CATÓLICA-LISBON

In recent years, digital brokers have become the preferred choice for thousands of Portuguese investors looking for simple, affordable, and accessible ways to invest in financial assets. Platforms like Trade Republic, DEGIRO, XTB, and Trading 212 have become very popular, especially among younger investors. Their appeal comes from low or even zero commissions, fast access to information, and user autonomy in decision-making. The ability to trade stocks, ETFs, bonds, commodities, derivatives, and in some cases cryptocurrencies, adds to their attractiveness. Unlike traditional banks, which continue to rely heavily on high fees and closed investment products, digital brokers provide a more user-friendly experience. They offer direct access to international markets and allow users to open accounts in just a few minutes from a mobile phone. I should mention that I hold accounts with several of these platforms and use them regularly. 

It’s easy to understand why these platforms attract young investors. However, the risks involved are not always immediately visible. One major concern is that many of these brokers do not have a physical presence in Portugal, which can make customer support difficult in more complex situations. Another issue is the tax component, which is often overlooked. Most digital brokers do not provide tax reports compatible with the Portuguese IRS system, increasing the risk of errors or omissions on annual tax returns. Many investors today begin their financial journeys by following content shared by influencers, some of whom may have achieved financial success without fully understanding the consequences of their advice. Financial literacy remains low across Portuguese society, and the rise of self-proclaimed experts only makes the problem worse. For example, books like Rich Dad, Poor Dad are commercially successful but often promote messages that encourage hasty or poorly informed decisions. Finally, while counterparty risk exists, it is somewhat mitigated by the fact that many of these brokers are regulated by European financial authorities. 

Although I was aware of these advantages and risks, I recently encountered an unexpected problem. One of my preferred digital brokers was Trade Republic, which I used most frequently over the past year. I appreciated the ease of opening an account, the intuitive interface, and the low fees. These features made it a very satisfying option. However, in recent months, a serious concern has emerged: communication with the platform has become much more difficult. I don’t expect a physical branch or a 24-hour phone line. I am perfectly comfortable using online chat or email. But what happens when those options disappear? After discovering errors in the tax report generated by Trade Republic, I tried to contact the company to resolve them. To my surprise, the email addresses that were previously available now send automated replies directing users to the app’s chat. The problem is that the option to start a new chat has been removed. At this point, it is virtually impossible to reach the broker. This should be a serious concern for anyone using the platform. The potential impact on my tax filing could far outweigh the amount I saved in fees. My conclusion is clear: I strongly encourage current and prospective Trade Republic users to think carefully about this limitation. 

In summary, digital brokers offer real value to new generations of investors. Still, it’s essential to remain aware of their drawbacks. We should be cautious about platforms that make communication difficult or impossible. Above all, investment decisions should be based on credible, well-informed sources. Digital brokers are tools, but long-term success depends on each investor’s knowledge, strategy, and discipline.