Help me pick ETF from SwissQuote

Investing / Portfolios
1

Hello, I discovered recently this community, and over the weekend I read a lot to try and decide on how to invest my money, but I’m still confused on
some aspects, so I would ask some help defining ultimately my portfolio.

General infos:

  • 30yo swiss citizen
  • stable job in IT
  • plan to live and die in Switzerland

Basically until now I just kept all my money in my private account and besides investing some in Crypto, I never invested in ETF/Stocks.

Now I want to divide my money like this:

  • 10% cash
  • 90% invested

I have 200k and all are available (no savings account, everything is in my main account) and it’s growing with each paycheck.

After I invest all of this, I will keep investing 50% of what remains from my paycheck each month after paying everything.
That should be around 2’000 CHF to invest each month.

Requirements:

  • Swiss broker (I know, I know, higher fees, but as I’m confident in investing everything I have without a sweat, I want it to be with a Swiss Broker, for my peace of mind.

  • in CHF (this is not really a requirement, but I assume that it will much cheaper to invest in my main currency, than having to pay forex fees, right?

  • 90% in Index ETF (no bonds) and 10% Crypto (I don’t need any Crypto advice here, got that covered, just ETF)

  • all ETF should be Ireland domiciled funds (because I keep reading that this is a good thing)

Today I opened a SwissQuote account (I chose this broker, as it looked like the biggest in CH).

To sum up, I’m seeking advice on how to invest 160k in Index ETF (20k will be going in Crypto from the 180k total available).

My main questions are:

  • I understood I should take accomulating ETF, but on SwissQuote I only found the Vanguard VWRL as distributing in CHF. What should I do in this case? As I planned to have the higher % in VWRL.

  • Should I stick to CHF? Because I saw some index ETF that are only available in USD or EUR on SwissQuote and I’m not sure what would be the real cost in exchanging currency there, as I only have CHF availability

  • -I also read in this forum that accumulating instead of distributing doesn’t make a difference in Switzerland, because you pay the same taxes? In my case, using SwissQuote, what would be the difference? For taxes, I would pay the 100CHF yearly for the tax report from them. If I pick the distributing, do I manually need to reinvest the dividends?

  • I’m going to deposit the money on SwissQuote this week, I assume, due to this pandemic, a lump-sum investment of 160k is a bad idea right?

  • In what period of time I should divide my investments? I was thinking 30-50K per month for the next 3-6 months.

Finally, if I want to allocate my portfolio something like:

  • 60% All World ETF
  • 15% Emerging markets
  • 15% European union (at least 5% in CH(SMIM) and some in UK)
  • 10% Asia Pacific

Based on this, what ETF available in SwissQuote (And possibily from Featured ETF, so I only pay 9CHF flat per transaction), should I pick?

Thank you and I hope my questions don’t sound exactly like many others, I tried to read as much as possible over the weekend, last week I had no clue
what an ETF was!

3 Likes
3

I think distributive ETFs are better. You have to pay the same taxes in Switzerland anyway (except Luxembourg-based funds but those are usually not exchange-traded). I assume you want/need to get back some money after you retire. You can use the dividends to rebalance your portfolio the way you want.

Why ?

4

I was checking all the ETF that peeked my interest on SwissQuote in JustEtf!
But there are so many of them that I’m a bit lost!

5

No particular reason, just based that list after reading this forum for a whole weekend and basically I always see that most of the allocation should be given to an All World / Global index, and if it doesn’t cover emerging markets, add some specific ETF’s for them.

Then Mustachian goes with some SMIM, so why not put 5% as well, and for other European union countries, I keep reading to invest in UK.

Finally Asia for Japan mainly, as I see many people suggesting it.

But I have no specific requirements about which % to invest where, for me it could also be 100% All World if it makes sense.

As long as I can do all in SwissQuote, I don’t pay a ton in currency exchange in case it’s not in CHF and I can just buy these ETF and leave them there for years to grow, I’m fine with everything!

7

Do you have a pillar 3a?
No -> start one now
Yes -> you should calculate the asset allocation of it into your overall desired asset allocation

1 Like
8

Ok after more reading, I want to avoid Distributing ETF, because I don’t want any hassle in converting currency, taxes form and reinvesting every 3 month when dividends are paid.

With Accumulating ETF’s, I can just buy and forget about it for years, then just print the tax form provided by SwissQuote and attach it to my tax return.

