Kassenobligationen / obligations de caisse / medium-term notes

Moneyland comparison and background information:

Some more background:

And here I am going to add a link on the summary of current rates for fixed term deposits of various kinds that I found in old posts:

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That is not that bad actually 1% for 5 years, wondering what is the risk…

What exactly?

一二三四五六七八九十

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I meant the risk for the cembra bonds

These are not bonds, but a product specifically for retail customers.

Your deposit is protected by the state protection program up to 100k CHF per bank-customer relationship. So if you stay below this threshold, no essential risks.

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Yes.

Yes, as well as no value fluctuation and a state guarantee on deposited amount up to 100k per issuing bank. So it basically gives a AAA security to a bond with a BBB yield.

They are 2 years minimum, shorter once are called Festgeld I think.

Oh yes.

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I am trying to familiarize with these products too (Kassenobligationen, Festgeld) How would you typically purchase them? through a normal broker?

I have seen Postfinance has web pages on them, would be quite convenient to just move funds from there, but it’s quite confusing as they say the products are unavailable at the moment ?

While for Festgeld, apparently you have to phone to arrange?

No. You open an account with the issuing bank directly.

Kassenobligationen were long time neglected, so many banks just stopped posting any rates. Or maybe they are preparing for the next rate hike by SNB.

Yes. Same story, and I think at Postfinance it is 100k minimum.

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Now I am actually thinking about opening an account with Cembra. There are short term notes

https://www.cembra.ch/en/savings/medium-term-notes/

By concluding this medium-term note transaction, you are simultaneously opening a free custody account, in which the investment will be deposited.

New customers must always open a deposit account. Buying medium-term notes is not possible without opening a deposit account.

Ok fine.

The deposit account:

https://www.cembra.ch/en/savings/deposit-account/

The account opening is free of charge.
The closing of account costs CHF 25.00.

Fine.

Account management is free of charge if there are running medium-term notes or the balance of the deposit account is higher than 50 000 CHF.

Had anyone opened a deposit account with Cembra and subscribed medium-term notes? I would love to have some information from the first hands.

Q1: Is it possible to open a joint account?

Q2: Is the whole thing really free if I have any medium-term notes subscribed? The minimum subscription is 20k, not little, but still less than 50k.

Many thanks in advance.

These are annual rates, right?

2 years: 0.8%
3 years: 1.25%
4 years: 1.5%
5 years: 2%

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Yes these are annual rates.

Hello Mustachians,

I was wondering if there are any term deposits (for 12 months - 3 years closed, without fees and interest rates in the range of 1%+) in reliable and safe banks / financial institutions…

I have found Cembra, Reiffeissen, Baloise to have attractive conditions related to that… around 1% and PF lagging behind with term deposits interests around 0.6%…

Do you know any other providers for term deposits?
Or any other reliable and stable solution for that kind of returns?

Can you get something higher than those online interest rates if you maybe negotiate in person?

To my view for instance in case someone has around 100kCHF deposits in PF gets no interest at all and is paying 144CHF yearly for account management fees!

If you would just simply deposit those money in Cembra and get 1% for 2 years with 0 fees you will get finally 2000-Chf after two years (plus not paying 144*2 = 288 chf to PF)

Are there any other risks or something not taken into consideration here?

The money is locked away for two years. If inflation stays high and the SNB raises interest rates again then the opportunity cost of locking away 100k at 1% p.a. might hurt. If you don’t need the money and it’s just sitting in your bank account anyways then yes this is a decent option, compared to investing in stock or bond ETFs, that’s a more difficult choice to make.

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Could you please provide some examples / links?

Note that it is difficult to find a broker which allows to trade Swiss bonds and has low trading fees. I mean, it probably doesn’t exist.

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You should also deduct income tax on distributions by the bond. It is coupon that is taxed, not yield, although in this case they are close.

And most importantly: Kassenobligationen are protected by the state insurance fund up to 100k CHF, which should be enough for most private investors.

Cembra Medium-Term Notes

2 years: 1.5%
3 years: 1.75%
4 years: 2%
5 years: 2.25%
6 years: 2.35%
7 years: 2.45%
8 years: 2.55%
9 years: 2.65%
10 years: 2.75%

It is getting more and more interesting.

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They are, and this is the nicest thing.

I recently got the preliminary tax bill for 2023. The interest rate for early payment is only 0.25%. What about buying medium-term notes with this money and pay the bill on the latest date?

But which bank offers medium-term notes for a couple of month and less than 100k CHF?

Medium Term Notes are a 2 years term minimum investment vehicle, what you are searching for would be individual bonds with a term around the date of your choice.

Their availability and the fees related to them (which come in reduction to their returns, also to note is that the coupon is taxed while I would guess your taxes early payment would not) would depend on your broker (if you buy them on the secondary market, I am not aware of a way for a swiss retail investor to buy them directly from the issuer), I’d say the easiest way to find them is to initiate a search on your broker’s platform. Be aware that some/many CHF issued bonds have very low liquidity and some may not be traded at all (even though they are listed).

I doubt you’ll find better net returns that way than by using a good savings account, which some offer (slightly) more than 0.25% currently (even with the tax adjustment), without a significant amount of added risk (either credit or currency risk).

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