Reviewing My Brokers: How the 5 Criteria Apply in Practice

Welcome to Financial Fluency - your weekly guide to mastering financial English, learning how money works, and making confident financial choices.

In this issue:

• A Look at the Markets: Bitcoin $BTC.X ( ▲ 2.8% ) 

• Reviewing My Brokers: How the 5 Criteria Apply in Practice

• Quote of the Day: Albert Einstein

• We value your feedback

• Words of the Day: Platform versus Broker

• Interactive Quiz

• Whenever you are ready, here is how I can help you

A Look at the Markets: Bitcoin $BTC.X ( ▲ 2.8% ) 

Bitcoin continues to be rangebound, trading between about $107,000 and $125,000. At some point, it will break out, but will it be to the upside or downside?

Rangebound: continued trading between two values, often forming support and resistance.

Reviewing My Brokers: How the 5 Criteria Apply in Practice

A practical example of choosing and reviewing investment brokers

Despite giving you 5 criteria to choose a broker last week, I can no longer remember how some of the criteria apply to my own brokers - Degiro and Interactive Brokers.

I am not concerned about this memory gap. Investors should not change brokers frequently - the transaction costs, tax implications, and administrative hassle rarely justify switching for marginal improvements. Instead, consider adding a second broker for different needs whilst leaving existing investments where they are. I started with Degiro and later added Interactive Brokers, which had some different products.

I will use this newsletter to review my brokers with the criteria from last week, which will also give you examples if you want to choose your own broker (I am not affiliated with either broker mentioned in this newsletter - always do your own research).

The 5-Criteria Evaluation

1. Reputation

Both my brokers had a good reputation when I opened them and still do, in my opinion.

I probably took a bigger risk in 2015 when I opened my Degiro account because it was a newer company. However, it seemed particularly attractive to European retail investors at the time. Degiro had launched retail services in 2013, making institutional-level low fees available to ordinary investors across Europe.

I opened my IB account in 2023 to separate my bond investments from my equities and invest in a crypto ETP which Degiro did not offer. Interactive Brokers, founded in 1977, had a much longer track record by the time I added them.

Both brokers are regulated. Degiro operates under BaFin (Germany), AFM and DNB (Netherlands), whilst Interactive Brokers is regulated by SEC, FINRA, and FCA among others.

2. Range of Products

When I opened my Degiro account, I was focused on trading individual shares and buying ETFs for the long-term.

However, in 2023, with interest rates increasing, I decided to invest in government and corporate bonds. I decided to keep these separate from my equities, so I opened another account with Interactive Brokers. Additionally, this account provided access to a crypto ETP which Degiro did not.

I have found that Interactive Brokers provides access to a much broader product range across global markets.

3. Cost

Here's where my memory failed me - I actually can't remember my fee structure.

However, on investigation, both brokers still offer competitive fees. In fact, Degiro offers zero fees on its core ETF selection, though there may be a small handling charge. Interactive Brokers are also competitive.

Both brokers offer low costs, but which is cheaper depends entirely on what you're buying and how much you're trading.

4. User-Friendliness

This is subjective and I have been looking at platforms for many years, so I tend to find them all straightforward.

I use TradingView for looking at charts so I just use the platform for transactions (buying and selling). Both platforms provide mobile apps that I use mainly to check performance. I possibly prefer Degiro but this may be because I use it more. Security is also worth considering. Degiro uses an authenticator app whilst Interactive Brokers uses their own app to access the desktop platform.

Choose the one that you prefer.

5. Tax Reporting

Neither Degiro nor Interactive Brokers offer automatic tax reporting in Italy.

This means that I have to do this manually, with the help of my accountant. To find automatic tax reporting you probably have to use an Italian broker such as Fineco.

However, this should not be your main criteria for choosing a broker but may simplify your tax affairs.

Conclusion

This exercise has shown that both Degiro and Interactive Brokers are good choices for ETF investing in Europe.

However, do not limit your research to these two brokers - I use them here only as examples.

As always, none of this is financial advice. Everyone should invest according to their personal circumstances, risk tolerance and financial goals.

Quote of the Day: Albert Einstein

This captures the broker evaluation process perfectly. Choose a broker that satisfies your most important criteria and stick with it.

We Value Your Feedback!

Your opinion helps us improve and lets you suggest topics or ask Business English questions for future issues.

Words of the Day: Platform versus Broker

Platform - noun - the software interface and technology system through which investors access their broker's services to view markets, place orders, and manage investments.

Context and Usage: While "broker" and "platform" are often used interchangeably in casual conversation, there's an important technical distinction. The broker is the licensed financial institution (Degiro, Interactive Brokers, Fineco), while the platform is the technology interface - the website, mobile app, or software - that you use to access the broker's services.

Note: In practice, investors often say "I'm using the Degiro platform" when they technically mean "I have an account with Degiro broker." This casual usage is perfectly acceptable, though the distinction matters when discussing regulation (brokers are regulated; platforms are just tools) or comparing services (one broker might offer multiple platforms).

Common Collocations:

Trading platform - the software interface for executing trades Both brokers provide mobile trading platforms that I use mainly to check performance.

Online platform - internet-based investment interface Modern online platforms have made investing more accessible than traditional phone-based brokers.

User-friendly platform - easy-to-navigate investment interface After years of experience, I find most platforms straightforward, though beginners may prefer simpler interfaces.

Switch platforms - change the technology interface (different from switching brokers) Some brokers offer multiple platforms - a basic web platform and an advanced desktop platform for active traders.

Business Example: Interactive Brokers offers several platforms including a web platform, mobile app, and advanced Trader Workstation, all accessing the same broker account.

Investment Context: Understanding the distinction helps when evaluating brokers. A broker with excellent regulation and low costs might have a poor platform (clunky interface, slow performance). Conversely, a beautiful platform doesn't matter if the underlying broker has high fees or limited regulation. Evaluate the broker first, then assess whether their platform meets your needs.

Interactive Quiz

Whenever you are ready, here is how I can help you:

We provide Business English lessons and Cambridge and IELTS preparation courses.

You can book a free 20-minute consultation with Iain over Zoom here:

Why not subscribe to our sister Business Fluency newsletter? It helps English students master essential business terms and provides practical strategies to boost your career prospects.

Disclaimer:

This newsletter is for informational and educational purposes only and should not be construed as financial advice. The information contained herein is generic and does not take into account your individual financial circumstances. You should always consult with a qualified financial professional before making any investment or financial decisions.

Additionally, the authors and/or publishers of this newsletter may hold investments in securities or other financial instruments mentioned herein. These are included for illustrative purposes only and should not be taken as a recommendation to buy or sell such securities or financial instruments.