neon invest in direct comparison with Yuh

You might have already read our two blog articles about neon invest, one of which is a fictional journey through neon invest and the other a mini-guide in which we explain some investment basics. This blog article is about neon invest as well, and this time we are giving you a detailed insight into our pricing structure, because we have found that often in superficial press articles, our figures are not being compared properly and do not give a complete picture of neon invest's advantages. That's something we want to do better here. Read on to find out what's in the spread and how neon invest actually compares to Yuh. And if you want to expand your knowledge about boxing and neon invest, get into the ring with us for the comparison between neon invest and the rest of the trading apps (spoiler: we win most of the rounds).

Comparing the fees – no custody fees, different trading fees

You don't pay anything for your account with neon free. With neon invest you don't pay any custody fees for your trading portfolio and your eTax statement is free of charge – this is well known by now. And the same is true for Yuh, where you pay neither custody fees for your trading portfolio nor fees for the account itself, but Yuh's eTax statement costs 25 CHF. However, when it comes to fees for currency exchange and trading, we and our colleagues at Yuh operate differently:

With neon invest, the trading fees per transaction (purchase or sale) are 0.5% for all ETFs and Swiss shares and 1.0% for foreign shares. Just as with the neon card, there are no surcharges or additional fees for currency exchange when trading with neon invest. Last but not least, there is no minimum fee with neon invest and you can already invest with less than 1 CHF. 

With Yuh, you pay a trading fee of 0.5% per transaction (purchase or sale) – but due to their minimum fee, you always pay at least 1 CHF per transaction according to Yuh's price list. The trading fees of 0.5% apply for domestic and foreign shares as well as for all ETFs – but Yuh charges an additional currency exchange fee of 0.95% per conversion. 

Last but not least, both neon invest and Yuh – just like all other Swiss brokers as well – are subject to the mandatory Swiss stamp duty of 0.075% on Swiss securities and 0.15% on foreign securities.  

Spoiler: As you will see in the examples below, the fee for currency exchange and the minimum fee make a crucial difference. 

Swiss securities – no difference, unless...

If you trade Swiss securities (in Swiss francs), there is basically no difference between neon invest and Yuh: Both on neon invest and Yuh you pay 0.5% fees per transaction for Swiss securities as well as the mandatory stamp duty of 0.075%. 

But there is an exception: If the buy/sell value of your transaction is less than 200 CHF, the transaction will cost a little more with Yuh. This is because in such a case you pay Yuh's minimum fee of 1 CHF instead of their normal trading fee of 0.5%. With neon invest, on the other hand, there is no minimum fee and you pay 0.5% per transaction for buying or selling Swiss securities, regardless of whether you trade for more or less than 200 CHF. As shown in the example below, if you buy a Swiss share with a hypothetical value of 50 CHF, this makes a difference of 0.75 CHF in favour of neon invest.

No fee for currency exchange – neon invest cheaper for foreign titles

Let's assume you want to trade securities listed on international stock exchanges in a foreign currency such as EUR or USD, but you don't have a foreign currency account and therefore want to buy your shares and ETFs in CHF. And when you sell your securities, you want to have your money back in Swiss francs on your account. 

When you buy foreign shares with neon invest, you only pay the mandatory stamp duty of 0.15% and the trading fee of 1.0% – there is no currency exchange fee, as all your transactions are processed in CHF. This is to your advantage because you are not exposed to any foreign currency risk, you do not have to exchange currencies yourself and there are no additional fees for currency exchange after buying or selling. You always know exactly what you will pay before you confirm the transaction. Completely transparent in the usual neon style.

Yuh handles this a little differently: If you buy a US share and only have CHF in your account, you pay a trading fee of 0.5% (but at least 1 CHF) plus the mandatory stamp duty of 0.15% – and an additional flat rate of 0.95% for the currency exchange. Meaning that, in total, you pay 1.45% for a transaction with foreign securities with Yuh, and thus 0.45% more than with neon invest. 

So in this case, trading foreign stocks is cheaper with neon invest than with Yuh. And once you sell your US shares and change your USD back into CHF, you pay the same fees again, doubling the difference in favour of neon invest to 0.9%.

Taking a closer look – neon invest and Yuh in direct comparison

Let's assume you buy the ETF «U.S. Dividend» in your neon app. On the 1st of September 2023 at around 1:30 pm, this ETF cost 59.90 CHF. Add the trading fee of 0.5% (0.30 CHF) and the mandatory stamp duty of 0.15% (0.09 CHF) to the price and, in total, you pay 60.29 CHF for the purchase of this ETF with neon invest on the date mentioned above. 

