How to Invest in Switzerland as a Foreigner
(A Beginner’s Guide)

If you are investing in Switzerland as a foreigner, you are not alone.
30% of all offshore money in the world is invested with Swiss banks.
All these offshore investors owning so much money can not be wrong. Switzerland is a safe-haven country.

You can choose among 286 banks and 2,500 independent asset managers.

With such a large choice, you may ask yourself:

  • Which Swiss banks are safe?
  • What is the best Swiss bank for me?

In this Article, I will guide you through the investment jungle and how to invest in Switzerland as a foreigner but successfully. I will show you a tested way. You will discover the safest way to invest in Switzerland as a foreigner.

I advised a few hundred happy clients who became successful investors in Switzerland. Stay with me.

My name is Enzo Caputo. I am an asset protection and banking lawyer advising private clients from all over the world. I am the owner of the boutique law firm Caputo & Partners and the founder of swiss-banking-lawyers.com, the place where successful international business people find tips and solutions to better protect their assets with Swiss banks and pay less tax.

Your

Autor: Enzo Caputo
Banking Lawyer since: 1986

Position: Founder & CEO of the
Boutique Law Firm Caputo & Partners

Updated on: 13.05.2022

This article is based on the following video:

📌 [1.] Remember: time, not timing, is what matters

Is now a good time to start investing or should you wait until the economic situation has changed?

The truth is that nobody knows the right time.
Experts are making forecasts that you can consider but even their timing can be wrong.

For example, 20 years ago, experts judged Google and Amazon as high-risk investments. Anyone who invested in Google and Amazon stocks in the early days became a millionaire.

Picking the next winning stock can be like finding a needle in the haystack. This is why successful Swiss asset managers always recommend the buy-and-hold strategy with well-diversified high-quality investments.

Do not invest in one shot. Do it step by step, based on installments in different periods.

Remember: diversification helps against volatility, uncertainty, complexity and ambiguity.

📌 [2.] Timing the market vs buy and hold

Your circumstances are much more important than the markets. It is important to understand that your money may be invested and blocked for a long time. You should invest money you don’t need to pay your bills.

If you invest in the stock market, you need a substantial amount of money for at least 5 years. You have to be sure that you won’t need that money for at least the next five years.

If you don’t feel comfortable with a long-term investment, it is not the right time for you to invest. It’s important to know that you are never too young to start investing. If you start early, this will have a positive impact on your wealth.

Based on the historical performance of investment accounts, you can expect to make an average return of 7% per year.

Leaving your money in your bank account means that your savings lose value over time. The prices increase faster than the return you’ll get from the money in your savings account. Leaving your money in a savings account means reducing the purchasing power of your money over time.

During the last 13 years, my best-in-class asset managers made 8 to 12% a year on average. I will explain more about how to find an external asset manager who gets results later in this Article. However, opening an investment account is imperative if you want to protect the purchasing power of your money.

📌 [3.] Investment opportunities in Switzerland

Before making investments, you need to know the most common investment opportunities in Switzerland like:

  • Real Estate
  • Gold & Silver
  • Cryptocurrency
  • Stocks
  • Bonds
  • ETFs

I will explain these very common asset classes in this Article.

More exotic investment opportunities such as commodities, art, luxury watches, classic cars, historical documents, Roman gold coins, and diamonds are excluded or explained in my other videos.

I will show you the pros and cons of the most common asset classes.

What’s the best way to invest in Switzerland 2022?
Read this Article until the end to find out how my non-resident and very happy clients are successfully investing in Switzerland. Find out how they found the safest Swiss bank and an asset manager that delivers results.

📌 [4.] How to buy gold and silver for investment

People have been investing in gold and silver for 5,000 years, and this will become even more popular as the world is becoming more insecure.

Gold and silver are widely known as safe investments in uncertain times. It’s one of the few investments where you can’t lose everything. It’s impossible to end with a total loss.

Gold is a safe-haven currency similar to the Swiss franc.

Pros:

  • Long-term track record: Gold and silver have maintained their value since ancient times. You should invest at least 20% of your wealth in physical gold.

  • Safety: Physical gold bars and gold coins are safer than gold and silver on paper. Switzerland is the best place for physical gold storage in a private vault out of the banking system.

Cons:

  • Cost: Storage and insurance are minor for gold but must be considered for silver due to the volume of silver.
  • No real income: Precious metals are not generating income. You can use gold as collateral for a cheap loan.
  • Impact of gold: Gold mining in third-world countries can harm the planet. Soon, the provenance of gold will be tracked based on blockchain technology.

In this video, I talk to a good friend of mine, Olivier Chédel (Swiss wealth manager with over 30 years of experience), about how to invest in physical gold:

📌 [5.] Invest your Money in Investment Funds

What is an investment fund?
A fund is a collective investment company where your money and the money of other investors are pooled together. The fund manager is managing the fund. He makes the buy and sells decisions for you.

Let’s assume that you have a UBS non-resident bank account. It’s a tremendous mistake to not outsource the asset management services to an external asset manager. You can be pretty sure that your portfolio will be overloaded with indirect investments, with the funds issued by UBS.

