ETF Savings Plan Switzerland: Buy funds or ETFs – it’s that easy!
Have you already looked for an ETF savings plan in Switzerland or ways to get more out of your savings each month with an investment savings plan? You can buy ETFs to invest money on a broad basis with low amounts. With an ETF savings plan you can invest money monthly at fair fees. Unfortunately, there is no real ETF savings plan in Switzerland (yet). But there are ways that are similar to an ETF savings plan and an investment savings plan. You’re probably wondering how this works. Buying ETFs in Switzerland is easier than you think. In the following article we explain how you can find the best ETFs in Switzerland, buy ETFs and create an ETF savings plan or an investment savings plan in Switzerland.
This article on the subject of ETF savings plans in Switzerland explains the following:
ETF Definition: What is an ETF?
An ETF (“Exchange-Traded Fund”) is an exchange-traded fund that tracks the performance of an index. Investing in ETFs is becoming increasingly popular and you can, for example, easily invest in the entire Swiss stock market by buying an ETF that tracks the SPI (Swiss Performance Index). By investing in this ETF, you are effectively buying all Swiss equities. The ETF “iSharesSPI Core” CH0237935652 invests in all the shares included in the SPI and pools the money of many investors. When you buy a share of an ETF, a part of the ETF belongs to you and thus indirectly also a part of the shares bought by the ETF. However, the performance of the SPI is heavily dependent on Nestlé, Novartis and Roche, as together they account for roughly 50% of the SPI. A portfolio that contains only Swiss ETFs is therefore not really well diversified. Good geographical and sector diversification is therefore important for a broad-based investment.
findependent uses the SPI and 8 other ETFs for our findependent investment solutions. ETFs have the advantage that you can invest broadly already with small amounts and are therefore particularly well suited to start investing.
What are funds?
Compared to an ETF, funds are not traded on the stock exchange and usually pursue an active trading strategy. They are therefore actively managed, which usually results in higher costs compared to an ETF.
At findependent, an ETF costs an average of 0.2% per year, while at UBS, a globally diversified active fund costs about 1.6%.
In the next section we explain how you can find, compare and buy the best ETFs in Switzerland.
ETF search, ETF comparison and ETF finder
You now know what ETFs are and now you want to choose the best ETFs for you, find the right ETF? The search for ETFs is not that easy, because the choice is huge. And the cheapest ETF is not always the best ETF. For the ETF search, the question “which ETF to buy”, there are numerous ETF finders where you can compare and find the different ETFs. In addition, there are a number of things to bear in mind when searching for an ETF:
- Broadly diversified
- Low total expense ratio TER
- Distribution or reinvestment of income
- Older than 1 year and at least CHF 100 million in volume
In the comparison of ETFs in Switzerland (ETF Switzerland comparison), it is important that you invest broadly in the entire market. Therefore, when searching for ETFs, you should make sure that you are not dependent on individual companies, sectors or countries. With the findependent investment solutions, 9 or 5 ETFs are used to adapt your ETF portfolio to your needs and to diversify it as broadly as possible. For your investment in ETFs, the initial deposit is CHF 500 so that we can invest your money in a diversified manner. With an investment amount of CHF 500 – 2’000 you hold 5 ETFs in your portfolio and from CHF 2’000 the number of ETFs is increased to 9. In this way, we make it possible for you to invest broadly in the entire market.
It is also important that investing pays off financially. Although ETFs are generally cheaper than actively managed funds, the product costs per ETF differ. The product fees can be compared with the Total Expense Ratio (TER). The TER is the annual cost of an ETF as a percentage. At findependent, when selecting an investment solution, we make sure that the fees are low so that there is more left over for you.
Use of earnings
A distinction is made between two different types of income allocation (dividends from equities, interest income from bonds – we call them “Obligationen” in Switzerland). There are distributing and accumulating ETFs. At findependent, we make sure to use reinvesting ETFs wherever possible. This means that the profit is reinvested and thus exchange rate costs as well as stock exchange and stamp duties are saved. For 4 ETFs that we use in our investment solutions, reinvestment is not (yet) possible. With distributing ETFs, the profit is distributed, as the name suggests, and dividends and interest income go directly into your account. When investing with findependent, we will reinvest the distributing income together with the next deposit. Whether you prefer accumulating or distributing ETFs depends entirely on your personal preferences.
Other important criteria for ETF comparison are how long an ETF has been around and how much money is invested in the ETF. The older an ETF is, the more data is available for comparison with other ETFs. ETFs that have not been in the market for long usually also have a lower fund volume. If the ETF is not in demand, there is a risk that the ETF could be liquidated at some point. It is therefore important to make sure that the ETF is older than 1 year and has a volume of more than CHF 100 million. In short, these are the most important criteria you should consider when buying an ETF. In our 4 tips you will also learn how to avoid the most common investment mistakes.
