Let’s say you have 10k EUR sitting there.
Now imagine that instead of those, you have 9.6k CHF in your regular account, what would you do:
Considering the FX loss in your decision is a sunk cost fallacy, it shouldn’t be part of the equation.
See above.
Yuh, but… see above.
Eurozone inflation rate Aug 2022 9.1%=> real cost of holding 10,000 Eur cash can be thought of as 910 Eur/yr
Swiss inflation 3.5%: real cost of holding 9600 CHF = 336CHF/yr
Above is before bank fees and any interest paid or charged by your bank (ECB rate is currently positive, SNB rate negative, not sure many retail banks are passing rates onto customers for small deposits)
Note that Euro zone currencies have declined by ~2% p.a. vs CHF over the long term
Eurozone inflation only matters to you if you’re having your spending in the eurozone.
If you’re in CH, you should only care about the FX (and interest rates) differences when comparing the currencies, the price of gas in Germany doesn’t affect your spending.
And looking at the long term movements of currency also need to take into account the delta in interest rates (0.75% between Germany and Switzerland in most of the past decade).
Hi everyone.
What are the latest advices for EUR sitting in a saving account in CH?
Thx!
Why do you need the EUR? What’s your horizon for needing them?
I don’t need EUR right now and won’t need them for the next 5 years.
Got them from a EU bank account and now they are just sitting
Then just convert them to CHF, there’s no reason to keep EUR.
(lots of options for low cost conversion, if you don’t have IB, then wise or revolut for instance).
i would also convert your EUR to CHF. There is no reason for the EUR to get stronger long term vs. the CHF.
Most people think of currencies as mean-reverting… but there is nothing less true. The Swissi will continue to be (one of) the strongest currencies around… especially against the USD and EUR.
I see EUR:CHF exchange going deep down to 0.97. Do you see any chance to revert the trend short term and get to 0.98-0.99? Not asking a crystal ball exercise, but mostly macro-economical considerations.
PS: Crystal ball, if any, also much welcome
In the long term there are two theories about currency equilibrium: same real rates for all currencies, and purchase power parity.
So in the long term, the currency loss of EUR vs CHF will roughly be the inflation difference and will roughly be the interest rate difference. Another way to see it is that in the long term and after inflation is removed from the equation, there is no real depreciation of currencies against each other, except for geopolitical issues.
But in the short and medium term, even for a few years, any fluctuations can happen, so this is only useful over a decade and more…
Hi All,
This is my first post so I’ll start by thanking the community for the great help it’s been for the last 2 months. It’s been very inspiring also to further read investing books and follow other channels and news. This has led to a big restructuring of my portfolio from sleeping cash to ETFs (CHSPI, VOO), a change of broker (I cannot believe what I was paying so far) and a monthly investment plan. All of that based on building a strategy for the next 10 years and trying to understand what I was doing, maybe for the first time in my financial life.
To make my case I’ll say that we’re a family of IT workers with 2 young children. After all that much reading I am still in deadlock mode with regards to 100k savings in euros which we brought when we landed in CH, 5 years ago. At the time, it was not clear whether we would stay or not, find a job for my wife or not, etc… so I just put the money in expensive funds with an expensive broker (PF self funds) and focused on all the struggle that comes with starting a new life in Switzerland.
Fast forward to current time, we’re now well settled, happy and sure (as much as we can) to stay in CH for a long time. In the meantime, our euros have lost around 20% of their value compared to CHF and the EUR is its lowest since a long time. My thoughts are:
I was thinking about letting 20k-30k in a Euro Stoxx 50 ETF (just for diversification) but changing the rest for USD and CHF. I could maybe try some cost averaging over 6 to 12 months but I’m even failing to see the reason on why that would be a good idea if the trend is clear.
So, should I give up on my Euros and move on or is there any better strategy you can see? Does it make any sense to let something into Euro Stoxx 50 for diversification if I’m already diversifying with VOO or, eventually, VT?
You could consider the WiLLBe savings account
It looks like an interest option for a savings account but I’ve the impression that a savings account might not be very Mustachian if CHF continues on uptrend compared to EUR, I’ll keep losing more and more value on my home currency. By the way, it seems IB will provide 3.477% on EUR cash above 10k which might be interesting for people like me waiting to see what happens with EUR in the next days.
The other thing I don’t like much about savings accounts is that in the long term I’m targeting capital gains instead of dividends or interest rates… that’s also why I’m thinking about just moving away from EUR definitively.
