Author Topic: Switzerland: How should I buy index funds here?  (Read 98441 times)

dmn

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Re: Switzerland: How should I buy index funds here?
« Reply #150 on: December 17, 2015, 05:59:33 AM »
The international stocks are hedged apart from the emerging market etf. The cost of the hedging is 0.55 TER and it will make me feel more relaxed.
I have changed from iShares to UBS for the Swiss stocks because they cost less.

0.55% additonal TER are a high price to pay for currency hedging. In the long run, currencies tend to fluctuate around purchasing power parity, which means that in the very long run they hardly move at all if you correct for inflation.

Depending on your age you might keep the stocks for 30-50 years. In 40 years, you will have paid about 20% of your international equities' value on currency hedging (assuming a constant 0.55% TER). Even if the CHF appreciates by 25% compared to the USD, you will only break even. To me, this sounds like a very expensive form of insurance.

Dago

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Re: Switzerland: How should I buy index funds here?
« Reply #151 on: December 17, 2015, 12:52:17 PM »
Interesting point. The 0.55 is the full TER not an addition to the "standard" TER.

How do you compute 20% payment over 40 years ?

If I look at the historical chf vs usd it appreciated a lot more than 25%, or am I misreading it ?
http://fxtop.com/en/historical-exchange-rates.php?A=1&C1=USD&C2=CHF&YA=1&DD1=01&MM1=01&YYYY1=1965&B=1&P=&I=1&DD2=17&MM2=12&YYYY2=2015&btnOK=Go!


dmn

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Re: Switzerland: How should I buy index funds here?
« Reply #152 on: December 18, 2015, 02:51:10 AM »
Interesting point. The 0.55 is the full TER not an addition to the "standard" TER.

How do you compute 20% payment over 40 years ?

Ah, I assumed that you had checked that the 0.55% was the price of hedging. Looking at the iShares prospectus, I get the impression that the hedging cost is not part of the TER, but that it is instead considered part of the fund's investments. I did not spend a lot of time checking, but I could not find clear indications for how much the hedging costs.

The 20% over 40 years was based on the 0.55% p.a. you stated, I calculated the fraction of your money not eaten up by the TER as (1 - 0.0055)^40 and got something close to 0.8, i.e. 80%.

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If I look at the historical chf vs usd it appreciated a lot more than 25%, or am I misreading it ?

Those exchange rates do not correct for differences in inflation. The stocks you buy are real assets: factories, land, material, machines, etc. They move up with inflation: if the US had 50% inflation, then US stocks would be worth 50% more measured in USD. Thus, an un-hedged stock market fund is generally not strongly affected by inflation. For exchange rate moves due to persistent inflation, hedging is not necessary.

Please also understand that differences in inflation are not removed by hedging: hedging only removes the unexpected exchange rate changes, the expected changes are incorporated into the fees you pay. To understand whether currency hedging is useful for you, you would need to look for inflation-adjusted exchange rates, which generally move less in the long run. As I understand it, hedging mostly limits your exposure to unexpected inflation-corrected upsurges in the CHF, e.g. during the last few years. And it makes you lose money in case of anologous unexpected downwards corrections in the CHF.

SGontour

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Re: Switzerland: How should I buy index funds here?
« Reply #153 on: December 18, 2015, 11:53:36 AM »
@Dago
Looks fine for me and your targets / risks you want to take.

My current asset allocation:
- Vanguard FTSE All-World High Div Yld ETF CHF...........70%
- iShares Swiss Dividend (CH)..................................20%
- iShares Emerging Markets Dividend UCITS ETF (CHF)...10%

-> I love dividends, so I think the higher risk and the higer TER are worth it :)
-> The vanguard ETF has about 5% in Swiss companies and another 5% in Emerging Markets.
-> None of them are hedged regarding currency risks.
-> 100% in stocks, as I do have a pension account with my employer, which is a huge part of my net worth and is almost risk free (and also brings almost no returns).

Agarshaker

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Re: Switzerland: How should I buy index funds here?
« Reply #154 on: March 14, 2016, 02:57:19 PM »
Just wanted to say a big thank you to all contributors to this thread as it started me on my path to mustachianism in Switzerland!!!
You collectively ROCK!

samuck

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Re: Switzerland: How should I buy index funds here?
« Reply #155 on: March 14, 2016, 03:55:03 PM »
Thumbs up to you, Agarshaker! ;-)

Btw did you guys know pillars 3a are actually not bound to 45% equities? I've realized just this year, not many institutes seem to bother, though. I'm contributing now to the Raiffeisen Pension Growth with 67% shares (includes also real estate, commodities and bonds) and 0.45% management fee, check it out, what do you think:

https://www.raiffeisen.ch/raiffeisen/internet/docs.nsf/$UNID/DF629972A00E2DDAC125785400388C7E/$file/PensionGrowth-d.pdf (German)

Update: TER is 0.9%, which is high but comparable to other Swiss 3a pillars.
« Last Edit: March 14, 2016, 03:59:50 PM by samuck »

Shef

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Re: Switzerland: How should I buy index funds here?
« Reply #156 on: March 14, 2016, 04:14:28 PM »
thank you samuck for that hint. do you have first-hand information about the deposit- and buying-fees at Raiffeisen? According to http://bit.ly/1TJz3hO, there's a buying-fee of 3% (!) and a annual fee of 0.98%. I think 3rd pillar remains a pain...

samuck

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Re: Switzerland: How should I buy index funds here?
« Reply #157 on: March 14, 2016, 04:57:37 PM »
Hi Shef, I contribute chf 550 each month, they take out 1% as Ausgabekomission and invest the rest. That is ok, I think. Not aware of any additional fees. Absolutely agree, there is very little competition around 3a pillars. TER of 0.9% (or 0.88% for the Postfinance Pension 45) for basic indexing is a rip off. But you can also do much worse ;-)

Dago

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Re: Switzerland: How should I buy index funds here?
« Reply #158 on: March 20, 2016, 03:58:06 AM »
Hi all,

I just wanted to share a tip.
When opening an account in Raiffeisen you become a shareholder ("sociétaire" to be precise) and you are forced to buy 1 share ("part sociale", 200 chf). I kept this one share and did not think of it till last year when I realized it was returning 6% (max, but it was the actual return in the past two years). I consider it an excellent return in Switzerland even if the value of the share is never going to increase (it is not an actual share).

You can actually buy 50 shares for a total of 10000chf (at least in my Raiffeisen in Geneva), getting 600.- every year.