So, let’s start simple, if I wanted to just go with a single ETF that covers all world (so for example All World (VWRL or VWRA)) but that at the same time is Accumulating,

what should I pick in SwissQuote? Because VWRL is not accumulating!
And I DON’T want an hedged ETF for currency.

From my research it doesn’t seem that SIX has anything like this, so if it’s not available in CHF, what should I pick from SwissQuote? EUR/USD doesn’t make a difference for me personally, I would need to convert in both cases.

Finally about Lump sum vs DCA, I guess a 50% now and 50% over 3-6 months might be a good idea, also because I have a strong feeling that financially speaking, we reached the bottom already because of COVID, so stocks can only go op (I repeat, it’s a strong FEELING, I might be wrong, but I’m here for the long game, so at the end it doesn’t really matter)

9

Yes! Using VIAC (highest risk setting currently, Global 100) and maxing it out each year (around 7k) , but only started last year, probably I will go down to in risk when the capital inside the 3rd pillar starts growing

10

I thought you were going to invest 2k each month after your initial investment(s) ? I don’t understand how it would be more dificult with the taxes… especially if you are going to pay swissquote for the paper.

12

So, yes, the idea is to keep investing 2k each month.
About the difficulty, I have no clue whatsoever how to declare taxes for invested money. So I THINK this would be somewhat complicated, I might be mistaken.

Because to invest 2k each month, I need 2 steps:

  1. Open my mobile ebanking app, and wire 2’000 CHF to my SwissQuote IBan
  2. Login in SwissQuote and buy more ETF of what I already bought

This is simple, now I have no clue how the whole dividends payment work, but as I was reading that you get them every 3 months in another currency, then you need to convert them back, then you need to declare them and finally buy back more ETF’s.

On paper it seemed a bit harder! But as I said, it might be just appearance and you could explain me how easy it is! What would the process look like?

EDIT: I read this on these forums which steered me towards wanting Accumulating:

“If you plan to reinvest in the same fund, Accumulating doesn’t seem optimally efficient. You’ll have to do the actual reinvestment yourself (usually), you’ll pay additional commission and fees on reinvested dividends. And on some funds the accumulating share seems to have marginally higher returns than the distributing.”

13

Yeah that is what I found out as well!
Now I’m trying to figure out for my case, which would be the best route:

A) Buy World in CHF as Distributing, and each dividend payout => convert => declare => reinvest

B) Buy World in USD as Accumulating on SwissQuote, and forget about it

14

…which you will be doing with VWRL/VWRA already anyway, depending how you look at it (For instance, The USA account for less than a quarter of worldwide GDP but more than 55% in VWRL).

VWRA ist doing exactly that.
If you need to convert to USD to buy it, these will be one-time costs.

COVID isn’t the only determinant there.
And stocks can easily go down or sidewards for 10 or 20 years. It’s happened before.

15

You made me a bit curious about this, as I do have the S&P 500 ETF with SIX. I do receive the dividends in USD, but it is automatically converted to my CHF account. So what I do is just invest the amount what ever I have on this account monthly. The declaration is done end of the year with the paper you get from Swissquote. I give this to my tax consultant and never had any questions back.

16

Buy VWRL & VFEM.
Convert the USD from divs to CHF or start buying some ETF in USD later (the Asia one you wanted or something).
Doing the Tax from these 2 ETF’s correctly is a once-off “learning” (takes a few hours), then simple thereafter (half an hour every year). Save yourself the fee for a tax doc from Sq for such a simple portfolio. Small time investment initially = life-long saving.

18

I recommended that because in his/her original post lug10 wanted 60% world + 15% em, so he wants to overweigh em (amongst others, smim & japan). Fair enough, I believe in simplicity, but I also believe 3-4 ETF’s are ok to handle for a beginner & a 200k portfolio is big enough to have 3-4 positions, 15% is 30k, that’s not nothing, and if you rebalance using the 6k per quarter it’s do-able IMO.
VWRL & VFEM cost “only” CHF 9 to trade at Sq so that’s also a reason.

19

First of all, thank you everyone, you answered all my doubts and gave me some good insights!

I love to self-teach, last week I had no clue about ETF’s, and now after hours of youtube videos and
reading these forums, I’m about to buy my first ETF!
So of course if doing Taxes correctly to declare my ETF is a one time effort to learn and then it’s a quick thing once per year,
I will do that!

