Review

DEGIRO Review 2021 – An honest review based on 5 years of experience

DEGIRO Review 2021

It’s about time to do a proper review of stock broker DEGIRO as many of you have been asking for my opinion. 

And as you might know already, DEGIRO is by many known for its low-cost fees. This is evidenced by the many awards it has won over the last several years in which low-costs were often an important factor1.

But is this all or is there more to it? 

I have been using DEGIRO for almost 5 years now. Hence, I believe that I can speak from a lot of experience in using their platform.

At the same time I am not intending to write a very lengthy DEGIRO review. 

I just don’t want to kill you with a lot of information, because that would be anyway redundant and overkill for most long-term buy & hold investors. 

So what can you expect from me in this article?

Just an honest and personal review about DEGIRO as a stock broker platform. This includes all their positives as well as some areas for improvement.

Having said that, let’s check whether you should also consider using DEGIRO as a platform for investing.


Disclaimer: Investing involves risk of loss


* This applies to people living in the Netherlands, Switzerland, France, Spain, Portugal, Ireland and Italy. Terms and Conditions may apply.


What is important to long-term investors when choosing a broker?

I believe that a typical dividend growth investor with a long time horizon will agree that the following aspects are very important to consider when choosing your stock broker:

  • Keeping your costs as low as possible to have maximum benefit from the compounding effect
  • The ability to buy many different blue chip companies in both Europe and the United States
  • Being sure that your investments are protected in case a stock broker would go bankrupt
  • No unpleasant and ad-hoc surprises which makes you rethink your choice for the stock broker
  • The user friendliness of the platform. It should be intuitive and provide you with all the information you need in a hassle-free format (i.e. for tax purposes)

Therefore I will use the above topics as a structure for my DEGIRO review.

But let’s start with some basics about DEGIRO first.


Some basics about DEGIRO

Availability in Europe

DEGIRO is still relatively new in the market, because it was just founded in 2008 in the Netherlands. 

However, they have grown fast since then and they are currently available in 18 European countries: 

This makes DEGIRO one of the most available and accessible stock brokers in Europe.

Account types

The most important thing you need to know in the context of this review is that there are two main account types you can choose from when registering at DEGIRO:

  1. Basic: provides you with access to all available products and investment services of DEGIRO except Debit Money, Debit Securities and Derivatives. If desired you can change a Basic account to an Active or Trader.
  2. Custody: it is different from a Basic profile in that the securities are held separately from the lending pool of DEGIRO clients’ securities and are thus unable to be loaned to third parties.  Debit Money, Debit Securities, and Derivative trading is not available with a Custody profile and you cannot change to an Active, Trader, or Day Trader account. A Custody Profile has different conditions and fees.

In this article I will be reviewing the basic account type, because this is what many dividend growth investors that I interact with are using. 

Flatex AG – DEGIRO acquisition

In 2020 Flatex AG acquired DEGIRO. It has now become one of the biggest online execution-only brokers in Europe with its own banking license.

So why am I mentioning this acquisition? 

Well, just in case you wondered if it has any negative consequences to account holders. 

So far, I’ve not noticed any changes since the take-over that have made me reconsider why I’m using DEGIRO.

However, Flatex did announce2 that it will make flatexDEGIRO bank accounts available for all their clients to hold their uninvested money.

This was not the case at DEGIRO, because until now it is still using cash funds to store your money3.

In my opinion this proposed change by Flatex is a good thing.


DEGIRO review – Fees

There are 4 type of fees which I pay careful attention to when selecting a broker:

  1. Transaction costs / commissions
  2. Portfolio maintenance fees
  3. Currency exchange costs
  4. Other costs to be aware of

Transaction costs / commissions

The fees you pay as a commission when executing a transaction really differs based on the country you are in and the stock market you invest in.

As an example, I have personally found the fees for trading on the US stock market (i.e. SP500) very low. Sometimes I pay only 52 cents for a single transaction when buying for instance a few shares of Johnson & Johnson.

On the other hand, I pay 4 Euro and a bit when buying shares in the Netherlands, i.e. Royal Dutch Shell or Unilever.

According to DEGIRO´s website, their fees are up to 80% cheaper than other brokers. Click here to check the full comparison.

I can personally confirm that, because I also own shares at Binck Bank NV. There I pay a minimum of 8 Euro per transaction, no matter the country I buy shares from.

DEGIRO also offers you a selection of ETFs which you can trade for free. Check the full available list here: degiro.co.uk/fees/commission-free-etfs

* This applies to people living in the Netherlands, Switzerland, France, Spain, Portugal, Ireland and Italy. Terms and Conditions may apply.


Portfolio Maintenance / Service Fees

Here is the good news!

You don’t pay any monthly or annual service fees.

DEGIRO Review 2021, are there maintenance fees?
source: https://www.degiro.co.uk/helpcenter/faq/fees/1062

I am very happy with this, because Binck Bank NV automatically deducts a monthly service fee as a percentage from my portfolio.

At my Binck Bank account this is €3,50 + 0,01% on a monthly basis, because I have a “green” account type over there.