EDIT: I sent this post a bit too fast. I wanted to add that the risk is linked to the inflation. As the share will not grow in value, any inflation is bad for you. If inflation comes back, I will sell the shares back to the bank.
« Last Edit: March 20, 2016, 04:01:30 AM by Dago »

dmn

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Re: Switzerland: How should I buy index funds here?
« Reply #159 on: March 20, 2016, 05:02:16 AM »
ER of 0.9% (or 0.88% for the Postfinance Pension 45) for basic indexing is a rip off.

For this reason I figured it makes more sense to buy cheap ETFs in taxable accounts. The tax savings of the pillar 3a are approximately eaten up by the extra fees, so why not keep the flexibility of taxable accounts?

samuck

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Re: Switzerland: How should I buy index funds here?
« Reply #160 on: March 20, 2016, 03:47:35 PM »
ER of 0.9% (or 0.88% for the Postfinance Pension 45) for basic indexing is a rip off.

For this reason I figured it makes more sense to buy cheap ETFs in taxable accounts. The tax savings of the pillar 3a are approximately eaten up by the extra fees, so why not keep the flexibility of taxable accounts?

I have never made an exact calculation, have you (or anyone else in that thread)? Needs to include fact that there is no wealth tax on 3a and neither on capital gains through them etc.
As long as I can contribute to both 3a pillar AND taxable saving, I decided for myself to do both and to consider 3a saving as the more conservative part of my savings. If I could save only CHF 6768/12 per month or less, I would reconsider.

boston swiss

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Re: Switzerland: How should I buy index funds here?
« Reply #161 on: March 25, 2016, 01:57:35 PM »
 Joining in on this thread to follow.  I'm a US citizen working in Switzerland. 

Quick question - is there a link anyone can offer to the basics of the pillar investing in Switzerland and how this money is provided to a non-Swiss citizen if/when you leave the country?  My company provided this info once, but my focus at the time was more trying to understand how much I was receiving vs. my old job in the US.  I'd now like to maximize my Swiss retirement funding, acknowledging that most of my investment experience in such matters is limited to the US 401k into Vanguard funds and US real estate investments.   I see some of the tax savings mentioned on Pillar III contributions, but would like to understand what the limits for these contributions for a US citizen living in Switzerland.  Thanks for any help you can provide!

I'd look forward to joining up with some folks for a Mustachian meeeting in Switzerland.



wapiti

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Re: Switzerland: How should I buy index funds here?
« Reply #162 on: March 27, 2016, 06:30:16 AM »
Hi everyone,

I have done quite extensive research about third pillar and index fund in Switzerland (I'm a swiss citizen)

There is currently 3 funds which offer more than 50% in equity for the third pillar:

-UBS (CH) Vitainvest 75 World, active fund, 75 % of equities, TER 1.6 %
–UBS (CH) Vitainvest 75 Swiss, active fund, 75 % equites, TER 1.6 %
-Raiffeisen Index Fonds – Pension Growth, passive fund 67 % equities, TER 0.9%

There are some  passive funds with less equities:
-Postfinance pension 45
-Swisscanto BVG 3 Index 45
-Maybe others

I strongly recommend the raffeisen fund as the fund is passive, has 67 % equities and 75 % of foreign equities are CHF hedged.

 "The tax savings of the pillar 3a are approximately eaten up by the extra fees, so why not keep the flexibility of taxable accounts"
it's depend of each situation and what is the ETF. I will do some calculation. If you have done some simulation, i would be happy to have an eye on it ;)

To buy index fund, I use postefinance and swissquote saving account.

My big question now: does 3rd pillard is a good investment if your take an early retirement ?
« Last Edit: March 27, 2016, 06:34:35 AM by titi22 »

samuck

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Re: Switzerland: How should I buy index funds here?
« Reply #163 on: March 27, 2016, 11:17:04 AM »

My big question now: does 3rd pillard is a good investment if your take an early retirement ?


Whether you take an early retirement or not is not relevant, I think. Whether you retire early or not, you can "cash" your 3a pillars only as of the age of 60 up to 65 (a split is recommended for tax reasons). Take a look here: http://www.bsv.admin.ch/kmu/ratgeber/00889/index.html?lang=en


Quick question - is there a link anyone can offer to the basics of the pillar investing in Switzerland and how this money is provided to a non-Swiss citizen if/when you leave the country? 

I see some of the tax savings mentioned on Pillar III contributions, but would like to understand what the limits for these contributions for a US citizen living in Switzerland. 


Check out what the Swiss government says: http://www.bsv.admin.ch/kmu/ratgeber/00889/index.html?lang=en (not in English, unfortunately).
The financial institutions that offer you the pillar 3a will certainly give you the specifics of how they cash out if you move abroad. For maximum annual contribution, it's the same amount as for Swiss citizens: 6768 CHF currently. This should save you roughly CHF 1000 per year, however, you will be taxed once you cash out.

wapiti

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Re: Switzerland: How should I buy index funds here?
« Reply #164 on: March 27, 2016, 11:50:57 AM »
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Whether you take an early retirement or not is not relevant, I think. Whether you retire early or not, you can "cash" your 3a pillars only as of the age of 60 up to 65 (a split is recommended for tax reasons

No. You can also cash your 3a pillar if you quit switzerland, buy a house/appartement, create your own company or become freelancer.

The explanation on https://www.ch.ch/en/3rd-pillar/

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You can only withdraw money from a 3a pillar pension plan before reaching retirement age if you want to use it to buy or build a residential property, go abroad to live permanently, or set up your own business.

The law article in german on http://www.bsv.admin.ch/kmu/ratgeber/00889/index.html?lang=en

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Ein Bezug der Gelder aus der Säule 3a ist in folgenden Fällen möglich:
bei der Aufnahme einer selbstständigen Erwerbstätigkeit (für bisher Unselbstständig-erwerbende),
bei der Aufgabe der bisherigen selbstständigen Erwerbstätigkeit und Aufnahme einer neuen, andersartigen selbstständigen Erwerbstätigkeit (für bisher Selbstständigerwerbende),
zum Erwerb von Wohneigentum,
beim definitiven Wegzug aus der Schweiz,
beim Bezug einer ganzen Invalidenrente der IV,
ab vollendetem 60. Altersjahr (Frauen 59. Altersjahr); die Altersleistungen werden bei Erreichen des ordentlichen Rentenalters der AHV fällig (65 Jahre für Männer und 64 Jahre für Frauen). Weist der Vorsorgenehmer nach, dass er auch nach dem ordentlichen Rentenalter der AHV erwerbstätig ist, kann er weiterhin Beiträge an die Säule 3a leisten und es kann der Bezug bis höchstens 5 Jahre nach Erreichen des ordentlichen Rentenalters der AHV aufgeschoben werden.

Shef

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Re: Switzerland: How should I buy index funds here?
« Reply #165 on: March 28, 2016, 09:39:58 AM »
My big question now: does 3rd pillard is a good investment if your take an early retirement ?

