I work for an international organisation, and my base salary is USD, which gets converted every month to CHF at the UN rate (I have no idea if it is a good one or not, by the way, and I’m not sure on what basis it is calculated). I keep a small part of it in USD to invest monthly in VT with IBKR.
I inherited a reasonable sum (in CHF) last year, which I plan to invest, still with IBKR and probably mainly on VT. Another sum is due this year (succession took time).
I’m not really ready to invest all in one chunk, so I’m starting to slowly migrate chunks of 10k-20k CHF to IBKR, convert them to USD, and buy them. I know it would probably be wiser to invest the total amount in one go, but psychologically, I’m not ready for that (convince me I’m wrong, please ). Note that I have a 10-year investment perspective as I am approaching retirement (no FIRE for me, maybe early retirement, but given personal circumstances, it might not be feasible).
It occurred to me that a better strategy would probably be to invest wholly my unconverted US monthly salary directly and pay myself in CHF from the inheritance instead. But that would mean that if I have 200K CHF, and my salary is about 10k, it will last for 20 months (and more with the additional sum), so I missed investment opportunities.
You do as you find convenient. It is better to invest not very efficiently than to not invest at all. I will just give you a small tip: do not anchor yourself in what currencies in which bank accounts you have at the moment. Money are tangible, you can convert them and transfer from one account to another. You are going to pay something for the conversion, but it won’t make a big difference in your life.
Specifically in your case, you can try to find out what currency exchange rates are applied. I don’t want to even guess. Then, note that USD transfers come with fees, so paying 10-20 USD to transfer 3000 USD might be not what you want.
Anyway, I suggest you to consider money movement issues as being subordinate to your investment strategy.
I know people are too much focussed on optimisation of costs . But normally I go in following sequence
Step 1 -: decide how much I want to invest every month (irrespective of currency)
Step 2 -: decide which ETFs I want to invest in
Step 3 -: use the currency I have available and invest. And if it’s not enough, then convert and invest
I normally use VT (USD), WEBG (EUR) or ACWI (CHF) and use same three steps mentioned above.
IBKR foreign exchange costs are very low. So for practical purposes just ignore it.
So in your case, as you are mainly interested in VT, maybe you can invest as much as possible from salary as it is in USD and then whatever is remaining amount you convert from CHF to USD and invest
Thanks all for your messages. It’s not the foreign exchange cost that bothers me, but the conversion from USD->CHF and back to USD and the forex fluctuations. As the amounts are on the 10k+ scale, those fluctuations can eat up part of the amount to be invested. Or are they flattened in the long term?
By the way. You need to understand the difference between these ETFs if you are not already aware. The other two ETFs are a bit less tax efficient than VT for Swiss investors.
To add, I’m a very “old school” investor (and not very young myself); my strategy (which has been successful enough for now) is to buy some stocks and funds and forget them there forever (well, until I need the money). Since I discovered EFTs (mainly thanks to this site), I took the plunge, but that currency conversion still worries me overall, even if I’ve read why it doesn’t count in many places. This is probably home bias, and I fear not being effective. But as we say in French, “je me soigne”
Well you have the same thing with stocks you can buy. The performance will vary in different currencies due to the evolution of currency exchange rate.
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). Note that I have a 10-year investment perspective as I am approaching retirement (no FIRE for me, maybe early retirement, but given personal circumstances, it might not be feasible).