investing · Uncategorized

Bux Zero Review: the 0% commission brokers App for beginners

Bux Zero has been out since 2019 now and they advertise themselves as being a broker that charges Zero Costs. Its an App only broker and this might be a bit uncomfortable for veteran traders, but for the younger generation who group up with Banking Apps this will probably come as a second nature.

If I had to compare it with a better known App I would compare it with Robinhood. Bux Zero might just be the Robinhood of Europe. Robinhood is not accessible in most European countries (including my own – Belgium), and Bux Zero could fill a market gap here.

Disclaimer: this blog post displays my own views, but can contain affiliate links

If you are a resident in Belgium and want to try out Bux Zero you can sign up using this link and you will get one free stock. In my case I ended up getting a GoPro stock, so I was quite surprised about it.

If you decide to use my link, then please also let me know in the comments what stock you ended up with.

Safety & Risks

Bux Zero is a small broker just starting out. That does make me a bit skeptical in advance as small sizes does come with certain risks, however there is a few points that are helping their credibility:

  • Your money is stored safely at ABN AMRO Clearing Bank, as they say on the Bux Website. This means that uninvested money on your App is protected & guaranteed by EU up to 100.000 EUR.
  • It is regualted by the The Dutch Authority for the Financial Markets (AFM), and therefore qualifies as a broker

So your money is safe there, well of course not including the Risks that come with Investing.

Investing is always Risky, so please before you do anything always do your own due diligence.

Image result for I am not a financial advisor

Costs

Before starting to use the App lets start with what investing with Bux Zero will cost you.

Their tariffs are actually public so everyone can see them.

They basically have three types of orders: Zero Orders, Market Orders and Limit orders.

A market order is when you place an order on the market at you are willing to buy / sell at market price.

A limit order is when you place an order on the market and you set a max buy price or max sell price.

Those two are quite common, but new are “Zero Orders”. This means that you place an order and this order is always executed at the end of the day.

So the tariffs are in other words extremely low. If you invest with small amounts of money (say 100 EUR / month), commissions can take a HUGE cut of your money that could take you at least a year to recover trough the general rising average of the market 8%. Its great, especially for small retail investors, that there is now a broker taking this pain away.

There was a reason why I moved to DEGIRO, away from Keytrade: the tariffs were much smaller. Until Bux Zero came along DEGIRO was without question the cheapest broker for me. Bux Zero has changed this now, as based on their tariffs Bux Zero is now clearly the cheapest broker.

Note that these tariffs do not include taxes, so most likely you will still need to buy local taxes, possible both where you live, as locally where you purchase the stock.

How does Bux Zero make money?

Nobody works for free, so how does Bux Zero make money? The 1 EUR limit and 1 EUR can’t really be enough to earn money right?

Bux Zero charges a 0.25% to exchange your currency when selling US stocks for example. I would not say this is particularly high yet and they are quite open about this with advertising this on their main Website.

Bux Zero is lending out your stocks

Its the things they don’t put on their website I was wondering about. So I went trough their 26 pages long customer agreement and found in section 12 what could just be their main method of making money, and that is they will lend out your stocks, most likely for short selling.

Short selling is the selling of a stock that the seller doesn’t own. … Sooner or later you must “close” the short by buying back the same number of shares (called “covering”) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference.

Other brokers do this as well, Robinhood in particular is famous for this. DEGIRO lends out about 30% of your shares. The difference with DEGIRO is that Bux Zero lends out 100% of their stocks. Sooner or later a broker would hit the market that would do this. I personally do not have a big issue with this.

Additionally you should know if you purchase an ETF, all the shares you hold in that ETF might be lended out. So this is not really an uncommon practice.

What is the Risk? If both Bux Zero and the party that has lended your stock go bankrupt then you will have a hard time to retrieve it.

Shares that are not lended out are stored at ABN AMRO Clearing. Shares stored at ABN AMRO Clearing are protected up to a certain extend. Namely 20.000 EUR of your investments is protected by the DNB should anything go wrong.

Good to know this protection is valid for about any broker in EU, so it makes sense to spread out your investments over different brokers.

Bux Zero is using your data

The second way I suspect they are making money is by using your data to analyze the market.

The truth is I don’t know how they are using the data.

I can only see what is in the User Agreement: section 21 states that they can use and analyze your data.

In section 21.4 specifically they state they can even share this data with third parties, who will use it in a confidential manner. But again how they will use it exactly is not clear.

My guess is this is for sure a big source of income for them. While it good be shocking to the older generation, the young generation grew up with companies like Facebook where the main source of income is data. Of course I don’t like that my data is sold to third parties, but I was not surprised when I came across it.