ER of 0.9% (or 0.88% for the Postfinance Pension 45) for basic indexing is a rip off.

For this reason I figured it makes more sense to buy cheap ETFs in taxable accounts. The tax savings of the pillar 3a are approximately eaten up by the extra fees, so why not keep the flexibility of taxable accounts?

I have never made an exact calculation, have you (or anyone else in that thread)? Needs to include fact that there is no wealth tax on 3a and neither on capital gains through them etc.
As long as I can contribute to both 3a pillar AND taxable saving, I decided for myself to do both and to consider 3a saving as the more conservative part of my savings. If I could save only CHF 6768/12 per month or less, I would reconsider.


The question whether is worth to invest in an 3rd pillar-account is also discussed in other places in the internet, e.g. http://www.obermatt.com/de/über-uns/blog/säule-3a-steuervorteil-gut-für-hausbesitzer-schlecht-für-alle-unter-55.html

In my opinion, it's worth as a substitute of a saving-account. But if you rather invest in etfs, you pay at least 0.5% higher fees every year (never mentioned here: https://www.wertschriftensparen.ch where you can buy the Swisscanto BVG 3 Index 45 R (3rd pillar fund) with a TER of 0.35%, but there's a custody fee of 0.5% (no commission at buying).

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #166 on: March 31, 2016, 10:27:59 PM »
Luzerner kantonal Bank offers the 0.35% swisscanto index 45 r and asks only for 0.22% depot fee for a total of 0.57%. I'm using since a year an can confirm it. You don't even have to go to Luzern since you can open it online and you can validate your identity for free at every other cantonal bank.

Since in taxable account your dividend/bond distribution is taxed as income (let's say about 1/4 of today's 2% dividend/bond dis, also 0.5% annually) and you suffer from the wealth tax (around 0.1% depending on the  canton you live in), being able to invest "free of charge" (0.57%-  ~0.6%) while reducing your taxable income is still very important.
But if you want to retire early, then I honestly don't know if it is the right vehicle. Since our first, state based pillar is in the red (news of days ago, half billion loss for 2015) there are already talk that want to restrict the access to 2nd and 3rd pillar to avoid having retired people on assistance because they used up their account to buy a home/start an activity.
You have to account for the risk that this money may be only accessible at 60. And maybe even later if they change the law.

Since I can save well north of 7k, I'm still using it and plan to retire at 50, but every situation is different.

Sent from my YD201 using Tapatalk


dmn

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Re: Switzerland: How should I buy index funds here?
« Reply #167 on: April 01, 2016, 01:44:43 AM »
Since in taxable account your dividend/bond distribution is taxed as income (let's say about 1/4 of today's 2% dividend/bond dis, also 0.5% annually) and you suffer from the wealth tax (around 0.1% depending on the  canton you live in), being able to invest "free of charge" (0.57%-  ~0.6%) while reducing your taxable income is still very important.

Remember that you have to pay taxes later on distribution. You defer the taxation of your current income and of your capital gains. Given the currently very low tax rates in Switzerland I am not sure that the tax rate on distribution will be lower. For all I know, it might as well be higher, given the government's unfunded future liabilities.

I thus only expect permanent savings from the wealth tax, which is only about 0.1%, and from the extra compounding due to deferred capital gains taxes. An 0.5% extra TER cancels these benefits: even in your calculation, which ignores the taxes during payout, you just break even.

What remains is the greatly reduced flexibility of 3a savings. I do not know when I will be able to access them, and it is not clear how they will be treated if I should ever move to another country. (Presumably they would be taxed much more heavily in that case.) So I prefer to buy low-fee assets like the cheapest of the Vanguard ETFs traded on the Swiss stock exchange with after-tax money.

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #168 on: April 01, 2016, 02:41:00 AM »
Since in taxable account your dividend/bond distribution is taxed as income (let's say about 1/4 of today's 2% dividend/bond dis, also 0.5% annually) and you suffer from the wealth tax (around 0.1% depending on the  canton you live in), being able to invest "free of charge" (0.57%-  ~0.6%) while reducing your taxable income is still very important.

Remember that you have to pay taxes later on distribution. You defer the taxation of your current income and of your capital gains. Given the currently very low tax rates in Switzerland I am not sure that the tax rate on distribution will be lower. For all I know, it might as well be higher, given the government's unfunded future liabilities.

I thus only expect permanent savings from the wealth tax, which is only about 0.1%, and from the extra compounding due to deferred capital gains taxes. An 0.5% extra TER cancels these benefits: even in your calculation, which ignores the taxes during payout, you just break even.

What remains is the greatly reduced flexibility of 3a savings. I do not know when I will be able to access them, and it is not clear how they will be treated if I should ever move to another country. (Presumably they would be taxed much more heavily in that case.) So I prefer to buy low-fee assets like the cheapest of the Vanguard ETFs traded on the Swiss stock exchange with after-tax money.

First, there are no capital gain taxes in Switzerland. Only on real estate. ETF, funds, stocks are never taxed for capital gains, period. Only dividends are taxed, and as income. That could change of course, but I don't see it happening.

The taxes are deferred yes but the percent rate increase with the account. A good solution would be to have around let's say 5 different pillar 3a accounts of 100'000 chf each. You can cash them out one at a time from 60 to 65.
Each time you pay the deferred taxes on it. A baffling ~5000 chf for a 100k account depending on the canton where you live in:
https://www.postfinance.ch/de/priv/prod/info/fincalc/cap3a.html/calculator/logicalc/tax/capitalizationtax/Index.do

In total you will pay ~25'000 chf of deferred taxes for 500k chf of capital, 5% of tax rate.

If you don't create the 5 accounts and retire your money at once (500k) you will pay double as much (56k of taxes)


Todays if you make from 80k up to 100k salary the contribution to the säule 3a of 6768 chf will reduce your taxes by an amount of ~1200 chf give or taken.

Let's say that you don't use säule 3a and you have a more aggressive allocation of 80/20 in your taxable account. You can then only invest the remaining money after taxes have been paid so 6768-~1200 = 4600 chf.
Let's assume the growth of 80/20 allocation is ~6% -0.5% of taxed dividend/distributions (1/4 * 2%)-0.1% wealth taxes - ETF costs (0.1 %) = 5.3%
To buy etf you have the swiss stamp duty tax, 0.15% at every transaction + transaction costs let's  say a total of 15 chf per 4600 chf of investments, netto investments 4585 chf.

You invest for 40 years (20y to 60y) an amount of 4585 @5.3%. That's roughly 627'000 chf at age 60.

Now let's say you are more conservative and wants a 60%/40% allocation in your taxable account. That brings the rate of expected return down to 5% and a total growth expenses included of 4.3 %. Your final capital will be ~488'000 chf.

