Hypothetical risk-free CHF return

If you had the option to put all your pensions and liquid wealth into a risk-free CHF bond and not allowed to invest in any other stocks/bonds. How much (nominal) interest would you need to convince you to make that investment?

  • 2%
  • 3%
  • 4%
  • 5%
  • 6%
  • 7%+
0 voters
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Not quite sure what it means, isn’t the real risk free return usually the same regardless of actual yield?

So for all option you’d expect the same inflation adjusted return and the logical option would be to pick the lowest one to minimize taxes :slight_smile:

I guess the author means yield or investment return, otherwise the question doesn’t really make sense.

A good portfolio is a well diversified portfolio. To convince me to put everything in one investment instrument it has to be damn well “risk-free” and provide a return that is comparable with a say, 80/20 stocks/fixed income portfolio with a good margin compensating for inflation risk.

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Yes the investment return on a hypothetical bond that magically has zero (default) risk.

Though inflation risk remains, and the existence of such a deal could have a societal impact on Switzerland as a whole. Not sure I could be convinced to take it.

What’s the point pursued by the hypothesis? I doubt anybody will ever be in such a situation: either they’ll be forced to invest in said solution, or it would not be exclusive, bar external causes like not having more funds available than make sense to put into it.

Edit: also, how liquid would the bond be? That is, can I redeem whatever amount of it at anytime at face value to provide for my expenses?

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Make it inflation adjusted, and I will take +5% above the inflation :joy:.

I think high yield risk free bonds typically lower velocity of money/economy (which is why central banks are increasing rates to lower inflation).

So either, we’re already in a very high inflation environment (in which case the real returns are poor), or we’re not but then Switzerland might end up having a massive recession :slight_smile:

I imagined it to be a life-long bond that is redeemed upon your death.

That makes it a strange investment to me. How am I supposed to cover bigger expenses (that 6 months honey moon in the Bahamas) if all my liquid wealth has to be invested into an illiquid bond and I can only use my income+interests from that bond to cover for my expenses?

Is the concept that we’d go into debt anytime we want to spend on something we can’t cashflow or are we allowed to keep an arbitrary amount of money in a checking account-like vehicle without that counting as “liquid wealth”?

Well people buy annuities and you don’t even get the principal back…

But let’s assume you can do whatever you want with the interest from this investment, including putting it on the bank or investing it elsewhere.

Edit: wait, I’ve read it all wrong. Correcting my thoughts.

It then sounds more interesting, though inflation may still be a problem. I’d have to rely on the returns for the first few years to beat inflation by enough for me to build an edge on the side. I don’t think I’m wealthy enough to make it work but some people might be interested in it.

Edit 2: I think it works either for low income people who still manage to save a tiny bit (like relying only on the 1st pillar for retirement) or very wealthy ones who could build enough interest on the side to diversify their investments and benefit once the societal, financial and monetary conditions of Switzerland change due to the new investing vehicle. I’m not one of them.

Edit 3: is the hypothetical linked with the book “The Missing Billionaires: A Guide to Better Financial Decisions” discussed on Boggleheads: New Book on the Life Cycle Model - "The Missing Billionaires: A Guide to Better Financial Decisions" - Bogleheads.org

Currently approx 1.6%. Of course, I would want to get more return but in reality - anything that exceeds this comes with some risk, one way or another.

Hence - 1.6% if it suffices for my purposes… or I am conscious that Intake a risk and then invest into assets with know risk profile (stocks and bonds).

Do you want to know what annuity return we want? For a lifelong, nominal annuity? Not sure I get the question


I guess in a roundabout way I’m asking what level of guaranteed return would you need for you to forgo speculative stock/bond market returns.

I won’t take anything if it is not inflation adjusted.


SNB Bills have a slightly higher yield (~1.7%) and should be even safer. Not directly buyable (some MMFs buy them regularly; that is one way to get exposure), but apparently there are banks that bid for you on them.

I voted 5% with the assumption the “offer” was inflation-adjusted.
But now I see the “(nominal)” part, so not much point to it.

If you want to account for inflation, you just increase the required return by your anticipated inflation.

Sadly no, I doubt that there are Swiss banks that do this for less than MMF TERs (~0.1%), at least not for <10M

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I wouldn’t keep all my money in fiat currency or fiat denominated bonds in any case, as holding all my wealth in one asset class would be downright risky. If the fiat currency becomes worthless (a situation I have experienced in countries I have live in), even the highest interest rate will not save you.

That said, a 7% interest rate on a CHF-denominated bond would be tempting under the present circumstances.

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