Goodbye 'No Money, No Clue', Hello FI!

I’d lean against overweighting in Switzerland, too. What’s the point? As a protection against currency swings? Well consider that swiss economy is heavily export-oriented, most of earnings come from abroad, need to be converted to CHF and so there’s a non-trivial amount of currency effects on share prices:

Strong frank -> weak swiss market & weak global market when expressed in CHF. One might argue this negative correlation justifies keeping the bond part of portfolio as CHF cash (forget CHF bonds, they are losing money at the moment). Except that then the SNB enters this picture with an agenda of not letting the frank get too strong…

4 Likes

Hi Mia,

I’m in a similar situation to you. Baby due in July, and just starting to try to sort out finances but definitely very much a beginner at this stage. I have a corner trader account and started with VWRL on the SIX. I realise that IB seems to be everyone’s recommendation round here. I see the logic of lower transaction fees but I’m only doing a few transactions a year so I don’t view it as imperative yet.

I’m pretty keen to avoid unnecessary admin so I’m planning to try and keep things as simple as possible. I was a bit intimidated by the idea of holding indexes listed on exchanges outside Switzerland in case it complicated my situation without me realising. I think I probably need to do more research on this. I will probably stick with CT for a year at least and then consider opening an IB account and US based ETFs if I get convinced that it will make a material difference to me.

One of my original reasons for going with CT was that I was hoping they would provide everything I need for the tax return in a compatible format. I haven’t been through that process yet so I’d like to submit next year’s tax return before I decide whether to move things about. Does anyone know if there is any advantage at all in using a swiss based broker from the perspective of the tax return?

In summary, I’m trying to get the basics right and avoid admin. Hope I’m not doing too badly.

2 Likes

Hi @Rinch, there’s no advantage in having a Swiss broker when filing your tax return, because the data you’ll need will be fetched from a government site. CT doesn’t provide anything more than IB (even if it did, you’d want to be sure to use the official source anyway). When I transfered VWRL to IB and then sold it, I paid a little over 60 CHF to sell, when I had paid around 180 CHF to buy it (just because I didn’t have to pay the Swiss stamp duty), so I’ve only been pleasantly surprised every time I do a transaction with IB.

2 Likes

Thanks Mobius, looks like I really am just wasting money on CT then. Thanks for the link to that site, seems fairly straightforward as long as the instrument you’ve bought appears on the government list.

I suppose I’d better start seriously looking at IB then.

You’re welcome. Also, be aware that you can easily get new instruments added to that government website by making a phone call. This has been documented in another thread.

1 Like

Guys thank you all so much for your great advice and input. I didn’t realise that the cost difference between CT and IB was so much. Perhaps this was just wishful thinking, because like @Rinch, I thought CT would make trading in CH that little bit easier for a beginner with all the admin (and the better UI) and that the difference was negligible. I’ll definitely try out the app if it’s easier to navigate - thanks for the tip @Alex

Great input on the CH home bias. Looking at it now, 20% would be leaning quite heavily on the Swiss market and as @1000000CHF & @hedgehog pointed out, really, what’s the point? Especially if the companies are included in VRWD/VRWL etc. I need to look into this far more, so thanks for the ‘warning’, so to speak.

Seems I was right to be weary of bonds - I’ll do the same and keep it in cash for now.

Hi @Rinch, yes it seems we’re in exactly the same situation/ way of thinking right now! Let’s stay in touch and learn from each other - I’m sure we’ll each think of things to ask the guys here that the other one hasn’t thought of and we can hopefully avoid any costly mistakes along the way.

Seems we have a lot of MP babies due! Wishing @Rinch and @1000000CHF all the best. @1000000CHF, I’ll race ya to the finish line :stuck_out_tongue_closed_eyes:

1 Like

Sure thing @mia, I’ll certainly be interested to follow your experiences. At the moment I’m mainly spending my efforts to cut out any stupid spending and waste from various bad decisions. I aim to learn more about investments at some point but until then I’m relatively happy that i’m not making any terrible mistakes even if things could be optimised.

1 Like

Here you have more info about home bias from Swiss perspective:

All the best to you and your family! See you at the finish line! :smiley:

Holy crap, everyone here is having kinds and i do not even have a girlfriend.

Not even a Phonecall, An E-Mail is enough and they are super quick (somebody give me an award for getting VT added XD)

4 Likes

Why do you think we were congratulating you on the foresight of starting your FI journey so early? :wink:

In any case, you have plenty of time for that - you’re already doing the most important, which is to set yourself up financially for when you do have wife and kids to be able to enjoy it without stressing about financials/making ends meet.

1 Like

Sorry that was a bad joke (i actually do not want kids, accidentally getting one is one of my bigger fears)

Haha, you need to use a smiley

NEVER! I have like an irrational hate towards emoji, freaking Unicode-pollution XD.

But enough shitposting for today, congratulations to everyone who is getting a baby.

Hello there. Congratulations on the imminent baby.

I think the key is make an asset allocation decision and then stick to it. There isn’t really a “right” answer, but if you are buying low cost index funds, you are doing the right thing. I just bought CHSPI (iShares core SPI) for my Swiss portion because the TER looked lowest.

One question for the forum: I have been looking at Corner Trader and IB for future investments. IB is US-based, so is there any impact in terms of tax or other footprint in the US if you are not US-resident? I believe that there are some complications in inheritance tax if you hold US securities (so it makes sense to have US exposure through Ireland-based ETFs), but if your broker is based in the US, are there any possible other problems?

1 Like

As a swiss resident you’ll be dealing with its UK subsidiary. So no estate tax issues, unless you buy US stocks, but also no SIPC protection, only inferior FSCS.

It was already discussed: here and here and here. To sum it up: IB + US-based ETFs is the cheapest retail option in Switzerland and US estate tax is not an issue for Swiss residents.

1 Like

Thanks 1000000CHF. Those were very useful threads. I’m new to this forum, so I hadn’t seen those.

However, from Hedgehog’s comment on dealing with IB’s UK subsidiary, this could cause me problems, as I’m a UK national (so any UK assets I hold in the UK are subject to UK tax). I will look into this and let you all know if I find anything interesting! I might just stick with my current brokers (was only looking to spread assets around to reduce risk).

There are quite a few tax traps around which complicate matters. Still, Mustachian problems are good ones to have!

1 Like

Even if it’s not frugal, sometimes it’s better to pay a tax advisor to avoid bad surprises :wink:

1 Like

Well, if I have a tax surprise next year, then at least I won’t be the only one in this forum. :stuck_out_tongue:

1 Like

Ok - here’s what I found. I contacted IB, and as a Swiss resident, the custody account is held by IB in the UK.

However, this does not mean that the account is subject to UK income or capital gains taxes for non-UK residents (government website here: https://www.gov.uk/government/publications/statement-of-practice-1-2001/statement-of-practice-1-2001-treatment-of-investment-managers-and-their-overseas-clients)

So it looks fine for Swiss residents. (However, don’t take this as advice - it is just the info I have been supplied.)

1 Like
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, vous confirmez avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/