A Look Into The True DEGIRO Costs For Passive Investors In ETFs

degiro costs

An easy way to make more money as an investor is to keep your costs low. Costs are directly related to your long term returns. If your costs increase, you will make less money. The differences are huge. Today we’re going to look at DEGIRO costs for passive investors.

Disclaimer: This article mentions facts and figures (such as, but not limited to, fees and costs related to investing with DEGIRO). I cannot guarantee these facts and figures are correct when you read this article. Always do your own research before making financial decisions. I cannot be held liable for any damages or losses suffered as a result of what you read on this website.

Why Low Costs Are Critical For Investors

When you look at the costs of investing, differences might seem small. What’s a 1% cost, you might wonder. Well, over long timeframes, these small costs turn out to be huge money drains.

This article is about DEGIRO costs specifically, but before we dive into that topic, let’s look at what costs do to your portfolio.

Let’s assume we invest 10,000 euros per year into a stock fund. The most common assumption is that the overall market returns about 7% per year, over the long term, on average. This 7% return is, of course, excluding costs.

If we invest for 10 years, we end up with almost 148,000 euros. After 20 years we have a balance of 439,000 and after 30 years we’re millionaires, our portfolio would be worth almost 1,011,000 euros!

Now assume we don’t invest our money in a cheap index fund, but rather in a fee loaded mutual fund that charges a 1% fee per year. At 10 years, we would have 140,000 euros, after 20 years 390,000 and after 30 years 838,000 euros. This small 1% fee decreases our portfolio by about 20% after 30 years!

If the fund is even more expensive, at 2% costs per year (yes they exist!) the resulting balances after 10/20/30 years would be 132,000/347,000/698,000 euros. It’s incredible how much impact these “small” costs have, isn’t it?

DEGIRO Costs For Passive Investors

At DEGIRO, there are a few types of costs that you incur. For the purpose of this article, I won’t look at the costs (total expense ratio) of individual ETFs, but rather at the costs that DEGIRO charges you for using their platform.

First of all, there are differences between having a basic account versus having a custody account at DEGIRO. The difference is in the costs DEGIRO takes out of your account when you receive dividends from stocks or coupon payments from bonds. With a basic account, this is free. With a custody account, you’ll pay a fee, effectively lowering your dividend or coupon and therefore lowering your return.

DEGIRO currently charges no holding fee, which is great. Some brokers do charge a yearly or monthly service fee or holding fee, which eats away from your returns. DEGIRO doesn’t charge you for having money on their platform.

However, DEGIRO does charge you for connecting you to exchanges. This fee is currently 2.50 per exchange per year. This is not a big fee to worry about.

At last, there are transaction costs. While I do think it’s wise to minimise costs and fees at all times, transaction costs are not necessarily a bad thing because they’re paid only once. Ongoing fees are scary, transactions fees are merely inconvenient. Anyway, I invest most of my portfolio in VWRL, which you can trade for free once per month.

Tips To Keep Costs Low At DEGIRO

One tip to minimise your DEGIRO costs would be to only trade ETFs that are part of the commissionfree ETF list. Trackers such as VWRL can be traded once per month for free.

For the commission free ETFs, conditions apply and differ per country. The Dutch conditions can be found here. The English conditions can be found here.

Trackers not on this list should be traded only with higher euro amounts. I own another ETF, called IUSN, which cannot be traded for free. I pay a fee of about 4 euros when I buy this ETF. Say I buy 100 euros of IUSN every month, that would cost me about 4% in upfront trade fees! So what I do is saving up a little bit more money to make larger trades. I don’t care if the allocation VWRL/IUSN goes a little bit higher or lower than 90/10, so over the months VWRL creeps up, and then I buy a whole lot of IUSN, etc.

What also helps to keep DEGIRO costs low, is to trade at as few exchanges as possible to prevent you from being charged the connection fees. However, as the connection fee is only 2.50 per year, I wouldn’t try too hard on this front.

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3 thoughts on “A Look Into The True DEGIRO Costs For Passive Investors In ETFs”

  1. I guess one way of avoiding the so-called connection fee, i.e. the charge for trading on stock exchanges other than your “home” one, is if you’re lucky enough to have bank accounts in different countries, thus allowing you to open separate Degiro accounts in those countries.

  2. I am still waiting in the waiting queue for DEGIRO but do you know if QQQ & SPY are available to us and documented in Dutch?

    Also if I find a fund on DEGIRO, does it mean that I can definitely buy it without thinking if I should or not, can I assume that DEGIRO already filtered the ones I am not allowed to invest in?

    1. I can’t comment on individual funds, unfortunately. My guess is they are available.
      Everything DeGiro offers you should be cleared for buying. It’s not you that is not allowed to buy certain funds. It’s the funds that are not allowed to be sold without translated documentation.

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