I have to invest with UBS and plan to FIRE (my story + call for advice)

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Hi All,

I’m 36, female, moved from Poland to Switzerland 2.5 years ago. I came here with ridiculously low (for Swiss standards) safety net and a mortgage in Poland to pay. During past two years my focus was to get settled and order my financial matters here and abroad. Now that it’s done, I have a stable financial situation: very decent salary, great pension fund and saving 40-45% of my yearly net income for retirement. Could probably save more but I also like to live a little :upside_down_face:

I plan to retire in the next (hopefully) 15-20 years. As I came here pretty late in my life and don’t have substantial financial assets yet, it is very unlikely for me that I will reach FIRE in Switzerland, so I have a plan to move to a country with a lower cost of living. At this point I don’t want to decide where exactly. All I know is once my coffers are full with :moneybag:, I will pack my things, withdraw my 2. and 3. pillar and go :beach_umbrella:. For this reason, I am focused on investing and not on e.g. buying a property in Switzerland. I have a flat in Poland that I rent out and I consider buying one more, as an investment (and because I know the real estate market there very well).

The problem I’ve got is that I am employed with UBS and due to FINMA regulations and internal policies against insider trading, I am forbidden to have a broker account outside of UBS. The only investments I can make are through UBS and this is expensive as hell (even though employees have huge discounts on trading and administrative fees, it still hurts). But I have no other option, it’s either investing with UBS or not investing at all. I already bought some ETFs to start.

Has anyone else been in a situation like this and have some advice? There is a lot of content online but most focus on IB or Degiro and I have a lot of questions around my situation, especially about taxes.

  • Is investing with US ETFs still the best choice tax-wise for all Swiss residents, or does the UBS factor change anything? Does anyone know what is the availability of US ETFs via UBS?
  • If I am not so sure about putting all my money in US-based funds, I assume that I should go with IE as the second choice?
  • Should I be prepared to fill in all these forms to get part of the withholding tax on dividend back, or can I expect a ready-to-go form from UBS?

Also, can you point me to the US/IE ETFs worth considering for my portfolio? (I will do my due diligence but it’s good to have a place to start).

I’d appreciate any advice from you, especially from the people who have similar constraint on the broker or plan like me to move out of Switzerland to advance their FIRE.

Just please don’t advise me to get a different job where I don’t have the broker limitation. I like my job, I have a good pension plan and real opportunity for significant salary increase in the next years, and I also consider getting pregnant within a year or two, so I won’t change my employer at this time.

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Congratulations and welcome!

Yes. Maybe Luxembourg if there are some that you really like. An additional advantage is the availability of accumulating ETFs, which might simplify your situation in the accumulation stage, especially if you have expensive trading fees.

If you go with IE and LU ETFs, there is nothing more to declare than dividends as income.

https://www.justetf.com/ is an excellent database of European ETFs
https://www.trackingdifferences.com/ (check the blog) will show you some more advanced things about ETFs.

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Tax-wise the broker shouldn’t matter as long as the broker is an IRS qualified intermediary, which I’d expect UBS to be.

However, I don’t know how the (discounted) fees at UBS compare between trades at different exchanges. Also, currency exchange is likely relatively expensive at UBS, which might favor CHF-traded ETFs.

For brokers with high currency exchange fees, my recommendation for global stocks is the combination of Vanguard Developed World (VEVE) and Vanguard Emerging Markets (VFEM) which both trade in CHF at SIX. With a 90%/10% mix, they have an average TER of 0.13%. They are distributing.

Depending on the UBS fee structure, you should consider not investing too frequently. Once a quarter may be reasonable. I’d recommend investing at the beginning (or very end) of each quarter such that you can sweep up accrued dividends in the same transaction as these ETFs distribute their dividends towards the end of each quarter.

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An additional advantage is the availability of accumulating ETFs, which might simplify your situation in the accumulation stage, especially if you have expensive trading fees.

Thanks a lot for your answers!
Yes, I forgot to mention that I aim at accumulating ETFs (exactly due to the transaction fees) unless I am strongly advised not to for any tax reason :slight_smile:
So far I understood from the blogs, that if the ETF is listed in ICTAX list, I am not at risk that the capital gains will be a subject to withholding tax due to mix up with dividends?

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Thanks a lot for your answer and advice!

However, I don’t know how the (discounted) fees at UBS compare between trades at different exchanges. Also, currency exchange is likely relatively expensive at UBS, which might favor CHF-traded ETFs.

Yes, transaction fees for SIX-traded instruments are lower. I also would get lower administration fees for UBS-issued ETFs but here I would be careful, I would rather invest in larger ETFs with more AUM.

