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Degiro vs Interactive Brokers - my experiences

If you are new to investing you might be asking yourself how to do it and which broker to use. In Europe there are a bunch of popular ones, but for serious investing people usually recommend either Degiro or Interactive Brokers.

This blogpost is not an ultimate guide to those two products, I’m just a normal investor and I want to share some of my experiences. I also only use the web desktop versions as I don’t want to do investing (or trading) from mobile. Your mileage might vary.

Why Interactive Brokers and Degiro are good options for your brokerage?

  • Trusted companies - not likely to disappear
  • Work across different countries (easy to transfer assets if you move countries and support different tax regimens)
  • Low fees (there use to be a regular fee for Interactive Brokers for accounts with assets below 100k, but it’s no longer the case)
  • Access to many different investment products

My history of using Degiro and Interactive Brokers

I started stock investing with degiro. I have a basic account and I would do a couple transactions a month 1-3 most months. The fees would vary, for US companies, they would be rather low, e.g. 53 cents. Overall, degiro didn’t give me any major troubles.

At the beginning of 2021, when my degiro account grew and I had trouble buying some specific stocks, I decided to open another brokerage and this time I went with Interactive Brokers.

The process of opening the account seemed a bit more involved than degiro, but also I opened the accounts at different times, so it’s hard to compare. I had no major issues with Interactive Brokers so far, but it doesn’t mean there aren’t any things to complain about.

Overall impressions of Interactive Brokers vs Degiro

Where Interactive Brokers is better:

  • Interactive Brokers offers more products
  • Buying on London Stock Exchange (LSE) with Interactive Brokers is cheaper
  • Interactive Brokers has pretty cool tools for analyzing your portfolio, e.g. breaking down what is in your ETFs and categorizing that) or comparing your portfolio against the benchmark
  • Interactive Brokers is more secure by default. In both you can use two factor authentication (e.g. password + your phone), but for Interactive Brokers it’s a default and for degiro it’s an option you need to dig up.

Where degiro is winning:

  • Degiro interface is much easier to use and less intimidating
  • Degiro has free ETF purchases for some ETFs. I’m not aware of similar perks in Interactive Brokers, but the costs are not very significant.

Why do I describe the Interactive Brokers as intimidating? Well, while doing pretty much normal things, it shows you scary looking dialogs that could deter you from a given action. I personally found it anxiety inducing.

Additionally, the email messages from Interactive Brokers are very secretive. It’s generally: “something happened in your account, we won’t tell you what, but you should log in to check it”.

The interface of Interactive Brokers is itself visually pleasing, but it’s a bit hard to find what you want to do in the sea of options. Also, if you have assets in multiple currencies, e.g. US stocks in USD, UK investment trusts in GBP and Irish domiciled UCITS ETFs, then it’s a bit unclear in what currencies the values are. Degiro on the other hand is very clear about the currencies associated with the shown values. As a European investor, I really appreciate that.

Why more than one brokerage?

Why do I use more than one brokerage instead of moving the assets to the new one instead? The two main reasons are security (and access) and the availability of different products.

Security of having more than one brokerage

The brokerages should generally be safe and the risk of losing your money should be very small, but it exists. 

The protections you get from the governments are per institution, so if you spread your assets over two institutions, then your protection can double! Neat!

Another risk that seems more likely is being locked out, e.g. if the company has an outage, you lost your password, etc or there is a hack.

More available products

At some point I got into investing in UK investment trusts and I was able to buy the ones interesting to me with degiro. However, at some point I stopped being able to buy the specific ones I wanted (some other ones were still available). I asked support about it multiple times, but they were unable to help me. Tough luck, I guess. I bought some different ones. But with Interactive Brokers I can buy then now. This is an example of the benefits of using more than one brokerage.

The downsides of using more than one brokerage at a time

The biggest downside is for sure additional complexity.

Where should I send money? This is a silly problem, but if you have different investments in different brokerages and add to them, then it’s now a problem of asset allocation.

Special care is required with taxes when buying the same asset in different brokerages. For example in Ireland if you have shares of company X, you have to sell them in the same order as you bought them. This might be awkward if you buy the same asset but in two brokerages. If I have the same stock in both, I will be buying only in one, and not alternating between brokerages. This way I can make my future sales easier.

Another example of the complexity is that you need to learn two different interfaces, e.g. dividends, gains, trading, reports will all be presented differently.

Conclusion

If you are new to investing, I would probably recommend you to use degiro as it is simpler. But both are pretty great, so you can go either way. Having two brokerages has its advantages, but if your portfolio is small, e.g. below 20k, I would keep it simple. I don’t see a big benefit of additional safety that would make it worth it to complicate your investments.


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