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Old 11.03.2015, 09:42
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New to investing -- questions re accounts and taxes

Hello all. I have read many of the threads and I am still looking for answers to basic questions.

I am looking to start investing. ETF's seem like a good place to start for me... looking at the banking options (threads cover PF, Saxo, Vanguard, etc.) Each bank seems to have advantages. Would it be smart to open several accounts for different needs or does this overcomplicate things?

I am a Swiss resident, does opening an account at Schwab or Vanguard, for example, have any drawbacks over opening a Swiss one?

I see conflicting information on Swiss taxes. Are all my dividends and capital gains tax free in Switzerland/Canton St. Gallen? Are their investments I should steer towards because of their tax situation?

Is there such a thing as going to a broker, say once a year for advice, paying for that advice, but not paying to manange my investments?

Thanks everyone
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Old 11.03.2015, 09:56
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Re: New to investing -- questions re accounts and taxes

I use a broker in the UK so can't recommend on a broker to use here, but we will be taxed the same anyway.

As far as I'm aware, there is no capital gains tax here. The only taxes you will have are wealth tax on your total net worth (if over a threshold) and income tax on dividends & interest.
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Old 11.03.2015, 12:05
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Re: New to investing -- questions re accounts and taxes

Thanks Enohzee,

May I ask, why a broker in the UK? In the end does it really matter at all if I use a broker in CH (PostFinance, Saxo) or one abroad (Schwab, TDWaterhouse)?
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Old 11.03.2015, 13:44
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Re: New to investing -- questions re accounts and taxes

Simply because I already had the account when I came to Switzerland. I invest in mostly UK stocks and funds but also some US. I also like to keep my investments in GBP and am a lot more aware of the UK stock market.

I can't imagine it will make any difference where the broker you choose is based.
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Old 11.03.2015, 20:24
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Re: New to investing -- questions re accounts and taxes

A few thoughts to consider.

First, the multiple accounts. It probably is overcomplicating the matter to open several accounts. Unless there is a significant advantage that is relevant to your investing (i.e. something you'll actually use rather than simply being available), I'd keep the accts to a minimum. Bear in mind that you have IRS disclosure requirements for foreign accounts. There are heaps of posts on here about that particular American delight. btw, I'm a dual US/Brit citizen so not taking the piss.

Having a Schwab or Vanguard account in the US would save some hassle on disclosure however you would still need to include the asset value in your Swiss tax return. Don't worry though, they don't tax your assets but do use your net worth to establish a tax rate. At least that's the way I understand it.

As for capital gains, I'd agree with the post above. Capital gains aren't taxed but income is. Things can vary from Canton to Canton so worth confirming but that's how it works in Schwyz. If you assume capital gains are not taxed and income is then obviously this would make growth stocks or other alternative investments that increase in value advantageous to those which generate income such as dividend paying stocks or bonds (do bonds still pay interest, ha ha).

Finally, meeting a broker/financial advisor once a year might be possible to arrange but it's not exactly how their business model works. We could start a whole new thread on the bundling of brokerage costs and should it or shouldn't it be done but broadly speaking, you pay for the advice through commissions on transactions. I think you already knew that based on your post and it's why discount brokers offering no advice are so much cheaper than a full service broker. Or There's the active manager route, which you don't seem interested in, but you would get that face to face time at least once a year to talk over the portfolio. He might offer low commissions on the one hand but then take a mgmt fee with the other.

Perhaps someone else on here has an alternative for you, but I don't think finding someone to sit down and just chat about the markets once a year is that common. Besides how much help would this really be, a diligent finance professional should/would need to take the time to learn about what your investment needs and wants are. How you view risk and what level would suit your portfolio. What your immediate and future liquidity requirements are. Etc. If you're going to manage your own portfolio, perhaps you could take what you expect to pay for this annual meeting and invest it instead in your own investing education and a few relevant newsletters. This would put you in a stronger, more informed position to manage your investments.

Apologise if I got rambling. Anyhow, good luck with your ETF investing. They are fantastic vehicles that enable anyone to put together a relatively sophisticated portfolio that would have required professional help and a heap of cash not so long ago.
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Old 11.03.2015, 21:23
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Re: New to investing -- questions re accounts and taxes

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Simply because I already had the account when I came to Switzerland. I invest in mostly UK stocks and funds but also some US. I also like to keep my investments in GBP and am a lot more aware of the UK stock market.

I can't imagine it will make any difference where the broker you choose is based.
If you by UK stocks as ADR's in the US there is no stamp duty, also the dividends usually have no withholding tax applied.

I would not bother asking a broker, they will just tell you what is hot today, had they picked the stock 3 months before when it was out of favour that would be 1 thing. Of course they have no idea what will happen, if they did they would not have to work for a living.

FWIW www.fundsmith.co.uk is where I would put any spare money, I have mentioned it several times over the last couple of years but most of the experts disagree, it's beaten most active funds. Of course the class of stocks being bought have consistently outperformed everything else over the last 50 years, simple concept.
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