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  #21  
Old 15.09.2013, 10:49
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Re: Low cost Investment Funds in Switzerland

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I will move to switzerland soon and I Have exactly the same question and after a little bit of searching on the internet and reading the previous posts this is my conclusion:

For investing money as savings my aproach will be to use ETF´s at Post Finance. Here is why. It is simple and free to open an account, the fees are not that expensive (compared to other swiss options which is the point of the thread)

The cost of buying or selling and ETF is around 0.35% (or 35 CHF per 10000 transaction). There is NO custody fees. ETF are great because of the much lower fees than mutual funds and you can by an ETF that replicates your favourite index (SP 500 for example as suggersted above).

Best of all, If I understood Jim correctly and other forum members there is no capital gains tax in switzerland. So if I buy an ETF for 10000 today and I sell it for 12000 in five years I do not have to pay any tax on these earned 2000. Am I correct?

If somebody have some suggestions to us non financial experts please let us know. (and I am not rich to hire a financial adviser so I try to do everything myself)
As you could invest $10,000,000 for charges of under $10 using a US broker, SwissPost's fee of 0.35% with a minimium of 35 CHF is extremely high & bad value, especially for someone who wants to invest say 1000 a month. You are charged on both purchase & sales.

If you only make 20% over 5 years, you have picked the wrong fund. Capital gains tax is not charged on such high risk actvities in CH Only if you buy safe Swiss real estate.
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  #22  
Old 15.09.2013, 11:55
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Re: Low cost Investment Funds in Switzerland

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As you could invest $10,000,000 for charges of under $10 using a US broker
I have never lived in the US nor I have US nationality (I have an EU national). That is why I am looking for a fully Swiss option.
Is it that easy to open an account with a US broker without US social security number or bank account in the US?

I will look into that anyway...
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  #23  
Old 15.09.2013, 12:00
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Re: Low cost Investment Funds in Switzerland

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I have never lived in the US nor I have US nationality (I have an EU national). That is why I am looking for a fully Swiss option.
Is it that easy to open an account with a US broker without US social security number or bank account in the US?

I will look into that anyway...
I am English, never lived in the US and had no problem opening an account with a US broker, which is why I gave the advice in the first place. I foolishly took the low cost Swiss option & have wasted 5k in fees.
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  #24  
Old 15.09.2013, 12:06
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Re: Low cost Investment Funds in Switzerland

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As you could invest $10,000,000 for charges of under $10 using a US broker, SwissPost's fee of 0.35% with a minimium of 35 CHF is extremely high & bad value, especially for someone who wants to invest say 1000 a month. You are charged on both purchase & sales.
This is idea introduces an extra FX risk into the equation - If the OP makes 2K and pays 70CHF in fees, I say it was well worth avoiding the extra FX risk...
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  #25  
Old 15.09.2013, 12:08
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Re: Low cost Investment Funds in Switzerland

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I am English, never lived in the US and had no problem opening an account with a US broker, which is why I gave the advice in the first place. I foolishly took the low cost Swiss option & have wasted 5k in fees.
Trading rather than investing???
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  #26  
Old 15.09.2013, 12:28
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Re: Low cost Investment Funds in Switzerland

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This is idea introduces an extra FX risk into the equation - If the OP makes 2K and pays 70CHF in fees, I say it was well worth avoiding the extra FX risk...
No extra fx risk, the OP wished to invest in the SP500, which is a US index. The fees will be more than 70 for that transaction..........also Swiss stamp duty & local fees on top.

Edit
BTW lots of foreign stocks traded on the US market........In any case Swiss Stocks foreign sales will fall if the CHF strengthens, resulting in a lower share price, so owning CH stocks still have a FX risk, you just don't see it!

