Investing · 3 min read
Investing in Switzerland: broad ETFs, domicile and fees
A plain guide to a low-cost portfolio from Switzerland: why broad index funds, how fund domicile affects withholding tax and what fees do over 30 years.
Education, not financial advice. Use at your own risk. Read the full disclaimer
In short
- A broad, low-cost index fund beats most alternatives after fees, and you do not need to pick stocks.
- On CHF 1,500 a month for 30 years, a 1% annual fee costs about CHF 125,000 compared with a 0.2% fund.
- Domicile, withholding tax and broker costs matter, so compare them before you buy and check the current rules.
Most of the work in FIRE is saving, not investing. Investing needs a plan that is simple enough to follow for decades, and cheap enough to leave the return mostly with you. This is general information, not a product recommendation.
The core idea
Own the whole market through broad, low-cost funds, and do not try to pick winners. A global equity fund holds thousands of companies in many countries. Add bonds or cash to match your risk and your need for a buffer. Then keep doing it, in good years and bad.
What fees do
Fees look small and act large. The table shows CHF 1,500 saved every month for 30 years, with a 4% real return before fees. You deposit CHF 540,000 in total.
| Annual fee | Result after 30 years | Lost to fees compared with 0.2% |
|---|---|---|
| 0.2% | CHF 993,000 | none |
| 0.5% | CHF 944,000 | CHF 49,000 |
| 1.0% | CHF 868,000 | CHF 125,000 |
| 2.0% | CHF 737,000 | CHF 256,000 |
A typical actively managed fund with extras can cost 1% or 2%. A broad index fund usually costs a fraction of that. Over 30 years the difference is a year or two of early retirement. See how it connects to the savings rate.
Domicile and withholding tax
Where a fund is registered affects how much tax is taken from dividends before you see them.
- Swiss shares. Swiss dividends carry a 35% withholding tax, which you can reclaim by declaring the income.
- US shares. US dividends are subject to withholding tax. A fund registered in Ireland benefits from the Ireland-US treaty at a lower rate than a fund without one. That is a reason Irish-domiciled funds are common among Swiss investors.
- Fund-level tax. Withholding tax taken inside a fund is generally not something you can reclaim.
Rules change, so check the current situation for the funds you consider and how your canton taxes the income.
Accumulating or distributing
An accumulating fund reinvests the dividends, and a distributing fund pays them out. The income is taxable in both cases, so the choice is about convenience and cash flow, not about avoiding tax. Check that the fund reports for Swiss tax purposes.
Costs beyond the fund
- Broker fees. Trading fees, custody fees and the cost of converting currency.
- Currency. A Swiss investor holding US dollar assets carries currency risk, in either direction.
- Pillar 3a. Securities-based 3a solutions have their own fees. See Pillar 3a for early retirees.
The part that is not about products
The biggest risk is not choosing the wrong fund. It is the order of returns in the early years of retirement, which is covered in sequence risk. The second is not following your plan in a crash. Choose a mix you can hold when it falls 30%. How much you can safely withdraw is in the 4% rule and why 3.5% is safer.
Next step
Set your age and savings in the calculator and test a higher fee to see what a point of cost does to your date.
Try it with your numbers
Change the fee assumption in the calculator and see how much a point of cost is worth.
Starts with
- Age 30
- Spend CHF 3’800 / month
- Save CHF 2’200 / month
- Saved CHF 80’000
Free and private. Your numbers stay on your device. Estimates for planning, not advice. Use at your own risk.
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