Stock/bond allocation, replication types, and taxes for (future) Swiss resident

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Topic Author
SomeRandomGuy
Posts: 2
Joined: Fri Nov 08, 2019 9:31 am

Stock/bond allocation, replication types, and taxes for (future) Swiss resident

Post by SomeRandomGuy » Fri Nov 08, 2019 9:38 am

I'm 39. I have ~$600k in liquid assets (cash + stock + bonds). Moving to Switzerland early next year, with a well paid job, where I expect to save $150k a year while living modestly but comfortably. I'm an EU citizen, currently living in Spain.

I'm trying to rethink my investing strategy, as a believer in the principles of Bogle. Not trying to get rich quick, but pursuing early retirement (if I can call it "early" being already 39!). I'm moderately risk-averse. I have some questions, and I'd deeply appreciate your insights.

- "My age in bonds"? I have a decent income, should I be more aggressive than that?
- How should I split US/Global/Swiss stocks and bonds, assuming I intend to stay in Switzerland for the foreseeable future?
- Do the exchange and broker matter much? I hold LSE ETFs through Interactive Brokers; should I switch to SIX ETFs and/or a Swiss broker?
- What's the consensus on synthetic replication? Worth the extra risk (e.g. counterparty)?
- How risky do you think the US is right now? Will it default on its bonds? Will its market crash?
- From a tax point of view, what's the best fund domicile given I'll be tax resident in Switzerland?
- I believe I should prefer accumulating funds to distributing funds (there's no cap gains tax in Switzerland). Does this make sense?

Thanks in advance for your assistance!

Edit: added some geographic information.
Last edited by SomeRandomGuy on Sat Nov 09, 2019 9:10 am, edited 2 times in total.

TedSwippet
Posts: 2499
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Stock/bond allocation, replication types, and taxes

Post by TedSwippet » Fri Nov 08, 2019 3:32 pm

Welcome.
SomeRandomGuy wrote:
Fri Nov 08, 2019 9:38 am
Moving to Switzerland next year, with a well paid job, where I expect to save $150k a year while living modestly but comfortably.
Maybe worth editing the title of your post to include 'Switzerland' somewhere. That should help flag down any other Swiss investors here.

Which country are you currently living in? And are you a US citizen or green card holder? I'd assume not, based on your questions, but worth asking just in case.

Topic Author
SomeRandomGuy
Posts: 2
Joined: Fri Nov 08, 2019 9:31 am

Re: Stock/bond allocation, replication types, and taxes for Swiss resident

Post by SomeRandomGuy » Sat Nov 09, 2019 9:10 am

Maybe worth editing the title of your post to include 'Switzerland' somewhere.
Done! Thanks for the suggestions.
And are you a US citizen or green card holder?
I'm neither, thank god :)

hilink73
Posts: 327
Joined: Tue Sep 20, 2016 3:29 pm

Re: Stock/bond allocation, replication types, and taxes for (future) Swiss resident

Post by hilink73 » Sat Nov 09, 2019 12:41 pm

SomeRandomGuy wrote:
Fri Nov 08, 2019 9:38 am
I'm 39. I have ~$600k in liquid assets (cash + stock + bonds). Moving to Switzerland early next year, with a well paid job, where I expect to save $150k a year while living modestly but comfortably. I'm an EU citizen, currently living in Spain.
Saving 150k a year sounds quite nice.
I have a great job, too, but this sounds ... interesting! :beer
Living cost are very high here...
I'm trying to rethink my investing strategy, as a believer in the principles of Bogle. Not trying to get rich quick, but pursuing early retirement (if I can call it "early" being already 39!). I'm moderately risk-averse. I have some questions, and I'd deeply appreciate your insights.

- "My age in bonds"? I have a decent income, should I be more aggressive than that?
- How should I split US/Global/Swiss stocks and bonds, assuming I intend to stay in Switzerland for the foreseeable future?
Still trying to figure that out for myself.
There's an article from Siamond (don't have the link ready now) which discusses safe withdrawal rates in different countries.
Based on that, I aquired a small Sxiss stocks allocation. Otherwise, I'm heavy on a GDP allocation.
- Do the exchange and broker matter much? I hold LSE ETFs through Interactive Brokers; should I switch to SIX ETFs and/or a Swiss broker?
That matters a lot in Switzerland.
Investing in Switzerland is expensive. There are some cheaper options now, but still expensive.
I'm with Interactive Brokers for this very reason.
- What's the consensus on synthetic replication? Worth the extra risk (e.g. counterparty)?
Personally, I do prefer physically replicating ETFs.
- How risky do you think the US is right now? Will it default on its bonds? Will its market crash?
No clue. I do have US equities ETFs.
- From a tax point of view, what's the best fund domicile given I'll be tax resident in Switzerland?
On the ETF level:
Swiss ETFs holding Swiss equities are better than foreign ETFs.
Irish domiciled ETFs are little bit better than ETFs domiciled in Luxembourg.

On personal level:
You are only taxed on dividends, so it does matter thgat much.
Also, taxes in Switzerland are quite low. No need to worry about that.

- I believe I should prefer accumulating funds to distributing funds (there's no cap gains tax in Switzerland). Does this make sense?
That doesn't matter. You are income taxed either way. No matter if you "see" the money in your account or if the ETFs invests it again.


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