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  #41  
Old 11.03.2021, 15:10
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Re: My interest rate is 0%, any suggestion

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That doesn't make sense. A house purchase is also an investment, I'm pretty sure most owners can't afford to lose their 20% downpayment.
We‘re not talking house purchase here, obviously. But anyway, over the last 70 years how many people have lost their 20% ??
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  #42  
Old 11.03.2021, 15:15
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Re: My interest rate is 0%, any suggestion

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We‘re not talking house purchase here, obviously. But anyway, over the last 70 years how many people have lost their 20% ??
Certainly it happened in the 90's & will undoubtedly happen again, I don't have any data from 1950-1990 but I an sure there would have been some down turns. I know of several repossessed properties that did not cover their mortgage outstanding in early 2000's I in Singen , 1 in Meisterschunden & 1 in Beinwill am sea around 2004/5 when I was looking in the area. 1 had unobstructed sea view, was only 5 years old, however had spent far too much on the original build, where the land was on a steep hill, land works went over budget by 300k due to ground water issues that were not clear till the tried to dig the cellar.
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  #43  
Old 11.03.2021, 16:48
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Re: My interest rate is 0%, any suggestion

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I find this week that the interest rate on my saving account in UBS is 0 (before I thought I had 0.01% interest rate).

Does anyone have any suggestion on the investment without too complicated procedures (e.g. can directly operate/buy/sell in the bank's app? this is not very important though). My target interest rate is between 1 ~ 4 % with low risk (so avoiding stocks).

Thanks
Are you open to investing in international bank deposits? You could research that option. You can also look at P2P lending via platforms like Mintos but you really must "look" carefully.

Last edited by zuercherbirmensdorfer; 11.03.2021 at 16:55. Reason: additional info
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  #44  
Old 11.03.2021, 16:50
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Re: My interest rate is 0%, any suggestion

One general thing to look for with any financial advisers is their motivation to help you. Are they getting a commission from investment vehicles they recommend to you?

Doctor normally doesn't have any motivation that should overshadow the wish for healing you (apart form crooked GPs pushing for specific medicines because they got bribes from pharma sales guys - not sure how much of an issue en Suisse, but out in the rest of the world its pretty common). Certainly not specialists in hospitals.

Financial advisors (or any other for that matter) - its all about money, and you may be a product rather than customer, especially if its free/very cheap. The safest bet might be somebody with fixed cost no matter what they recommend, but that's also not 100% guarantee. Accept one-time expense, if you have properly sized investments, its a drop in the ocean.
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  #45  
Old 11.03.2021, 18:11
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Re: My interest rate is 0%, any suggestion

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We‘re not talking house purchase here, obviously. But anyway, over the last 70 years how many people have lost their 20% ??
In CHF I think I have with my London flat
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  #46  
Old 11.03.2021, 21:41
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Re: My interest rate is 0%, any suggestion

A lot depends on timing - if a big downturn happens just after you buy then you could well be screwed.

If you've gained enough years of "average" growth then you would have a buffer.
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  #47  
Old 12.03.2021, 14:39
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Re: My interest rate is 0%, any suggestion

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We‘re not talking house purchase here, obviously. But anyway, over the last 70 years how many people have lost their 20% ??
Below you find the price development for commercial real estate in CH since 1980, courtesy Finanz und Wirtschaft (the domestic equivalent of the Financial Times). Sure, it's not residential real estate, but the two rarely differ too much (except over the last decade) and I can't be bothered to dig out the same old stuff yet another time.

Cumulative consumer price inflation from 1990, roughly the peak of the bubble, through 2005 cost an additional 30% in purchase power. No significant change in CPI since 2006, PP lost since is 3-4% only.

The crisis in the early 90ies:
- saw mortgage interest rates jump from 3.5% to 8% in two years
- cost the financial companies (banks and insurances) 43 billions in writeoffs on mortgages, 12-13% of the total outstanding at the peak
- those writeoffs amounted to almost 12% of GDP in 1990

If you assume 500k average loss for the bank that's at least 86'000 foreclosed homes; in reality many more ownerships must have been wiped out because banks never lose 100% of the mortgage, and back then a price of 400-700k per single family home was common outside of the cities. In many cases the banks took the property onto their books to not increase supply even more, and were able to sell at a decent price a few years later.

The depressed prices lasted well into the new millenium, the price bottom for residential real estate was reached somewhere around 2000-2005 (in 2003-04 if memory serves, probably due to the immigration caused by the Bilaterale).


Last edited by Urs Max; 12.03.2021 at 14:52.
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  #48  
Old 12.03.2021, 22:03
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Re: My interest rate is 0%, any suggestion

That graph looks rather different to this one claiming to also be a commercial real estate index:

my-interest-rate-0-any-suggestion-comm_prop.png

https://www.ceicdata.com/en/switzerl...mmercial-space
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  #49  
Old 12.03.2021, 23:19
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Re: My interest rate is 0%, any suggestion

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That graph looks rather different to this one claiming to also be a commercial real estate index:
Who's behind that site? Where do they get their data from, and is their index based on CHF or USD?
They claim to have data on 200 economies, they're virtually guaranteed to use something other than CHF.

Just an example comparing the year 2000 with today:
USD was about 1.80 to the CHF then, it's half that now. Doubling the real estate price in CHF over that timespan would result in zero change from a USD perspective.
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  #50  
Old 13.03.2021, 08:23
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Re: My interest rate is 0%, any suggestion

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Below you find the price development for commercial real estate in CH since 1980, courtesy Finanz und Wirtschaft (the domestic equivalent of the Financial Times). Sure, it's not residential real estate, but the two rarely differ too much (except over the last decade) and I can't be bothered to dig out the same old stuff yet another time.