And finally let's say you want to invest with the same allocation as the säule 3a of 45% stocks/55% bonds. Let's assume 4% rate of return that goes down to 3.3% with expenses. Your final capital will be 382000chf.

On the other hand you can invest 6768 chf with a TER of 0.57 and a buying commission of 1% with an allocation of 45/55.
Rate of return assumed as 4% - 0.57%TER =3.43%. No other taxes but for the final 5-10% when you cash in the accounts.
Contributions: 6768 - 1% commission = 6700 chf
After 40 years growing at 3.43%: ~576'000 chf
Netto capital after deferred taxes: 550'000 chf.



So if you make a risk-adjusted comparison in which you keep both allocation identical (same risk) but you invest 4600 in taxable or 6700 chf in tax deferred you may get to 550k vs 380k. Thats 170k more just because you were able to invest 1200 chf more and that difference compounded over the years, amounting to much more than the deferred 25k of taxes. So you have to consider the opportunity costs of those 1200 chf lost to the government.

So while you are right that you greatly gain in freedom if you invest in taxable, at the same time you are forced to take on more risk (for instance 70/30) to barely break even with a 45/55 in tax deferred.

So what I wanted to say is that you everyone has different situations but if you make a risk-adjusted comparison it still is good to invest in the säule 3a.

You just have to accept the greatly reduced freedom, that's for sure, but everyone has different goal and different allocations.
If you want to have an aggressive allocation, then maybe the Säule 3a is not for you. If you don't make 80k of yearly salary, then the säule 3a may not be for you. There are a lot of personal factor to consider.

And by the way, I'm always using a dividend/bond distribution average of 2%. If the interest rate goes up, that can only increase and since you are paying 1/4 of taxes on that as income, it will only get worse.
If Dividend and Distribution go up to 4% annually, you have to pay 1% in taxes every year. That's an huge drag that you don't have in the säule 3a.

dmn

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Re: Switzerland: How should I buy index funds here?
« Reply #169 on: April 01, 2016, 03:05:05 AM »
In total you will pay ~25'000 chf of deferred taxes for 500k chf of capital, 5% of tax rate.

Oh, I did not know that the 3a payout is taxed below the normal income tax rate. For people retiring in Switzerland, this makes the 3a accounts much better than I thought.

I still feel uneasy about the prospect of paying the income tax rate of whichever country I will live in at that age on the full payout amount. Other countries are less generous on deferred taxation.

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First, there are no capital gain taxes in Switzerland.

Sorry, that was incorrect language on my part. I meant capital income, i.e. interest and dividends, not capital gains.

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #170 on: April 01, 2016, 03:09:45 AM »
Someone planning to retire outside switzerland should really make their own calculation, I would probably not invest in säule 3a. I think if you take them out early because you depart from Switzerland you have to pay the full income taxes.

wapiti

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Re: Switzerland: How should I buy index funds here?
« Reply #171 on: April 03, 2016, 12:53:30 PM »
If you quit Switzerland or buy an house, what are the rate applied ?
As my current knowledged i don't see any good case to put money in a 3a with ETF if you retired before 65.

BTW: raffeisen and ubs offer ETF with more than 45% of shares.

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #172 on: April 04, 2016, 02:31:38 AM »
Any good case? That's harsh. If you make 150k+ you will no problem in finding 6k to put in a säule3a and reducing your taxes of 2k.

I've informed myself and it seems that if you take the money to buy a home, the same tax rate is applied as for the take out at 60-65 years old.
So around 5% for 100k and around 3.5% if you take out less, around 30k (also you pay 1k of taxes).

I think if your plan to FIRE entails buying a home somewhere (and there are some surprisingly cheap ones even in Switzerland, in the forgotten valleys aways from civilization) it could make sense to stash aways in the säule 3a:
http://www.finanzmonitor.com/3-saule/kriterien-vorbezug-auszahlung/
 

sirde

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Re: Switzerland: How should I buy index funds here?
« Reply #173 on: April 21, 2016, 10:49:06 AM »
Hello everyone,

I've been introduced to this blog a few month ago and have realized since then how uninformed we can be about finance and tax optimization in Switzerland. Before then in my mind tax optimization meant cheating and investment meant gambling....

After a few month of browsing the web (thanks for this excellent thread!), reading "A random walk on street" and "le capital au 21e siècle" and talking (too much) to everybody, I'm ready to start ;)

The plan:
I was thinking about transferring some money to my 2nd pillard, but have decided not to since the interest are quite low and it will most likely get harder and harder to get it.
I just opened a 3rd pillard at banque Coop with the swisscanto ETF.
I already have a insurance 3rd pillard at Retraites populaire from a few years ago, I'll have to decide to continue or to stop it.
Finally I'm about to open an account (most likely on cornertraders) to buy ETF all-world.

If some romand want to meet I'd be interested ;)

chestwood96

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Re: Switzerland: How should I buy index funds here?
« Reply #174 on: April 23, 2016, 07:43:12 AM »
After i have read myself somewhat ito the topic and picked a broker I think I am going with a portfolio that looks something like this (100% stocks):

80% Vanguard FTSE All-World UCITS ETF @ 0.25%
20% iShares Core SPI @ 0.10%

I do know if I should add anything else, maybe some reit or something?
Just 2 funds looks kind of boring abut I guess boring is good sometimes (I am not even shure I want the SPI, I just have that for currency reasons).


wapiti

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Re: Switzerland: How should I buy index funds here?
« Reply #175 on: April 23, 2016, 12:05:29 PM »
Hi chestwood96,

Vanguard FTSE All-World UCITS ETF @ 0.25% is a really good choice

For iShares Core SPI @ 0.10%,
1. a big % of equities are already included in vanguard index.
2.  The 3 main position of the SPI (Nestle, Novartis, Roche) weight around 50% of the indice, not really diversify (SLI index correct this issue)
3. As the fund is swiss based, the dividend wil be cut with "impot anticipé"

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #176 on: April 23, 2016, 12:47:01 PM »
If you want a more domestic bias (chf, Swiss economy) I would buy either a SMIM etf or the excellent ubs etf SPI-Mid, 80 companies of middle capitalisation and diversified. Things like Holcim, sprungli, lindt, the largest cantonal banks, etc. The SPI is dominated (50% of the index!) By Roche Nestlé novartis, that follows the global market trend already captured by the all-workd etf.

