When I am creating an account in Degiro (in Germany) I am exposed to these profile options (beware: the translation has been done by Google translator from German the original):

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Of course I am interested in the characteristics of the Basic-Profil but there's got to be a trick.

What is all this about "Your securities can be lent"?

I want to use the Degiro to make long-term investment (100K ~ 200K) I really want to be sure my money is as safer as possible and not wake one day to see that my money is gone because a stupid movement from by broker.

  • Brokers lend shares from the accounts of investors to short sellers in return for an interest payment (called a borrow fee). Some brokers share this fee with the share lender. In the US, SIPC insurance covers broker-dealer risk and loaned stock is protected. I have no idea what protection Degiro and/or Germany offers. Check with your financial regulatory authorities for that info. – Bob Baerker Jan 23 '20 at 21:16

Short selling involves

  1. Borrowing a block of shares, or some other investment, from somebody
  2. Selling it
  3. Waiting a little while
  4. Buying it back again
  5. Giving it back to the person it was borrowed from.

The short seller hopes that it will go down in value between when they sell it and when they buy it back. If they are right, they make a profit. If not, they lose money (but that's not your problem).

But that requires somebody willing to lend out their investments. Actually, it isn't really lending, more like renting, as the lender will expect some payment in return.

This fund is offering you two choices:

  1. Agree to lend out your investments. This involves some risk, but the "rents" that the short sellers pay means you are charged less in fees for the account.
  2. Take the safe option. Don't allow your investments to be lent out. Pay more in fees.
  • Where exactly is the risk for OP? That the fund borrowing OPs shares goes bankrupt in between and is not able to return the shares? – quarague Jan 24 '20 at 15:54
  • @quarague There's a small risk that the short seller will make a huge mistake with their timing. If the shares start going up in price, then the short seller may fail to find enough money to buy them back again. It should happen very rarely. – Simon B Jan 24 '20 at 19:19

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