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I am relatively new to the investment world. I know enough about economics & finance and I have bought & sold government bonds through my bank before.

I am moving to a new country (Germany) and I feel that it is time to begin serious long term investing. I have found a couple of good ETFs that I want to invest in regularly.

But I don't know how to find an appropriate broker. There are a lot of options to choose from but I don't want to trust some random broker. I have always thought of using German banks like DB and ING since they are good in terms of reliability and customer support (in case anything goes wrong). However, banks charge a number of fees (annual fee, transaction fee, etc.), which makes the whole scheme obsolete.

How safe are online brokers compared to banks? What should I look for? How can I find a safe broker so that there is no possibility that I could lose all my savings because of something my broker has done?


Edit: (my comment to a given answer)

[...]but regulations do not prevent the broker from going bankrupt, do it? Of course, no one can be sure whether a broker/bank will not go bankrupt, but it is more likely for some than others

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In the USA, there are requirements for brokerage firms:

  • Licenses to sell investment products
  • Financial Industry Regulatory Authority (FINRA) registration
  • Securities Investor Protection Corporation (SIPC) registration
  • State registration
  • Broker-Dealer approval from the Securities and Exchange Commission (SEC)
  • Sufficient operating capital
  • Deposits to clearing firms

The SEC regulates brokers and provides records of violations and judgements against brokers. I have no clue what the process is in Germany but I would assume that it also has a similar regulatory agency and that should be your starting point.

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  • Thanks for the info, but regulations do not prevent the broker from going bankrupt, do it? Of course, no one can be sure whether a broker/bank will not go bankrupt, but it is more likely for some than others. – onurcanbektas May 4 at 8:11
  • SIPC insurance protects against the loss of cash and securities at a member firm (total coverage is $500k with a $250k limit for cash). It protects the custody function of the broker dealer. The customer is protected against embezzlement, missing securities, bankruptcy, etc. and it applies to non citizens as well. It does not protect against fluctuating asset value. – Bob Baerker May 4 at 11:19
  • Is it the insurance provided by the government? – onurcanbektas May 4 at 11:24
  • SIPC funding comes from its members and interest earned on US government securities that it buys. Over 99% of eligible investors have been made whole in the 324 cases of failed brokerage firms that it has handled since its founding 42 years ago (2013 stat). Google for more details. – Bob Baerker May 4 at 13:14

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