As a Swiss investor, I still have a little bit of cash laying around (20% of my investment portfolio should be near risk free asset). Please entertain those few questions:
Is there any reason to stay in cash considering the economic situation?
Bond funds still have some kind return compared to cash, so why would you keep cash at all?
Is it rational to still expect positive returns in bond funds in the next 10 years?
âas a Swiss investorâ, be careful when investing in something like BND.
About the benchmark
The Bloomberg Barclays U.S. Aggregate Float Adjusted Index is a rules-based index that measures the investment return of investment-grade, taxable, fixed income securities in the United Statesâincluding government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securitiesâall with maturities longer than 1 year.
These are all USD bonds. So fixed income, but in USD. For the last 10 years the exchange rate between USD and CHF has been pretty stable, but who knows how it will be in the future.
Granted, housing and maybe public transport make up a sizeable part many householdâs expenses. Other than that, so much gets imported that holding CHF itself isnât âfreeâ of currency risk either.
There remains a risk of the CHF losing value - and purchasing power - against other major currencies.
And Most Swiss investors will have CHF overweighted anyways, by way of their 2nd pillar holdings.
USD at least compensates you with higher interest rates.
As other pointed out you need to specify in which currency you want your investment to be risk free.
IMO if thatâs CHF, cash is best, itâs currently yielding 0.75% over the the SNB rate, and 0.5% over the Swiss government bonds (with no interest rate risk).
EUR is likely similar given thereâs also negative interests, USD might be different (but with interest rates are 0%, Iâm not sure there is much benefits to bund funds at the moment even with USD, whatever you get above 0 also has increased risk).
They offer 0.25% with no upper limits for regular savings account? Seems like the best rate Iâve seen recently (CA Next had good rate on savings accounts, but not anymore).
I actually thinking about buying some silver bars. I heard it will be the new gold. Anw, it looks quied cheap at the moment. Does anyone knows where to buy it at a good price?
Be carefull with âbond fundâ. If interest rates go higher, the bonds in the fund will have less value, Therefore the value (NAV) of your fund part will go lower.
Not a likely scenario right now but already happened.
âbond fundâ are far for ârisk freeâ. (also default risk on the creditors).
Best
Tux.
Silver is indeed quite cheap (see gold/silver ratio), and has numerous industrial applications in addition to being a candidate for storing value and being used as a currency.
There are several downsides though:
subject to VAT
you need to keep that in mind when buying and selling
takes a lot of space
a small safe is quickly filled up with silver
higher volatility
smaller price can be impacted more easily than gold
To buy silver bars Degussa is a solid player, they do delivery but I found the experience of going in a shop to buy in person reassuring (careful though, depending on the amount it can get heavy really fast).
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