My bank has informed me that I, as an American, am not allowed to invest in its Pilar 3 stock funds. I don't see any reason to keep funds earning an extremely low interest rate for the next decades. So i'd like to know if this is a general rule for all Swiss banks now? Any bank out there daring enough to take on an American who wants to invest a few francs for retirement?
Thanks for any tips!
I'm interested in pillar 3a because its tax deductible and (in the past at least!) gives an opportunity to invest in stock funds. The swiss version of a 401k, but not as good because lacking options and flexibility. I declare my income and accounts to the IRS but have never had to pay taxes.
CGT is capital gains tax? If there is no CGT in switzerland, that sounds like an even better idea to invest here.
So, what do we do? send our francs to the USA and invest there? i recently read that expat americans are now having trouble doing just that! if transactions were made from abroad or foreign addresses were used, some brokers are blocking such activity.
very frustrating!
We couldn't find alternative investment options here, so we moved the money back to the US.
Lack of access to efficient investment options here is a driving reason why we will likely have to return to the US after retirement. Retiring in Switzerland as an American citizen is verging on financially untenable.
I'll be at the embassy in Bern this January, forking over my $2,350 and explaining why I am a traitor to the land of my fathers - for that very reason.
I've had an account at the UBS for 20 years now. After they liquidated my 3a Pilar account, I spent a LONG time looking for a bank that WOULD help me - and found no takers whatsoever.
Nearly three months ago Amb. Suzan LeVine seemed to promise US citizens in Switzerland that they would be removed from the firing line in the US' war on Swiss banks if the Swiss banks cooperated. She has obviously done nothing since then.
This was her statement made in an interview with the "Schweiz am Sonntag":
"Reporter: Many of your fellow citizens are suffering from the tough tax policies of their own government. Many of them even are giving up their citizenship. That must give you worries.
Amb. Suzi: Most renounce their citizenship because they do not have much connection to the USA, and only their parents have lived there. For others it is a very difficult step. We look at their motives and try to solve the problems, along with the IRS, the U.S. Department of Justice, and also the Swiss Bankers Association. My predecessor Donald Beyer has participated in many meetings of Americans abroad and listened to them.
Reporter: Have you?
Amb. Suzi: I have met some but I benefit from his preparation. I understand the problems of Americans living in Switzerland very well and try to help them. Next week I will fly to Washington D.C. and will speak with important people about the situation of our citizens in Switzerland. If we, with the Swiss banks, can take a step forward in the tax debate, I am confident that the situation of Americans abroad will improve. "
So, Suzi, just what haven't the Swiss banks done to resolve the tax dispute so that the US citizen hostages in Switzerland can be set free?
In the mean time, i've found a different solution. I will transfer capital I want to invest into my wife's accounts. She is Swiss and not American. Will the circus stop there or the IRS will want to know even more since my accounts suddenly zeroed out?!
Has anyone gone through the trouble of weighing the benefits of the crippled 3rd pillar funds with their exorbitant fees vs losing the tax benefit but being free to invest in proper funds with low TER and superior returns? Would be most interesting to know the results.
On a separate note - an excellent article from the FT on the topic of active managed funds and their likely future
As someone who is totally new to investing, I'm trying to learn and hopefully get some advice from some pretty knowledgeable people here on EF. For my learning, I've read through a lot of older posts on EF as well as adding Investopedia articles to my daily read list.
I'm trying to figure out other places to put 3a funds into something other than an savings account (which by the way, reading through old forum posts is a bit sad as the interest rates are just going down and down).
I found some information from Raiffeisen, and they only have a few offers, including a few index funds which are the ones I'm interested in (or perhaps I should be looking at ETF's?). Anyway, to buy the fund (under 3a) they charge 1% at purchase, nothing on sale and no yearly fee. Is this good, par for the course or something else? When looking at these kinds of investments, what are points I should pay attention to? Other than other banks, are there other places to buy index funds as investment options for 3a? I've seen people recommend Vermogens on this forum as well, what exactly is it?
Do people here put money in a 3a (if they aren't American and can benefit from the tax reduction)? Where do you put it? Savings account or something else?
Thanks!
I believe the fees that you quote are only those charged by your bank (Raiffeisen?), and not the fees charged by the fund. E.g. You'll be charged 1% of your investment by your bank as a sort of subscription fee, and then you also have to pay fees that the fund requires. This latter fee is also important because it will impact your income on a yearly basis.
And finally, what is the reputation of Vermogens? There is often a company mentioned on EF whose name is not typed out, I assume Vermogens is not of the same class?
Thanks!
Raiffeisen has a fund with TER of 0.9% that holds 67% equity that can be used for 3a: Raiffeisen Index Fonds - Pension Growth A
I think it should be sticky up there in the section that rule of thumb goes:
- if you have an investment horizon of 20 or more years, stay out of 3a and invest in low-cost funds, diversify and buy-and-hold no matter what.
- if you are on the market for a primary residence in 5-10 years, stick to 3a, as the tax breaks make sense. Else, go option 1
For those rich enough and smart enough, the truth perhaps lies in the mix of both - put money on the 3a to buy property while on the side you invest properly and with low TER?
In my research of 3a funds (as we are on the market for a house soon-ish), I found UBS to be daylight robbery with TER of 1.4% and higher, CS to be second with classic robbery and so far lowest fees Raiffeisen (your random mugging kinda thing). What sets the Raiffeisen offer apart is also the higher equity component at 2/3 of the mix, whereas both UBS and CS cap at 45%.
What say you, sensei - does above make better sense?