Conflict of interest situations will destroy the performance of your portfolio. Your UBS private banker will look after his bonus. He will sell exclusively the financial products and investment funds issued by his bank.

According to my case studies based on 115 real existing portfolios, direct investments in the best Swiss stocks are outperforming indirect investment in funds by far.

Indirect investments are super expensive. They make money for the bank but not for you. The bank will collect the intransparent fees and destroy your returns.

Read what I discovered after having analyzed 115 real existing portfolios.

Pros:

  • Diversification: You will have low investment risks because of well-diversified investments. The risk of losing money is minimized but the returns are low.
  • Liquidity: You can sell your investment funds at any time if you buy liquid funds. Liquid funds issued by a big bank like UBS are very liquid.
  • Returns: You will not lose money but the returns will be modest. Passively managed funds can outperform actively managed funds because of substantial expenses.

Cons:

  • Hidden fees: Due to their complex and intransparent structures, funds are notoriously known for hidden fees. My case studies uncovered that funds can destroy the returns.
  • Illiquid hedge funds: When investing in funds, you have to be very careful with hedge funds. They can be very illiquid and risky.

📌 [6.] How to buy Swiss stocks

Buying Swiss stocks means participating in a company’s success by being a co-owner of the company in Switzerland. Thanks to digitalization, the Swiss stock market has become easier and more cost-effective.

Stock investment in Switzerland with the best Swiss stocks is a low-risk investment. Companies like Roche, Novartis, and SwissRe are dividend-generating Swiss blue-chip stocks for the long run.

Please check my video on how to invest in the Swiss stock market.

Pros:

  • Attractive returns: Attractive as a long-term investment with a 7% return per year on average.
  • Excellent liquidity: Immediately after having sold your stocks the money will be credited instantly to your account.
  • Simplicity: Unlike derivatives and funds, there are no hidden fees and intransparent structures with other intermediaries. Americans with Swiss bank accounts can buy US stocks in Switzerland very easily. Americans with Swiss bank accounts should engage a best-in-class asset manager. You will get much better results with an external asset manager.
  • Full transparency & control: You compose your portfolio with direct investments by picking the best Swiss stocks.
  • Sustainable investment: You can instruct your external asset manager to exclude companies that you do not wish to support, for example, tobacco, mining, weapons, or climate-changing industries.

Cons:

  • Volatility: Stock value moves up and down. Therefore, it is crucial to have different stocks in your portfolio. Diversification is king. Minimize the risk of your investment.
  • Risky short-term investments: Do not speculate with stocks. Time, not timing, is what matters. You should follow a buy and hold strategy holding your stocks for at least five years.

📌 [7.] Are Bonds a Good Investment in 2022?

Buying bonds in Switzerland was considered a safe investment. Swiss government bonds are the safest bonds you can invest in.

Swiss government bond yields are very low. Investing in corporate bonds is much more lucrative but there are more risks involved.

Bonds are debt obligations. You loan an amount of money to a company or government and you will receive the same amount back after a certain time, including a yield. The difference is that you can buy and sell bonds on financial markets at any time.

Because of the low-interest rates, investing in bonds is not attractive. As the interest rates are increasing simultaneously with growing inflation, bonds will become much more attractive again.

However, I would not invest in bonds in these uncertain times of war in Ukraine and inflation. I would wait until we will have peace in Ukraine and we will have a more clear picture of inflation.

Pros:

  • Volatility: Bonds are more stable than other investments.
  • Low Risk: The risk depends on the quality of the issuer of the bond.

Cons:

  • Difficulty: Bonds are long-term investments with a large minimum investment. You can circumvent the difficulties of investing in bond ETFs.
  • Returns: Bonds have very low returns because of low-interest rates.

📌 [8.] How to Buy ETF in Switzerland (Exchange Traded Funds)

ETFs are very popular. Are you looking for the best ETF in CHF as an investment in Switzerland?

What is an ETF in stocks?
An exchange-traded fund (ETF) is security with pooled investments that operate similarly to a mutual fund. ETFs in stocks is an exact copy of an index like the S&P 500.

In Switzerland, you can buy ETFs as a foreigner. There are no restrictions for foreigners.

Pros:

  • Diversification: ETFs have a high level of diversification.
  • Ownership: You own a share of a fund owning the stocks.
  • Cost: As they are passively managed, ETFs are less expensive than traditional funds.

Cons:

  • Complexity: Sometimes, ETFs can be sophisticated investments with complex risks difficult to access.
  • Sustainability: When investing in ETFs, be aware that sustainable ETFs are often less sustainable than they claim to be.

📌 [9.] Is it Smart to Invest your Money in Real Estate right now?

Switzerland has very high rents compared to Europe. A lot of people in Switzerland are considering investing in their property. You should buy a house for your family without treating it as an investment.

As a non-resident foreigner, you are not allowed to buy your own home. You can invest in commercial properties only.

The returns from real estate investments in Switzerland are modest. Smart investors are very selective about the location of the property. If you choose to invest in a central location, you will realize a substantial capital gain. Choosing the right location is of exceptional importance. 

Good investments are accessible only off-market. As a foreign investor, you need professional advice.

