Degiro vs Bux Zero compared from an Irish perspective
I am active in the FIRE community here in Ireland and specifically, Limerick. There was a discussion about a new broker called Bux Zero. No one had used them so I thought I’d sign up to test it.
The first thing I’d say is the usual disclaimer, this is not financial advice. Do your own research and seek professional advice if you are unsure. Your circumstances will be different to mine so what’s good for me, might not be good for you and vice versa. I am from the UK so my thinking is biased towards the Anglosphere.
Degiro is another discount broker popular in the FIRE community and across Europe. I will use them as the benchmark. I have also signed up to Interactive Brokers who are another recommended stockbroker. I will do a comparison at some point with that too. Etoro, Revolut and Trasding212 are also other popular places you can buy stocks. Trading212 aren’t taking new members at the time of writing so I can’t compare with those. Etoro looks decent and I will probably set up an account one day to have a look. Revolut is perfect for a small investor who is dipping his toes in. Just the custody fees make it not somewhere you’d use long term.
Post-tax investing in Ireland is awful compared to the UK. There are no ISAs and the CGT limit is very low at €1270. Compare with the UK where you can earn £12300 tax-free from capital gains. In an ISA you can also put away £20000 a year too and gains are tax-free within the ISA wrapper.
Forget about ETFs in Ireland
Ireland also has something called ‘exit tax’ at 41% on ETFs. This is a punitive tax that means they are not a viable investment. To make matters worse, there is also something called ‘deemed disposal’ that means you have to pay tax on your gains after 8 years even if you don’t sell. This makes compounding very difficult. You are much better of buying shares or investment trusts. It does seem like there is a cult following of people who say buy ETFs, set and forget. This might be true in a pension but outside a pension, the ETF in Ireland is an awful investment.
With that in mind, there is no point in evaluating the costs of ETFs on Degiro or Bux Zero as buying them isn’t a good idea. This leaves shares or investment trusts.
The main problem with Bux Zero is that they do not list the London Stock Exchange on their platform. You can’t buy household names like HSBC or Tesco. This is a major problem for a British person. So Degiro is the hands-down winner for buying UK equities as you can’t even buy them on Bux Zero. As investment trusts are all listed on the LSE, then if you want to buy those as an alternative to ETFs, you are out of luck. Degiro is very competitive on UK shares, they charge €4 plus 0.05% capped at €60 a transaction.
Moving on to US Equities. Buying Amazon and Google is a good long term move I think. If they fail, then we’re all doomed.
The downside of both platforms is they do not do fractional shares. New for 2022, Bux Zero does allow Fractional Shares. So at the time of writing, Google is trading at $2700ish and Amazon $3700ish, it’s a lot of money. There are cheaper ones, for example, Apple is $150ish after numerous splits.
The main issue with buying USA shares is the FX fees. Bux Zero is zero commission but there is a 0.25% forex mark up. As this markup is paid when you buy and sell, it’s effectively a 0.5% charge/ fee. Compared with Degiro, this is not competitive. Degiro charges a 0.1% forex fee but also a trading fee of €0.50 and 0.004c a share. So for small amounts, Bux Zero is better but for anything above €333 it’s cheaper with Degiro. (Just solve 0.5x/100<1+0.2x/100 ). With Degiro you can also keep the money in USD so you can buy different shares after you sell and not pay the fx fees again. Also, you can bulk change if you want and it will cost you less, its €10 + 0.02% so the cut-off point is €12500 to change.
So why bother with Bux Zero?
Going through the numbers and choice, it does seem that Bux Zero is pointless. However, I forgot the EU shares with no forex fees. If you are into buying EU shares, you will save. You can buy Austrian, Belgium, German, French and Dutch shares. There are some household names there, for example, Adidas, Alliance, Heineken, etc. Being British though, I prefer to stick to the LSE and USA stocks.
If you are adventurous though, the savings will add up, Degiro charges at least €2 a transaction. Bux Zero is free for Zero orders or just €1 for regular market buys and limit buys. Zero orders get executed at the end of the day but as €1 is cheap anyway, most people probably want the certainty the trade has gone through at a certain price so may as well pay the €1.
Degiro is better for UK and USA stocks whereas Bux Zero is better for EU stocks. As I don’t buy EU stocks its not for me but if you do, Bux Zero is the best place to buy. With the option of zero commission or just €1, it beats Degiro for EU shares.
Update 16 March 2022
I have written a guide to Bux Zero Ireland
- I have not bothered with the UI or sign up process, both straightforward and user friendly. All that matters is the cost and range of products.
- For EU stock ideas, listen to this guy You can see his portfolio here.
- My preferred method of post-tax investing is the spread bet.
A free share with a value of €1 to €200 selected at random (but higher chances on lower values) handed out after the first deposit.
I personally got a share in PG & E.
Sign up here