It’s a fact: Money is very important in Switzerland, but people are reluctant to talk about it. Whether you have it or not, whether it’s hidden or obvious, there’s one money question we’re all interested in today: How and where can you best save money in Switzerland??
If you think you are doing everything right by putting your money in a savings account, you are sadly mistaken. We tell you why this is so and where you can better invest your francs in the future.
Swiss are European champions in saving
On average, you earn CHF 6,500 gross per month in Switzerland . An international comparison of countries shows that we are in fourth place and thus do very well – only in Monaco, Liechtenstein or Bermuda do people earn better.
On the other hand, there is the high cost of living, which mainly affects people with lower incomes. For example, housing costs for low-wage earners account for around 30 percent of the salary.
How much money is left over at the end of the month also depends on where you live, because the cost of living and tax rates are not the same everywhere. Many households could increase their monthly budget by changing their place of residence – for example, by moving to Uri or Glarus, where housing costs are low and taxes are limited. But a move to a neighboring municipality could also be worthwhile, because even within the canton of residence, the different municipalities have different tax rates. You can calculate the amount of municipal taxes on the website of the tax office.
In principle, rural cantons such as Obwalden, Thurgau or Appenzell Innerrhoden are considered more financially attractive than urban cantons. The most expensive places to live in Switzerland are Geneva and Basel-Stadt. Not only are housing costs higher there, but the tax burden and health insurance premiums are also higher than average compared to Switzerland.
Despite the high cost of living, saving money is easy for many in this country: according to a survey, one in two people say they are able to put money aside each month without having to forego consumer spending.
In Europe, Switzerland even ranks first with a savings rate of just under 19 percent – this means that the savings rate is about twice as high as in neighboring Germany. In concrete terms, this means that an average Swiss household puts aside around CHF 1,400 a month.
The money of the Swiss usually ends up in a savings account at a Swiss bank, but is it still worth it??
No. As mentioned at the beginning, it is a misconception that the money saved in a savings account will multiply by itself. Nowadays, interest rates of less than 0.01 percent are often the reality of a classic savings account. Due to low returns and rising inflation (inflation rose by about 0.9 percent in 2018), money saved in a savings account actually loses value instead of increasing in value.
The Swiss Federal Statistical Office regularly surveys the average income and expenditure of Swiss households. A closer look at this study reveals that although we are generally very keen to save money in this country, only just under half of the population puts money aside, namely those with higher incomes.
According to the Federal Statistical Office, around 40 percent of people are barely able to save anything and in some cases even have a negative savings amount. Alternative savings options are therefore needed from which all income groups can benefit.
How to really save money in Switzerland?
There are the following ways to save money in Switzerland:
- Saving in everyday life
- Saving through the right investment
- Tax savings
But why should you save at all?
Be it for vacations, a planned investment, as a retirement provision or as a reserve for worse times: It is never a bad idea to have a few francs on the side. The motivation to save increases if you keep your goals in mind and thus know why you are cutting back.
But before we get into the investment options that will get the most out of your assets, let’s first take a look at how you can save money in everyday life and thus put something aside on a regular basis.
The best tips for saving in Switzerland
Putting money aside at the beginning of the month
If you always wait until the end of the month to put money aside, you will quickly realize that this is not a successful strategy. It’s easy to lose track of your spending on the day-to-day account, especially when there seems to be plenty of money left over. But suddenly at the end of the month a forgotten bill flutters into the house and the account is empty without having saved money.
Therefore, it is worth automating the process of saving and putting aside a certain amount right at the beginning of the month. About the same as if there were additional taxes on the income. More than half of all Inyova customers use a monthly plan, where the agreed savings amount is automatically transferred to the investment on payday.
A lower account balance helps you plan your month better and avoid unnecessary spending.
Create a budget
You can really save money with a set household budget. It turns out that many people spend their money every month without knowing afterwards where it actually went. The only thing that is clear is that the account is empty.
To avoid this scenario, it is worthwhile to keep track of income and expenses by means of a household budget and to set yourself a monthly limit. Keeping a budget doesn’t sound like fun for most of us, but luckily there are technological tools that make budgeting easy and painless for all of us.
For example, you can carry around your budget book, easily as an app right on your smartphone, and immediately record every expense in it. Good apps for this are for example " Expenditure Manager – Tracker " or " Budget Book: Money Manager ".
Avoid spontaneous purchases
Who does not know it? Influenced by good marketing or attractive advertising, you can be tempted to make an unplanned purchase, whether in a store or online. Later, one is often annoyed by the unnecessary expenditure, for example, when the purchased item hangs unused in the closet and at the end of the month there is again no money left to save.
It often makes sense to set a price limit for spontaneous purchases in advance, for example CHF 50. For items that exceed this value, you should think carefully about whether the purchase is really necessary before you make it. Instead, you can write down on a piece of paper what you would have liked to buy and put it in a drawer for a week. After seven days, you pull out the notebook again and consider whether the desire and need for the product are still there.
You will see how often you have forgotten the note as well as the product after one week.
Put coins aside
With this tip you will not only ease your conscience, but also your wallet. Hardly anyone likes to carry around a lot of coins, but when paying you still often forget to pick out the exact amount to get rid of the annoying weight. What follows is even more change.
So why not leave all the coins at home?? By feeding a piggy bank every day, you can quickly accumulate a considerable amount of savings. For example, a handful of coins can quickly be worth up to CHF 30.
And the best thing about it is that this method saves you money without you having to give up anything – except the extra weight in your wallet.
If you want to save money on your daily shopping, the following tip is recommended: The cheapest time to buy is just before the store closes. Many supermarkets such as Coop and Migros offer many fresh products such as meat, dairy products or sandwiches up to 50 percent cheaper about one and a half hours before closing time.
