Is there a rule of thumb amount to DCA whether to use IBKR or SCB to invest in Ireland Domiciled US ETF or direct via TD Ameritrade (zero comms)? Situation: Less than 100K and older than 26 years old

Ireland Domiciled ETF is better than US domiciled ETF for world indices as there is a much lower withholding dividend tax.

IBKR has lower fees but minimum monthly fee of USD10
SCB doesn't have minimum monthly fee, but higher commission fees

Another option is to use TD Ameritrade for commission free, but higher withholding tax.

Which is the best option if you plan to DCA into S&P500 or something similar with the lowest overall costs?

Thank you!

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thefrugalstudent

14 Jun 2021

Founder at thefrugalstudent.com

Hi Anon,

I totally understand your dilemma! This is something I pondered over as well, though my consideration was for S&P 500 ETFs and choosing between Tiger/IBKR (because my TDA account has still not been approved yet).

Interestingly enough, while the monthly fee of 10 USD from IBKR sounds like a lot, there comes a point in time where the withholding tax efficiency of Ireland-domiciled ETFs results in more savings than the 10 USD monthly fee, and this happens way before you're even close to 100k USD in assets.

In my comparison between VOO/Tiger Brokers and CSPX/IBKR, I found that this occurs at a portfolio value of about 37k USD. Ie when your portfolio is below 37k USD, it's cheaper to invest in VOO with Tiger Brokers. But once it exceeds that, it makes more sense to invest in CSPX with IBKR.

If you happen to have a TDA account, then this threshold is going to be higher at about 46k USD (based on my estimation) since TDA charges no fees (ie cheaper than Tiger).

If you're interested, you can check out my blog post where I discuss this issue as well!

Hope this helps!

Regards,

thefrugalstudent

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