Welcome back guys, my name is Angelo. Since my last European broker comparison was over two years ago, an update was way overdue. I'll be covering a total of 14 brokers today, way more than last time.
After all, quite a bit changed since then and you've asked me about my opinion regarding many other options as well over the years, which I want to address as well today. Just so you know where I'm coming from, I've been investing into stocks in the form of passive ETFs for over six years and my portfolio, which I share with my wife, has grown to a decent size since then. Over this six year period I've used a large number of different brokerage accounts as I was looking for the best options for investors based in Europe like myself.
I'm hoping that by the end of the video you'll have a good understanding of the options that are out there as well as the respective pros and cons to help you make a decision and get started on your own investment journey. I'll also mention some local options if you're based in Austria like me or in Germany as taxes in both of those countries are a lot more complicated so it makes sense to go with a broker that takes care of those for you. Before I jump right into it, if you'd like to check out any of the brokers that I mentioned in the video and support me, feel free to use my links down below in the description. Apart from subscribing of course if you haven't already.
Alright, you should know that I'm a simple buy and hold ETF investor, so I'll be viewing every broker through that lens. For me there are a couple of non-negotiables when choosing a broker for the long run. After all, I'm planning to hold my ETFs for decades, ideally forever.
So here's what I'm looking for. First, I want a broker with strict regulatory oversight, ideally from a financial regulator in central Europe. Second, I want to be able to buy shares in my home currency, the euro, and not be forced to convert it and pay conversion fees.
Third, I don't want fees for simply having an account, holding my shares there, inactivity fees if I don't use my account for a while, or deposit and withdrawal fees. I'd prefer having more money left over to invest instead. Fourth, the ability to transfer stocks and ETFs in or out to another broker if I ever become dissatisfied and I want to change. This is more important than you may think in the long run. When this is not possible, you're basically locked in.
If after a few years of investing you become unhappy with a broker that doesn't offer transfers, maybe because they suddenly introduced account fees or inactivity fees, your only way out is to sell those shares, move the money over to the other broker, to buy those same shares again. This sounds like it's no big deal, but here's the problem. When you're forced to sell your positions to get out, you might be realizing a large taxable profit right away, instead of in retirement when you actually need the money.
Meanwhile, when you're able to simply transfer your shares over to another broker, the full amount can keep working for you no matter how much you earn profit, as a simple transfer compared to a sale is not a taxable event. And fifth, since we're talking about long-term investments, I try to limit outside risks that have nothing to do with the value of my ETF itself going up or down as much as possible. As a result, I prefer brokers that don't lend out the shares I own.
That's because at the end of the day, even though they lend out against collateral, there's still a small amount of risk. if both the lender and the borrower were to go bankrupt at the exact same time. Now that you know what I'm looking for, let's get to the best options for long-term investors in Europe based on both my own six years of experience investing in the stock market, as well as my research.
My personal number one is still interactive brokers. They have the longest history out of all the brokers I'm going to mention today, being founded more than 46 years ago in the US, and put a lot of emphasis on security with more than 12.2 billion dollars of equity capital. They have an A-rating by Standard & Poor's, which is actually better than the credit rating of many European countries, and they're a highly profitable, publicly listed company, which means even more regulatory oversight compared to a regular broker.
If I had to select a single broker to live hundreds of thousands of euros worth of investments on, Interactive Brokers would be my first choice. That's also because they have no account fees, your shares are never lent out unless you yourself want to activate the stock yield enhancement program manually using a margin account, in which case you actually get 50% of the income from it. Although to be honest I don't think it's really worth it. It's unlikely you're gonna make more than 0.1% extra per year.
They give you direct access to the largest amount of stock markets among European brokers while having some of the lowest trading fees. For example I rarely pay more than 1,30€ for order amounts over 1,000€ of my favorite ETF, the accumulating Vanguard FTSE OWL using their tiered pricing model which you can switch to in your account. And when placing orders via their web interface or their mobile apps they automatically route your orders to whichever exchange offers the best price for your share or ETF.
Not only that, you're able to keep your money in different currencies so you're not forced to convert dividends you receive in US dollars for example. The one downside is that IB is quite complex which can be a bit overwhelming at first. So make sure you check out my interactive brokers versus de giro comparison where I go into a lot more detail on how to use the broker and how to place orders. At least they've become easier to use on mobile via their global trader app which now looks a lot better and is easier to interact with. Next up is Trade Republic, based and regulated in Germany which is now available in most European countries.
They have no account fees, don't lend out your shares, they offer commission-free recurring investments via saving plans, you only pay 1 euro when buying stocks or ETFs directly, and you're even able to buy fractional shares directly, a very useful feature. Not only that, they're paying 2% interest per year on uninvested euro deposits, secured by a 100 000 euro bank deposit guarantee, with interest being paid out every month. As a result I've been keeping my cash reserves on Trade Republic since January. Needless to say I've become a big fan of the broker.
