I haven't done this before, but am thinking of doing it, and found some questions/answers on other threads. I thought I'd collect some of them together here in case other people can use and/or add to them.
It seems there are two main options:
Single share trading account in euro.
Pros:
Pros:
Cons:
From other threads, it seems that brokers may vary wildly, from charging several percent commission on each conversion in any direction, to practically zero. If you are buying shares in other currencies, this can be a significant consideration. My own share account is with Saxobank in the UK. If I am understanding it correctly, they use the "mid-spread FX spot rate" +/- 0.5% commission. So there is a 1% total hit for buying and selling, plus any currency movement in the meantime. This seems reasonable compared to the alternatives (interested in others' opinion on this).
If you go for the "separate accounts" option, see the thread below on best ways to convert currency.
Other threads
A selection of related threads. Unfortunately some are just questions without answers.
It seems there are two main options:
- Keep your share trading account in euro, and convert when buying and selling shares in other currencies.
- Maintain separate trading accounts in multiple currencies.
Single share trading account in euro.
Pros:
- Simpler administration
- Currency conversion happens whenever you buy/sell shares. You don't have to worry about accounting separately for FX when calculating tax.
- You are stuck with whatever FX charges and commissions are levied by your broker.
- You cannot avail of more favourable rates available elsewhere
- You cannot exchange currency at a time when the rates are more favourable, independent of when you buy/sell shares.
Pros:
- You choose when foreign exchange is done, and can choose a favourable time.
- You may be able to choose a cheaper exchange service than your broker provides, such as CurrencyFair / Transfermate.
Cons:
- Your broker may only accept transfers from an account in your name. They may not accept transfers from your euro bank account via a cheaper exchange service such as Transfermate. You will end up needing euro and foreign currency bank accounts in your name, as well as multiple share trading accounts, and may incur fees.
- More complex administration of multiple accounts
- You will have to account for foreign exchange for tax purposes, separately to your share trading.
- You may not have that much choice about when to exchange, since money left sitting in your trading account (or most banks' foreign currency accounts) will earn little or no interest.
From other threads, it seems that brokers may vary wildly, from charging several percent commission on each conversion in any direction, to practically zero. If you are buying shares in other currencies, this can be a significant consideration. My own share account is with Saxobank in the UK. If I am understanding it correctly, they use the "mid-spread FX spot rate" +/- 0.5% commission. So there is a 1% total hit for buying and selling, plus any currency movement in the meantime. This seems reasonable compared to the alternatives (interested in others' opinion on this).
If you go for the "separate accounts" option, see the thread below on best ways to convert currency.
Other threads
A selection of related threads. Unfortunately some are just questions without answers.
- Currency and buying Shares
- When selling shares can you deduct currency commission from your tax liability?
- Foreign Currency Account for Uk and US Shares?
- Taxation of FX gains
- Funding broker account with usd/foreign currency
- investing in Uk shares
- FX costs of investing in sterling shares
- Currency Transfer Advice please
- Mid Market Rate in Currency Exchange
- The best way to transfer large amounts in euro to and from other currencies
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