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-   -   New to Switzerland and investing - help needed! (https://www.englishforum.ch/finance-banking-taxation/300061-new-switzerland-investing-help-needed.html)

coolbeanz 09.09.2020 13:09

New to Switzerland and investing - help needed!
 
Hi!

I recently moved to Switzerland and would like to invest my savings.

I'm looking to invest into a managed portfolio - I'm not interested in picking out stocks directly by myself.

I'm 31 and I'd like to invest on a 5+ year horizon. I don't have plans to buy property anytime soon.

To complicate matters further, I have a chunk of cash saved up in EUR and a bit in GBP. Given the strength of the CHF, I don't think it's a great idea to convert these at the moment.

Can anyone recommend any suitable investment vehicles that would cater to my requirements, especially maintaining a portion of my investment in EUR and GBP? From what I gather, Swiss banks charge ridiculous fees. Any cheaper online platforms that I should consider?

Thanks!

logo123 09.09.2020 13:41

Re: New to Switzerland and investing - help needed!
 
Check out threads by Fatman Films on this forum. Also check out the blog posts by thepoorswiss.

HickvonFrick 09.09.2020 14:21

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by coolbeanz (Post 3215720)
Hi!

I recently moved to Switzerland and would like to invest my savings.

I'm looking to invest into a managed portfolio - I'm not interested in picking out stocks directly by myself.

I'm 31 and I'd like to invest on a 5+ year horizon. I don't have plans to buy property anytime soon.

To complicate matters further, I have a chunk of cash saved up in EUR and a bit in GBP. Given the strength of the CHF, I don't think it's a great idea to convert these at the moment.

Can anyone recommend any suitable investment vehicles that would cater to my requirements, especially maintaining a portion of my investment in EUR and GBP? From what I gather, Swiss banks charge ridiculous fees. Any cheaper online platforms that I should consider?

Thanks!

Hi. I'm also 31 and quite recently arrived in Switzerland.

Point number 1 would be don't worry about which currency your investments are held in. If (say) the pound underperforms over the next five years with Brexit, and you hold a global portfolio you will have a higher % gain (in pounds) that somebody else who held the same global portfolio in a different, strengthening currency would. Does that make sense?

That said, there's no reason to change your GBP and EUR into CHF in any case.

I have a Degiro account in both CHF (https://www.degiro.ch/) and GBP (https://www.degiro.co.uk/). The fees are minuscule and transparent, and the app is user friendly. Its also possible to open an account in Euros (https://www.degiro.nl/). You can buy various investment trusts in Degiro.

I have Smithson Investment Trust, https://www.smithson.co.uk/, Pacific Horizon Investment Trust (emerging markets), Scottish Mortgage Investment Trust and Edinburgh Worldwide Investment Trust, all from Bailie Gifford https://www.bailliegifford.com/en/uk...vestors/funds/. These are all denominated in £, but you could use your euro or CHF account to buy with pretty low exchange fees (0.1% IIRC).

There are a limited number of funds available in Degiro, and I don't have any. The main fund I am interested in is Fundsmith Equity https://www.fundsmith.co.uk/invest/Index/, which is British, but also allows a Euro based fund https://www.fundsmith.co.uk/global/eu. You can make your GBP or EUR account directly with Fundsmith.


Fundsmith Equity and Smithson invest in solid, no nonsense, resistant, brand focused companies and have a fantastic track record of long term growth.

The Baillie Gifford stuff is more tech heavy and high risk, although the returns have been very strong also. All are worldwide except for Pacific Horizon which is East / SE Asia except Japan basically.

Its worked pretty well for me so far.

coolbeanz 09.09.2020 14:53

Re: New to Switzerland and investing - help needed!
 
Thank you for your detailed response @HickvonFrick.

I'm actually in the process of opening a degiro.ch account. Is the degiro.nl account available in English? I read online that I could alternatively open a degiro.ie account. Are there any residence or tax implication to opening non-Swiss Degiro accounts?

