In search of the ultimate hands-off solution

Investing / Others
22

I got findependent set up i‘m paying 0.39% fee + TER approximately 13-15% average. I‘m using their global 100 99% shares strategy.

Ishares core spi
Spi mid
ish msci usa
ish msci europe
ish msc japan
ish mac em

That would make it „only“ 2-3% more expensive than finpension and only because of the ter.

If i would use VWRL it would make it .39% + .22%

Would somone in this case still choose VWRL 100% with findependent instead of reocurring investment with YUH or NEON? i understand if its a strategy and if you dont want to do the rebalancing because you dont‘t understand how it goes or whatever. But only VWRL at findependent where you choose your custom strategy? I don‘t see why somone who „understands“ at least that he wants only VWRL should make the decision to invest it at findependent?

23

Recurring investments are - as far as I remember - only possible since this year.
But if one is able and willing to set up everything, it’s going to be cheaper with neon and yuh, since there is no custody fee. This makes especially a difference the larger the portfolio is.

Still there is the thing about the distributions of VWRL. With neon you set the amount you want invested each month (I imagine it’s the same with yuh). So when a distribution comes in, it’s either not invested, one would have to lower the amount they send to neon (because it’s covered by dividends) or increase the recurring order for those months.
IIRC with yuh you get the distributions in USD, so to reinvest them it’s even more “work”.
With findependent the distributions are reinvested automatically.

To conclude: IMHO neon and yuh are very good and cheap solutions to invest in VWRL.
But they are just not hands-off solutions. :slight_smile:
So it’s up to you to decide what you prefer.

Edit: With neon you could choose the Invesco FTSE All-World, which is an accumulating fund, therefore no distributions to deal with.
So with that setup - once the recurring order is in place -, it is a hands-off solution.

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24

While neon has VWRL, the 0% offer is for FWRA, which is accumulating. So it is indeed very hands off, as there are no dividends to deal with.

But I’d still only recommend it (or Yuh) if one already has an account with them. Or if someone wanted to get rid of their expensive traditional banking solution as well.

EDIT: sneaky edit by @Luk_nuts while I was writing this :sweat_smile:

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25

BTW: What do you mean by this?

26

With findependent or finpension you create an account, select a strategy and then you get an IBAN to set up a standing order with. And you’re done.

With Yuh and neon, you need to create an actual new bank account first, complete with MasterCard and all, then you need to set up a standing order from your existing bank account to this new bank account, and within this new account you then need to create another regular payment into investments, and these investments you need to select yourself. Not really the definition of the “ultimate hands-off solution”.

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27

I think it would always be good to inform those people about the cost of „hands off“ solutions versus the open a self serve account (Neon, Yuh, SQ, Saxo etc) and invest once a month in accumulating funds trading on SIX.

It might not be too much of difference. But it’s best to be aware of. Or else 25 years down the line , they would feel ripped off by 0.39 to 0.50% management fees while they could have achieved the same by spending much less. With expected returns of world equity being less than 5% in CHF terms, 0.5% is 10% of that return.

We need to remember VIAC, FP and truewealth came into existence because of >1% fees of traditional banks for 3a accounts. So the gap of 0.6% was enough for them to move customers away.

Edit, here are some numbers. I think Hands-off investor can be happy :slight_smile: its not such a huge difference for 1K per month contribution but there is sizeable difference for 5K per month even though one can argue it’s fair cost of not being actively involved. Trying to keep focus on Swiss options and not including IB/Degiro. Two tables below
Custody fees Buy Fees Sell Fees WHT Saving Final value
Swissquote Buy ACWI per month on SQ, TER 0.12% 4655 3120 0.10% - 582’208
Finpension Invest 1000 CHF per month on FP, TER .09% 25136 0 0 0.10% 573’483
Neon Buy FWRA per month on NEON, TER 0.15% 0 0 0.50% 0 589’333
Assumptions
Beginning value 10000 CHF
Contribution 1000 CHF per month
Finpension saves extra WHT in USA
Neon buying fees will remain ZERO
Investment period 25 years
Custody fees is applied to 0.5 x (2 x beginning value for year + 12000)
SQ custody fees ranges from 80-200 CHF per annum
Buy fees and sell fees in FP is ZERO
Custody fees at FP is 0.39%
Buy fees at SQ is 10 CHF per month
Stamp duties ignored as they are same everywhere

Numbers become different at 5K per month investments

Custody fees Buy Fees Sell Fees WHT Saving Final value
Swissquote Buy ACWI per month on SQ, TER 0.12% 5080 3120 0.10% - 2’832’130
Finpension Invest 1000 CHF per month on FP, TER .09% 118133 0 0 0.10% 2’743’699
Neon Buy FWRA per month on NEON, TER 0.15% 0 0 0.50% 0 2’816’619
Assumptions
Beginning value 10000 CHF
Contribution 5000 CHF per month
Finpension saves extra WHT in USA
Neon buying fees will remain ZERO
Investment period 25 years
Custody fees is applied to 0.5 x (2 x beginning value for year + 60000)
SQ custody fees ranges from 80-200 CHF per annum
Buy fees and sell fees in FP is ZERO
Custody fees at FP is 0.39%
Buy fees at SQ is 10 CHF per month
Stamp duties ignored as they are same everywhere

