Bonds: yes, no, maybe?

[OrientExpress]

Hi!

I am in the process of restructuring my investment. The main part will be based on a worldwide capitalisation-weighted index. But due to my personal risk tolerance there will be a risk-free part.

For the risk-free part I am considering cash or government bonds (SBI® Domestic Government 1-3). When reading though this forum I found an number of writers that recommend a savings account over bonds, see for example:

@hedgehog

There’s no reason for retail investors to buy any of these negative yielding abominations. You can just hold the cash in a savings account at 0% and still be covered by the government up to 100k per bank. Once you start running out of banks you could trust your money to, then it might make some sense to do it, to put the trust into government. Otherwise it’s just a rather expensive bet on interest rates going down.

What strikes me in this argumentation is that even tough it’s correct that the esisuisse deposit insurance will cover a maximum of CHF 100’000 per bank relationship, the protection would not work in the event of a systemic crisis since the system is limited to a total amount of six billion Swiss francs [1][2]. The situation might look better with cantonal banks.

Long story short, I am considering to split the risk-free into a savings account and domestic government bond part.

I am happy to hear your thoughts on this.

[1] Home | esisuisse => Download SRF radio report (German), 31.3.2018 on the bottom right.
[2] Verunsicherung nach CS-Übernahme: Wie sicher ist mein Geld bei der Bank? | Beobachter