Sent from my YD201 using Tapatalk


ecomic

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Re: Switzerland: How should I buy index funds here?
« Reply #177 on: April 24, 2016, 02:26:49 AM »
Hello everyone,
It is not as common now than years before, to talk about taxation discounts. :)  Now a days I would be more worried about making a real profit from any investment, rather than looking for the cheapest taxation product. We have seen generalised markets losing 30% of their value in less than a month. The oil problem it is still not solved, while Europe and Asia havent settled their economies in the good direction. Investing in funds seems safer, even more if its in the long run, but I dont think are the safest vehicles to invest money right now. Every country has different taxation laws, so it is not possible to have a generalised conversation about it.
Markets are tricky and my advise is to look for an independent investing advisor (or company), never a bank and look for oportunities that can bring profits around 15 - 20% without excessive risks. Sectors like oil or health/Pharm have great potencial of growing exponentially.
My economic tips in Smart Finance Mag

Expatriate

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Re: Switzerland: How should I buy index funds here?
« Reply #178 on: April 25, 2016, 06:37:25 AM »
@Dago
Looks fine for me and your targets / risks you want to take.

My current asset allocation:
- Vanguard FTSE All-World High Div Yld ETF CHF...........70%
- iShares Swiss Dividend (CH)..................................20%
- iShares Emerging Markets Dividend UCITS ETF (CHF)...10%


Since dividends are taxed as ordinary income and capital gains are not taxed at all, is not disadvantageous to hold dividend funds? I only hold accruing funds in my taxable accounts (with InteractiveBrokers in the UK by the way). Or is there something wrong with my reasoning?

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #179 on: April 25, 2016, 08:44:28 AM »
It depends where you are taxed. In Switzerland it doesn't matter if your fund distribute dividends or not, you are always going to pay taxes on the dividend, even if it stays "internal" to the fund.
If you want to know how much it is, you have to look at this website (which only gives you I think the taxable income for share on the SIX)

https://www.ictax.admin.ch/extern/de.html

If you try to look for an accruing fund (no distribution) you will see that unless is a very peculiar fund (only "cash reserves distribution" or buyback shares) you will have some income to declare and be taxed upon.

If your ETF is not listed on the website and you have to decalre your income in Switzerland, then you'll have to look in the annual report and look for the taxable income generated by your ETF. It could be a pain in the ass.

This fact (you are taxed in every case) and the not-zero transaction costs you usually have in CH makes dividend itself not so bad.

What could be questionable is the fact that a "high yield dividend strategy" is not really better and usually less diversifed than a pure passive capital-weighted index ETF. 

Expatriate

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Re: Switzerland: How should I buy index funds here?
« Reply #180 on: April 25, 2016, 10:13:22 AM »
It depends where you are taxed. In Switzerland it doesn't matter if your fund distribute dividends or not, you are always going to pay taxes on the dividend, even if it stays "internal" to the fund.

That makes sense and I should've known. Only recently started investing. Agree that it could be a pain in the ass to figure out which part of appreciation was due to dividends

Thanks for the feedback!

wapiti

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Re: Switzerland: How should I buy index funds here?
« Reply #181 on: April 25, 2016, 01:47:14 PM »
Quote
In Switzerland it doesn't matter if your fund distribute dividends or not, you are always going to pay taxes on the dividend, even if it stays "internal" to the fund.
You are right.
If the fund is based in switzerland and distribute dividends, 35% will be keep by the tax administration until you have declared your investments.
This slow the reinvestment of dividend.

On my side, accumulation ETFs are better, because it's reinvest dividends for free.

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #182 on: April 26, 2016, 12:03:23 AM »
You are right.
If the fund is based in switzerland and distribute dividends, 35% will be keep by the tax administration until you have declared your investments.
This slow the reinvestment of dividend.

On my side, accumulation ETFs are better, because it's reinvest dividends for free.

Absolutely. If you receive dividend, and then reinvest it, you are going to pay the 0.15% swiss stamp duty on the transaction. Therefore Accumulating ETF are cheaper.
On the other hand, having the cash flow from the dividend makes it easier to rebalance and to invest more money together, which drives down the total cost of the single transaction (ex: investing 1000 chf of savings with postfinance paying ~28 chf->bad, paying 29 to invest 2000 chf (1000 coming from from dividends) only half so bad ;) ).
I think in the end is a question of personal preference. Accumulating ETF are probably cheaper, but the cash flow from dividends makes it easy to rebalance, maybe even avoiding rebalance transactions sometimes. So I believe it's kind of a wash.

Just a final note: not all the dividend that you receive is subjected to the "impot anticipé/verrechnungsteuer": swiss company can distribute reserve capital instead of profit (dividend) and this capital distribution is not taxed. For instance the SPI-Mid ETF had a total distribution of 1.69 chf per share, of which 70 cts were not taxable (because capital redistribution) and 99 cts were taxable as dividend:
https://www.ictax.admin.ch/extern/de.html#!/instrument/CH0130595124/2015

so more often than not you are not "losing" the whole 35%: in this case it would be 35%*0.99/1.69 =~ 20% of the distribution.

Dubenstash

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Re: Switzerland: How should I buy index funds here?
« Reply #183 on: April 26, 2016, 02:50:08 AM »
Hello Everyone,

Long time reader - first time poster.  Firstly, thank you for this awesome thread - its been hugely informative.  I'm interested to know if anyone has found an advisor/tax consultant who could help create the most tax efficient strategy to create their investment portfolio.  I am at the start of my journey and it seems the tax optimization/strategy for investing might almost form the foundation for an investment plan.  I live in Zürich and would be very appreciative for any recommendations.  I am very interested in setting up a new company and would like to know if this could be advantageous from the point of view of tax optimization.

Thanks,

D

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #184 on: April 26, 2016, 05:05:11 AM »
Hello Everyone,

Long time reader - first time poster.  Firstly, thank you for this awesome thread - its been hugely informative.  I'm interested to know if anyone has found an advisor/tax consultant who could help create the most tax efficient strategy to create their investment portfolio.  I am at the start of my journey and it seems the tax optimization/strategy for investing might almost form the foundation for an investment plan.  I live in Zürich and would be very appreciative for any recommendations.  I am very interested in setting up a new company and would like to know if this could be advantageous from the point of view of tax optimization.

Thanks,

D

Hi, I can't help you, like many others here we are at the start of our Financial journey and for the moment the cost and time involved in finding and discussing with an advisor is not worth it. I think maybe when you start going beyond 400k it could make sense, but many of us are far away. You could try on the forum of
www.cash.ch
or try to see if they published somthing here:
www.10x10.ch


chestwood96

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Re: Switzerland: How should I buy index funds here?
« Reply #185 on: April 27, 2016, 05:24:07 AM »
Hi chestwood96,

Vanguard FTSE All-World UCITS ETF @ 0.25% is a really good choice

For iShares Core SPI @ 0.10%,
1. a big % of equities are already included in vanguard index.
2.  The 3 main position of the SPI (Nestle, Novartis, Roche) weight around 50% of the indice, not really diversify (SLI index correct this issue)
3. As the fund is swiss based, the dividend wil be cut with "impot anticipé"

If you want a more domestic bias (chf, Swiss economy) I would buy either a SMIM etf or the excellent ubs etf SPI-Mid, 80 companies of middle capitalisation and diversified. Things like Holcim, sprungli, lindt, the largest cantonal banks, etc. The SPI is dominated (50% of the index!) By Roche Nestlé novartis, that follows the global market trend already captured by the all-workd etf.

