Investing is hip again! Some of you may already be investing, while others have yet to take your first steps in the investment world. It is essential to build up a reserve for the future.
In the Past: Effects Under the Mattress
It was once different when people still bought securities and received an official title deed instead. Securities could be registered but were often anonymous. These were called bearer securities.
The story of the baker who returned from vacation, turned on his oven, realized that he had hidden his bearer securities in the oven, and saw his fortune go up in smoke! He could collect the interest, dividends, and capital (at maturity) without any problem. The major drawback was that the finder was considered the owner when someone previously lost those bearer securities.
Now: Everything in a Brokerage Account
You may no longer issue new bearer securities since January 2008. Bearer securities registered in a securities account have been converted into ‘dematerialized’ securities. These are not physical securities but securities whose ownership is recorded in a register of names. Anyone who still owns stakes on paper can collect or register them in a securities account. But there is a penalty of 10% on the value and another 10% increase in fines yearly. Because the fine will be the same as the value in 2025, securities will be worth nothing in practice.
Securities are all kept in a brokerage account today. This securities account is linked to a savings or current account by default. All dividends or interest are automatically deposited into that existing savings account.
Why a Securities Account?
A securities account offers you as an investor many advantages:
- Safe: No risk of loss or theft.
- Practical: transactions such as exchanging, collecting dividends, and paying out securities at maturity are done automatically.
- Tradable: securities in a securities account are always in line with the market and can be traded immediately.
- Straightforward: You have an up-to-date overview of your portfolio via the Internet or the extracts you receive with every change in your trading account.
Method
Like your other accounts, a securities account has an IBAN (international bank account number) and at least one holder (the owner). A securities account can belong to several persons (co-holders), and it is also possible to designate authorized representatives.
A mandate account is linked to your securities account at Crelan. This is the Crelan Current Account from which the purchase of the securities is settled and into which the dividends, interest, and securities sold and maturing are paid out.
The holder of the mandate account must be the same as that of the securities account. Exception: The mandate account may be a joint account for married and legally cohabiting partners.
Rates and costs
- Management fee: see the list of rates for private individuals. The management fee is included in the contribution for the Crelan Performance Pack and the Crelan Excellence Pack.
- Custody fee: see rate list of private individuals. The custody and follow-up of securities issued by Crelan are free.
- Taxes: Customers with an average asset in securities accounts of $500,000 or more are subject to a wealth tax of 0.15% per year (situation 2018).
Let me explain what it is about. If you buy bonds, shares, or other securities, you must place them in a securities account for several years. A so-called bearer delivery is no longer allowed.
There are advantages to placing your securities in a brokerage account; they cannot be stolen or go up in flames. Your bank also ensures proper follow-up by automatically cutting the dividends and notifying you if there are any actual transactions. Of course, it should not offer this service for free, but is paid for. How much precisely is that compensation? Your bank itself determines that.
Tip: View the Cost of Security Accounts at the Various Banks Here
Fees for transfers
The stock of costs is not finished because your bank may also charge expenses if it must transfer your securities to another financial institution. And here, too, they are free to determine these costs themselves or to change them. In the latter case, they are obliged to inform their customers at least two months in advance so that they can switch if desired. If they do not, the new rates will be tacitly accepted.
Banks appear to be eager to make use of that freedom. For example, MeDirect and BNP Paribas Fortis charge $150 per line. Suppose you have shares of 6 companies and four different investment funds in your trading account, then the cost of switching to another bank can already rise to $1,500.
Other banks are less fierce, although that is also relative: Belfries charges $75 per line. ING $60.50. This prevents many investors from transferring their securities to another bank. Experts even consider this outright hostage-taking.
Most banks do not charge any fees to receive securities. It is also good to know that some banks will refund (part of) your transfer costs if you switch to them.
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