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Hello,
I would like to save or invest 1500 francs per month over a 10-year period. How can I get the best interest or returns on my saving?
Hi there,
There are a number of different options, and which you choose is primarily a matter of how high your risk tolerance is and the returns which you hope to achieve.
These are just a few of the available options:
1) Savings account: At the moment, banks pay relatively low interest on savings, but you benefit from a guaranteed return on your savings. Your savings are also guaranteed by the Esisuisse depositor protection scheme. You can find the most profitable savings account using the moneyland.ch savings account comparison.
2) Medium-term notes: Interest rates are currently low, but here too, returns are guaranteed and savings are insured by the depositor protection scheme. You can use the moneyland.ch medium-term note comparison to find the most profitable notes.
3) 3a retirement account: The benefit of this type of account is that you can deduct money which you deposit from your taxable income. The disadvantage is that you can only withdraw the money when you reach retirement age (and a few other, exceptional circumstances). Interest rates are similar to those used for savings accounts. You can use the moneyland.ch 3a retirement account comparison to find the most profitable account.
4) 3a retirement fund: You can deduct your investments in a 3a retirement fund from yoru taxable income, up to the annual limit. 3a retirement funds can potentially earn higher returns than savings accounts, but they also come with higher costs and more risk. You can find tips in the moneyland.ch guide to 3a retirement funds.
5) Stocks and ETFs: Shares in public companies or exchange traded funds may be an option for a 10 year investment because the long term gives shares time to grow in value in spite of short-term declines and hikes. However, even when you buy and hold shares over a long term, there is still a risk that their value will decline and you will lose money. Make sure to buy shares through a low-cost broker and hold them in a cheap or free custody account. You can compare costs using the moneyland.ch online broker comparison.
6. Precious metals and commodities: Precious metals tend to retain their value, and if you buy at a time when prices are low, then your chances of selling at a decent profit at some point within the 10 year term are high. Precious metals like gold, platinum and silver can be purchased from Swiss banks and reputable precious metals dealers, and held in a safe or a safe deposit box. Alternatively, you can invest in precious metals by opening a precious metal account or buying precious metal certificates (for metals held in a bonded warehouse, for example).
7) Derivatives, cryptocurrencies, luxury goods. If you have a very high risk capacity, meaning you are willing and able to lose your money without the loss impacting your financial life, then high risk investments may be an option. These allow you to potentially achieve the highest possible returns, but you also risk losing some or all of the money you invest very quickly. High-risk investments include derivatives such as CFDs (including forex trading) and futures. Cryptocurrencies are another vehicle through which you can potentially earn high returns if the unit value increases and there is enough market demand that you are able to sell units at a profit. These too come with a high level of risk as there is no guarantee that your units will have any value in the future. Luxury goods like classic cars, fine art, rare wines, whiskies, and diamonds are other investment vehicles which can potentially deliver very high returns, but can also decline in value based on market supply and demand.
Other options for long term savings include saving with an investment fund account (pay attention to fees), buying shares in actively-managed investment funds (pay attention to fees), making voluntary contributions to your 2a pension fund (relatively high interest but no withdrawal until retirement), taking out a whole life insurance plan (relatively high interest but inflexible and life long) and investing in real estate (through a mortgage, for example).
Important: Setting up a recurring transaction through which the money you want to invest is automatically deducted from your income and invested (via a direct debit from your private account, for example) can help you stick to your savings plan. However, unless you are completely confident that your financial situation will not change over the 10-year savings term, you should avoid using products which charge heavy penalties if you are forced to drop your savings plan due to lack of money. Whole life insurance policies and life annuities, for example, can yield relatively good returns but typically penalize you if you are forced to surrended your policy ahead of schedule.
Best regards from Moneyguru