My only two criticisms are that first you're only able to use a single exchange, Lang & Schwarz in Germany, even though admittedly it's one of the best out there in my opinion. And second the web interface is still missing a few features from the mobile app as they launched on mobile first but they're working on fixing that. Then we have Scalable Capital as another newcomer on my European brokers list.
If you're lucky enough to live in Austria, Germany, Spain, France, Italy or the Netherlands. Their offering is actually very similar to Trade Republic. They're also based and regulated in Germany, have no account fees, don't lend out your shares, offer commission-free recurring investments via saving plans, and direct orders of stocks and ETFs using the Get-X exchange cost 99 cents each using the free broker model. Meanwhile, if you're buying ETFs from iShares, Invesco or Xtrackers for a minimum of 250 euros, you pay no order fees.
You also have the option to place your order using another German exchange, etc. Just be aware that there the fees are higher, at a minimum of 5,49€ per trade. One thing that could be interesting about Scalable is that they offer three broker models.
Free, the one I'm using, which is great if you only invest via commission-free recurring saving plans or don't place more than two orders per month. Prime broker for 2,99€ per month. This one is only worth it if you place more than three orders every month as it removes the order fee on GetTax.
Or Prime Plus broker for 4,99€ per month which in addition to the free trading pays 2.3% interest per year on your uninvested euro deposits secured by a German 100 000 euro bank deposit guarantee. Just be aware that interest is paid out once per quarter, not every month like on Trade Republic. If you sign up until the end of July you can currently get Prime or Prime Plus for free for three months if you want to test it.
You can cancel and go back to the free broker model anytime. I've been happy with my experience on Scalable Capital as well over the past few years. My wife currently has a recurring monthly ETF savings plan running here.
Again, if I had anything to criticize it would be the limited selection of exchanges, only get tax etc. and that based on my experience in the past they take a few days longer than interact with brokers to credit dividends from an ETF or stock to your account. Let's move on to Dejiro next, which used to be the only low-cost broker option for Europeans up to a few years ago but now has a lot more competition. Overall, Dejiro is still a great broker that's available across 17 countries and supervised by regulatory agencies in Germany and the Netherlands. Dealing fees using the broker are still quite low. but they recently raised them slightly.
Your best bet fee-wise are the ETFs from its core selection, using the exchange listed there. These actually used to be commission free, but now you pay a one euro handling fee when buying them. In addition, while the Giro doesn't have account fees per se, they charge a 2,50 euro exchange connectivity fee per year for each of the exchanges you use. This is something you should keep in mind if you have stocks or ETFs on several different exchanges. Here's my main gripe with the broker though.
Unless you have a custody account, an option that they remove for new investors, you can't opt out of the Giro's share lending policy. Luckily your shares are only lent out against collateral of at least 104% of their value, with the Giro itself acting as the counterparty. But this still means that your investments on the broker carry some counterparty risk, limited to the difference between the collateral and the value of the lent out shares, if both the borrower and the Giro were to go bankrupt at the same time. This is why I personally feel better holding larger investment amounts, for example anything above 20 000 euros, on the other brokers I mentioned so far. but that's just my personal preference.
Last but not least regarding long-term brokers I just quickly wanted to mention Saxo Bank since some of you asked me about them. I'll just say this they look like a trustworthy well-regulated option to keep your investments on but sadly they charge custody fees for holding your assets and the rest of the fees are quite high as well. So if you can I would choose another broker.
Now you're probably wondering wait a second what about all the other options? Trading 212, the newcomer lightyear, freedom24, etoro or xtb? We'll get to those in a second.
Again, if you're enjoying the video so far and you'd like to check out any of the brokers that I mentioned while supporting me, feel free to use my links down below in the description. First, as promised, I wanted to quickly discuss the best options if you're based in Austria like me or in Germany where taxes are more complicated and I highly recommend choosing a broker that takes care of those for you. If you're in Austria there is really only one option, flat tax. Every other broker in the country charges monthly or quarterly brokerage fees, usually a percentage of your asset value, which is a major no-go in my opinion, as those can add up quickly as your account grows in value. Meanwhile, Flatex charges no fees whatsoever for simply holding your stocks or ETFs there.
They also never lend out your shares, so they always remain exclusively yours. The one thing to keep in mind when using Flatex is that their fees for direct purchases are relatively high, starting at €5.90. However, if you set up a recurring investment in the form of a savings plan instead, You never pay more than 1,50€ for each investment into an ETF.
The saving plan comes with the added benefit that it buys partial shares as well, so whichever amount you set it up with will be fully invested. And you can of course stop saving plans anytime you want. As a side note, I've found accumulating Vanguard ETFs to be the most tax efficient for Austrian investors.
