What would you do if you were me?

[San_Francisco]

@AnarquiaJoker

Would I have excessive fees if I wanted to sell in 6 months and change ETFs or add another

No.

@AnarquiaJoker

but I have been advised against (even if 2 years have already passed since my entry) to do so if I am not sure I will stay here at least 10 years and therefore have 10 years of payments.

If you want to invest in broadly-diversified funds anyway, it doesn’t matter. You invest today, you can convert into holding cash anytime, and you can withdraw after emigration.

Your length of stay matters for consumption purposes - since 3a funds are locked and can’t be used for consumption as long as you’re a resident. Maybe your new country would also tax a withdrawal at higher rates than your Swiss canton.

Also, I’m not sure how it’s supposed to matter if you have 10 years or only one or two years of payments into pillar 3a - unless you sign up for one of those shitty insurance products that nobody fully understands.

If you want to invest just 6’800 a year in diversified equity funds and don’t need that money for consumption, you can just as well do it in pillar 3a. Regardless of whether you stop after two or ten years (small caveat: taxation).

[Dr.PI]

@AnarquiaJoker

Is an initial investment of 10,000 chf with a subsequent monthly commitment of 800-1000 chf a good idea? On a single ETF com VT? Would I have excessive fees if I wanted to sell in 6 months and change ETFs or add another?

Yes. Yes. No.
Especially with VT, which has essentially zero spread.

For a smaller monthly contribution I would rather recommend a European broker such as Degiro or Flatex, where you have zero fixed fee for trading (well, under certain conditions). IB will cost you 2 USD per currency exchange transaction + min. 0.35 USD per trade for US ETFs.

[ChickenFat]

@Dr.PI

For a smaller monthly contribution

Or invest every 3 months. I do so just after dividends are distributed to save some Rappen of tax.

[Wolverine]

@AnarquiaJoker

in my career as a doctor

Adding in White Coat Investor’s blog to the reading list. While it’s a US blog, I guess some themes translate here, like insurances and advisors preying specifically on doctors, as highly intelligent (and confident in their own skills) but poorly financially educated professionals with high salary and high net worth. (Edit: Wow, hadn’t gone there in a long time. He IS a salesman. I’m keeping it here for the profession specific stuff but do apply caution.)

On that same note, do be wary of the financial schemes that will be/are presented to you and don’t hesitate to run them here to get other points of views. You’ll likely be advertised 3a mixed insurances solutions which, if you have done some reading here, you probably already know are almost never a good investment.

@AnarquiaJoker

Technically I can, but I have been advised against (even if 2 years have already passed since my entry) to do so if I am not sure I will stay here at least 10 years and therefore have 10 years of payments.

I’m joining @nabalzbhf, here, it sounds like the calculation was made on an insurance plan. Which most nobody here would advise. If (do make your calculations) the tax advantage is worth it, low cost self investing solutions (VIAC, frankly, finpension) are probably worth it.

@AnarquiaJoker

Is an initial investment of 10,000 chf with a subsequent monthly commitment of 800-1000 chf a good idea?

As a fellow learner by doing, making some mistakes and correcting course on the go, I’d say there’s not much you can loose that would put your future in jeopardy by doing that (though there is indeed some money at stake, which may seem like much right now depending on your current situation). While fees matter, they can be counted as the price of learning, which may be worth much on the long run.

I’d still check that I don’t need those 10K in the short term (like for a rental deposit if you may be moving in the near future, or a downpayment or somesuch) and prepare myself mentally to potentially see that amount loose 60-80% paper worth tomorrow, because it can (though it should recover if you don’t sell. The calm-mindeds get rewarded during downturns).

@AnarquiaJoker

On a single ETF com VT?

VT can arguably be all you need. It’s a great start, you can add other funds later if you want, though there is no necessity to that (and as such, you should always know why you are adding another specific fund to your allocation).