Depending on the UBS fee structure, you should consider not investing too frequently. Once a quarter may be reasonable.

Here I did some math, and because of the employee discount and rather complicated fee matrix, the cheapest purchase for foreign exchange lands somewhere between 6-8k CHF (have to check that in practice still).

When it comes to dividends, I would favor the accumulating ETFs (to not have to pay the stamp duty and the transaction fee when re-investing them) but I am not totally opposed some distributing products.

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This is something worth looking at, actually. I personally find the “danger” of smaller ETF closing overexaggerated.

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This is something worth looking at, actually. I personally find the “danger” of smaller ETF closing overexaggerated.

In general I agree and wouldn’t necessarily avoid all smaller ETFs. But in my situation getting my salary from UBS, investing through UBS and in UBS products is a little bit too much putting-all-eggs-in-one-basket situation. And maybe there’s nothing to worry about but better safe than sorry :wink:

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I could be interesting if you can invest in their mutual fund in spite of their ETF. You should check their funds, fees, etc. :slight_smile:

Personaly, in your case, I think that I will privilege UBS ETF/Funds if you can have them at lower price in comparison with other exerternal ETF as Vanguard or Blackrock. Because you are entitled with them, you should prioritize the lower cost as much as possible. Also, they have some interesting ETF with lower TER too.

Maybe you could also invest in their Quality ETF as @San_Francisco is doing for USA and UE market :thinking:

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IE00BZ56SW52 WisdomTree Global Quality Dividend Growth UCITS ETF
IE00BX7RRJ27 UBS ETF (IE) Factor MSCI USA Quality UCITS ETF (USD) (distributing only, AFAIK)
LU1681041890 Amundi MSCI Europe Quality Factor UCITS ETF
IE00BK5BQT80 Vanguard FTSE All-World UCITS ETF
IE00BM67HK77 MSCI World Health Care UCITS ETF 1C

I’d argue no one „needs“ any other Europe-domiciled equity ETF. Unless you deliberately want to „bet“ on some specific country, region or sector (do keep in mind that the U.S. dominate World ETFs though).

Personally, I‘ve largely given up on Emerging Markets funds. Currency depreciation seems to mostly eat up your returns in local currencies/companies, China dominates most vanilla EM indices to the point that you’re not well-diversified, and many other countries‘ indices are dominated by just a handful of big financial service providers or energy/mining stocks.

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It’s difficult to answer without knowing the fees applied, UBS products you can access to, as well as the margin on forex transactions.

If the margin is high, I would favor CHF ETF: 1) UBS products if you can invest in share classes with lower TER vs a standard Swiss investor 2) external ETF (i.e Vanguard, Ishares).

If the margin is low, I would invest in US ETF (as long as UBS allows you to invest in such products). Place your orders in order to minimize your fees (i.e. quarterly purchase).

A form W8-BEN will allow you to benefit from the tax treaty rate (to be checked internally within UBS)

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Such withdrawals are taxable in most destination countries - but not all, it depends on the dual tax agreement

Just mentioning it since it is often overlooked, it makes sense to have a plan to optimise this

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Thanks, I am aware. I plan to consult a tax advisor couple of years before the expected retirement, once I have a better idea where I stand and where I would like to move to. A lot can change in between now and then :slight_smile:

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What‘s your position at UBS?

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Thanks a lot, this is really helpful. I will start digging :wink:

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Welcome on the forum and good luck with your plan. Being financial literate, having a good saving rate and discipline are the key ingredients.

Personally, I suggest not to mention your current employer’s name so widely (few times in this thread and in other that I have just seen). I am usually not a internet control freak but it’s just better to avoid spread personal info on the web (this is a forum but all our comments appear on google search and etc).

Going back to your question. Also check custodian fees and price difference between UBS funds vs non UBS funds. UBS funds may have lower purchasing and custodian fees and may make more sense even at lower AUM.

Last suggestion: no need to overthink maximum cost reduction, stay the course and consistent investing are way more important than some more expensive funds.

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This is applicable to all internal employees, so it doesn’t matter. Only external staff is exempt. People with real inside to trading information have even more restrictions on top of that.

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Hi Steve, thanks for all your input and the warning :slight_smile:
I don’t know how I could explain why I have to invest with UBS without disclosing that I am employed there :wink: But I did not share any sensitive information here that I feel needs protecting.

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I am a UBS employee too and had exactly that problem one year ago. However, one of the exceptions for you to have an external brokerage account is if the account is part of your country of citizenship. So I did get an exception for this account I had in a Portuguese bank and am now allowed to trade through it.

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I am in the same situation but I want to use IB. Do you think it is possible? I don’t want to have troubles but the fee are too high

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May I ask how high the fees are for you at UBS?