By any chance do your still have a broker in your home country ?
You could invest this euro into VEUR ETF and expose you to the european market with 549 holdings.
Your euro will be vested and it will be your home country bias exposure. In case things go south in Switzerland and Europe start to trend again you will have this exposure to European companies.
I think I do. Mostly stocks (75%): ETFs that I regularly feed like VOO and CHSPI and a one-time investment on Xtrackers Euro Stoxx 50. I eventually count on investing in individual stocks just for the fun, though that’s a modest investment (I know I won’t beat the market but, you know…). And then some cash (15-20%) that I intend to keep on IBKR as long as interest rates are high (USD) and, given that we have now the C-permit, CHF in cash so it gives us some margin for the one-time tax payment that will come (and the other urgent stuff). With bonds (~5%), I had very bad experiences in the last years (like I guess everybody) and I don’t see the need for them if I shall not need the money in the mid-term. But, I also want to keep my equity part to a maximum of 3/4 of my liquidity so that’s why I put the remaining 5% in bonds. Besides, I count most of 2nd pillar and half of our 3a as bonds though that’s my non-liquid portfolio of course.
The rational of that “liquid” portfolio is that we are renting a very cheap flat we like and we think we won’t have the need to buy in the next 5 years. So, I hope we can wait and cross fingers when we’re losing 30% next year 
. I’m also ready to sacrifice some years of early retirement in favour of spending some extra money and time with the children doing some travelling or the expensive nice stuff you’re supposed to do when you have kids at the cost of less savings capacity. I’m not sure if all of the above counts as a plan, feedback is more than welcome.
Right now I’m at the point of deciding the allocation for EUR and bonds. I cannot see the point of investing so many EUR if I count on living in CH for a long time (EUR keeps losing and losing with CHF) and the European market does not have the growth capacity of something as total world or S&P 500 for instance. I have the feeling that EUR is a no man’s land from a Swiss investment perspective: you don’t have the safety of CHF, you keep losing in the FOREX and you don’t have the growth power of assets in USD. I could see the point in investing a maximum of 15-20% in EUR for the sake of diversification but that’s it. Does it make sense?
No advice but similar position. Wife is burned by some bad financial advice in past with a 3a+insurance like product. From a past sale she keeps ~150k EUR which over past few years lost what, 10% value versus the franc. Finally been able to persuade her to a willBe account, but the interest will be paid with higher taxes, of course. Still she refuses to change to CHF, maybe next year I will be successful with that. My point is, if you have no direct use, why keep it around in a currency which likely will keep long term declining vs franc. And diversifying when already diversifying through 3a/2nd/world-ETFs like VT is … well, subjective opinion, useless. At some point you have to make a decision instead of slicing the portfolio pie into smaller and smaller pieces. There’s nothing wrong with a big pie piece, except the callories, no need to spread it around. And a diverse ETF is already spread out enough in my opinion, why add FX risk additionally.
@deckard One way of looking it at it, if you had the equivalent amount in CHF what would you do with it?
How much would you convert to EUR?
(that’s the classic way to fight status quo bias by reversing the current situation)
You should think at your global portfolio composition.
Your target could be MSCI IMI.
I like the detail weights of indices
You could invest your CHF into the SP500 for 56% of your portfolio while investing your 100k euros into another European ETF representing 14% of you global allocation.
So you will diversify brokers and ETF emitters.
This makes a lot of sense, indeed. At this point, my only reason to invest a relative small amount in the European market is more the home-bias but I cannot find any single reason to keep this massive losing position and not move on with something more “practical” for the place where I decided to live.
I have to admit that I was somehow looking down on Swiss bonds but it’s true that I might prefer a Swiss bond at 1.5% rather than an European bond at 3% but 5% yearly depreciation for EUR.CHF.
Agree. The point is: if I don’t move on with euros, I find myself with a portfolio where more than 50% of the assets are in EUR. It doesn’t seem to me like a smart Swiss portfolio after all I read in the last months but I might be wrong.
Well, I never thought it like this, I guess you nailed it. If any, I would only have a maximum of 15% in my portfolio in EUR or nothing. Moving around 3 currencies is currently a PITA, I’d rather prefer to focus on the essentials for the next years: savings plan, tax optimization and re-balancing. In the last years, when I tried to optimize FOREX to not lose with EUR I miserably failed because I was either playing with hope (maybe the EUR will go up) or with bad timing (lowest of the year).