According to predictions from the Forrester Research Centre, the number of Europeans using online brokerage services to build a nest egg will almost double from 5 million in 2003 to nearly 10 million by 2007.
Both traditional banks as well as online brokers have been getting more business since the financial market rebounded as of the end of 2003. The years 2001-2003 were marked by gloomy financial markets, the events of 11 September and accounting fraud in some companies. “The market is better and people are confident in making investment decisions,” comments General Manager of the international online broker Internaxx, Robert Glaesener.
Vice President International of the global online broker E*TRADE Financial Corp., Mathias Helleu, explains however, that when the market rebounded in 2003, investors came back to online brokers at a faster rate than to traditional brokers.
Almost three-quarters of expats in Europe invested offshore according to a survey carried out by Internaxx last year. You don’t have to be wealthy to invest offshore or onshore. Internaxx’s starter deposit is a minimum of EUR 1,000, whereas E*TRADE requires a USD 1,000 minimum.
Just how much expertise is actually necessary to handle online investment? As Robert Glaesener mentions: “You have to do the homework yourself”. Mathias Helleu explains “It is a do-it-yourself enterprise. It is up to you to create your own investment portfolio. You have to make your own decisions. Investing in equities involves risk. You can reduce these risks by doing your own research and gain knowledge in this field”.
Many of Internaxx’s clients have a financial background or are interested in the financial market. A survey on expat investors by Internaxx showed that nearly three quarters do not pay for advice, preferring to do their own research using internet and English-language media.
Both of these online brokers, as well as bank HSBC, offer services which enable you to do your own research. You have online access 24 hours a day, 7 days a week to information on the website. If you need an update on trading activities you can phone a call centre. Internaxx’s call centre hours are the stock exchange hours (8 a.m. – 10 p.m. CET), E*TRADE’s call centre is open 24 hours a day. Its clients can participate in a variety of seminars and conferences as well.
“People want to have more control over their finances”, comments Mathias Helleu. In targeting self-directed customers, specialised online brokers offer a better quality service to its customers. Robert Glaesener sums up the perks of using an online broker. “Specialised online brokers focus on their core skills: a rapid handling of transactions at the best price and with the best possible service”. Mathias Helleu describes his online brokerage service as a “real time” service, which includes a trading speed guarantee and a good price.
Through its share dealing service, HSBC InvestDirect International also offers online investment services. “Successful investing is about nothing more than making the right investment choice,” claims HSBC, which offers its clients access to US and UK shares, online share dealing and an offshore interest bearing bank account to settle trades.
You gain by paying less per trade or execution. To get the real time quotes E*TRADE provides, would cost you a fortune when using a traditional broker, asserts Mathias Halleu. For example, it is not uncommon to pay a USD 100 for one execution ( or trade) on US stocks via a traditional broker as opposed to USD 9.99 for one execution (or trade) on US stocks via E*TRADE.
“With an online broker like Internaxx, you can buy and sell stocks at discounted prices and may pay up to 10 times less than with a traditional bank”: Robert Glaesener.
Other benefits of an international online service include the multi-currency accounts and access to a number of stock exchanges. Robert Glaesener illustrates this point with an example. A Dutch online service, might for instance, not be able to trade in Canadian dollars or have access to a number of stock exchanges worldwide. E*TRADE has local retail brokerage operations in 12 countries. Internaxx has access to 12 stock exchanges.
Another important service for an expatriate is multilingual communication. A local online service often only offers the local language. Internaxx’s call centre caters to its customers in six languages: English, French, German, Dutch, Spanish and Luxembourg. E*TRADE’s call centre communicates with its clients in at least ten languages including the Chinese and Arabic languages.
E*TRADE specialises in trading US and international equities where it has local brokerage operations. E*TRADE’s brokerage operations are in US, Canada, UK, Germany, Sweden, Denmark, Finland, Iceland, Hong Kong, Japan, Korea and Australia. According to E*Trade, the most attractive overseas market for its international clients is the US. This is not surprising as the US market is the largest and most liquid in the world. In addition to US stocks and options, E*TRADE provides a range of global products such as derivatives, forex, futures. Many of its international clients do trade ADRs of European and other foreign stocks which are listed on the US exchanges.
Internaxx claims to have a soft skill in dealing with expats and its’ speciality is the expatriate market. Internaxx offers a broad range of international investment products for self directed international investors. The local and international products offered are equities, derivatives (forex and cfds), investment funds and the cash account in multiple currencies.
Researched and written by Lesley Thomas
The Photo credit: Marv! via Visual Hunt / CC BY-NC
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