I have been gradually entering the stock market through dollar-cost averaging, purchasing VWRL via a Swiss broker.
However, a few concerns have arisen for me:
a. the high concentration of U.S. stocks
b. the high valuations mainly on the US part
c. the absence of small cap stocks
To offset the third concern, I have decided to allocate 20% of my total investment portfolio to AVWS, thereby providing a small tilt towards Small Cap Value.
To address the first two concerns, I am considering a couple of strategy options. Ideally, I would prefer UCITS ETFs traded in CHF at SIX.
1] Keep VWRL and add EXUS and AVWS VWRL 57% EXUS 23% AVWS 20%
That results roughly to:
US: 50%
Developed: 44%
EM: 6%
TER: 0.24%
The TER could be reduced to 0.20% by replacing VWRL with FWRA or even 0.15% with WEBN.
I don’t like so much WEBN because is not traded in CHF/SIX → ~1% forex fees + expensive buying
Like: Only 3 ETFs Don’t like: EM underexposure, a little bit high TER
2] Split (sell) VWRL to US, ex US MSCI, EM + AVWS WEBH: 37% EXUS: 33% XMME: 10% AVWS: 20%
That results to:
US: 50%
Developed: 40%
EM: 10%
TER: 0.16%
Like: EM %. Slightly lower TER. Don’t like: 4 ETFs instead of 3.
I am not sure about the spreads of relatively low AUM ETFs in SIX. Is this an issue? Do Market Maker(s) provide enough liquidity?
Do you have any suggestions? Maybe better ETF choices?
That would have actually been a good option as the ex US part has also higher dividends. (not taxable in 3a)
The problem is that my contributions in 3a are not enough. I started contributing recently + I decided to pause investing via 3a due to very high taxes in case I FIRE/retire to an EU country.
Does not look too bad. You can move to another community/canton before withdrawing or go for staggered withdrawal or transfer your capital to a foundation in the cheapest canton before emigrating.
Side-note: AVWS doesn’t seem to provide any tax reporting to Switzerland (yet). For an accumulating ETF, this could be an issue. In the prospectus, SIX is mentioned as potential stock exchange, so it seems likely that there will be a listing on SIX and also tax reporting to Switzerland at some point but who knows when that will happen.
You could ask the Swiss tax authorities whether they could still already add AVWS to ICTax. Until that’s confirmed, I would hold off.
I withdrew pillar 2 while living in Luxembourg. There, the capital from pillar 2 was used to calculate a global income tax rate (for the sum of income + pillar 2 capital), which was then applied on my local income. As you mentioned, it was around 45%. Only, I did not work much (edit: get much salary) in that particular year and ended up paying very little (0.9%) for withdrawing my pension capital. I could also reclaim the Swiss tax at source, so 0.9% was all I had to pay.
As a conclusion: Pillar 3a are handled the same way and you might find it beneficial to invest while living in Switzerland.
It’s very new and hasn’t even had a full year yet. It will guaranteed have reporting next year for this year. And if not (unlikely) just shoot them an email, they will add it.
The Avantis etfs have already gathered a big interest.
I would not hold off because of that. It will be added soon enough 100%
In the country I am thinking of, the entire 2nd pillar amount may be taxed at 45% (although there might be a gray area). It is not used to determine the tax rate for local income only.
Heya, no further input other than that I am personally not convinced to tilt towards anything other than the Quality Factor (for which are no great easily accessible ETFs). I thought about SCV for ages and then never bought into it.
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