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Saxo Bank Is Opting for Record Interest Rates

May 21, 2023

Many investors are familiar with the Saxo Bank trading platform. In this interview, George Falkner, CEO of Saxo Bank Switzerland, explains why the bank is offering a high interest rate of 0.98 percent, and how you can protect your wealth against economic crises, fluctuations in financial markets, and inflation.

George Falkner, how are you able to offer your customers such a high interest rate on Swiss franc balances?

Fairness and openness are important to us, and we want our customers to profit directly from increases in interest rates. We at Saxo Bank Switzerland pass on the Swiss National Bank’s interest rate adjustments to our customers.

That is why we now have an interest rate of up to 0.98 percent for Swiss franc balances. We pay up to 2.36 percent for euro balances, and up to 4.26 percent for US dollar balances.

And unlike most savings accounts and, of course, fixed deposits, there is no ceiling on the amount of money on which you earn interest, and no minimum deposit term. If another opportunity arises, your money is immediately available to invest. This offer is unique in Switzerland.

Many savers and investors are somewhat unsettled at the moment. Inflation is remaining stubbornly high. We read about a looming recession in the US and in EU countries. Financial markets have been a roller coaster ride. What is your advice?

In unstable times, and when inflation is high, saving with tangible assets instead of cash is recommended. Unlike interest-based investments, tangible assets are real property. Whether gold, real estate, energy, commodities, or stocks – buyers of these assets always receive something tangible. While money in a savings account loses value to inflation, tangible assets retain their value or even become more valuable.

So, people should exchange their money for gold?

No, it is not as simple as that. Risks should be spread, which means not keeping all of your wealth in just one asset. Additionally, at least part of your investments should be easy to liquidate if you ever need money for something else. Ideally, you should invest in easily-tradable assets like stocks either directly, or indirectly through ETFs and other funds. Funds also provide a simple way to trade gold, real estate, energy, or commodities.

But not everyone is prepared to invest all of their money…

That also is not the idea. The recommendation is that if you want to protect your wealth from devaluation, you should invest a part of it rather than keeping all your money in a savings account. But keeping some liquid assets as a reserve in order to respond quickly when opportunities arise in the financial markets does make sense. Additionally, large amounts of capital should not be invested all in one go, but should be divided into smaller amounts and invested in tranches across a certain time frame.

And with savings accounts, you need to look at the interest rate.

Yes, exactly. If you already have to accept some loss in value, then you should at least keep this loss as small as possible. Many banks pay no more than 0.5 percent interest, and even only pay that on the first 100,000 francs.

Those who want more interest need to open a fixed deposit account and cannot access their money for a long period of time. At Saxo Bank, our job is to help our customers do more with their wealth. That is why we have an interest model for account balances which yields interest at the going market rates.

Are there other benefits for customers besides favorable interest rates?

Right from its founding 30 years ago, Saxo Bank was set up as a digital bank with the goal of offering a platform for online trading and investment that anyone can access. Digitization is democratizing investment opportunities for customers with smaller amounts of wealth. The Saxo Bank platform lets them access a host of investment opportunities – like the ETFs and funds which I mentioned earlier – at very attractive and transparent prices. That last point is very important because returns on an investment strongly depend on the fees and charges.

Some customers still connect the term “online” with poor security.

That may be true of some online brokers, but it certainly is not true of an online bank like Saxo Bank. Saxo Bank Switzerland offers the security of a fully-licensed bank overseen by the Swiss financial regulator FINMA. We are headquartered in Zurich, with a subsidiary in Geneva. The Saxo Bank group has a solid financial base, with equity of around 1 billion euros and a Tier 1 capital ratio of 24 percent – well over what FINMA requires and what most Swiss banks have. What is also important is that we do not take on risk, which is why we do not engage in lending.

On the topic of risk: How do you manage the risk of possible hacking attacks?

With regards to cyber security, we aim to meet the highest possible standards. For 30 years we have been continuously developing our online platform, and the technologies required to run it. We have around 100 specialists who, on a daily basis, examine and analyze, simulate possible scenarios, and implement precautionary measures.

One last question: What advice would you give to young people who, for example, are considering investing as part of their retirement plan?

The recommendation to invest instead of save is particularly important for young people and those just starting their careers, who want to begin planning for retirement. For them, conventional saving with a bank account is not a sensible option. Savings plans where a certain amount of money is invested in a stock fund or stock ETF on a regular basis are recommended for people in these groups. Those who stick with their savings plan for a long period of time and invest in stocks month by month have good prospects for making returns.

You can find information about Saxo Bank’s offer and analyses from its experts here.


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