Sent from my YD201 using Tapatalk

OK so no SPI (not that I care much about the Nestle/Roche/Novartis thing because those are basically immortal evil corp)
I am actually not shure if I even need a chf fund but I still would like one.

SMIM and SPI-Mid both look very interresting but intuitively I would go for the SPI-Mid because more is better right?

So I would just swap out the 20% SPI with 20% UBS ETF (CH) – SPI® Mid (CHF) A-dis @ 0.25%? or is 20% home currency too much?
(Yay UBS, I actually have UBS stocks but I have no Idea where they are XD)

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #186 on: April 27, 2016, 05:41:30 AM »


OK so no SPI (not that I care much about the Nestle/Roche/Novartis thing because those are basically immortal evil corp)
I am actually not shure if I even need a chf fund but I still would like one.

SMIM and SPI-Mid both look very interresting but intuitively I would go for the SPI-Mid because more is better right?

So I would just swap out the 20% SPI with 20% UBS ETF (CH) – SPI® Mid (CHF) A-dis @ 0.25%? or is 20% home currency too much?
(Yay UBS, I actually have UBS stocks but I have no Idea where they are XD)

Also I think the UBS SPI-mid is the cheapest and largest (more diversified) mid-size ETF in Switzerland. About your question: don't forget that Vanguard All-World has already 3.1 % of swiss stocks (mostly Novartis, roche, nestle)

My personal allocation for the stock side is 75% All-World ex-CH / 25% switzerland (with 12.5% SMI and 12.5% SPI-Mid). I include the swiss percentage of the All-World in my Swiss allocation, so I have an excel spreadsheet to check the percentage since they are not immediately obvious.
I think 20% in SPI-Mid and 80% in All-World is a good allocation too. It is sort like a small cap tilt, since most of the company in the SPI-Mid are relatively small, and you reduce your overall currency risk. And some year the SPI-Mid will be doing well while the all-world lags behind so there is an imperfect correlation that provides nice rebalancing opportunity.

chestwood96

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Re: Switzerland: How should I buy index funds here?
« Reply #187 on: April 27, 2016, 05:49:11 AM »
Also I think the UBS SPI-mid is the cheapest and largest (more diversified) mid-size ETF in Switzerland. About your question: don't forget that Vanguard All-World has already 3.1 % of swiss stocks (mostly Novartis, roche, nestle)

My personal allocation for the stock side is 75% All-World ex-CH / 25% switzerland (with 12.5% SMI and 12.5% SPI-Mid). I include the swiss percentage of the All-World in my Swiss allocation, so I have an excel spreadsheet to check the percentage since they are not immediately obvious.
I think 20% in SPI-Mid and 80% in All-World is a good allocation too. It is sort like a small cap tilt, since most of the company in the SPI-Mid are relatively small, and you reduce your overall currency risk. And some year the SPI-Mid will be doing well while the all-world lags behind so there is an imperfect correlation that provides nice rebalancing opportunity.

That makes about 23.1% CH wich seems ok if compared to your allocation. (I might retire on USD who knows)
But it is still only 2 funds I kind of think I need more than that. I am not really interrested in bonds but what about REIT and stuff like that?

Kilbim

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Re: Switzerland: How should I buy index funds here?
« Reply #188 on: April 27, 2016, 11:50:02 AM »
Hi! I am so glad that I found this topic to still be active!

I am getting crazy trying to find the best solution, maybe you have experience and you can help me out.
I am looking to invest 5000 CHF first year, then 1500 following years.
I want to invest in 3 ETF using a dollar cost averaging strategy, this means investing 3 or 4 times a year in those 3 ETFs. This makes more or less 12 investments of 150 CHF each year (apart from first year).

It seems doing this is very expensive because of the flat-fees most brokers charge. My consultant at UBS advised me that if I want to invest this way I am better off buying their funds, since they don't have flat fees.
But their funds have very expensive other fees, compared with ETFs.

Anyone knows a cheap way to buy small sum ETFs in Switzerland? If I were in the USA I'd just go with vanguard, but here it's not available for private investors.
So, anyone with experience in this?

Thank you

samuck

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Re: Switzerland: How should I buy index funds here?
« Reply #189 on: April 28, 2016, 02:31:57 AM »
Hi Kilbim, if you go through this thread you'll find lots of recommendations for brokers in Switzerland. Most often mentioned are Swissquote, Corner Trade and Postfinance, I believe. This website also helps you to find a cheap broker: http://www.moneyland.ch/de/onlineTrading/index

Given the relatively low figure you intend to invest per year, I'd recommend either a mutual fund (for instance, Postfinance Global Fund), where you can make monthly investments as low as CHF 100) however, with high TER. Or you give Truewealth a try, where you can build a well diversified portfolio, even with low investements

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #190 on: April 28, 2016, 05:22:59 AM »
if you are investing only 5000 chf and then 1500 I think you could further simplifiy your portfolio.
We have to live with this reality that transaction fee are high. Even postfinance and his funds (postfinance global) has a buy in fee of 0.5% and a TER of 0.88%.

So forget mutual funds.

Swissquote dynamic savings can buy you some etf at low costs (9 chf+stock exchange taxes, no depot fee) but you can choose only between some 80 ETF.

If I were you, I'll do a two asset location:

- cash
- Vanguard All-World ETF, cheapest (0.25 TER) all-country ETF out there, bought once per year

three ETF with rebalancing is already too much if you are investing only ~1500 chf per year. The bonus you will gain will be taken away by depot and transaction fee.
Open a POstfinance or Corenrtrader (no depot fee) and buy once per year and keep the rest as cash. Forget Swiss bonds etf: you'll pay transaction and taxes to buy it, we have negative inteterests so someday the value of the fund will decrease following rise in the interest rates. I know it's painful to leave cash at 0.1% interest but for so little money it really makes no sense to buy bond in today's low rates environment. And don't forget we have a slight deflation of around 0.5% so in reality Cash is making 0.6% a year.

Just my two cents.





Kilbim

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Re: Switzerland: How should I buy index funds here?
« Reply #191 on: April 28, 2016, 11:44:15 AM »
if you are investing only 5000 chf and then 1500 I think you could further simplifiy your portfolio.
We have to live with this reality that transaction fee are high. Even postfinance and his funds (postfinance global) has a buy in fee of 0.5% and a TER of 0.88%.

