Where to park your cash?

Investing / Portfolios
1

Hi there

Where/how do you guys park your cash? Suppose you have 20% cash “just in case” or maybe a inheritance to be invested slowly in ETFs, etc… Brokers like DEGIRO punish you now if you have cash on your account…

Thanks and cheers

2

In small local banks that gives high interest. I am still considered young by some banks so the interest is even higher.

2 Likes
3

I use a short-term bond ETF like BSV. It tanked a whopping 5% in the worst couple of days in March 2020 (probably due to margin calls), but rebounded very quickly. I sleep well with it.

If you’re even more risk averse, you could use a real money market fund or ETF, e.g. ICSH. This one tanked maybe 3.5-4% in March 2020, rebounded quite quickly as well. As it’s a true money market fund, it has almost no return, though.

1 Like
4

For 0.72% yield, does it really make sense to “risk” it?

It might also be that I just don’t understand bond ETFs enough.

Btw there are at least 2-3 threads on the same topic - please use the search function before opening new ones, @binfch.

5

Also it’s in USD, I assume for most people here it wouldn’t make sense (you’re holding a lot of currency risk when instead you’d want to have cash).

Personally I have a CHF bank account in a few places (below 100k in each case).

2 Likes
6

For 0.72% yield, does it really make sense to “risk” it?

“Risking it” would probably most depend on your personal risk acceptance profile?

Not sure where you get the 0.72% yield as it always depends on buy-in price and time, time held, and – if applicable – dividends collected?

In my time holding BSV – 5 years, in varying amounts – I’ve averaged a little over 2% return. This is still minuscule to riskier market return, of course, but the question was where to park money, for whatever reason.

Also it’s in USD,

These vehicles exist in all major currencies.

Personally I have a CHF bank account in a few places (below 100k in each case).

A bank account is where I’d store my liquidity. In fact, it’s where I do store my liquidity. It’s not where – even if sharded – I hoard several hundred k of cash with essentially zero return.

YMMV of course.

7

Aren’t those 0 returns higher than the risk free fixed income ETFs in CHF: https://www.ishares.com/ch/individual/en/products/261157/ishares-swiss-domestic-government-bond-37-ch-fund (-0.5% weighted avg YTM)?

edit: I guess we shouldn’t call it fixed income anymore :slight_smile:

8

2% total or p.a.?
In USD or CHF?

9

I got it from the ETF.com page - https://www.etf.com/BSV#overview.
That’s what I also meant by possibly not understanding how bond ETFs work. :slight_smile:
I interpret that as “yield p.a.”, that in my understanding is “dividend-like” (or does it involve appreciation+dividend?), which might be incorrect.

In terms of risk - I believe bonds are “risky” too in times of such low interest rates - how much exactly is out of my knowledge at the moment. :slight_smile:

Love this :rofl:

Regarding savings accounts with “high interest rates”, the highest I found was 0.4% with CS (but within a bigger compulsory package; using moneyland.ch).
@REandSTOCK, which others small/local could you recommend?

10

It’s called return-free risk :slight_smile: . The risk there is that an interest rate increase will lower your bond ETF’s value.

1 Like
11

p.a., USD.

Even though it has a nice-to-have small return I don’t treat it as an investment, it’s really only where I park excess money that isn’t ready to be invested according to my plan, or where I park money as I move out of the market of risky assets and where I take money when going into the market of risky assets.

1 Like
12

I got it from the ETF.com page - https://www.etf.com/BSV#overview.

Looks like that’s the Yield-to-Maturity (which is actually even lower according to Vanguard)? Your actual yield depends on when you buy and sell and how much you hold on ex dividend days.

1 Like
13

@dbu

The Caisse d’épargne d’Aubonne has a “real” ebanking even for their savings account.

Compte d’épargne jeunesse (-> 30 yo) 1.25% (10k a month)
Compte d’épargne placement 0.5% (probably 10k a semester?)
Compte d’épargne nominatif 0.25% (probably 10k a month?)
Compte d’épargne senior 0.5% (probably 10k a month?)

WIR Bank

Compte d’épargne bonus 0.1% (0.3% since the moment you come with 5000 more CHF and you don’t withdraw in the year, so wait for the 3rd january to withdraw) You can get additionnal bonus up to 0.7% total if you have a lot of shares of the bank.

For people under 25/26 yo, there is a lot of other alternatives

1 Like