In search of the ultimate hands-off solution

Investing / Others
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Through my interest in the matter of investing and the age group me and my peers are in (35-45), the topic of how to invest savings for retirement pops up more and more (and I’m not* initiating these discussions, I swear :crossed_fingers:).

The major pain point I’m encountering almost every time is probably also one of the reasons most people choose the bank they’re already with and their respective high-fee, underperforming active fund savings plans: complexity.

Most people want their investing to be super-easy: just set up a monthly standing order and you’re done. Everything transferred gets invested, no money left over, no dividends to deal with, no currency conversions, one can sporadically transfer a one-off sum (bonus, 13th salary, whatever).

So I’ve been putting together a list of solutions with passive funds (100% equity) with non-egregious fees that takes care of everything that I can recommend to friends and family for the “invest a few hundred CHF each month into the world” use case. For simplicity’s sake I’ve left out stamp tax that would apply to all solutions anyway.

So here’s a list of fitting solutions and also of solutions I’ve excluded. For cantonal banks I only checked ZKB and BLKB (the largest and the one used by various friends and family members). Anyone have something to add? Might even turn into a wiki article at some point.

Solution Fees (incl. TER) Notes
BLKB 0.57% You need to choose the weight of CH manually (there is a World ex CH and a CH passive fund, can be an advantage if you want to have a slight home bias), emerging markets are missing, you can’t opt out of ESG, unclear fees for currency conversion (the World ex CH fund is in USD)
findependent 0.66% If you invest at least 5000.–, you can create a custom portfolio with only FTSE All-World. You’ll pay a few Rappen stock exchange fee for each transaction (e.g. Fr. 0.05 for transactions under Fr. 1000). As there’s no accumulating fund, you’ll lose out on 0.5% of the USD dividends when they’re exchanged to CHF.
finpension invest 0.47% A few countries (Canada, Denmark, Israel, Norway, Sweden) are missing**; fees don’t include additional stock market fees (unclear how much that is)
neon invest savings plan 0.15% This only qualifies if you’re already a neon customer and you don’t want to do one-off investments. Otherwise it’s not a set-and-forget solution: you’d need to manage another bank account and adjust the savings plan. Selling is very expensive (0.5% fee).
Swissquote savings plan 0.22% + 144 Fr. + Fr. 100-200 This only qualifies if you’re already a Swissquote customer and you don’t want to do one-off investments. Otherwise it’s not a set-and-forget solution: you’d need to manage another bank account and adjust the savings plan. You’ll pay around Fr. 12.– per purchase and custody fees of Fr. 100-200 per year. As there’s no accumulating fund, you’ll lose out on 0.95% of the USD dividends when they’re exchanged to CHF.
Yuh savings plan 0.22% This only qualifies if you’re already a Yuh customer and you don’t want to do one-off investments. Otherwise it’s not a set-and-forget solution: you’d need to manage another bank account and adjust the savings plan. As there’s no accumulating fund, you’ll lose out on 0.95% of the USD dividends when they’re exchanged to CHF. Selling is very expensive (0.5% fee).

Summary

So it seems like if you’re a neon customer, go with that, else go with finpension invest, and if someone REALLY wants to invest with a Swiss bank then use BLKB.

I’ve pondered what to do about home bias. I believe a home bias of 40% is way too high (leads to disqualification), but one of 10-20% is acceptable. Especially if people who are wary about investing will feel more at ease when Swiss allocation is higher. So this is why I didn’t disqualify BLKB, although it is not really a 100% hands-off approach. You’d need to specifiy the Swiss allocation once when opening the account and choosing the two passive index funds.

Exclusions

Here are the other solutions and the reasons why I didn’t include them above:

Solution Reason for exclusion
Alpian No passive strategy
Clevercirles No passive strategy
Invoya No passive strategy
Kaspar& Massive CH home bias (40%)
Raiffeisen Rio Intransparent strategy
Selma No passive strategy
Swissquote Invest Easy No passive strategy
UBS key4 Massive CH home bias (40%)
Vontobel Volt Intransparent strategy, not possible to exclude thematic ETFs
True Wealth Active weighing of world regions (not based on market cap)
ZKB No passive strategy

*well, mostly
**Irrelevant? Novo Nordisk might disagree.

8 Likes
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Is it possible to consider IBKR as a “set up to forget” investment option?

It is possible to set up automatic monthly purchases of one or more ETFs (US and IE). It is also possible to set up a standing order and have dividends automatically reinvested (or simply choose accumulative ETFs).

Personally, I have two monthly recurring investments on IBKR: VT + SLICHA.

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Yuh offers a passive solution too (but fixed amount and frequency). However, it only makes sense if you choose one of the six free ETFs to buy (otherwise it’s 0.5%) but that does include e.g. VWRL. That way you only pay the stamp duty when buying, and only face the TER (e.g. 0.22% with VWRL) as ongoing cost. Very similar to neon savings plan.

It is a bit prohibitive for withdrawing too, which isn’t too bad for certain investors. Either you sell at 0.5% cost, or you cash out by opening a full Swissquote account (near instant), transfer the titles (some days), and sell for flat fee of ca. 10 CHF plus stamp duty. But, you then either terminate the contracts or face the account fee from Swissquote (minimum ca. 100 CHF/p.a.).