I've seen Fundsmith recommended elsewhere on this forum. I know very little about investment funds - why is Fundsmith so popular?

gipfelisturmer 09.09.2020 14:56

Re: New to Switzerland and investing - help needed!
 
For the platform I use Interactive Brokers.
Most economical fee wise: 2 USD for forex, 0.33 USD for trades (which count towards the 10 USD/month maintenance fee; past 100k this fee goes to 0).

As for products - broad stock market - you can choose 1 or more cheap ETFs (0.03-0.10% TER):
A) VT (total world market, by Vanguard)
B) VTI + VEA + VWO (US + dev. world ex-US + emerging markets)

HickvonFrick 09.09.2020 15:13

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by coolbeanz (Post 3215772)
Thank you for your detailed response @HickvonFrick.

I'm actually in the process of opening a degiro.ch account. Is the degiro.nl account available in English? I read online that I could alternatively open a degiro.ie account. Are there any residence or tax implication to opening non-Swiss Degiro accounts?

I've seen Fundsmith recommended elsewhere on this forum. I know very little about investment funds - why is Fundsmith so popular?

Of course - I only suggest NL as Degiro is a Dutch company. There are no tax implications in opening an account elsewhere AFAIK. Fatmanfilms is probably the person to ask though.

Fundsmith is popular basically because its had strong performances over a decade or so, and the fund manager, Terry Smith had good performances before that running a pension fund. Its quite concentrated (25-30 individual stocks), which allows for significant divergence from the index. He believes that he is buying very high quality large companies that are well set up for long term sustainable growth and are resistant to new technologies being developed. If you are interested I recommend you watch their AGM video on youtube https://www.youtube.com/watch?v=PZy9-4Z_4i8 - its very beginner friendly.

As I said in my last post you can't buy Fundsmith on Degiro as its a fund not a trust, but you can buy Smithson, which is for mid-sized companies using the same philosophy and is ran by the Fundsmith team. Its also done well so far (although is much younger - only 2 years old).

LuganoPirate 09.09.2020 15:56

Re: New to Switzerland and investing - help needed!
 
Have a look also at some ETF's -Exchange Traded Funds. They are usually quoted and have a very low fee structure. It's not a managed fund but invest in a sector, or a country etc. For example, if you like food companies, there will be an ETF that invests in the likes of Nestle, Unilever etc.

HickvonFrick 09.09.2020 16:03

Re: New to Switzerland and investing - help needed!
 
Certainly a global ETF is something to consider, especially if you don't feel confident picking an active fund manager.

wantone 09.09.2020 19:57

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by coolbeanz (Post 3215720)
Hi!

I recently moved to Switzerland and would like to invest my savings.

I'm looking to invest into a managed portfolio - I'm not interested in picking out stocks directly by myself.

I'm 31 and I'd like to invest on a 5+ year horizon. I don't have plans to buy property anytime soon.

To complicate matters further, I have a chunk of cash saved up in EUR and a bit in GBP. Given the strength of the CHF, I don't think it's a great idea to convert these at the moment.

Can anyone recommend any suitable investment vehicles that would cater to my requirements, especially maintaining a portion of my investment in EUR and GBP? From what I gather, Swiss banks charge ridiculous fees. Any cheaper online platforms that I should consider?

Thanks!

Interactive Brokers. You can send your EUR and GBP cash to Interactive Brokers very easily.
I agree, don't convert to CHF plus more investment opportunities in USD markers.

coolbeanz 10.09.2020 10:17

Re: New to Switzerland and investing - help needed!
 
Thanks for all the tips everyone.

Should I also consider robo-advisers? Please excuse my naivety, but they seem take a lot of hassle out of the entire process. Do they have any major drawbacks? Are there any that come strongly recommended?

Although I have a basic understanding of the various investment products, I'm not sure that I am in a position to objectively assess my investment risk profile and how to split up my investments accordingly.

AbFab 10.09.2020 13:15

Re: New to Switzerland and investing - help needed!
 
With regard to currency, it all depends on where you hope to end up.

