New Member here! I’ve been thinking about index futures as a means to save on taxes.
From my understanding, if I have 80´000 CHF invested in SMI (ETF or Stocks) it might be beneficial to use the SMI future instead which will give me the same underlying exposure. The cost to roll the position is less than CHF 80 per year (4x (8 CHF commision + 10 CHF spread) = 72 CHF), which is less than 0.1% pa.
Since there are no dividends on futures (but a discount upon purchase) this strategy yields no taxable income but only taxfree capital gains. With a dividend yield of 3.3% (2’640 CHF pa), tax savings would be very significant (around CHF 400 if you assume a marginal tax rate of 15%).
Additionaly this strategy can free up capital (margin requirements are low) since it allows you to effectively “borrow” at interbank rates (which are currently negative in Switzerland). Of course if you’re risk averse/prudent, you can leave the freed up cash in your brokerage account to minimize the risk of geting a margin call or getting liquidated.
Obviously this thought could be extended to other markets (especially with high dividend yields/low interest rates).
I’m curious to hear if anyone guys thought about this or has some experience with it (futures)?
Also, are there any pitfalls in my argument?