One more reason why I'm exclusively investing into those. In my case just one, the Vanguard FTSE OWorld. Now, Trade Republic is currently working on becoming tax easy in Austria as well, but they're not quite there yet.
Hopefully they manage to get it done this year. I would love to have another easy, inexpensive option to recommend to people living in Austria that don't want to waste time on yearly tax returns. Okay, let's move on to the best brokerage options if you're based in Germany, which according to YouTube analytics should be about 10% of you.
As a German resident you're very lucky. You have a ton of competing brokers in the country. All the brokers I'm going to mention here have no account fees, so you're not paying anything for simply holding your shares there.
They don't lend out your shares, and fees for buying or selling ETFs and stocks are extremely low. And all of them come with the added benefit that they take care of any taxes for you if you live in Germany. If you live in Austria you can still use these brokers and take advantage of the low fees, but you'll need to deal with taxes yourself, which may not be worth it.
Once again we have Trade Republic with their free saving plans, their one-year fee for direct orders, with you being able to even buy partial shares directly, and the 2% interest per year with a 100 000 euro bank deposit guarantee. Then Scalable Capital, which I also mentioned already, with another large share of the company. selection of free saving plans, a 99 cent order fee when buying shares directly using getex, 750 ETFs from iShares, Invesco and Xtrackers which can be traded completely commission free, and where you can also get interest on uninvested cash, in this case 2.3% per year, if you sign up to their prime plus broker. And my third recommendation for Germany, based on my own experience, is Smartbroker. I also use them quite a bit before making the switch to interactive brokers, as they charge no trading fees when placing an order of 500 euros or more using the getex exchange.
Just be aware that they're not not as great for recurring saving plans compared to Trade Republic and Scalable as they charge a 0.2% fee for those. Also they are currently in the process of moving from the French BNB Paribas to the German Baader Bank as their custodian bank. That's the same bank Scalable Capital uses as well, so we'll have to wait and see what changes then. Just trade and finance the net.
zero seem like two more well-regulated decent low-cost options if you're based in Germany. But since I personally don't have any experience with them I'm not going to go into too much detail here. Alright I hope I didn't lose the majority of you by spending too much time talking about the best options for Austria and Germany. Let's finally get to what I would recommend.
would consider more speculative short-term brokers for European investors. I categorize these this way because in my eyes they're more useful for the occasional short-term trade rather than long-term investments. That's due to each of them missing at least one feature that I consider to be essential for a long-term buy and hold investor.
Most of them also try to motivate you to trade more or to take on excessive risk by using leverage or by buying CFDs, all of which I don't recommend messing with unless you're a professional trader, which I'm certainly not. Okay, first we have Trading 212. They don't charge any account. or order fees and they have some interesting features like investment pies where you can set what percentage you want to be invested where.
I've also read that they're planning to introduce interest payments on uninvested cash soon, so maybe that could be interesting depending on the interest rate and on how the money is secured. The shares you buy are held in a pooled account with interactive brokers. So far so good. Now comes the stuff I don't like. You can't opt out of Trading212's share lending policy, which is one way they finance their free commissions.
At least they seem to have added a feature which enables you to see the percentage of your shares that's actually lent out. By the way, that's something that you should add as well. And second, the deal breaker for me, you can't move your shares from trading 212 to another broker so you're locked in.
That's an essential feature I'm not willing to compromise on. Next is Lightyear, a new broker based and regulated in Estonia. A few of you asked me about this one.
It looked quite interesting at first glance, with low fees, the ability to earn interest on uninvested cash in different currencies, in this case without a deposit guarantee though, and no share lending. Sadly, I have mixed feelings about it now. Here's why. Lightyear was launched just one and a half years ago.
ago in the UK and opened up to other European countries 10 months ago. So it still needs to prove itself over time. Secondly, and this one is a deal breaker, as confirmed to me by a support agent, there is no way to transfer your shares out to another broker, so you're locked into Lightyear. And lastly, I reached out to them to find out more and to ask them if they would be willing to create a referral link that I could use for this video in case someone wanted to sign up. Well, here was their requirement.
They would have wanted me to send them any video or text mentioning Lightyear before publishing it as they would need to approve it first. I was shocked. I told them that's never going to happen as I'm not willing to give up my independence.
No other broker I've been in contact with has ever asked for something this ridiculous. I've never sent text or videos to anyone beforehand for review and I'm certainly not going to start now. Honestly, that was a bit of a red flag for me. I have no idea why they have this policy. Well, at least now you're aware that most likely very few of the Lightyear reviews you find online are independent as they needed to be pre-approved by the company's marketing department.
According to Lightyear, this is a normal practice for all the existing partnerships we have in the UK and Europe and they are ready to go. regularly aware of this. Now you know.
do whatever you want with this information, personally I won't be using or recommending the broker. Anyway, let's move on to Freedom24, run by a European subsidiary of the publicly listed Freedom Holding Corporation. What makes them stand out from other brokers is that they offer investments into IPOs, something I personally don't have any experience with.