When I moved here in 1989 UK interest rates with about 3 times higher that Swiss ones and the exchange rate was £1 = CHF3.20.

As to the future of Sterling, I always though it can‘t go any lower, but it did. This has gone on for 50 years when there were 20 CHF to £1. We can perhaps see the future from past experience...

wantone 10.09.2020 13:24

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by AbFab (Post 3216073)
With regard to currency, it all depends on where you hope to end up.

When I moved here in 1989 UK interest rates with about 3 times higher that Swiss ones and the exchange rate was £1 = CHF3.20.

As to the future of Sterling, I always though it can‘t go any lower, but it did. This has gone on for 50 years when there were 20 CHF to £1. We can perhaps see the future from past experience...

He is probably EUR based. UK has declined since the 1930s. It is unfortunate but the UK elites don't care about the GB pound, they only care about their properties.

Meerkat33 10.09.2020 14:15

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by coolbeanz (Post 3216020)
Thanks for all the tips everyone.

Should I also consider robo-advisers? Please excuse my naivety, but they seem take a lot of hassle out of the entire process. Do they have any major drawbacks? Are there any that come strongly recommended?

Although I have a basic understanding of the various investment products, I'm not sure that I am in a position to objectively assess my investment risk profile and how to split up my investments accordingly.

I suggest reading this blog post https://thepoorswiss.com/robo-advisors/ which also mentions drawbacks and lists the most common ones in CH. If your profile fits that description, it can be a good option. The investment risk profile is the lesser problem as you can do that for free I think, the selling point is that you do not have to rebalance your portfolio, you put the money in and forget about it.

HickvonFrick 10.09.2020 14:30

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by coolbeanz (Post 3216020)
Thanks for all the tips everyone.

Should I also consider robo-advisers? Please excuse my naivety, but they seem take a lot of hassle out of the entire process. Do they have any major drawbacks? Are there any that come strongly recommended?

Although I have a basic understanding of the various investment products, I'm not sure that I am in a position to objectively assess my investment risk profile and how to split up my investments accordingly.

I wouldn't personally. They'll be significantly more expensive than trying to do things yourself, and that could cost you a lot in the long run. My advice would just be to stick to something you feel confident with and leave it be for a couple of years.

If you don't feel confident to select an active investment, I'd personally just go with a passive world tracker such as iShares Core MSCI World UCITS ETF USD (Acc) https://www.justetf.com/ch-en/etf-pr...n=IE00B4L5Y983. You are just following the world's stock markets which in the long run should be going up not down. At 31 and without a house on the horizon that is a comparatively low risk investment imho.

Perhaps you could consider that as your main vehicle and try out some active investing with smaller sums to gain some confidence, and to get an idea about how volatile some of the more concentrated actively managed funds may or may not be.

Its scary to put your toe in the water but rewarding ultimately - but that's just my 2p. I was terrified when I started a few years ago, but now I'm pretty calm and relaxed when the markets turn. The younger you start with this the better.

amogles 10.09.2020 14:58

Re: New to Switzerland and investing - help needed!
 
I agree with HickvonFrick.

When I was in my early 30s I didn't have enough money to make investing worthwhile. So I didn't start until about 10 years later. If you're younger, compound interest is on your side, so the earlier you start, the greater your benefit. Use it. This time factor more than cancels out any differences between different fund pacakges IMHO.

Urs Max 10.09.2020 15:14

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by coolbeanz (Post 3216020)
Thanks for all the tips everyone.

Should I also consider robo-advisers? Please excuse my naivety, but they seem take a lot of hassle out of the entire process. Do they have any major drawbacks? Are there any that come strongly recommended?

Although I have a basic understanding of the various investment products, I'm not sure that I am in a position to objectively assess my investment risk profile and how to split up my investments accordingly.

Every advisor, even if they seem to be for free, has the bank's interest at heart, never yours. Your financial situation (not necessarily success) is the means for them to generate earnings - always keep in mind that for the service provider (bank, broker, advisor alike) you're the cow begging for financial milking. That doesn't apply always, but it does usually.