Note that there is some uncertainty currently in regards to whether we will still be able to buy US based ETFs next year. Not sure if it would apply to you as a B permit holder. You can keep VT and buy another fund if it happens (there are Irish based equivalents) , or sell and consolidate if needs be. That would also be a good learning experience (which might have you incur some minor costs).

On that note, I’d keep the accounts at IB and Degiro for the time being and see if they apply different conditions for investors based in Switzerland next year. Let the dust settle before picking a winner.

[San_Francisco]

@Wolverine

Not sure if it would apply to you as a B permit holder

General availability of investment funds and/or accounts is virtually is based on (permanent) residency, not citizenship or permit in Switzerland - so the type of permit should be irrelevant here.

Exceptions may of course apply to citizens of the “worst” countries for financial service providers to deal with (e.g. North Korea, Syria, Cuba, Iran or USA). Also, if you’re banking or trading with a broker that is very domestically focused on a particular market, they will often not bother to make products available for the few non-residents that could buy them, if they can’t offer them domestically.

[AnarquiaJoker]

@San_Francisco

If you want to invest just 6’800 a year in diversified equity funds and don’t need that money for consumption, you can just as well do it in pillar 3a. Regardless of whether you stop after two or ten years (small caveat: taxation).

Do you recommend it even if I am going to invest in ETFs a sum quite higher than these 6800 CHF? however I will try to find out more about the third pillar here on the site.

[Burningstone]

Yes, because you can deduct these 6’800 from your taxable income, which depending on your income tax rate, leads to a large tax reduction.

[AnarquiaJoker]

@ChickenFat

Or invest every 3 months. I do so just after dividends are distributed to save some Rappen of tax.

If I did it every 3 months, would I greatly reduce the expenses without particular losses in terms of risk / gain?

[AnarquiaJoker]

@Burningstone

Yes, because you can deduct these 6’800 from your taxable income, which depending on your income tax rate, leads to a large tax reduction.

I don’t know if with the fact that I have withholding taxes (Italy) having a residence permit B, this changes. I don’t do the tax return at the moment, because I don’t exceed 120k chf at the moment (I think this is the ceiling) and I don’t have a C permit.

[San_Francisco]

Sure do. You can invest a maximum of 6800 and some Francs a year into pillar 3a. You usually can deduct this from your taxes (even on a B permit with withholding tax) which usually makes it worth it.

[Barto]

Do we think @AnarquiaJoker should first understand how much tax he or she will save in comparison to the tax rate on eventual withdrawal of 3P? If current income is not high, it may not make sense to lock away the money, depending on the canton.

In addition, since B permit is mentioned there was a recent thread discussing that in some cantons it may now be necessary to complete a full tax declaration in order to claim the tax deduction for 3P =>more admin work and potentially more taxes

Another factor to consider is how he or she would withdraw the 3P. If it is planned to do this after returning to Italy, it might be taxable there. I do not know specifics of IT - CH dual tax agreement but I suspect it is generally not smart to save taxes in CH to then have to pay them later in IT…

[ChickenFat]

I think I pay <2 CHF per forex transaction and <2 CHF per trade at IB. I reduce the number of trades because my tax declaration become easier. If you investment time is more than a couple of months you wont probably feel a difference

[AnarquiaJoker]

@Wolverine

Wow, hadn’t gone there in a long time. He IS a salesman.

Yes I noticed hahaha. However, it may be useful to take a cue in our specific case, thanks.

@Wolverine

it sounds like the calculation was made on an insurance plan

yes likely, the person who told me about it is an insurer, I’ll find out more on the forum.

@Wolverine

I’d still check that I don’t need those 10K in the short term

I was quite tight in the end, I could invest more but I prefer not to overdo it at the beginning.

@Wolverine

On that note, I’d keep the accounts at IB and Degiro for the time being and see if they apply different conditions for investors based in Switzerland next year. Let the dust settle before picking a winner.

Thanks for the advice, I’ll stay tuned.