Thanks for the explanation.I agree if the market is volatile you can sometimes make a bad or a good trade compared to the daily average.
However, you haven’t explained why you have chosen the CSIF in foreign currencies and not in CHF. This choice seems to be more a deal with WIR than an advantage for the customers.
All of them except CSIF SMI, CSIF SPI Extra and the hedged.
Credit Suisse offers all funds in multiple currencies USD, CHF and EUR. If VIAC buys the fund in CHF instead of the foreign currency, the exchange fees would be 0% on the VIAC side and very low on the Credit Suisse side.
For example: Instead of buying the CSIF World ex CH fund in USD, they would buy the fund in CHF.
It costs next to nothing to the bank itself, all cost (like 0.75% for wir) is pure profit for the bank.
As to what they charge to you, well, the spread between share issue and redemption prices for these CS funds is only about 0.1% - I posted the link to the data right in the first post. So, cost from mid-market value should be about 0.05% for everything, FX included.
Subscribing to these funds in any other currency than CHF does not make any sense and the argument that it “saves” money by increasing netting potential is complete bs.
Many ETFs that you trade in USD have equivalents that can bought on SIX in CHF instead. Like Vanguard’s S&P 500. See the ETFs choices that VZ made - https://www.vermoegenszentrum.ch/dam/jcr:4fa6be08-1b8c-40f0-8a52-20b2d4b5101a/Selektionsprozess%20und%20Titelliste.pdf - and note how many are traded in CHF. FX spread during SIX trading hours is negligible (<0.0x%) thanks to HFTs (btw welcome citadel securities to zurich!!!). Buying these ETFs in CHF and subscribing to CS mutual funds in CHF should be much more effective strategy for eliminating ridiculous FX fees from WIR than trying to balance cash flows.
It costs 0.002% at Interactive Brokers even for retail investors
VIAC is a startup company and probably still in the phase where they need to grow to cover the costs and future ideas. They broke the paradigm to do that innovation. We will see how VZ and other banks/service are capable to react to this service. They are really surprisingly transparent, as comment above shows. They answered to all my questions with a fresh honesty. Comparison to IBKR is really not valid, because the business model is a different one. Just to be clear, I do not know them in person, but really appreciate how they communicate and act. This is really refreshing.
P.S. and anytime I am in contact with them via chat, I drop my wish list of Vanguard assets to be available soon on their platform hopefully.
Yeah, one of these business models is ripping people off by charging arbitrary spreads pulled out of thin air.
It doesn’t cost anything even remotely close to 0.75% to change currency to any well connected financial institution. You must be completely clueless (or held at a gunpoint at the threat of cancellation of your business relationship with no other vendor to turn to, for example) to accept it.
IB is just an example of a retail broker that lets you enjoy similar level of fees/spreads that professional big players pay. A reference point, if you will.
CS, as mentioned above, changes currency and covers all other costs (stamp duty…) for just 0.05% in spread or so. Much better than 0.75% too.
I do like your criticism. You cover with open eyes the blind spots. But that´s the beauty living in a free society. If you don’t like it, don’t buy it. Or even better - if you know how to make it better, crowdfund your own business and build up a better and cheaper solution as an entrepreneur. If you can manage that, all the Mustachian here will be your loyal future clients.
A side note from me: just take a step back to see the big picture and try not to be irritated: we are all discussing pillar 3a solely because we can save some tax money. All these extra hoops that we have to take were constructed by some goddamn politicians. For us mustachians it’s just a waste of time. A great example of the retardedness of the law is for example the fact that you can’t reimburse a portion of your 3a stash, only the whole amount. So it’s advised that we spread it over 5 accounts. This pointless overhead makes me really frustrated. And we’re in Switzerland, a country with moderately easy taxes. (end of rant)
Sure, however, improper planning of your exit can wipe out all the tax savings that you’ve got through 3a while you were a swiss resident. And VIAC needs an extra step in this planning or you can get bitten by your new country’s tax and you’d be better off not investing in 3a at all.
Come to think of it (even though still expanding the off-topicity of the conversation ):
If one is not pretty certain that they will stay in CH long enough to withdraw the money at retirement, then it also doesn’t make much sense to maintain 5 different Pillar 3a accounts - as you cannot ramp your withdrawals through 5 years (as you would if you would retire here).
Am I seeing it right?
And a related question:
Can multiple Pillar 3a accounts be merged together at some stage? (e.g. when shifting to other providers)
Yes, you can merge them and even transfer them into new 3a account (also to new provider). Restriction is that you must transfer them fully (and can not partly).
Correct. Even if you are going to retire in Switzerland and will buy a property here, then it also doesn’t make much sense to bother with multiple accounts - you can withdraw pillar 3 towards property’s purchase and mortgage amortization every 5 years, and banks allow partial withdrawal for this case.
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