Author Topic: How to make money on the Swiss stock and bond markets (CHF only)?  (Read 3560 times)

mustachianpost

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How to make money on the Swiss stock and bond markets (CHF only)?
« on: September 27, 2014, 04:14:04 PM »
Hi fellow Mustachians,

I finally managed to wrap-up the "Investing from/in Switzerland" step by step guide to get you onboard!
The full tutorial is here: http://goo.gl/sAA2rH

Don't hesitate to let me know if you have any question or if you need more details on how to get started.

Looking forward to hearing your feedback!!!
MP

samuck

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #1 on: September 28, 2014, 08:16:29 AM »
Congrats on the post, MP!
First and foremost, it's a great read! You got me hooked immediately and I read it in one go - good and engaging writing! I'm a private investor in Switzerland myself and love to get insights from other investors here, so I'll make sure to regularly visit your page. However, I would suggest you focus on smaller pieces of the pie. By just talking about investing in Switzerland, you have to remain somewhat general and cannot cover many of the so important elements. For instance, it would be great to read and discuss different online brokers (as opposed to focus only on swissquote), decision criteria for ETFs (why did you go for these four, what is the TER, why hedged, etc) or different pillar 3a options.
There is so much to talk about, hope to read from you soon! ;-)
Samuck

Keen

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #2 on: September 28, 2014, 11:13:48 AM »
A blog like this is long needed. We really need a place like this that collects bits of wisdom and writes them up nicely.

For example, I recently figured out that you shouldn't buy ETFs that are not traded in CHF. Reason: Banks rig the currency exchange in their favor. For example, when I tried to buy stocks in USD, PostFinance withheld about 1.8% of my money. You can calculate this for your bank: Get the spread between buy and sell for USD and divide by 2. That's the hidden currency exchange fee.

1.8% is a lot. Assuming I buy an ETF with a TER with 0.2% instead of 0.25% that is traded in USD instead of CHF, it would take over 38 years to make up for it (36 years if you don't factor in rising stock prices).

Another bit I recently found is that Swissquote and PostFinance are going to partner in 2015: http://www.post.ch/post-startseite/post-archive/post-mm14-strategische-zusammenarbeit-swissquote-postfinance/post-jobs-und-karriere-news.htm - Swissquote is going to do the trading for PostFinance then. I wonder what this means for fees, until now PostFinance had higher trading fees but zero yearly fees.

samuck

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #3 on: September 28, 2014, 12:11:57 PM »
For example, I recently figured out that you shouldn't buy ETFs that are not traded in CHF. Reason: Banks rig the currency exchange in their favor. For example, when I tried to buy stocks in USD, PostFinance withheld about 1.8% of my money. You can calculate this for your bank: Get the spread between buy and sell for USD and divide by 2. That's the hidden currency exchange fee.

1.8% is a lot. Assuming I buy an ETF with a TER with 0.2% instead of 0.25% that is traded in USD instead of CHF, it would take over 38 years to make up for it (36 years if you don't factor in rising stock prices).

Agree, 1.8% is a lot. However, I wonder whether they use the same trick with CHF-traded ETFs when converting the underlying currency into Swiss francs. There is always a conversion at some point of the process... Any insights into this?

swissgva

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #4 on: September 28, 2014, 12:20:09 PM »
Good luck on your project :)

Keen

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #5 on: September 28, 2014, 01:23:03 PM »
Agree, 1.8% is a lot. However, I wonder whether they use the same trick with CHF-traded ETFs when converting the underlying currency into Swiss francs. There is always a conversion at some point of the process... Any insights into this?
I'd say at this point it doesn't matter much anymore. If the price of the ETF was too high in Switzerland then some bank would buy it in the US and sell it here until the price were roughly equal, plus maybe their real cost of transferring money (which is going to be significantly lower than 1.8%).
And even if that were not the case - if we assume an ETF is always more expensive on the SIX - you would pay the extra fee once, but you would get it back when selling. Which is not the case with currency conversions, you pay once when buying and then you pay once again when selling.

mustachianpost

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #6 on: September 29, 2014, 12:36:35 PM »
@samuck
Thanks a lot for your message, it is highly motivating me! It is always hard to know if you write good or not, too short or too long, etc. Thanks!
I plan to focus on "small pie pieces", but with this blogpost, I really wanted to get people to act and not have to wait for the next post in the series.

Regarding your idea about online brokers comparison, I think it is great!
I focused only on Swissquote because that is the one I use and from what I could compare, the other ones can have a better User Interface (not hard though), but the fees seems to be the best on the market.
Which online broker do you use? Would be great to take your insights for a future post.

Same for ETFs decision criteria and different 3a pilar options. Hopefully I have time soon to cover these topics ;)

Again, thanks for taking time to read the MP blog!

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@Keen
Thanks for the nice word. Happy you like the CH specific coverage.
Concerning the ETF traded in other currency than CHF, that's a good point. I didn't mention it while writing, but I got a lot of questions about it. I hardly found infos as the most blogs are US focused. My financial advisor friend told me to not go this way due to currency conversions as you say it.

Interesting info you got about Swissquote and PostFinance. Let's see if they don't try to charge you/us even more ;)

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@swissgva
Thanks! Good to see some readers from Romandie ;)

samuck

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #7 on: September 29, 2014, 03:47:55 PM »
I'm using Postfinance of which I'm a client anyway, however, Swissquote seems to be the better deal. Here is a comparison: https://www.justetf.com/ch/online-broker-vergleich/etfs-kaufen.html

mustachianpost

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #8 on: September 29, 2014, 03:54:31 PM »
Thanks for sharing this link Samuck!

mustachianpost

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #9 on: October 19, 2014, 09:24:24 AM »
Hi guys,

Short follow up on the topic: I recently discovered a new Swiss online asset manager => http://moneyvane.com/
I discussed a lot with the CEO during the past week and this new service looks promising!!!
The private beta will launch next month. Hopefully I manage to be part of it; then I will report to you via the blog.

Keep you posted!
MP

Bob W

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Re: How to make money on the Swiss stock and bond markets (CHF only)?
« Reply #10 on: October 20, 2014, 09:31:48 AM »
Thanks for this post and everyone's comments!