Repay leverage in CHF or keep USD?

Investing / Portfolios
#1

Hi there,

I have a leverage of around 50k CHF (with an interest of 4%) that I took during the crash in March this year. Since then I sold some of my investments that did really well and I have almost the same amount available in USD in my account.

My question is if:

  • I should convert the USD into CHF and repay my loan to the bank
    or
  • keep the USD amount I have and repay the loan in CHF gradually from my salary each month

I ask this question because when I took the margin the USD was almost at parity with CHF, but since then it lost around 10%. Is it worth it to realize this 10% of loss in order to avoid paying interest on my loan in CHF?

Thank a lot for your advice.

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#2

Why the hell are you paying 4% interest on USD margin? It’s 1.6% at IB.

#3

I work at a Swiss bank and unfortunately I need to have my portfolio there. Their interest rate is 4%. :frowning:

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#4

I would definitely repay the loan now.

  1. USD have been divided by 6 in two centuries. It won’t go up.
  2. The interest rate is too high and my understanding is that you would keep those USD at 0% on your account without investing them ?
  3. The longer you keep that loan, the higher risk you have to be declared a professional according to circular 36.
#5

It is not only about the $, but more also about the CHF. The CHF is used in uncertain times as a safe haven as you know. The demand for CHF is huge and the SNB is investing those fresh gained €, £ or $ into their local stock market to buy blue chips. And this makes the Swiss State (and the CHF) even more robust and strong.

Would think about to cut your losses and try to repay the loan if this is an option.

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#6

Do they really force you to have your investment there ? For people working in finance IB has a service that discloses your trade automatically to your employer.

#7

Thanks a lot for your replies.

Yes, unfortunately I have to keep all my stocks at the bank, it’s quite annoying. :frowning:

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