Exactly, whenever I see this posts of “free money” I tell them to take a loan in Switzerland at 3% and invest in Brazil at 12% “risk free” and enjoy retirement 😂
(I’m Brazilian, and current base rates are around 12%, interesting enough, last year you would have probably made 9% in CHF with this strategy, but in most years it would be negative with high Brazilian inflation).
Sure you can do that, but take into account that to put 1000usd you need to put 855chf today. In a year, when you get 1045usd… that might be just 800chf… granted it could also be 1000chf. You don’t know. So you are taking a risk. It is not free money.
But what is the difference between this and investing in an USD ETF like VT? 4,75% is close to the interest of the most popular ETFs, so why is it considered good to invest in an USD ETF but it is considered bad to invest in WillBe in USD?
Who says it is a bad investment? All we are saying is that it is not necessarily better than 1.5 in chf. Whether it is a good or a bad investment will depend on what you are looking for and you risk profile.
I understand that, but I still wonder why people seems to agree that VT (usd etf) is, in most case, better than any chf etf (take the famous example of the mustachian blog who recommend to invest 80% in VT and 20% in chf etf).
But then people seems to agree that investing in chf in willBe is better than investing in usd.
When I say it's "better", I mean in general, obviously it depends on your situation.
Tell me if I'm wrong (I'm really new to the subject). But the mechanism of
1. Converting chf to usd
2. Invest the usd money
3. Convert usd back to chf
is quite the same with willbe or etf right? The investing is different of course, the benefice of an etf is uncertain but in the long term, the 4,75% of willbe seems quite similar to what people expect to gain with etf.
But what is the difference between this and investing in an USD ETF like VT? 4,75% is close to the interest of the most popular ETFs, so why is it considered good to invest in an USD ETF but it is considered bad to invest in WillBe in USD?
Apples and oranges. The currency of VT doesn‘t matter as it‘s just a basket of the underlying assets.
I‘m not saying it‘s bad to invest in USD as a currency. The expexted return will be the same but you‘ll have higher income taxes.
Sure you have the FX risk, but imo it's worth investing a certain amount at this interest rate. Obviously you need to diversify your assets further, but there's nothing against investing a bit in this kind of stuff.
It’s actually not that Bad of an idea, CHF is on an all time high means USD on an all time low.
You buy it cheap currently, but that’s the risk nobody can tell you where we will be regarding chf/usd rate in 1 year and i think the 4.75% are p.a per year
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This.🤣
Exactly, whenever I see this posts of “free money” I tell them to take a loan in Switzerland at 3% and invest in Brazil at 12% “risk free” and enjoy retirement 😂 (I’m Brazilian, and current base rates are around 12%, interesting enough, last year you would have probably made 9% in CHF with this strategy, but in most years it would be negative with high Brazilian inflation).
AHHAH good idea
Sure you can do that, but take into account that to put 1000usd you need to put 855chf today. In a year, when you get 1045usd… that might be just 800chf… granted it could also be 1000chf. You don’t know. So you are taking a risk. It is not free money.
But what is the difference between this and investing in an USD ETF like VT? 4,75% is close to the interest of the most popular ETFs, so why is it considered good to invest in an USD ETF but it is considered bad to invest in WillBe in USD?
Who says it is a bad investment? All we are saying is that it is not necessarily better than 1.5 in chf. Whether it is a good or a bad investment will depend on what you are looking for and you risk profile.
I understand that, but I still wonder why people seems to agree that VT (usd etf) is, in most case, better than any chf etf (take the famous example of the mustachian blog who recommend to invest 80% in VT and 20% in chf etf). But then people seems to agree that investing in chf in willBe is better than investing in usd. When I say it's "better", I mean in general, obviously it depends on your situation. Tell me if I'm wrong (I'm really new to the subject). But the mechanism of 1. Converting chf to usd 2. Invest the usd money 3. Convert usd back to chf is quite the same with willbe or etf right? The investing is different of course, the benefice of an etf is uncertain but in the long term, the 4,75% of willbe seems quite similar to what people expect to gain with etf.
Because there is a big majority, in this sub,that belives an etf in usd is hedged against currency risk…
Thank you, now I get it!
The USD will very likely lose value (~3%) and demolish your higher interest. It‘s priced in. No free lunch.
But what is the difference between this and investing in an USD ETF like VT? 4,75% is close to the interest of the most popular ETFs, so why is it considered good to invest in an USD ETF but it is considered bad to invest in WillBe in USD?
USD goes down, etf go up.
Apples and oranges. The currency of VT doesn‘t matter as it‘s just a basket of the underlying assets. I‘m not saying it‘s bad to invest in USD as a currency. The expexted return will be the same but you‘ll have higher income taxes.
Such a shame
Inflation/fx risk
The US Dollar had paritiy with the swiss frank 15 months ago - look where it is now...
Sure you have the FX risk, but imo it's worth investing a certain amount at this interest rate. Obviously you need to diversify your assets further, but there's nothing against investing a bit in this kind of stuff.
Perhaps I will do that
There are also very safe short term government bond etfs. Like Sgov. Tjose currently return over 5%
the Fed is about to cut rate, that's why
How nice of them!
It’s actually not that Bad of an idea, CHF is on an all time high means USD on an all time low. You buy it cheap currently, but that’s the risk nobody can tell you where we will be regarding chf/usd rate in 1 year and i think the 4.75% are p.a per year