Last edited by fatmanfilms; 15.09.2013 at 12:42.
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  #27  
Old 15.09.2013, 12:29
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Re: Low cost Investment Funds in Switzerland

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Trading rather than investing???
Investing, the longer you invest the more you spend in fees, it's about 100 transactions.
Swiss brokers are also a pain when it comes to dividends, upto 4 statements per stock per year, all need to be sent to the tax office, Print out of all dividends & tax deductions on the same page for US broker. Swiss withholding tax is 30% v 15% if held in CH. Lots of extra work.....
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  #28  
Old 15.09.2013, 13:04
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Re: Low cost Investment Funds in Switzerland

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Investing, the longer you invest the more you spend in fees, it's about 100 transactions.
Swiss brokers are also a pain when it comes to dividends, upto 4 statements per stock per year, all need to be sent to the tax office, Print out of all dividends & tax deductions on the same page for US broker. Swiss withholding tax is 30% v 15% if held in CH. Lots of extra work.....
Thanks for the Advice on the US broker, I will look into that. Although I am wondering whay advantage do you see in investing in dividend-stocks vd. Investing in an accumulating ETF based in some high dividend index. It is my understanding that in the second case you will pay no taxes as this are capital gains. ( the dividends are reinvested so the share price of the ETF rises instead of giving you dividends each year ).

of course one can always go and buy and ETF with a US broker...
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  #29  
Old 15.09.2013, 13:21
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Re: Low cost Investment Funds in Switzerland

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Thanks for the Advice on the US broker, I will look into that. Although I am wondering whay advantage do you see in investing in dividend-stocks vd. Investing in an accumulating ETF based in some high dividend index. It is my understanding that in the second case you will pay no taxes as this are capital gains. ( the dividends are reinvested so the share price of the ETF rises instead of giving you dividends each year ).

of course one can always go and buy and ETF with a US broker...
It's fun & possibly to significantly beat the index's, however if like most mutual funds you just buy whats hot today & what everyone else is buying you will under perform the index as 90% of them always do year after year,
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  #30  
Old 15.09.2013, 16:36
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Re: Low cost Investment Funds in Switzerland

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Investing, the longer you invest the more you spend in fees, it's about 100 transactions.
Swiss brokers are also a pain when it comes to dividends, upto 4 statements per stock per year, all need to be sent to the tax office, Print out of all dividends & tax deductions on the same page for US broker. Swiss withholding tax is 30% v 15% if held in CH. Lots of extra work.....
Well first of all US dollar holdings would only amount to one or possibly two positions in my portfolio, if I where to use a US broker all would be in dollars. Second I only trade perhaps 6 times per year and then I buy accumulators so there is no dividend issue.

I certainly would not go using a US broker in this case.
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  #31  
Old 16.09.2013, 16:27
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Re: Low cost Investment Funds in Switzerland

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As you could invest $10,000,000 for charges of under $10 using a US broker, SwissPost's fee of 0.35% with a minimium of 35 CHF is extremely high & bad value, especially for someone who wants to invest say 1000 a month. You are charged on both purchase & sales.
In comparison the Swissquote ETF trading fee is a flat 9CHF regardless of how much you invest (although there is a custody fee). SwissPost's 0.35% (min 35CHF) is definitely a bad deal especially if you plan to invest regularly

I'm not sure if there's a US Broker out there that's significantly cheaper than Swissquote that will let you open an account with no US address or SSN, and let you have a free CHF account so you don't automatically have to convert everything to USD, and let you invest in accumulating ETFs (which aren't listed on the US markets) at the same low trading costs

For example if I want to track a broad index of European stocks the iShares MSCI Europe UCITS (Acc) ETF is traded in CHF on the Swiss market so I can invest without any FX exchange cost (obviously I still have the FX exposure of the underlying stocks). The expense ratio is 0.35%, all the dividends are reinvested so there's zero tax to pay and Swissquote only take 9CHF. If it wasn't for the 60CHF-200CHF annual custody fees it would start to look like a good deal!
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  #32  
Old 16.09.2013, 19:38
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Re: Low cost Investment Funds in Switzerland