So forget mutual funds.

Swissquote dynamic savings can buy you some etf at low costs (9 chf+stock exchange taxes, no depot fee) but you can choose only between some 80 ETF.

If I were you, I'll do a two asset location:

- cash
- Vanguard All-World ETF, cheapest (0.25 TER) all-country ETF out there, bought once per year

three ETF with rebalancing is already too much if you are investing only ~1500 chf per year. The bonus you will gain will be taken away by depot and transaction fee.
Open a POstfinance or Corenrtrader (no depot fee) and buy once per year and keep the rest as cash. Forget Swiss bonds etf: you'll pay transaction and taxes to buy it, we have negative inteterests so someday the value of the fund will decrease following rise in the interest rates. I know it's painful to leave cash at 0.1% interest but for so little money it really makes no sense to buy bond in today's low rates environment. And don't forget we have a slight deflation of around 0.5% so in reality Cash is making 0.6% a year.

Just my two cents.

How would you go about buying Vanguard?

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #192 on: April 28, 2016, 01:53:20 PM »

How would you go about buying Vanguard?

open an account with a stock brocker that doesnt bill custody fee (like swissquote) or an inactivity fee (like Interactive brokers). As far as I know there are two: postfinance etrading (easy to use, trnasaction is 27+0.15% of tax) or corner trader (pretty complicated interface thought for stock gambler, but you can buy ETF for 20 chf+0.15%)

Open a test account gratis on cornertrader they give you 100k fake money to play with and see qhat you think of the interface and try to buy the vanguard etf.
If you are lost, go to postfinance etrading. Try to buy while keeping the transaction fee around 1% of the invested money (like 25 chf fee for 2500 chf money)

just my experience, but I can manage to invest a little more so I don't know what I would do in your situation.

wapiti

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Re: Switzerland: How should I buy index funds here?
« Reply #193 on: May 01, 2016, 02:58:03 AM »
Swissquote saving account is really cheap, however you have around 70 ETFs (~45 in CHF and 25 in EUR). I don't know how they are choosing the ETFs,but some important index are missing. If someone is intersted i can put the list on the forum

Kilbim

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Re: Switzerland: How should I buy index funds here?
« Reply #194 on: May 01, 2016, 08:48:30 AM »
I have found truewealth and I think I am going to go for it. For 0.5% p.a I can trade a lot of ETFs (no choice on exactly which though).
Since I want to invest very little sums each month and apply dollar cost averaging, this would allow me to do it.
With the other solitions listed I wouldn't be able to do it (given the costs of transactions).

wapiti

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Re: Switzerland: How should I buy index funds here?
« Reply #195 on: May 01, 2016, 09:30:39 AM »
How much do you mean by small ?
Of what i have understood with truewealth you choose an asset allocation, not  specific ETFs.

You will need minium 8.500 to open an account :
"What is the minimum amount to open an account?
The minimum investment required for a True Wealth portfolio is CHF 8,500. This allows us to offer you a tailored portfolio with a sufficiently broadly diversified asset mix."

Kilbim

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Re: Switzerland: How should I buy index funds here?
« Reply #196 on: May 01, 2016, 10:39:11 AM »
I calculated to start off with a 5'000 investment, to which I could add 1500 each year.
I inteded to divide this in 3 ETFs, and investing 4 times a year. This made investing 12 times ~400 CHF, and then each year investing 12x125chf.
The cost of buying 12 ETFs a year, even with the cheapest option, is actually 9 CHF. This would be way too much for me.
Go lump-sum investment is a no-go for me, given the current status of the market.
I can invest the 8500 required by truewealth, and if I understood correctly (I checked this with them) I will be able to use some sort of dollar cost averaging by putting the majority of the sum into the categroy "cash" and then monthly reducing my cash asset and changing them into ETFs assets.
In doing this I only pay 0.5% p.a., which is way less that what I would pay in investing in the ETFs with swissquote or others.
The only downside is that I can't pick the single ETF, but I think one can control that to some extent (they allow you to chose country % allocations within equities)

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #197 on: May 01, 2016, 10:27:26 PM »
I calculated to start off with a 5'000 investment, to which I could add 1500 each year.
I inteded to divide this in 3 ETFs, and investing 4 times a year. This made investing 12 times ~400 CHF, and then each year investing 12x125chf.
The cost of buying 12 ETFs a year, even with the cheapest option, is actually 9 CHF. This would be way too much for me.
Go lump-sum investment is a no-go for me, given the current status of the market.
I can invest the 8500 required by truewealth, and if I understood correctly (I checked this with them) I will be able to use some sort of dollar cost averaging by putting the majority of the sum into the categroy "cash" and then monthly reducing my cash asset and changing them into ETFs assets.
In doing this I only pay 0.5% p.a., which is way less that what I would pay in investing in the ETFs with swissquote or others.
The only downside is that I can't pick the single ETF, but I think one can control that to some extent (they allow you to chose country % allocations within equities)
It sounds like you made up your mind and for sure Truewealth can be easy ad practical, although "true" mustachians are more DIY and do not like to pay for something so easy as rebalance.

You speak about 12 times 9 chf (with the swissquote dynamic savings). In reality is a little different: you choose 3 ETF, build a "model" (that can contains up to 5 etf) and invest in it. The total cost is 9 chf per "model purchase" + 2 chf per each ETF, so the cost per transaction is actually 11 chf (model with one ETF) to 19 chf (model with 5 ETF).

With three ETF you would spend 15 chf per transaction, if you do it 4 times a year it is 60 chf.
Truewealth account with 12'000 chf in it@0.5%: 60 chf too of expenses.

With that said, I personally don't like the ETF offered in the swissquote dynamic saving since are amost all based in Luxembourg instead of ireland (and therefore cannot profit of a tax treaty with the US) so all indx with a majority of US funds will be losing 30 % of the US-dividends instead of 15% like the irish-based fund.
aee here:
https://www.bogleheads.org/wiki/Nonresident_alien_with_no_US_tax_treaty_%26_Irish_ETFs


Lastly, before investing in a closed platform like Truewealth I would ask the how easy is to move the ETF in another account in the future. What if a truly good option comes around and you are stuck with truewealth? Can you move the ETF out of their account and to another one?Or are you forced to sell and rebuy with already 0.30 % losses only because of the stamp duty tax?