That's why you need to educate yourself (no offense), there's no way around that unless you're willing to pay, over time, with 20-30-50% of the wealth your assets would grow into with a cost-conscious approach by the time you retire. That's what as seemingly little as 1% annual cost adds up to over 30-40 years (life expetancy at age 31 is 56 years for females, 51 for males).

Only you can know what's best for you, and only you does want the best for you. There's no need to hurry but a definitive need to learn the basics. IMHO Wiley's "Investing for Dummies" and John Bogle's "Little Book of Common Sense Investing" are must-reads. The first because it takes a broad approach on how to go about managing your wealth and making good use of diversification, the second because it teaches you to use stock funds and ETFs to your advantage when investing in stocks and avoid paying more than necessary.

Not knowing you, I'd say standard allocation first. I'm assuming you're single with no financial obligations other than your own needs:
1) have 2-3 monthly salaries as liquidity, available immediately
2) have 3-6 monthy salaries as iron reserve, available at short notice
3) add big outlays you're planning for to the two above, be that taxes, that shiny car or the trip around the world
4) invest everything beyond that. Allocation decisions should be dominated by your risk tolerance

In addition, it's helpful to use the services of at least two banks or similar that are independent of each other. Because if one goes bankrupt or becomes otherwise unavailable you still have access to the rest. In these interest-less times I'd say to use two "Kontokorrent" accounts for 1) and 2), at different low-cost banks, e.g. Raiffeisen and Postfinance. Using a broker that's independent of those two is an additional plus.

If you invest (some portion) in the stock market, and you definitely should, you need to assume that at some not-too-distant point in time it will drop by 50% when determining what percentage of your assets you should invest there. The reason is that you need to stay invested and avoid selling when that happens, and happen it will (most probably). It can be a very painful experience to see all that hard-earned money go up in smoke and disappear into nothingness, and you need to keep your emotions from determining your financial decisions in those situations.

And do make sure your expectations remain realistic. 7-9-10% return in USD, or 6-8% in CHF, will grow into a very nice sum over time. Btw, these two rates of return are likely to be roughly equivalent as the CHF is likely to keep appreciating against the USD.

user137 10.09.2020 15:17

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by HickvonFrick (Post 3215784)
As I said in my last post you can't buy Fundsmith on Degiro

why do they make it so hard? :msnmad::msnmad: I have a postfinance account, which is expensive but other than that it's fine, it uses SwissQuote in the backend.

I have a SwissQuote account that I'm not using as they have 3rd level cards distributed on paper every year :eek: (sorry, no thanks)

I have a Raiffeisen account for my personal checking balance.

All 3 of those have a different set of funds available, and usually nothing what I wanted to buy, why? Where to go if I want to access everything online and do things myself?

PF as well as Raiffeisen is just a web interface for some human to punch in my trades into another system.

HickvonFrick 10.09.2020 15:23

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by Urs Max (Post 3216121)
Every advisor, even if they seem to be for free, has the bank's interest at heart, never yours. Your financial situation (not necessarily success) is the means for them to generate earnings - always keep in mind that for the service provider (bank, broker, advisor alike) you're the cow begging for financial milking. That doesn't always apply, but it does usually.

That's why you need to educate yourself (no offense), there's no way around that unless you're willing to pay, over time, with 20-30-50% of the wealth your assets would grow into with a cost-conscious approach by the time you retire. That's what as seemingly little as 1% annual cost adds up to over 30-50 years.

Only you can know what's best for you, and only you does want the best for you. There's no need to hurry but a definitive need to learn the basics. IMHO Wiley's "Investing for Dummies" and John Bogle's "Little Book of Common Sense Investing" are must-reads. The first because it takes a broad approach on how to go about managing your wealth and making good use of diversification, the second because it teaches you to use funds and ETFs to your advantage when investing in stocks and avoid paying more than necessary.