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In comparison the Swissquote ETF trading fee is a flat 9CHF regardless of how much you invest (although there is a custody fee). SwissPost's 0.35% (min 35CHF) is definitely a bad deal especially if you plan to invest regularly
I agree with you. But Postfinance looks bad even for non-intensive trading. We can take the following example:
We want to invest 100000 in 5 ETFs 20000 each to diversify. Each year we will sell 2 ETFs and buy another 2. (lets assume that all the ETFs remain constant in value over the years. I know this is a stupid asumption but it works for calculating costs). Then

Postfinance

5 * 70 (buying cost) + 0 (maintenance fee) = 350 (first year).
4 * 70 (two buys and two sells) + 0 (maintenance year) = 280 (2nd year and after)

Swissquote

5 * 9 (buying cost) + 100 (0.025% * 10000 quarterly maintenance fee) = 145 (first year).
4 * 9 (two buys and two sells) + 100 (maintenance year) = 136 (2nd year and after)


So Swissquote looks much better even for this low level of trading.

If somebody spots a mistake in the calculation please say it!

By the way, anybody has any experience with swissquote?
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  #33  
Old 16.09.2013, 19:43
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Re: Low cost Investment Funds in Switzerland

Still not understanding why noone is considering interactivebrokers....they have far and away cheaper prices than postfinance and swissquote.
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  #34  
Old 16.09.2013, 19:49
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Re: Low cost Investment Funds in Switzerland

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For example if I want to track a broad index of European stocks the iShares MSCI Europe UCITS (Acc) ETF is traded in CHF on the Swiss market so I can invest without any FX exchange cost (obviously I still have the FX exposure of the underlying stocks). The expense ratio is 0.35%, all the dividends are reinvested so there's zero tax to pay and Swissquote only take 9CHF. If it wasn't for the 60CHF-200CHF annual custody fees it would start to look like a good deal!
So for the long term investor using ETFs and balancing the portfolio by adding more cash, the custody fee may be more the issue.
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  #35  
Old 16.09.2013, 20:18
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Re: Low cost Investment Funds in Switzerland

I'm Swiss and just started getting into investment too.

Correct: Capital gains tax are zero. That might change some day but not so far.

Here some Data about my Bank (Raiffeisen)
Index Funds which are passively managed definitely cheaper. I am at Raiffeisen.
Buying Funds at Raiffeisen or Vontobel (Partnerbank)
1-1.5%. It is cheaper from 50'000
Selling funds is free.
Buying and Selling Stocks is around 1%

Managing Fees:
Actively Managed funds: 0.8-1.6%
Passively Managed funds (index funds): about 0.4%

--
I might compare with postfinance too sounds interesting.
If you are looking for competition, switzerland might not be your first choice. We have quite easy cartel laws. My law professor used to say "the first murder is free"
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  #36  
Old 16.09.2013, 20:49
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Re: Low cost Investment Funds in Switzerland

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Still not understanding why noone is considering interactivebrokers....they have far and away cheaper prices than postfinance and swissquote.
I will move to switzerland soon and I prefer a swiss broker. I am not a trading pro or financial expert, but I do make the taxes myself. I want to avoid the headache of doing taxes in switzerland and having to declare my US trades. I am no tax expert, but I think that if you trade in IB they will keep some taxes automatically. I do not even know if you can recover this buy declaring that you are a swiss resident. Contrary to this, with a swiss broker I buy some ETF I sell it in a couple of years and I do not have to pay any capital gain tax. This is simple and straightforward.

I do agree that US brokers seem a lot less expensive than swissquote.
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Old 17.09.2013, 10:17
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Re: Low cost Investment Funds in Switzerland

Reading the thread I have the impression that there is a bit of confusion about using a Swiss bank vs. a foreign broker, especially a US based one.
For the sake of clarity: I am Swiss, living in Switzerland, but I invest both in Swiss and foreign markets, as small investor, i.e. as normal starving person.

In my opinion and generally speaking, the only two advantages of using a Swiss financial institution (bank, one of the few Swiss brokers or an insurance investment plan), for a small investor (weight < 2-3 Mio CHF) living in Switzerland, are:

1. Personal contact with your financial advisor / physical presence of the bank locally.
2. Access to Swiss instruments as Swiss Structured Products (huge choice) and other derivative products as Swiss Warrants and Swiss Dots.
3. Tax optimization, in case of an investment tied with a pension saving plan.