Kilbim

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Re: Switzerland: How should I buy index funds here?
« Reply #198 on: May 02, 2016, 11:58:58 AM »
I calculated to start off with a 5'000 investment, to which I could add 1500 each year.
I inteded to divide this in 3 ETFs, and investing 4 times a year. This made investing 12 times ~400 CHF, and then each year investing 12x125chf.
The cost of buying 12 ETFs a year, even with the cheapest option, is actually 9 CHF. This would be way too much for me.
Go lump-sum investment is a no-go for me, given the current status of the market.
I can invest the 8500 required by truewealth, and if I understood correctly (I checked this with them) I will be able to use some sort of dollar cost averaging by putting the majority of the sum into the categroy "cash" and then monthly reducing my cash asset and changing them into ETFs assets.
In doing this I only pay 0.5% p.a., which is way less that what I would pay in investing in the ETFs with swissquote or others.
The only downside is that I can't pick the single ETF, but I think one can control that to some extent (they allow you to chose country % allocations within equities)

It sounds like you made up your mind and for sure Truewealth can be easy ad practical, although "true" mustachians are more DIY and do not like to pay for something so easy as rebalance.

You speak about 12 times 9 chf (with the swissquote dynamic savings). In reality is a little different: you choose 3 ETF, build a "model" (that can contains up to 5 etf) and invest in it. The total cost is 9 chf per "model purchase" + 2 chf per each ETF, so the cost per transaction is actually 11 chf (model with one ETF) to 19 chf (model with 5 ETF).

With three ETF you would spend 15 chf per transaction, if you do it 4 times a year it is 60 chf.
Truewealth account with 12'000 chf in it@0.5%: 60 chf too of expenses.

With that said, I personally don't like the ETF offered in the swissquote dynamic saving since are amost all based in Luxembourg instead of ireland (and therefore cannot profit of a tax treaty with the US) so all indx with a majority of US funds will be losing 30 % of the US-dividends instead of 15% like the irish-based fund.
aee here:
https://www.bogleheads.org/wiki/Nonresident_alien_with_no_US_tax_treaty_%26_Irish_ETFs


Lastly, before investing in a closed platform like Truewealth I would ask the how easy is to move the ETF in another account in the future. What if a truly good option comes around and you are stuck with truewealth? Can you move the ETF out of their account and to another one?Or are you forced to sell and rebuy with already 0.30 % losses only because of the stamp duty tax?


Thank you for your feedback.
As a new investor I am just looking for information like yours.
So if I understood your correctly, I don't pay 9 CHF for each time I buy a share (or more) in an ETF.
I rather pay 9 CHF to "start" a portfolio, and then 2 CHF for each additional ETF. Making it 9+2+2+2 = 15 CHF for a portfolio with 3 ETFs.
And then I can add money to the portfolio, and spend that amount (15 CHF to add money to the 3 ETFs).
Is this correct?

But then how is the money divided between the ETFs? Do I need to add the same amount to each ETFs everytime? Or 1 month I can decide not to add to one of the ETFs?
Also, don't I also need to pay custody fees on swissquote? Their page says "0.025% quarterly (min CHF 15.00)", so it means I also pay 15 CHF * 4 times a year, = 60 CHF, on top of the price of buying the ETFs, or I am mistaken?

Nevertheless, even if it's only the 15 CHF of the ETFs, It's still more than what I would pay with truewealth, since with them I pay 0.5% p.a. and I don't account to go up to 12'000 CHF very soon. But even if I did, I still have the advantage to spend comparatively less, since with truwewealth I can buy once a month (making dollar-cost-averaging more effective), or even once a week.
To buy once a month with swissquote I would need to spend 15*12 CHF, which is way more than 0.5% p.a.. And with truwealth if I want I can also invest in more than just 3 ETFs.

It seems a good choice, but I need people more experienced than me to help me.
Am I mistaken or forgetting something here?

Thank you

Grog

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Re: Switzerland: How should I buy index funds here?
« Reply #199 on: May 02, 2016, 01:09:57 PM »

Thank you for your feedback.
As a new investor I am just looking for information like yours.
So if I understood your correctly, I don't pay 9 CHF for each time I buy a share (or more) in an ETF.
I rather pay 9 CHF to "start" a portfolio, and then 2 CHF for each additional ETF. Making it 9+2+2+2 = 15 CHF for a portfolio with 3 ETFs.
And then I can add money to the portfolio, and spend that amount (15 CHF to add money to the 3 ETFs).
Is this correct?

But then how is the money divided between the ETFs? Do I need to add the same amount to each ETFs everytime? Or 1 month I can decide not to add to one of the ETFs?
Also, don't I also need to pay custody fees on swissquote? Their page says "0.025% quarterly (min CHF 15.00)", so it means I also pay 15 CHF * 4 times a year, = 60 CHF, on top of the price of buying the ETFs, or I am mistaken?

Nevertheless, even if it's only the 15 CHF of the ETFs, It's still more than what I would pay with truewealth, since with them I pay 0.5% p.a. and I don't account to go up to 12'000 CHF very soon. But even if I did, I still have the advantage to spend comparatively less, since with truwewealth I can buy once a month (making dollar-cost-averaging more effective), or even once a week.
To buy once a month with swissquote I would need to spend 15*12 CHF, which is way more than 0.5% p.a.. And with truwealth if I want I can also invest in more than just 3 ETFs.

It seems a good choice, but I need people more experienced than me to help me.
Am I mistaken or forgetting something here?

Thank you

It's my pleasure. I know it can be difficult to navigate our limited and obscure selection of investment possibilities.

First of all, for your situation it seems tha Truewealth is the way to go. I still would ask them if in the future you could move your etf somewhere else and how much it would cost you, just so to have all information.

Secondly, about Swissquote.

There are two swissquote account:

- The first is linked directly to the SIX stock exchange and you can buy ETF directly for 9.85 chf +2 chf of platform-fee + swiss stamp duty tax. You pay per transactions, that means that every ETF costs you as much. With the same account you can buy single stocks or future or speculate currency and so on. This is the "normal" swissquote that you see in the home page

- The second account is an ETF sparplan, you found it here (it's very hidden):
https://www.swissquote.ch/sqweb/savings/introduction.jsp?l=d
you build "a model" based up to 5 ETF, and for every ETF you decide how many shares. So example if you want a model 50% MSCI world and 50% SMI you look at the price of the ETF (in this example let's say MSCI world cost 150 chf per share and SMI ETF cost 50 chf per shares). To build a 50/50 model you chose 1x MSCI World and 3x SMI etf (so the both have more or less the same "weight") for a minimum of 300 chf, and then you can buy it as multiple of this minimum. Like you can buy one time the model at 300 chf with 9+2+2 = 13 chf commission or 3 times the model (you need 900 chf) with the commission staying at 9+2+2=13 chf.
That's what I was describing with the 9+2*nr ETF commission costs. I try to attach the EXCEL with all the different ETF offered by this account.


But as you say in your case Truewelath is a valid option, and I think it will do the job for you. The important thing is to invest.