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).
What about Festgeld from NKB?
1% interest for a period of 7 months and commission-free. But minimum amount is 100k CHF.
I do not know if a private account with them is needed.
Don’t forget to look at real rates too. Inflation’s been at 3.3% this year. So what you’re getting are still negative real rates.
Better to invest as much spare cash as you can in real assets (stocks, real estate, gold etc.)
Why does it matter? Just get the highest rate regardless of inflation. It’s still comparable.
Real rates might be relevant for long term financial planning, but that doesn’t really matter here.
Sure, for short-term needs I agree. But if you find 2.75% nominal interest attractive for 10 years: nope, sorry. Personally, I already find 1.5% nominal interest for 2 years a bad deal.
Depends how the future is. Such nominal CHF yield would have been amazing for a risk free investment in the past 10y.
Sure, better than before in nominal terms. But considering inflation, it’s actually not that much better. Sure, you can always hope for deflation. But in deflation, stocks usually do much better, especially if we’re talking long-term horizons (5-10 years).
So if you take the 2-year rate of 1.5% and inflation stays at 3% you’ll have a real rate of -1.5%: you’ll have lost 1.5% at the end of 2 years.
Just saying, only looking at nominal rates is deceptive. People are stuck in nominal thinking because we haven’t had inflation for a long time.
@fizzy fixed deposit (nkb or elsewhere) is probably a good option (~1%) for 100k, yuh’s 0.5% is probably a good option for <100k.
as wolverine mentioned, an individual bond is another option, probably not the best for the avg person though.
example: you buy 50k of psp162 at current ask price of 99.22 via swissquote. it gets repaid on 1.9.23 (some credit risk of course). that’s a gross yield of 1.47%. we have to deduct transaction fee of 135.- (0.27%) plus depot fee of 80.- (0.16%) plus stamp tax of 0.075% and no marginal tax as it’s a zero coupon, i.e. net yield of 0.96%.
Would you mind explaining further why you think it doesn’t matter here?
it’s about parking money for ~half a year, so inflation is irrelevant
Exactly, for such short duration you want a low risk investment, whether it beats inflation or not is not relevant, what matters is how much value you preserve/gain.
I’m afraid by focusing on short term inflation (we don’t know how long that will stay high), people might end up chasing riskier assets beyond their investment horizon.
Additionally, if the purpose is to compare the best available returns for a given amount of volatility we are willing to bear, the inflation adjustment will be the same over all the alternatives and comparing nominal returns makes sense.
In this specific situation, the investment is meant to cover a nominal expense (taxes for last year, so an amount that is not affected by 2023 inflation), too.
Using real (inflation adjusted) data becomes necessary when doing expense planning and considering what amount of risk we are willing to take to reach our goal. Our future expenses are subject to inflation so not planning for it bears the risk of falling short on our actual goal.
Given that year-on-year inflation increased again to 3.3%, I expect the SNB will raise rates again in the next annoucement, perhaps to 1.5%.
My big fear though is that the SNB has permanently changed their mindset and will lower the interest rates again once inflation is back to <2%. People (as in the real estate lobby, the government and big corporations) have gotten way too comfortable with easy money, low interest rates and the SNB going on these massive buying sprees to artifically support the export industry. I really hope we’ll go back to normal levels of interest rates (average for CH historical is 2.5%) but realistically we’re probably stuck with real rates below zero. And you can’t even escape this by buying foreign bonds unless you want to take a big fat forex risk.
did you do it? and if so, was it possible to get the (cembra) deposit account online?
No, not yet. Will think about it soon.
i just called them as i’m gonna buy one for myself. i also asked your questions:
they don’t do joint accounts. she said you can basically get the same via ‘vollmacht’ and ‘hinterlegung wirtschaftliche bevollmächtigte’, though.
btw, response to another call i just made:
should the interest rate change after you applied online (time gap until documents received & returned and money transferred & note set-up), they’ll give you the better rate (if down => according to application date / if up => the new one).
any online application possible ?