Skilled at identifying top-tier brokers despite lacking in trading proficiency.
In a recent investigation, BÖRSE ONLINE has delved into the world of neobrokers in Germany, providing insights into what services these digital trading platforms offer and what trading with them actually costs. The aim of this comparison is to help users find the perfect neobroker for easy and convenient trading at the stock exchange.
While the comparison does not provide a list of the best neobrokers in Germany, it does evaluate providers based on 9 criteria: range of offerings, costs and fees, single order, stock trades, ETF trades, savings plans, fund trades, crypto trades, and security.
Top neobrokers generally offer stocks, ETFs, savings plans, funds, and increasingly cryptocurrencies. However, some brokers may lack certain products like bonds, futures, or options. For example, some leading brokers do not offer bonds or crypto trading.
Many claim very low or zero commissions per trade, but hidden costs such as inflated bid-ask spreads and routing trades to market makers create indirect costs that can significantly impact returns. For instance, Trade Republic’s advertised €25 fee can mask total costs exceeding €3,000 in practice due to these hidden fees.
While some ETFs are commission-free, there are often "thank you" payments from ETF providers to brokers (kickbacks), which effectively increase your costs. Also, accumulating ETFs in Germany can incur a hidden tax ("Vorabpauschale") that applies even if investments decline.
Fund trades typically involve explicit costs or management fees, which vary by provider and are often less transparent than stock or ETF trades. Specific costs at neobrokers for funds are not detailed in the sources but generally are higher than ETF trades.
Not all neobrokers offer cryptocurrency trading. Those that do often charge higher commissions or spreads compared to stock or ETF trades. For example, some brokers like XTB charge high commissions on crypto CFDs, while others exclude crypto entirely.
Security is a key aspect of the comparison, with regulated German and EU brokers holding client assets securely with deposit protection schemes and compliance with EU financial regulations. Risks of fraud or insolvency are low among regulated neobrokers.
Other fees to consider include currency conversion fees, which are often hidden in exchange rates, eating into profits when trading internationally. Inactivity fees, withdrawal fees, and custodial fees may also apply, depending on the broker.
Profits from trades are subject to a 25% withholding tax plus surcharges in Germany for residents. German brokers withhold this tax automatically, but foreign brokers require self-reporting.
In conclusion, while neobrokers in Germany often advertise low or zero explicit fees, hidden costs such as bid-ask spreads, order routing payments, kickbacks, tax peculiarities, currency conversion fees, and sometimes inactivity or withdrawal fees can substantially increase the true cost of trading. Careful comparison and transparency reviews are essential to understand the full cost structure for your trading mix.
Users can compare the best neobroker providers in Germany using BÖRSE ONLINE's comparison, with the cost of attending an annual general meeting ranging from 10 to 25 euros with neobrokers. Every euro saved per trade can make a significant difference for short-term traders, and the comparison's overall ranking is calculated with an additional score. The comparison focuses on trading anytime and anywhere, and keeping an eye on one's portfolio.
Investing through neobrokers in Germany may appear cost-effective due to low or zero explicit fees, but hidden costs can significantly impact returns. These hidden costs involve bid-ask spreads, order routing payments, kickbacks, tax peculiarities, currency conversion fees, and occasionally inactivity or withdrawal fees.
While some neobrokers offer cryptocurrency trading, they usually charge higher commissions or spreads compared to stock or ETF trades. On the other hand, security is a crucial consideration, with regulated German and EU brokers ensuring secure holding of client assets and compliance with EU financial regulations.