Other costs to be aware of

There are few costs that have surprised me in the past and there are 2 specific costs which I would like you to be aware of.

1. Annual DEGIRO Exchange Connectivity Fees.

If you buy shares for the first time on a certain stock exchange then you generally need to pay a small fee upfront. This fee is typically 2.50 Euro and it is automatically deducted at the start of a new calendar year.

I trade at 6 different stock exchanges which therefore costs me about 15 Euro on an annual basis.

2. Country transaction taxes

There are some countries in Europe which have implemented a tax on every single transaction you make.

I don’t have a total list of countries, but from my experience this applies at least to the United Kingdom and France.

These transaction taxes are coming from the local government and DEGIRO will pass them on to you. This means that you might see additional “transaction costs” when trading stocks in those countries.

In my situation this was 0.5% on the transacted value when buying UK listed stocks (i.e. Chesnara Plc). And I paid 0.2% on the transacted value when buying French listed stocks (i..e. Danone)

3. Transfer costs when moving shares to another broker

This is not a cost type that many people think about when signing up at a new broker and I have never seen this being discussed in another DEGIRO review.

But there can come a time, for whatever reason, that you might want to transfer your shares to another broker. In that case you will need to be aware that you will currently pay 100 Euro per single position line to DEGIRO.

This can become quite costly depending on the amount of positions you have in your portfolio.

You might think now: OK, then I’ll just sell my shares at DEGIRO and buy them back at my new broker.

This might be a good consideration, but it really depends on your tax jurisdiction.

I’m living in Poland and it would trigger a Capital Gains tax event. It means that I would need to pay 19% of tax on all the triggered capital gains when selling my shares.

Hence, I would be much better off with a transfer of shares between my brokers.

Access to foreign markets

Buying and Selling shares

European dividend growth investors typically want broad access to many international stock markets.

This allows us to take benefit of all those little gem’s out there, whether it’s in the Netherlands, Germany, United States or somewhere in Asia (i.e. Japan).

Good news here, because DEGIRO provides access to more than 50 exchanges across 30 countries for trading shares4.

In other words, almost all the US dividend aristocrats and European Noble 30 members can be bought via DEGIRO.

Option trading

Some dividend growth investors also like option trading to earn some additional income.

In such cases the availability to stock markets looks a bit different.

As an example, you will most often not be able to trade options in popular US stocks.

DEGIRO exchanges to trade options
Stock markets available at DEGIRO for Option trading

Recommended read: 2 Option Income Strategies – It doesn’t need to be difficult

Some limitations to buying US REITs at DEGIRO

To my knowledge it’s currently not possible anymore to buy Real Estate Investment Trusts (REIT) on the US stock market.

An example of that is Realty Income Corp (ticker symbol $O), which is a quite popular dividend growth stock in our community.

The reason according to DEGIRO is “an unresolved tax issue, so until this is fixed no new US REITs will be made available again

I’ve been recommended to ask the service desk for an update on this situation in a couple of months from now.

Hence, I do sense that there’s an intention to make US REITs accessible again.

Is your money safe with DEGIRO?

This is quite an important question for any investor. The last thing you want is your broker to go bankrupt and losing all your holdings with it.

So how does it work then at DEGIRO? Are your assets and your money safe at DEGIRO?

Have a look at the below answer from DEGIRO on their website:

Is DEGIRO safe to hold my investments?
Source: DEGIRO FAQ

In my opinion a lot would need to happen before you would lose all your assets at the segregated entity. But it doesn’t mean that it’s not entirely impossible at allI. In my opinion this applies to many brokers.

DEGIRO Review – Lending of shares

DEGIRO may lend your shares to short sellers when you have a BASIC account. This is one of the ways DEGIRO can keep their fees low to us as investors.

To be honest, it is quite common practice for stock brokers to do this (not all though!). DEGIRO offers a CUSTODY account in case you don’t feel comfortable with this.

It costs a bit more, but it would protect you from any potential risk a short seller is running.

securities lending
source: DEGIRO5

Just to be clear, this applies to individual securities.

Disclosure: I have a BASIC account and I personally feel comfortable with the risk associated to securities lending.

Did DEGIRO surprise me over the years?

Definitely! There are two examples which I vividly remember:

  1. When DEGIRO first offert a selection of ETFs which you can trade for free. Check the full available list here and be aware that terms and conditions do apply. 
  2. The current restrictions in buying US REITs.

I personally find that these two surprises even themselves out.

Furthermore, DEGIRO didn’t negatively surprise me yet compared to my other Dutch broker Binck NV.

Binck decided a few years ago to introduce a monthly maintenance fee which is now costing me about 150 Euros on an annual basis.

Those are the surprises I really don’t like and this has not happened to me over the last 5 years at DEGIRO.

Is DEGIRO a user friendly platform?

User Friendliness is something very personal. Your own perception of user friendliness is often defined by past experiences elsewhere.

Nevertheless, I find this an important aspect as part of this DEGIRO review.

