The movie scene of a wealthy protagonist with financial investments in the Swiss marketplace is a film classic. It is
not surprising though, because, in reality, Switzerland is one of the safest investment destinations in the world. The
country's low inflation and national debt, strong economy, and low unemployment rate fuel Swiss investment banking.
So, you want to know how to invest your money in Switzerland within the level of risk you are comfortable with? This
article will help.
Invest when the socio-economic and personal climate is right for you
You will know that the time is right to invest your money when you can live sustainably for an extended length of time
without the urgency to access your investment as your lifeline.
An investment in the Swiss stock market, for instance, requires at least CHF 2,300 to diversify your portfolio. It might
not be the ideal time for you if you invest this money and not accessing it within the first five years puts a heavy
strain on your finances.
If you are not sure whether to invest in Switzerland or not, you can always ask the experts. SIGTAX is one such Swiss
company that advises you on the ideal time to invest, how to diversify your investments in the various industries and
Don't store your investment in your personal bank account!
Storing your investment in your personal bank account increases your chances of misuse, especially when you don't have
enough money to pay your bills.
Also, your savings will depreciate over time if you keep your money in a Swiss bank account with, for example, a 0.02
percent interest rate due to a combination of fees, low interest, and inflation rates.
Instead of saving your money in a personal account, consider diversifying your investment, as explained below.
Diversify your investment
Making different investments lowers the risk of losing money if one investment fails. You also reap multiple streams of
income when the money you invested has matured.
Here's a quick rundown of the various ways you can diversify your investment.
Investing your Money in Stocks
When you acquire stocks, you become a co-owner of the company. When the firm succeeds, your long-term returns are
appealing, with an average annual return of 5 to 6%.
Also, the stock market has become easier and more cost-effective for small investors as a result of digitalization. For
instance, an investor can get an online company report from the Securities and Exchange Commission (SEC) website as soon
as it is published, thanks to the Internet.
Additionally, you can download large financial papers in seconds as well as search for keywords, subjects, and specific
financial statements with ease. Capitalize on the accessibility of Stock information online to improve your chances of
getting sound returns on your investment.
Investing your Money in Investment Funds
An investment fund is a pool of capital that has been contributed by a group of investors. They then use the total of
contributions to buy assets collectively. However, each investor owns and controls his or her shares.
Liquidity is a significant perk of Swiss investment funds. You can sell stocks and have the funds in your account in
seven business days or less. Also, the danger of losing money is dispersed among a pool of individual investors,
lowering the risk of losing money.
Investing your Money in Exchange Traded Funds
An ETF is a collection of securities that trade like stocks on a stock exchange.
Unlike mutual funds, which only trade once a day after the market closes, ETF share prices fluctuate throughout the day
as the ETF is bought and sold.
It's vital to compare all relevant costs before investing in an ETF. You should consider custodial fees for the
safekeeping of your shares in addition to brokerage fees.
Consider this scenario: You buy 10,000 francs worth of shares in two SIX Swiss Exchange-listed ETFs, store them in a
custody account for a year, and then sell them. You will pay somewhere between 80 and 700 francs for the investment,
depending on the broker you pick — this does not include any costs levied by the ETFs themselves.
For share transactions of Swiss-listed ETFs, certain Swiss banks with online trading platforms utilize a flat-fee
- BKB-EasyTrading (30 francs);
- Strateo (7 francs for ETFs issued by Comstage and iShares);
- Cash banking by zweiplus (29 francs);
- Swissquote (9 francs plus real-time markup of 85 centimes).
Investing your Money in Bonds
Bonds are debt obligations. You loan money to a firm or the government, who agrees to repay with interest, within a set
When you sell your bond, the buyer receives all future interest payments as well as the original loan amount. Swiss
government bonds, in particular, are often considered low-risk investments because Switzerland has a great track record
of repaying its debts.
Define your investment horizon
To determine the right investment horizon, you must first recognize that each investment is based on three key factors:
liquidity, return, and security.
An extended investment horizon helps to mitigate the risk of losing money by compensating for market changes. SIGTAX
advocates investing for a minimum of five years. You can "ride out" any market downturn this way, then sell your
investment once prices recover.
Compound interest works by reinvesting your initial investment's return into the same portfolio repeatedly. Both the
investment amount and the return increase this way.
Consider compound interest similarly to a candy floss machine. As it collects additional candy, it expands with every
meter. The longer you wait for the machine to stop spinning, the bigger it will get.
Every investment intends to generate a profit after a specified time period, such as 6% each year.
At the end of each period, you may either:
- Receive all your investment, or
- Reinvest it by adding the return to your initial investment amount.
You will benefit from a higher return after the next investment period if you reinvest your money. It will start
increasing impressively without the need to invest more money.
For a better chance at successful returns on your financial investments in the Swiss market, patience is of the essence.
Daily changes are much more likely to cause your money to fluctuate by little quantities, whereas the predicted return
will occur over a longer period.