Unfortunately there are much more drawback. Here a few ones:

1. Horrible transaction costs
2. Generally, bad execution of orders.
3. Expensive deposit fee.
4. Inconvenient and expensive to invest in foreign currency products
5. Very primitive user interface for online services
6. Impossible to use external programs (software) to manage the investments: one have to stick with the primitive online interface offered by the bank (or the proprietary software offered by the bank, for example Saxobank).

Conclusion: I personally use both Swiss banks (UBS, a couple of cantonal banks, Postfinance, which recently became the license to operate as bank) and two foreign brokers (TD Ameritrade and Interactive Brokers), in the following way:

1. Swiss Banks for investing in Structured Products and a couple of funds (pension saving plan with tax optimization).

2. Foreign brokers for investing in stocks (including Swiss stocks) and to use derivative products for hedging (protection of the investment in case of crash) or performance optimization (from a simple covered call to more complex structures).

A couple of considerations, in response of various statements in this thread:

> Capital gains tax are zero.

This is not 100% correct.
Indeed, if one for example:

1. opens and closes positions within 6 months
2. use derivative products for purposes other than mere hedging

the Swiss tax authorities classify him as a professional investor. Therefore, the capital gains are considered taxable income (and the losses are deductible)

> I will move to Switzerland soon and I prefer a Swiss broker.

I do not see the point: why someone moving to Switzerland should use a Swiss broker? It is legally perfectly possible/feasible to use a foreign broker.

> Still not understanding why noone is considering interactivebrokers. they have far and away cheaper prices than postfinance and swissquote.

Fully agree!
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  #38  
Old 17.09.2013, 10:52
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Re: Low cost Investment Funds in Switzerland

The only reason I would not go to Interactive Brokers is because their fees are geared towards active investors - their pricing is otherwise pretty much unbeatable.
But if you do less than 10 trades in a month you still pay 10 USD that month, as if you had done 10 trades.
If you want to buy and hold, I suggest either TD Ameritrade or Schwab, even though a single trade costs almost 10 USD, as long as you do less than 12 trades per year you are still better off with regards to transaction fees when compared to IB.

Evaluate your own investment strategies and decide which is best for you.
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  #39  
Old 17.09.2013, 11:25
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Re: Low cost Investment Funds in Switzerland

Hello,

I don't want to abuse the forum for publicity but being a regular contributor to english forum and working for a Swiss based online broker www.strateo.ch, I hope you allow me adding our name as an alternative for a Swiss online broker. I think in all fairness we are pretty good on American markets, offering nyse, nasdaq, amex, options, ETF's, OTC-BB etc in real time. Cost is 30$ for orders up to 20K (15$ for orders up to 2K).

We have experience with clients who moved from US brokerage accounts; yes the US brokers are cheaper (it is after all a huge market with only one language) but feedback we receive is that contacting people proved more difficult and transferring money in and out can be cumbersome. I guess it all depends how often you trade whether it is worthwhile or not to use a US based online broker.

best regards

Patrick
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Old 17.09.2013, 21:35
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Re: Low cost Investment Funds in Switzerland

At least three forum members (kiwiguy08-fatmanfilms-SwissIT) already suggested that the best option is to go for a US broker.
I will ask them or anybody who knows the following question:
If you invest with your US broker 100000 and at the end of the year you made a 10% profit so you have 110000.
How much the US will take from those 10000 profits in taxes? (Supposing that you are a Swiss resident?).

I am obviously trying to compare with Switzerland where in principle if you have 1 fund or ETF for 1 year and make a 10% profit you pay NO taxes.

(I know that nobody trades like this, but I am trying to make myself and idea of how much tax do you pay on your US brokerage account)

If you can indicate where the rules for taxes on US investments from Switzerland are explained I will appreciate it.
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