Finally I have some finals doubts:

1) VWRA or VWRL ? I cannot decide, I will buy on SwissQuote, so VWRL is in CHF, VWRA in USD on the London exchange.
For a total of 175k invested, I would pay 300 CHF fees for VWRL and 500 CHF fees for VWRA.
(And by the way, shouldn’t the Fee for buying VWRL be just 9.-? As it is an ETF Leader and SQuote says it is 9.-)
I would prefer of course not having to convert USD/CHF, but I’m still trying to figure out the real tax differences between the two.

Let’s say I have 100K CHF in both, what will be the tax difference in them, assuming same performace and dividends converted back to CHF and reinvested?

2) For now probably I will just stick to one World ETF, but down the road, after more reading, I would like to overweight some a little bit more on:

  • Swiss market
  • Asia
  • Tech (even if I know world covers much Tech already)

But probably not more of 20% of my total portfolio divided by these 3.

3) Finally, let’s say I start with AllWorld ETF, and I want to put 150K there. I see that that ETF is currently still below the levels it was before the COVID pandemic. So maybe it would make sense to go All in, and invest as lump sum all 150k, as the stock eventually has to go up? (yes this is all speculation, I know markets can go down and stay down for years and years, I just like to think positive)
Or is the general consensus that it might be a good idea to invest a part right now, and then each month do like 20-50k ?

Thank you again

20

You should give a call to Swissquote on this and ask for an explanation. They usually answer quickly by phone&email.

21

You’ve read the discussion above, haven’t you? :kissing_heart:

He or she set out the idea of additional allocation to EM/Europa and Asia in his/her original posting, replying with (for) “no particular reason” after having been asked “Why?”.

Well, I believe I’ve addressed the discussion above in this thread by (briefly) stating one major possible motive to do so: tilting the allocation more towards the distribution of world’s economic activity (geographic distribution of world’s GDP), rather than just investing whatever countries have the biggest stock market (highest market cap) - possibly just by virtue of more companies choosing to list on stock markets.

Whether that’s a good investment strategy in particular can be up for debate. Theoretically, under the assumption of efficient markets and fair valuation, it shouldn’t matter much in performance and educe lump risk (political etc.), shouldn’t it? On the other hand, there’s the observation that US markets obviously have overperformed many other regions in the world lately (and maybe historically as well).

22

There is no difference, because you have to pay taxes on dividend you receive and also on dividend you “receive” (unless it is based in Luxembourg). The inception of VWRA was in july 2019, so it looks there was no tax in 2019 and they probably report to the ESTV/AFC after their annual report (june 2020), so I can’t show you the actual taxes now.

If I take an other random accumulating fund based in Ireland to prove my point : iShares Core EURO STOXX 50 UCITS ETF EUR (Acc) IE00B53L3W79 , you can see that the investor has to pay taxes on 3.798 CHF per share fore 2019 ICTax - Income & Capital Taxes

23

I guess most of the amount is due to the swiss federal stamp tax (non “stolen” by SwissQuote directly but part of the privilege to use a swiss broker (or - let’s say - part of your piece of mind cost)

Please also consider that - independent from VWRL/VWRA - you’ll have to deal with currency conversions costs (about 1% at SwissQuote → you’ll loose additional 1’600 CHF just to start)

24

From my research, the Federal Stamp tax should be 0.025% on SwissQuote, so if I go on their trading page, and go through the steps of buying 175k worth of VWRL, it says that 290 CHF will be the Fees.

Now, the federal stamp on that amount should be less than 30 CHF, then 9 CHF per transaction because VWRL is a Featured ETF, I assume I shouldn’t be paying more than 50 CHF for that transaction.

Then meanwhile for VWRA, for the same amount, the fees are around 500 CHF which I understand because it’s not on SIX.

Finally, for your last point, what??? 1’600 CHF ?
From what I understood, VWRL is in CHF, so the only currency conversion would be my dividends, and is it correct that they would apply 1% to convert the dividends in CHF?

And for VWRA, why should I pay currency conversion? Doesn’t SwissQuote offer you 3 accounts, CHF, USD and EUR, so I should be able to transfer to the USD account and just by the VWRA?

Finally I could imagine buying VWRL in CHF, then keep dividends in USD and buy with them VWRA. So the only conversion I would do, is when one day I sell my VWRA, and get USD, but also in that case, I wouldn’t convert it in SwissQuote, but transfer it to my USD account in UBS, and convert it by myself.

Am I missing something? Cause for sure I’m not paying 1600 CHF just for one transaction