As a comparison, you buy the same ETF in the Yuh app – there it is called «U.S. High Dividend Stocks (USD)» and cost 67.82 USD (= 60.44 CHF with the exchange rate of 0.89118 valid at the time of purchase) on the 1st of September 2023 at approximately the same time. Yuh charges you their minimum fee of 1.00 USD (0.89 CHF) for the transaction as well as the mandatory stamp duty of 0.10 USD (0.09 CHF). This means that you pay a total of 68.92 USD (= 61.42 CHF) for the purchase of the ETF with Yuh. Based on this total, you then pay an additional 0.95% (0.58 CHF) for the currency exchange. With Yuh, you ultimately pay 62.00 CHF – which is 1.71 CHF more than with neon – for exactly the same ETF. 

Admittedly, this doesn't sound like much for a single ETF – but if you buy an ETF for less than CHF 200 once a month, for example, as a retirement provision, this difference will add up. However, the difference decreases again when you trade for more than 200 CHF with Yuh and therefore pay their normal trading fee of 0.5% instead of their minimum fee. But as we know from the example above: Due to the currency exchange fee, you still pay 0.45% more per transaction with Yuh than with neon invest. 

Dividends – small advantage with Yuh 

If you receive dividends for a foreign security via neon invest, they are paid out directly in CHF to your neon main account by our partner bank. The exchange rate for the conversion is updated by our partner bank at least twice a day and includes an interbank rate surcharge of approximately 1.5%. 

Let's assume that the ETF from our example above yields an annual dividend of 2% and that the value of the ETF remains the same throughout the year. In this case your dividend is 1.19 CHF, i.e. 2% of the ETF value of 59.90 CHF. After deducting the fees of 1.5% for the currency exchange before payout, you will receive 1.18 CHF on your neon main account. 

You are eligible for the same dividend on your Yuh account as well, meaning it also amounts to 2% of the ETF's value of 67.82 USD, which is 1.35 USD. If you do not want to have the dividend on your Yuh account in USD but in CHF, you have to pay the 0.95% fee for the currency exchange – with the exchange rate of 0.89118 already used above, this results in a dividend of 1.20 CHF, of which the 0.95% exchange fee corresponds to 0.01 CHF. Consequently, you have a dividend of 1.19 CHF and thus have one cent more in your account than with neon. 

However, if you factor in the fees paid at the beginning, the advantage of one cent is no longer significant. And if one day you sell your ETF, you pay the same fees all over again. 

At first, the difference of 0.55% in the currency exchange may look like an advantage in favour of Yuh. But looks are deceiving: Since the dividend value is usually a low percentage based on the security value, the 1.5% for the currency exchange of the dividend through our partner bank is not as significant as the 0.45% that you pay more for the purchase of a foreign security with Yuh compared to neon invest. This is because with Yuh you pay those 0.45% on the security value, which is several times higher, and not on the dividend value, which is much lower in comparison.

The spread – what it is and where you can find it

Last but not least, let's take a look at the spread: The spread is the difference between the buying and selling price (also called bid and ask price) of a security. This difference is influenced by various factors such as liquidity, trading volume, or volatility of the security and occurs on every stock exchange. If the security has a high trading volume, the spread is usually relatively narrow; for securities with a low trading volume, the spread is correspondingly wider. Depending on the liquidity of a security, a risk premium may also be included in the spread. This is the case, for example, for American securities in the morning (Swiss time), as the US stock exchanges do not open until the afternoon of our time and thus the liquidity is correspondingly lower and the risk for the broker is higher. 

You can neither directly see the spread of a security in the neon app nor on Yuh. If you want to check the spread for one of the many securities on neon invest in order to compare it with the spreads of other providers, you can do so on the homepage of our exchange partner BX Swiss – the spread of Yuh, on the other hand, can be found on the homepage of Swissquote.

Although the difference in spreads between Yuh (traded on SIX) and neon invest (traded on BX Swiss) is usually in the low per thousand range, it is also worth comparing spreads. As a random sample in the financial newspaper «Finanz und Wirtschaft» (only available in German, paywall) shows, the shares of Nestlé, Roche and Novartis, for example, have a narrower spread on BX Swiss with a bid-ask spread of 4 basis points (Nestlé and Roche) and 1 basis point (Novartis) than on the SIX with a spread of 7 basis points for Nestlé, 8 for Roche and 5 for Novartis. That is why it makes sense to also have a look at the spreads every now and then. 

Conclusion

Whether you buy for a lot or a little money, or whether you sell securities again: If you have a preference for foreign shares and ETFs and want to trade in Swiss francs, you usually pay less with neon invest than with Yuh. If your foreign stocks yield dividends, on the other hand, you have a small advantage with Yuh. And when you trade Swiss securities, the costs between neon and Yuh do not differ significantly. However, if you only buy or sell Swiss shares for a small amount of money at a time, you have an advantage with neon because of Yuh's unfavourable minimum fee. 

Eventually, the best thing to do is to take a look at your neon app for yourself to get an impression of our «Investiverse» and find out if you like it. Have fun!