On the subject of income or dividends: By the way, there is also a kind of dividend ETF, this exchange traded fund invests exclusively in shares with high dividend yields. Of course, there are different providers and you should also compare ETFs here, as described above.
findependent helps
findependent takes care of the ETF search for you as we have selected 9 or 5 ETFs for you and put together four investment solutions to suit your investment profile. In order to invest broadly, we invest in equities, bonds and real estate. The distribution of equities is globally diversified in order to avoid heavy exposure to individual sectors. However, the focus remains on Switzerland with a distribution of 40 % Swiss equities and 60 % foreign equities. Investments in Swiss equities have tax advantages and avoid additional foreign currency costs. However, investing abroad achieves both geographical and sector diversification. For these reasons, the focus remains on Switzerland with a distribution of 40% Switzerland to 60% abroad. If the weighting does not suit your taste, you can also put together your own investment solution with a personal weighting of the individual ETFs.
You can easily and conveniently calculate various scenarios with our yield calculator.
Foreign equity investments
In addition, only so-called ESG Screened ETFs are used for foreign equity investments, as the companies in these ETFs adhere to the UN Global Compact. In addition, companies from the following sectors are excluded:
- Nuclear power
- Coal power, coal mining
- Oil sand mining
- Tobacco industry
- Nuclear, controversial (e.g. cluster munitions) and civilian weapons
When searching for ETFs, sustainability and low fees are central to us, so that the investments are financially worthwhile and we can also stand behind the investments made from a social and sustainable perspective. We regularly review the investment solutions and the ETFs used in order to offer an optimally coordinated and client-oriented investment solution.
ETF Savings Plan Switzerland: The findependent solution
So you see, investing money doesn’t have to be complicated. But how can you invest in ETFs in Switzerland? findependent offers you several options: With our ready-made investment solutions, you can confidently leave the ETF trading to us and do not have to worry about the ETF search. In addition to the ready-made investment solutions, you also have the option of putting together your own investment solution. Regardless of whether you prefer a ready-made investment solution or your own, you remain completely flexible with findependent and can adjust your regular savings contributions at any time.
Account opening procedure
To open your account with findependent, you first determine your personal investment solution. After answering a few questions, we will make you a proposal for your suitable investment solution, which you can still change afterwards. If you are already experienced in investing and would like to dive deeper into the world of ETFs, you can also put together your own investment solution from an investment amount of CHF 5’000.
As soon as you have chosen your investment solution, we can start opening the account with our partner bank, Hypothekarbank Lenzburg. To complete the account opening, the findependent contract must also be signed. Now you are ready to start investing money regularly with ETFs in Switzerland. To get closer to the idea of an ETF savings plan in Switzerland, it is easiest to set up a standing order and pay regular savings instalments into your ETF portfolio at findependent. We recommend that you invest at least CHF 100 per month so that we can invest your money on a broad basis. You are completely free to adjust your savings rate. You can also stop your deposits at any time. You are not obliged to do anything and can withdraw your money at any time. The investments legally belong to you and are therefore not affected in the event of bankruptcy of findependent or the bank, and the account is in your name. Furthermore, the liquidity portion up to CHF 100’000 is protected by the Swiss deposit guarantee.
Regular Review
findependent checks the distribution of your investment solution into shares, bonds and real estate on a daily basis and, if necessary, carries out a rebalancing for the optimal distribution. If the value of the shares suddenly increases significantly more than the value of the bonds and real estate, it may be that the share of shares exceeds the 40% in the investment solution Cautious. Through rebalancing, the equity shares are sold again and the allocation is rebalanced. This ensures that your investment solution suits you in the long term. You can find out how to determine your suitable investment amount in our practical guide.
Due to our low fees, more is left over for you. Because the fees constantly eat away at your savings and become increasingly noticeable over time. In a robo-advisor comparison in Switzerland, our management and custody fees are on average 70% lower than the competition. What’s more, our investment solutions require few transactions, as fees and exchange rate costs are reduced as much as possible. You can easily open your account online and access your investments at any time using your smartphone.
The ETF’s success partly represents the triumph of passive over active investment, in which funds simply try to match the performance of the market instead of trying to beat it.
– Financial Times
Advantages for an ETF savings plan in Switzerland with findependent
With an ETF savings plan in Switzerland, you can successfully invest money with findependent and benefit from long-term growth.
Thanks to these advantages, nothing stands in the way of your desire for an ETF savings plan.
- You are flexible: you can change or even deactivate your standing order at any time
- You can invest in a diversified manner: our investment solutions are broadly based geographically and in terms of sectors.
- Starting amount from CHF 500: easy to start with a low starting amount
- Low fees: fee-free start up to CHF 2’000
- Completely digital: thanks to an easy-to-understand app, you have an overview at all times
- Swiss provider: your money and your ETFs are held by our partner bank
Our vision is to make investing accessible to all, so that everyone can benefit from economic success. In around 15 minutes you can open your account completely digitally and without paperwork. After opening the account, you are still free to decide when you want to deposit money.
If you want to know how to invest your savings cleverly in ETFs every month at findependent, we have summarised the most important tips for beginners and created an investment guide for you. In addition, we explain what you can do against the devaluation (due to inflation) of your savings. After all, interest rates on savings accounts will remain low for some time to come.
Do you have any further questions about ETF investing in Switzerland? We at findependent will be happy to help you and support you in investing in ETFs.
