets will be safe as you are the owner of the stocks & ETFs you buy via DEGIRO. - Fees - Good fee comparison between IBKR and DEGIRO: [DEGIRO Vs Interactive Brokers Pour Le Portefeuille Européen : Qui Est Le Moins Cher Sur 2024? - The Poor Swiss](https://thepoorswiss.com/fr/degiro-ou-interactive-brokers-europe/) - Fees seem to be smaller than IBKR for european investors (outside of Switzerland) - Leaving DEGIRO if needed is not very expensive: Transfer portfolio from DEGIRO € 10.00 per position + external costs