And to be straight to the point: I personally find DEGIRO a user-friendly trading platform after 5 years of usage.

Some of the features I find very helpful are the following:

  • a clean overview of all your portfolio holdings
  • visibility on the upcoming dividend payments
  • face ID login
  • 2 factor authentication
  • real-time quotes

A nice example of the look & feel of the mobile app can be seen below:

Features I would like to see in the future at DEGIRO

I strongly believe that DEGIRO is a very good broker for long-term European Dividend Growth Investors.

However, it doesn’t mean that their services and products achieved full perfection already.

There’s always room for improvement and the below two topics are high on my wish-list

1. The possibility to DRIP with DEGIRO Basic account

One of my most desired features would be the possibility to automatically reinvest my dividends. Unfortunately there is no such thing in DEGIRO’s basic account.

The costs are generally low for US stocks, so in that case I could reinvest some shares myself when needed.

Though, the lack of automatic dividend reinvestment possibilities means that I’m rarely doing it. It just costs me time and attention.

For European stocks it’s not even a consideration, because I personally find the transaction fees a bit too high to make it lucrative.

2. The possibility to automatically reclaim foreign Dividend Withholding Tax beyond the US

DEGIRO provides you the possibility to submit your W8-BEN form. Submitting this form will result in an automatic reduction of the US dividend tax from 30% to 15% which is in line with the double taxation treaties.

However, to my knowledge this is not yet possible for other countries.

It’s my wish that we might see something like that in the future. And of course, also in a low cost manner 😉

However, to be clear, I don’t expect this to happen anytime soon, if at all.

Regulatory Supervision

Just in case you were wondering, DEGIRO falls under the German Investor Compensation Scheme. What it means is already best described by DEGIRO themselves on their website:

DEGIRO regulatory supervision
source: https://www.degiro.co.uk/helpdesk/about-degiro/safety-and-security/if-something-happens-degiro-are-my-investments-protected

Summing up DEGIRO Review

That’s it. This is my DEGIRO review based on more than 5 years of experience with their platform.

I personally find DEGIRO a cheap broker with a wide access to foreign markets. Hence, it looks like a good fit for me as a dividend growth investor with a long-term buy & hold approach to investing.

I’m also very happy that brokers like DEGIRO entered the market, because it has definitely lowered the costs of investing for us.

There are few things to consider though as mentioned in this article: access to US REITS, transfer costs if you ever would like to move your shares and that there is no option to DRIP your shares with the BASIC account type.

Having said that, I sincerely hope that you enjoyed reading this article.

I’ve tried to make it a balanced review about DEGIRO so that you can make your own informed decision.

There’s so much more knowledge to share, but I believe that I provided you with my highlights.

But off course, feel free to let me know if you have any additional questions or suggestions.

As always,

Yours Truly,

European Dividend Growth Investor


* This applies to people living in the Netherlands, Switzerland, France, Spain, Portugal, Ireland and Italy. Terms and Conditions may apply.


Disclosure: This article may contain affiliate links. It doesn’t cost you anything, but I may collect a small fee in return. It supports me in keeping this blog up and running.


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Sources referenced to:

  1. Awards: degiro.co.uk/about-degiro/broker-awards
  2. Flatex announcement: degiro.co.uk/degiro-flatex
  3. Cash Funds: : degiro.co.uk/about-degiro/cashfund
  4. Access to Exchanges and Countries for trading shares: degiro.co.uk/products-and-markets
  5. Information about securities lending: https://www.degiro.co.uk/about-degiro/safe-and-reliable

Disclaimer

I’m not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant nor a lawyer. I’m not a finance professional through formal education. I’m a person who believes and takes pride in a sense of freedom, satisfaction, fulfillment and empowerment that I get from being financially competent and being conscious managing my personal money. The contents on this blog are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my blog is appropriate for you or anyone else. By reading this blog, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information provided on this blog.

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It's my desire to retire early via Dividend Growth Investing as a passive income stream. This is not easy and especially when living in Europe. That's why I started this blog and share my journey: to give you a European perspective.

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Diogo
Diogo
7 days ago

I use DeGiro and IBKR. Loved DeGiro for it’s low fees, hated it for removing so many securities from their catalog, even if it’s not entirely up to them… When they removed securities that they used to offer, they forced me to sell 5 of my holdings, some of my favorites and some at a loss. That led me to discover IBKR. DeGiro has a very friendly interface, yes, and have been improving lately in terms of data. However, not having fractional shares or DRIP, for me, hurts DeGiro. And I don’t think they have any intention on implementing them,… Read more »

Last edited 7 days ago by Diogo
Ron
Ron
6 days ago

I was an American expat living in the Netherlands since 2005, retired in 2019. When I was in the situation that I had extra money to invest I had no clue where to turn to do so and ended up investing through ABN AMRO, my Dutch bank then and now. I never found the ABN AMRO experience to be user-friendly and would have loved to have had something like DEGIRO to invest through. However, now that my investments in the Netherlands are in a holding pattern waiting to be spent or more likely moved back to the US when we… Read more »

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