Meanwhile, trading commissions for stocks and ETFs are pretty low as well. And you can actually buy US-based ETFs like SCHD, the Schwab US Dividend ETF, or VTI, the Vanguard Total Stock Market Index, which some of you asked me about. And since I wanted to make sure, I got a written...
information. support agent that you're buying the actual fund here, not just some derivative like on popular CFD brokers. That's a pretty nice feature in case you were looking for a place to buy US-based ETFs without wasting a ton of fees doing USD wire transfers back and forth to a US broker like TastyTrade which seems to be the only other option where something like this seems to still be possible for Europeans. Personally I'll stick to ETFs domiciled in Europe but I still wanted to mention it.
Additionally they have some of the best interest rates on uninvested funds using their D account. 2.5% per year on euros and 3% in US dollars with interest being paid out daily. The one thing you need to know in this case is that compared to trade with public or scalable capital here your money is not protected by a 100 000 euro bank deposit guarantee but rather the Freedom Holding Corporation, which seems to be in a good financial condition according to its latest financials and its BB rating by Standard & Poor's.
So far so good, but here are three reasons that still put them a level below the best European brokers in my opinion. First, while they do allow you to transfer your shares over to another broker, they charge a pretty high 100 dollar fee for that, but at least you have the option so you're not locked into Freedom24. On a side note, the 30 dollar depository fee you see here was a bit confusing, but it's not relevant if you're simply buying stocks or ETFs.
Second, they charge a 7-year withdrawal fee. So make sure you calculate that in in case you're thinking about using them to earn a bit of interest on uninvested cash. And third, they called me after signing up to ask if I have any questions and if I need some help getting started. While they were very friendly and weren't trying to sell me on anything, I'm not a big fan of brokers reaching out via phone without me requesting a phone call beforehand. All in all, I think they could be a useful addition for those of you that wanted to buy some US-based ETFs or earn some interest on uninvested cash, but I wouldn't make them your primary broker.
Okay, next up is Etoro, probably the most heavily marketed broker ever, not 17 years ago in Israel. They offer commission-free trading on stocks and ETFs. Just pay attention as a lot of ETFs, especially US-based ones, are actually CFDs. They also offer copy trading where you can replicate other investors portfolios and trades without fees other than a bid-ask spread whenever shares are bought or sold. As enticing as this may seem, I strongly recommend against blindly copying someone else's portfolio based on their recent performance.
Chances are you'll lose money and you'll regret it. Also I wouldn't buy CFDs. As noted by the broker, 77% of retail investor accounts lose money when trading CFDs on Etoro.
Now here's why I don't consider Etoro a viable long-term broker. First, your account runs in US dollars so every time you deposit or withdraw euros your money needs to be converted and you're forced to pay relatively high currency conversion fees of 50 pips or about 0.4%. Second, they charge a $5 withdrawal fee and a $10 monthly inactivity fee if you don't log into your account for 12 months. And third, you can't transfer your shares to another broker so you're stuck and forced to sell if you want to move your funds somewhere else. The last broker I've been asked about a few times is XTB, launched in Poland over 20 years ago.
They are quite similar to Etoro as their offerings are mostly CFDs, but they also offer physical stocks and ETFs for investors from several European countries without trading commissions. Here again you don't see the commission directly, but it's still there in the form of spread, hidden in the price when buying and selling. Again I would recommend against trading CFDs. As noted by XTB on the German or Italian version of the website, 79% of investors lose money trading CFDs on XTB. XTB I would stick to physical stocks and ETFs instead of derivatives.
And you're luckily also able to transfer them to another broker if needed so there is no lock-in here. Compared to Etoro you're also able to keep your account running in euros and there are no withdrawal fees on withdrawals of 100 euros or more. That being said, because of its strong focus on risky CFD products which will likely lead to worse outcomes for most investors, for me XTB falls into the short-term speculative broker bucket as well.
So there you have it. Once again this video got a lot longer than I had planned but hopefully the timestamps made navigating it a bit easier. Now you should have a pretty good overview of the landscape of brokers that's available to us Europeans, including their respective pros and cons, which will hopefully help you get started on your own investment journey.
Do you agree with how I categorized each broker and is there a broker that I missed and that you would have wanted me to include? Let me know in the comments below. As usual, if you enjoyed the video and you'd like to check out any of the brokers that I mentioned while supporting me, feel free to use my links down below in the description. Apart from subscribing for more European finance videos of course.
Also you might be interested in this playlist next, where I go into a lot more detail about investing into ETFs. The best. strategies, how to actually buy ETFs using interactive brokers or Trade Republic, and basics like the difference between distributing and accumulating ETFs. Thank you guys so much for watching, have a wonderful day, and until next time.