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What’s the best way to make money on your investments in Switzerland?

You must have noticed by now that your bank savings accrue very little interest these days — well below 1 percent. And rates are not likely to go up in the foreseeable future.

Published: 3 January 2020 12:00 CET
Updated: 16 May 2021 09:36 CEST
What's the best way to make money on your investments in Switzerland?
Where should you put your Swiss franc in 2020? Michele Limina/AFP

The Swiss National Bank (SNB) is keeping its key interest rate at minus 0.75 percent, charging banks that park their money there negative interest. The pressure is now increasing on the banks to pass this penalty interest on to their customers.

You may therefore be tempted to invest your money elsewhere, but be cautious. The promise of a potentially higher yield may actually backfire, according to the financial expert from the VZ Vermögenszentrum in Zurich. 

Consider these options carefully:

Shares

Shares are an attractive investment, Rolf Biland, head of investment at VZ Vermögenszentrum told the Bluewin.ch web portal. “Depending on the stock index, dividend income of around 1.5 to 3.5 percent is distributed before taxes,” he said.

However, keep in mind that there are risks involved: larger fluctuations in value can occur in the equity area, which can significantly — though temporarily — reduce the invested assets. “Therefore, in addition to the necessary risk capacity and risk tolerance, equity investors also need a multi-year investment plan,” Biland noted.

Gold

In terms of risk, investing in gold is similar to investing in stocks but, unlike stocks, “no long-term asset accumulation is to be expected”, Biland noted. And gold does not generate any returns, while savings interest rates could rise again.

However, “gold can make sense in a diversified portfolio as an addition to other investments”, he added.

Bitcoin

Bitcoin and other cryptocurrencies are hot-button topics, but they are “a highly speculative investment”, according to Biland. The price fluctuations are immense and there are no signs that this could change in the future. Bitcoins should therefore “not even be seen as an investment, let alone as an alternative to cash or bank balances”.

READ ALSO: Switzerland leads the way as Bitcoin makes a return 

Real estate

Real estate can generate a higher dividend yield than other investments. “However, there are also major risks on the real estate market, particularly in Switzerland, such as bubbles or liquidity risks”, Biland said. But, like gold, real estate could make sense as part of a diversified investment portfolio.

Art or vintage cars

If you are considering investing in art objects, watches, vintage cars, and such, think again, Biland said. The lack of a regulated market is particularly problematic and “a very high level of specialist knowledge is required to make a purchase decision. Such items should, in the best case, make up a small proportion of a large fortune”.

Conclusion:

You have to decide how much of a financial risk you are willing to take in order to grow your assets. If you are not totally risk-averse, then a diversified investment portfolio may be your cup of tea. Otherwise, stick to the traditional savings account, which will not yield you interest but at least your money will be safe — unless the bank goes bankrupt.

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READER QUESTION

EXPLAINED: Can I terminate my Swiss telecom contract early?

When you sign up with a telecom provider in Switzerland, your fate is sealed: you must remain with that company until your agreement expires. But what if you want to get out of the contract ahead of schedule?

Published: 24 July 2024 13:21 CEST
EXPLAINED: Can I terminate my Swiss telecom contract early?

On July 24th, 2024, Switzerland’s largest telecom operator, Swisscom, has abandoned its inOne Home package, which includes the telephone, Internet and television, and replaced it with another service, Basic Home.

But the cost of the subscription increased from 50 francs a month to 59.90 francs.  

If you happen to be one of the Swisscom customers affected by this change, but did not cancel your subscription on time (read more about this below), you were ‘migrated’ to the new bundle automatically — and will be charged accordingly.

What happens if you don’t want this more expensive service but have not cancelled your contract in time?

More specifically, can you terminate your telecom subscription — whether with Swisscom or another company — at any time?

The simple answer is yes, but it will cost you money.

That’s because telecom contracts typically have a minimum term — usually 12 or 24 months, but this can vary — as well as the required cancellation notice period.

Each of Switzerland’s three main telecom providers — Swisscom, Sunrise, and Salt — have a two-month termination notice period, at calendar month’s end.

This is the usual notice period for smaller providers like Yallo, Wingo, Coop Mobile, LidlConnect, and M-Budget Mobile as well.

On the other hand, prepaid mobile services don’t require notice periods and can be terminated at any time.

What are the penalties for early termination?

If you cancel your service within the contractual notice period, then you are in the clear.

However, failing to do so can be expensive.

The reason is that telecoms will not just let you off the hook and wish you well while you contract with one of their competitors.

Most likely, you will be faced with one of two scenarios: the company will charge you penalty fees or continue to bill you for the plan until the notice period has expired.

Also, according to Moneyland consumer platform, “a practice that is widespread among Swiss telecom companies is to continue charging you the basic fees for your plan until the contract term expires… Regardless of whether you are terminating ahead of the contract term or just the notice period, telecom companies will require you to pay the full outstanding amount in both cases.”

In terms of actual amounts, they vary from one provider to another.

Swisscom charges the highest penalty fees for breach of contract — up to 4,800 francs.

Other mobile service providers impose penalties of several hundred francs, according to Moneyland.

Exceptions to the rule(s)

You are allowed you to terminate your contract early without penalties when a ‘negative’ change is made to your plan — that is, telecom provider reduces or drops services that were previously included.

Penalties can also be waved if you cancel your subscription early because you move out of Switzerland.

If you relocate within Switzerland, you won’t have to pay penalties, but only if your new home is completely uncovered by your provider’s mobile network.

Additionally, even though Swiss telecoms have a contractual right to raise their prices once a year to match changes in the consumer price index, these increases do entitle customers to terminate their contract early without penalty fees.

And, last but not least, death is also deemed a justifiable excuse to wave penalties.

As Moneyland put it, “all Swiss telecom companies take a customer-friendly approach in the case of death, allowing relatives to terminate the deceased’s contracts immediately without paying penalty fees.”

Can you just refuse to pay the early termination fees?

Unless you move out of the country, or go to live in an extremely rare place in Switzerland where there is no wi-fi coverage (like a cave), or die, then you do have to pay the penalties — unless you come to an amicable agreement of some sort with your telecom provider.

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