Account inactivity fee

The 5 EUR / month account inactivity fee in section 26.6 Bux Zero adds did came as a surprise to me and even caused a slight panic.

Not to worry after doing some research I found out it was not as bad as it sounds. The main thing is how does Bux Zero define inactivity. After some searching I found the following conditions apply:

– There has been no trading activity on your BUX X account (opening and closing positions*) in the last 90 days AND
– The BUX X app hasn’t been opened (no app sessions) in the last 90 days AND
– You currently don’t have any open positions in your BUX X portfolio.

So as long as you just hold on to the free stock that you got you don’t need to worry about this one.

The App

The App is like a very stripped down version of larger brokers like Keytrade, DEGIRO and Lynx.

While I don’t consider DEGIRO complicated, I have to admit, it was never easier to find and get to the buy screen of a stock, as you can see bellow:

Step 1: open the Bux Zero App
Step 2 Search a stock
Step 3: click Kopen to buy

In the top right of the fourth step you can select what kind of purchase you want to make. But as you can see in only 4 clicks we got to the screen to buy a stock.

I’m not saying its different for other brokers. I believe DEGIRO its a similar amount of steps, but there are for sure a few brokers outthere where it is more complex.

The app basically stripped away everything, so really easy for beginners to start investing, but at the same time it will also make it much harder to become an advanced investor with this app.

Bux Zero: what can you buy?

Bux Zero allows you to purchase any stock on the US or EU market. Thats actually more then enough really.

It also allows you to purchase ETFs. As a great fan of ETFs I did wanted to find out what kind of ETFs they have there.

Here the offering is quite limited, but that doesn’t mean there is no opportunities here. For example I was surprised to find an ALL-WORLD INDEX ETF from Lyxor there with only a cost of 0.12% per year. This is a huge win for Bux Zero that they can offer that. In total I saw around 30 ETFs there, so not exactly a huge offer, but more then I had expected.

I didn’t went trough all of them but I did checked out detailed information of a few and I could not find any ETFs that had unexpected huge yearly costs. The highest I found was the emerging markets ETFs around 0.7-.08% yearly, which is quite high.

This is different from other brokers where you can buy all ETFs, but if you don’t pay attention you can be looking at a yearly cost of over 2%.

You could see at the information of the ETF that they are trying to appeal to a younger crowd.

Translated the information with the ETF says: “Take a shot of Russian Wodka and flush it away with the biggest companies in Eastern Europe”.

For me personally this funny text will not encourage me to invest, but it is entertaining to read, and I can see the appeal. I don’t judge them for this. What matters to me is that there is a link to the Key Information Document, which is a standardized document explaining what the ETF is, does and what its costs are.

What can’t you buy?

Bux Zero has limited itself to US / EU Stocks and ETFs.

That means that advanced things like Options, futures, forex and resources are not available.

Personally I don’t trade these types, and they are usually the things where you lose money with. I consider it a bit gambling to be honest, but perhaps there is some people that enjoy investing in gold for example that will feel like they are left out by this.

What do I not like about Bux Zero?

I understand that a stripped own version of a broker app could appeal to a younger crowd. However one thing I do not like is this:

I don’t mean the stock, I actually own Galapagos stock. What I mean is that you can’t see time indications onthere. On most apps you can see what hour, day, week, month or year the stock behaved this way. Here you really have no clue, and for me this is one of the biggest misses. It makes it very hard to analyze the history of the stock, and I can’t really understand why they chose to do it this way.

If they add any new features in the future I hope it will be this one.

Will I be using Bux Zero?

I wrote this blog because I am currently analyzing on using this App for my stocks. I would probably be okay to use it to buy Stocks. For ETFs I would stick with DEGIRO. I usually do not buy stocks in large supplies and then a discount on stocks could be useful.

Most likely I would stick to limit orders if I use Bux Zero as opposed to Zero orders. The main reason is that its not clear to me how they are using the information they gather, and I wouldn’t want them to use my information of buying stocks mid day to predict a stock price end of day. This is not so much an issue right now, but this information can become very valuable to Bux Zero once they have more users.

All in all its worth it to give this App a chance if you are looking for something simple – no hassle – to use. Its missing a few features, but this could actually protect the beginning investor.

If you are a resident in Belgium and want to try out Bux Zero you can sign up using this link and you will get one free stock. In my case I ended up getting a GoPro stock, so I was quite surprised about it.

For the advanced investors its probably missing a few features though.

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