I think IBKR is way too complicated for a novice fire-and-forget investor. There is a reason those new offers use child-like marketing and gamification; everything that looks too much like serious money seems to scare people off.

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You can go 99% VWRL, and this what I would recommend.

Flatex if you are okay exchanging and transferring EUR.

P.S. I see that you lump together robo advisors and brokers with investment plans. Not a problem by itself, but they are quite different things.

Nevertheless the biggest problem remains the readiness of people to invest and how much they are going to blame you when things go south.

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If rebalancing is not needed , easiest is to open Swissquote account (which is a 3 in one account including banking services) and just buy a mix of SPDR ACWi and CHSPI.

All purchases are in CHF. All sales are in CHF. The CHSPI dividends would be in CHF and can be used for normal payments or custody fees. ACWI would keep accumulating. So no currency drama, no dividend reinvestment necessary. Swiss bank , Swiss regulation, offices in big cities. No DA-1 needed and no issues with US estate taxes.

Even if the investor rebalance once a year , it’s enough. And if they forget, it’s still not going to be bad.

Cost -: custody fees 80-200 CHF (Max annual) + (0.075 - 0.15% stamp duties + ~10 CHF)for every buy transaction of these ETFs

I saw that a recurring buy is also possible to setup on SQ for even lazier investors. I don’t see a need of going through robo advisory services for basic investments.

This is what I do for my SQ portfolio.

P.S -: Neon might be fine too. I just don’t like their 0.5% sell fees.

1 Like
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Well, I guess once it’s all set up it can be considered a hands-off solution, although it is quite a step up in complexity compared to other solutions. It not being a Swiss bank will scare a lot of people away as well.

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Thank you, I added it as well.

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Has SPDR ACWI recently been included in the titles that can be bought regularly with Swissquote’s savings plan?

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I think findependent is the best hands-off solution to test things out, as the first 2’000 CHF (3’000 CHF with a referal code) are invested free of charge (TER only), and from 5’000 CHF onwards one can choose 99% VWRL, with dividends reinvested.
So IMHO with < 5’000 CHF invested, the home bias issue is negligible and after that, the issue is solved. :slight_smile:

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Didn’t know you couldn’t choose your own funds under 5k.

Why do you prefer it to finpension?

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Because VT VWRL.

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As you correctly pointed out, complexity is a big problem with many solutions.

Findependent is a simple one fund solution and very intuitive to set up.

→ I just tried to set up a finpension invest portfolio. By putting “basic knowledge” I couldn’t get over 40% stocks with auto select nor with self select. :grimacing:

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Jesus, they don’t let you choose whatever you want? :roll_eyes: And findependent allows you to be completely free in your investment decision, no matter what you answer during onboarding?

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VWRL in and of itself doesn’t have any magical component that makes it better than covering the world with multiple funds or other world ETFs.

What do you two prefer exactly? More complete coverage of the world market?

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I trust FTSE can do better indexing than finpension, given their granularity of holdings of 1%. You have wrote about it yourself. I also trust Vanguard to do rebalancing between holdings in VWRL better and cheaper than finpension in their all-world portfolio.

We were talking about simple solutions, right?

3 Likes
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Hi. I do not actually know what is savings plan.
I just buy it myself

But I know SQ offers recurring investments. Never tried it though

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No. If you want more than 40%, they say “please customise the questions to determine your risk capacity.”

Findependent also suggests an investment solution for you, but then lets you choose a higher/lower stock percentage.

In a simple hands-off solution I prefer an easy to understand broad based market cap portfolio, ideally with just one fund.

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Sure, I see it the same way, I was simply unsure/interested in what your reasons were.

Well I’d give finpension a pass for the “simple solution” aspect, as the distribution and rebalancing happens automatically. So for the user it is not actually more complicated than 1 ETF.

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So in summary it basically comes down to finpension and findependent:

  • finpension
    • has lower fees
    • there’s no minimum investment
    • there’s the (so far unproven) ability to get US WHT back (but only for portfolios >70k)
    • but the world coverage has not insignificant gaps
  • findependent
    • has a proper world coverage
    • but it’s not a preset strategy so you have to have at least 5k invested and then set this strategy up yourself
    • but while you’re at it, it’s possible to set up a home bias* without having to rebalance other regions as well
    • if Vanguard finally decides to lower VWRL’s fees (LOL), and/or with sums of 50k or more, fees could quickly approach those of finpension

The search for a fitting solution that isn’t afraid of uppercase letters is still ongoing however.

*even fancier ones with SLI or SPI Select Dividend 20, but I know, nobody cares about that aside from us

2 Likes
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Personally, I recommend finpension to people asking me for a recurring investment.
I know it’s not the cheapest option, but it’s one of the most user friendly option and the support is reactive.
And I recommend Swissquote for a big one time investment (more than 500k) with an accumulating ETF traded in CHF.

A lot of people want a provider that they can trust, being based in Switzerland and a phone support, strongly increase the trust

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