Cumulative consumer price inflation from 1990, roughly the peak of the bubble, through 2005 cost an additional 30% in purchase power. No significant change in CPI since 2006, PP lost since is 3-4% only.

The crisis in the early 90ies:
- saw mortgage interest rates jump from 3.5% to 8% in two years
- cost the financial companies (banks and insurances) 43 billions in writeoffs on mortgages, 12-13% of the total outstanding at the peak
- those writeoffs amounted to almost 12% of GDP in 1990

If you assume 500k average loss for the bank that's at least 86'000 foreclosed homes; in reality many more ownerships must have been wiped out because banks never lose 100% of the mortgage, and back then a price of 400-700k per single family home was common outside of the cities. In many cases the banks took the property onto their books to not increase supply even more, and were able to sell at a decent price a few years later.

The depressed prices lasted well into the new millenium, the price bottom for residential real estate was reached somewhere around 2000-2005 (in 2003-04 if memory serves, probably due to the immigration caused by the Bilaterale).

I am amazes the Bank can take property onto its books, surely it must be sold at arms length probably by auction to establish what the client owes them?
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  #51  
Old 13.03.2021, 08:56
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Re: My interest rate is 0%, any suggestion

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I am amazes the Bank can take property onto its books, surely it must be sold at arms length probably by auction to establish what the client owes them?
presumably, if there was enough equity, the bank could force a sale and recover the loan. in a zero equity position, the owner might be glad to remain in the house and bank glad to hold for a better price?
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  #52  
Old 13.03.2021, 09:39
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Re: My interest rate is 0%, any suggestion

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presumably, if there was enough equity, the bank could force a sale and recover the loan. in a zero equity position, the owner might be glad to remain in the house and bank glad to hold for a better price?
The owner is responsible for the booked loss & rent would be higher than the mortgage interest.
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  #53  
Old 13.03.2021, 19:27
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Re: My interest rate is 0%, any suggestion

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Who's behind that site? Where do they get their data from, and is their index based on CHF or USD?
They claim to have data on 200 economies, they're virtually guaranteed to use something other than CHF.

Just an example comparing the year 2000 with today:
USD was about 1.80 to the CHF then, it's half that now. Doubling the real estate price in CHF over that timespan would result in zero change from a USD perspective.
They claim to use SNB data - and when I plot the average of office and industrial/commercial properties from https://data.snb.ch/en/topics/uvo#!/...RG1,US),D2(A,T) I get a very similar result:

my-interest-rate-0-any-suggestion-snb.png
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  #54  
Old 14.03.2021, 12:31
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Re: My interest rate is 0%, any suggestion

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So the moment you receive our salary, the inflation starts to steal it from our pocket. once we try to fight against the inflation, we risk losing more.
So what is the problem here? How to stop the steal in a safe way?
So what is the problem here
The problem is that the debt from the 2008 financial crisis still exists. Governments have been unable to increase interest rates from ~zero as it would cause an economic catastrophe. As you correctly say this "steals" from prudent savers and subsidises borrowers and investors. The situation has been further exacerbated by Covid

You probably don't want to be the "vache à lait" with excess cash in the bank without a clearly thought out rationale as to why

How to stop the steal in a safe way
What are your objectives? Most of the comments in this thread are correct but the answer depends entirely on this.
For example, is your priority to be financially independent in x years? Or is your priority to buy a house? Or a car? Or to fund education?
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  #55  
Old 14.03.2021, 13:26
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Re: My interest rate is 0%, any suggestion

Some people as saying that with the huge increase in government debt over the Covid recovery that rates on government bonds will continue to rise and that there will be a transfer over from stocks . Meaning stocks may lose ground against bonds .

Of course the problem with predictions is that they are generally better at predicting the past than they are at predicting the future
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  #56  
Old 14.03.2021, 15:46
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Re: My interest rate is 0%, any suggestion

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I am amazes the Bank can take property onto its books, surely it must be sold at arms length probably by auction to establish what the client owes them?
Yes, that's what happens. The bank will force a sale/auction if interest isn't paid (usually didn't care too much whether the mortgage was still covered, they had their hands more than full already without that, and may have been able to to avoid a writeoff), bid until the mortgage is covered, and buy if nobody bids higher.
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They claim to use SNB data - and when I plot the average of office and industrial/commercial properties from https://data.snb.ch/en/topics/uvo#!/...RG1,US),D2(A,T) I get a very similar result:
I didn't notice that the chart is thru 2004 only, here's the article. I thought it's behind a paywall.

That said, the point was to demonstrate the price drop, which was considerably more than the typical 20% downpayment.

@FMF
See newtoswitz's link, the SNB data shows 4.6% jump in transation prices for residential property for 4Q2020.

Last edited by Urs Max; 14.03.2021 at 16:02.
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  #57  
Old 14.03.2021, 18:05
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Re: My interest rate is 0%, any suggestion

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Some people as saying that with the huge increase in government debt over the Covid recovery that rates on government bonds will continue to rise and that there will be a transfer over from stocks . Meaning stocks may lose ground against bonds .
The argument is that rates are so low and borrowing so high that inflation might overshoot government targets. Therefore central banks might have to increase rates

However considering CHF LIBOR rate is -0.75% I don't think the changes currently being imagined are going to improve the interest rates on our bank accounts in a meaningful way in the near future. In addition, the argument for increasing rates in a bigger way would be if inflation is expected to spike, which would be bad news for cash savings

It really is quite complex to decide what to do with hard earned money during these times

Last edited by jim1; 14.03.2021 at 19:56.
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  #58  
Old 15.03.2021, 15:52
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Re: My interest rate is 0%, any suggestion

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Below you find the price development for commercial real estate in CH since 1980,
What's the time scale? is it logarithmic?
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