Pros:

  • Low volatility: The pricing for real estate is stable.
  • Capital gain: If you live on your property you will save a lot of money on rent.

Cons:

  • Illiquid investment: If you need money, you are forced to sell your property. You have to find a suitable buyer. This will take months or even years under particular circumstances.
  • High risk due to leverage: If you buy real estate with 80% third-party money and 20% own money, your investment can be at risk if the prices go down.
  • Lack of diversification: Buying real estate in Switzerland is expensive. If you are not in a position to invest your money in other investments, you may not survive the next real estate crisis.
  • Restrictions: As a non-resident foreign investor you can invest only in commercial properties. As a foreigner resident in Switzerland, there are no restrictions.

📌 [10.] Invest your Money in Cryptocurrencies

Are cryptocurrencies such as Bitcoins, Ethereum, Tether, Binance Coin, USD Coin, Terra, and XPR a hype that you should avoid, or is it an imperative investment for the future?

As some investors became millionaires very quickly investing in cryptocurrency, many others have lost everything. If you invest your money in cryptocurrency you have to be very careful.

Because of the low level of regulation, there are many scam artists and other criminals involved in cryptocurrencies. In my view, investing your money in cryptocurrencies is equal to wild west banking.

Governments can declare cryptocurrency investments illegal overnight. You can lose your investment in cryptocurrencies instantly. There is no protection against it.

Pros:

  • Easy going: Doing transactions is very easy and very fast.
  • Blockchain technology: Decentralized payment systems are an interesting alternative to traditional payments common in banking.

Cons:

  • High volatile market: The cryptocurrency market is going up and down fast.

  • No return: Similar to gold and silver, cryptocurrencies are not generating returns. It is a speculation on capital gains. Due to the tremendous volatility, you can generate substantial capital gains in a short time.

📌 [11.] You can Invest your Money in your Bank Savings Account

Many people are convinced that keeping money in a bank savings account has nothing to do with investing. That’s not true.

Let me give you an example:

When the Euro was launched in January 1999, one Euro quoted one Swiss franc and 61 cents. We will have parity. One Euro is quoting one Swiss franc only. Just by investing your capital in Swiss francs, instead of Euros, in your bank savings account and leaving it without investing in stocks, the capital gain is 61%.

Since many people are just keeping their life savings in their Savings bank account, my advice is to invest in Swiss francs, a safe-haven currency.

Pros:

  • Guaranty of the government: In case of bankruptcy, you will be covered for up to CHF 100,000.
  • Liquidity: If you need to spend your money within the next year or two, keeping it in a savings account in Swiss francs is a great option.

Cons:

  • Negative interest rates: If you keep substantial amounts in Swiss francs there are negative interest rates.
  • Losing buying power: Without investing money you end up losing wealth. The buying power will diminish. A good independent asset manager will make sure to preserve the buying power.

📌 [12.] So, how to invest in Switzerland as a foreigner?

As a foreigner, you are not familiar with Swiss banking. Most customers do not know how to judge the safety of a bank. The best Swiss bank account for foreigners has to be opened with one of the safest Swiss banks.

We at Caputo & Partners know how to measure the safety of a bank. We are focused on the safest Swiss banks only. Our Swiss private banks do not have a leveraged balance sheet.

Only the strongest capitalized banks with a tier-one capital ratio exceeding 20% are good enough for our clients. UBS and Credit Suisse have a tier-one capital ratio far below 20%.

For our clients, we suggest Swiss banks not be involved in derivatives, not in investment banking, not in risky lending activities, not issuing letters of credit, no bank guarantees, etc.

We prefer Swiss private banks with the core business of wealth management. Avoid using an offshore company as the account holder. The Swiss bank account has to be opened directly in your name. It will ensure direct control over the assets.

We propose Swiss private banks tailor-made to your needs and expectations. Normally, we propose 3 to 5 very strong capitalized Swiss private banks. You will make the final choice.

📌 [13.] What is the minimum balance to open a Swiss bank account?

You need a diversified portfolio with a multi-currency account.

The minimum balance should be 500,000 CHF to ensure proper diversification.

Spreading your direct investments across countries, sectors and industries is imperative. To achieve a suitable diversification with direct investments you need a minimum capital of 500,000 CHF.

📌 [14.] Why are the family offices managing the money of wealthy families engaging external asset managers?

The answer is very simple.

External asset managers are delivering much better results than banks.

We tested the performance of the last 10 years of 115 real existing portfolios.

We discovered that external asset managers, also known as independent asset managers, are performing 4 times better than asset managers employed by the Swiss banks.

Of the best portfolios outperforming the benchmark, only 20% were banks while 80% were independent asset managers.

Our best-in-class asset managers generated between 8 and 12% return per year on average, for the last 13 years.

If you are interested in knowing the exact figures, please read our article “Independent Financial Advisor in Switzerland”. What we have discovered will shock you!

The external asset managers have a limited power of attorney on your account. They are allowed to manage your wealth but they are not allowed to take money away. The asset management agreement with the asset manager can be cancelled at any time.

Simplified-Set-Up-External-Asset-Manager

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