Not knowing you, I'd say standard allocation first. I'm assuming you're single with no financial obligations other than your own needs:
1) have 2-3 monthly salaries as liquidity, available immediately
2) have 3-6 monthy salaries as iron reserve, available at short notice
3) add big outlays you're planning for to the two above, be that taxes, that shiny car or the trip around the world
4) invest everything beyond that. Allocation decisions should be dominated by your risk tolerance

In addition, it's helpful to use the services of at least two banks or similar that are independent of each other. Because if one goes bankrupt or becomes otherwise unavailable you still have access to the rest. In these interest-less times I'd say to use two "Kontokorrent" accounts for 1) and 2), at different low-cost banks, e.g. Raiffeisen and Postfinance. Using a broker that's independent of those two is an additional plus.

If you invest (some portion) in the stock market, and you definitely should, you need to assume that at some not-too-distant point in time it will drop by 50% when determining what percentage of your assets you should invest there. The reason is that you need to stay invested and avoid selling when that happens, and happen it will (most probably). It can be a very painful experience to see all that hard-earned money go up in smoke and disappear into nothingness, and you need to keep your emotions from determining your financial decisions.

And do make sure your expectations remain realistic. 7-9-10% return in USD, or 6-8% in CHF, will grow into a very nice sum given enough time. These two are likely to be roughly equivalent as the CHF is likely to keep appreciating against the USD.

+1

I'd be concerned that the robo advisor would recommend funds it'd get a commission on, SJP Style, rather than what would actually benefit you, and then charge you for the benefit of taking advantage of you.

Id also be concerned it'd suggest something too conservative for your risk profile - at your age, presuming you have no kids, knowing you have no desire to get on the housing ladder you should have quite a high risk appetite. Personally I wouldn't hold any bonds for example. Certainly the viac pillar 3a suggests a proposal for me I find too conservative.

poot 10.09.2020 20:06

Re: New to Switzerland and investing - help needed!
 
-Open an IB account, load with GBP, Euro, CHF, $ or whatever you want
-Put some in very broad index ETFs like VT, SPY etc
-Put some in some actively-managed ETFs, I especially like the ones from ARK Invest like their disruptive innovation offering ARKK
-if you love any companies, buy theM too, but with much smaller %

Forget about it / Add as often as possible Eg. Monthly

No need for real advisors, robo-advisors etc

spark 11.09.2020 02:07

Re: New to Switzerland and investing - help needed!
 
Quote:

Originally Posted by HickvonFrick (Post 3215761)
There are a limited number of funds available in Degiro, and I don't have any. The main fund I am interested in is Fundsmith Equity https://www.fundsmith.co.uk/invest/Index/, which is British, but also allows a Euro based fund https://www.fundsmith.co.uk/global/eu. You can make your GBP or EUR account directly with Fundsmith.


Fundsmith Equity and Smithson invest in solid, no nonsense, resistant, brand focused companies and have a fantastic track record of long term growth.

Smithson is an interesting fund for sure and has its niche. But FEF is a large cap dinosaur whose performance is mostly explained by its tech/growth tilt. If large tech/growth companies is your thing, you'd do better buying QQQ (0.20%) or MGK (0.07% TER) than rushing to pay 1% of your assets to Mr. Smith. FWIW FEF underperformed QQQ by a *lot* in recent years.


Quote:

Originally Posted by user137 (Post 3216122)
why do they make it so hard? :msnmad::msnmad: I have a postfinance account, which is expensive but other than that it's fine, it uses SwissQuote in the backend.

I have a SwissQuote account that I'm not using as they have 3rd level cards distributed on paper every year :eek: (sorry, no thanks)

I have a Raiffeisen account for my personal checking balance.

All 3 of those have a different set of funds available, and usually nothing what I wanted to buy, why? Where to go if I want to access everything online and do things myself?

PF as well as Raiffeisen is just a web interface for some human to punch in my trades into another system.

Mutual funds are not exchange traded, that's what makes it so hard. It's all down to which mutual funds your broker has business relationship with. There's no central party involved (an exchange) through which both brokers and mutual funds can make deals with each other, unlike for stocks and ETFs.


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