Sell fees at SQ are based on assumption that investor would sell 10,000 CHF at a time and not the entire portfolio. 10 CHF fee for 10K

FP WHT benefit is assuming 35% marginal tax rate and 1.5% dividend yield for US & 60% exposure to US in portfolio

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28

Nice overview. I would transfer FWRA for 100.– from neon to another broker and sell there to avoid the 0.5% fee.

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29

I think that’s possible but I also think the fees to buy would come back. Or else there is no way to make money for Neon in this offer (Neon invest)

30

Interesting.
It would be nice to know, how investing with IBKR or DKB compares, considering there is a one time investment to set them up but they are totally hands off (?) afterwards. (How much) Does the initial time investment pay off? :blush:

PS: how can buy fees be 0 at a Swiss bank? I thought there was stamp tax?

31

I ignored Swiss stamp duties because they are same for all the three players-: Finpension, Neon and Swissquote. Basically it would be another 0.15% of invested amount. For 1 K investments over 25 years it would be 450 CHF in total. And for 5K monthly investments , it would be 2250 CHF. And same amount to sell

IBKR is definitely cheaper, so there is no point comparing.

  • no custody fees
  • very low buy/sell fees
  • Low forex fees
  • No stamp duties
  • You can buy all ETFs there

However one need to be willing to invest via online American broker to use IBKR, so I didn’t include it in comparison. But I would say it would be about 12K cheaper (vs Swissquote) for scenario where investor invests 5K per month for 25 years and withdraws after that the same ACWI SPDR ETF

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32

It is definitely possible, I just did so last month.

With the fees being 100.–, most wouldn’t do a transfer because the position would need to be significantly over 20k to be worthwhile. I don’t think there are many with portfolios over 50k.

33

I didn’t mean transfer is not possible.
I mean the zero fees to buy at neon is not sustainable. I think it would be reinstated once AUM grows to expected levels

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34

I see, thanks.

Good to make sure that the advised person is okay with the amount they are loosing out on.

(12k doesn’t seem too much for the amount invested but it does seem to be a decent payout for maybe 1-2h of supplementary work (opening an account to transfer money and setting that up and maybe some supplementary paper work bc foreign bank?).)

35

Here is the comparison with stamp duties included for Hands-off investor who is planning to invest in World equities with one ETF or one plan approach (and does not want headache of dividend reinvestment, currency exchange etc.) IBKR is >20K cheaper than SQ. Let`s say that is cost of using swiss broker :slight_smile: or approx 1% of final capital.

In my view, for some this is not much of an issue because ETFs can move 1% in a day :slight_smile: But hopefully the numbers help decide the level of “hands on” people like.

Custody fees Buy Fees + stamp duty Sell Fees Stamp duty (sell) WHT Saving Final value
Swissquote Buy ACWI per month on SQ, TER 0.12% 4880 5250 0.10% 0.15% - 2’823’663
Finpension Invest 5000 CHF per month on FP, TER .09% 107161 2250 0 0.15% 0.10% 2’735’513
Neon Buy FWRA per month on NEON, TER 0.15% 0 2250 0.50% 0.15% 0 2’815’159
IBKR Buy ACWI per month on IBKR, TER 0.12% 1500 0.05% 0 0 2’845’357
Assumptions
Beginning value 10000 CHF
Contribution 5000 CHF per month
Finpension saves extra WHT in USA
Neon buying fees will remain ZERO
Investment period 25 years
Custody fees is applied to 0.5 x (2 x beginning value for year + 60000)
SQ custody fees ranges from 80-200 CHF per annum
Buy fees and sell fees in FP is ZERO
Custody fees at FP is 0.39%
Buy fees at SQ is 10 CHF per month
IBKR -: no stamp duty
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36

Thanks for the work!

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37

Not sure if it matters for the calculation, but finpension does not charge a premium on the exchange rate for foreign currencies. AFAIK Neon does. Not sure about the others.

38

I’m already happy when I can convince people to use something like findependent instead of active Raiffeisen funds…

neon doesn’t

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39

All these ETFs are in CHF. So no impact I would say

40

neon doesn’t charge FX fees when buying, but non-CHF dividend payments get converted to CHF automatically and a fee of 1.5% is applied.

41

Updated the calculations with VIAC Invest included
Time horizon -: 25 years , assuming 5% return for all portfolios as they are all world portfolios.

There is a bit of simplification here because VIAC most likely doesn’t allow investors to have equivalent market weight global portfolio. But maybe it does. So I didn’t differentiate

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