Buying in bulk is especially worthwhile on Saturdays, as many supermarkets want to get rid of the products cheaply before they close on Sunday.
Compare insurance premiums
With this tip you can save several hundred francs a year. Compare your insurance premiums and benefits regularly online with Comparis to see if you are still using the best deal for your car or health insurance or life insurance.
When changing insurances, you have to pay attention to the cancellation periods of the respective insurances. For example, every year you have to put aside up to 30. November announce whether you want to terminate your health insurance. For car insurance, the cancellation period varies between one and three months, depending on the provider.
Cancel unused contracts
Similar to insurance premiums, you can save a lot of money with this tip. Who does not know it: Motivated one locks a yearly contract in the Fitnesscenter – and forgets the good resolutions shortly thereafter again. But paying for such contracts and other unused memberships is clearly a waste of money.
So it’s a good idea to go through all your subscriptions, memberships and contracts at least twice a year and cancel those you don’t use appropriately. You may have noticed that many companies do not make it easy for you to cancel such contracts online. Instead, they demand signed cancellations by mail. Fortunately, you can use cancellation templates that you can easily customize online .
Cheap train tickets
We Swiss love our SBB, because according to statistics, each of us travels by train around 50 times a year. Of course you can also save some money.
The next time you plan a longer train trip or your guests want to travel by train, it is worth asking your municipality if they have discounted day tickets available. With the day tickets of the municipalities, you can – depending on availability and municipality – travel across Switzerland for as little as CHF 40, even without a Half-Fare Card.
For comparison: At the SBB the day ticket with half fare card costs CHF 75 . If you don’t have a Half-Fare Card, you’ll have to resort to the Economy Day Pass, which can cost as much as CHF 106 for the 2nd class. Class can cost. Buying early from the municipality is therefore worthwhile.
Save money by investing correctly
If you now have enough money, as already mentioned, do not leave it unused in a savings account and hope for better interest rates. Instead, the principle is: investing money is better than saving money.
But this saying has two sides, because on the one hand a good investment brings more returns, but on the other hand also more risk. If you don’t want to take that risk, sooner or later you’ll have to settle for preserving your assets or even taking a loss if the money in your savings account loses value.
The following options are available for investing the money saved:
- Real estate
- Index funds
Investment in real estate
While a few years ago it was advisable to invest in real estate, the tide has now turned. Real estate prices are at a high, which calls for caution.
According to the latest Raiffeisen study "Real Estate Switzerland", the prices for real estate in 2018 between 0.8 percent (condominium prices) and 1.7 percent (single-family homes) – rents, on the other hand, have fallen by up to 2 percent. The reason given for this is, on the one hand, the high number of vacancies and, on the other hand, declining immigration compared to the years between 2016 and 2018.
Real estate is still in demand as an investment property, but in our view is no longer too recommendable, as the income and the actual distribution amount after deduction of maintenance costs remains at a low level.
If you invest in a house to live in it yourself, however, it is still worth the investment in many cases, even if you have to borrow money from the bank to do so, since interest rates for 5-year fixed mortgages are currently at an all-time low.
As the owner and simultaneous occupant of a property, it is important to note that the imputed rental value must be declared as income for tax purposes. This was originally justified as an incentive to keep debt limited in Swiss. Other factors, such as debts and maintenance costs can be deducted from the homeowner’s taxes. However, an abolition of the imputed rental value tax has been discussed for some time now.
Saving with shares and index funds
In general, when investing in the stock market, you should be careful to invest your money for the long term, as the share price can change quickly in the short term and you risk losses. The advantage of many equity investments, however, is that in the event of short-term liquidity needs, the money can normally flow back to the investor within seven working days.
If handled correctly, the stock market offers you good profits and far better returns than the savings accounts of the major Swiss banks. Basically, you can decide at the beginning whether you want to invest in shares or index funds to invest money.
What are the differences? Whereas with stocks you invest in one or more companies, with index funds you benefit from the fact that they include all those securities that are included in the chosen index. Mostly these are stocks or bonds. Since stock indexes often combine the companies that have the most value on the stock market, it is also often said that a stock index reflects the market. Profit distribution is not based on just one company, but on the average performance of the stocks and bonds included in the index.
Exchange-traded index funds (ETFs) are currently very popular and offer newcomers an easy and inexpensive way to participate in stock market activities. One disadvantage, however, is that as a customer you buy ETFs in bundles and cannot select specific companies or eliminate them from the fund. This is particularly important if you want to decide for yourself which companies you want to invest in and what your individual risk profile should look like.
The profit distribution of index funds is based on the average performance of your package. A recent study conducted by Quirin Privatbank showed that there are large differences in ETF returns as a result, and millions in profits are lost each year.
Caution must also be exercised with regard to transaction costs and taxes. At Inyova there are no hidden fees for you, because transparency is very important to us.
Then why isn’t everyone investing?
Of course, there is still a risk in investing in the stock market – even the best experts can speculate on the stock market and unpredictable crises can occur.
When people talk about "risk" on the stock market, they generally mean the uncertainty and insecurity as to whether the planned investment result can be achieved. This risk factor still inhibits many people to invest their money, although with the right management the right balance between risk and high returns can be found for everyone. When investing in shares, there is of course a correlation between the amount of return and the risk that one has to take for it. So if you want to play it safe, you can’t count on a huge profit distribution.
Basically, you should get acquainted with the most important rules of a good financial investment. It is worthwhile, for example, not to invest the available investment amount in just one company, but to diversify your investment.
Diversification means that not all your money is put on one card, but losses of one company can be compensated by the profits of another one.
In practice, Inyova divides your investment between at least 30 different stocks. Your investment is also spread between different industries, countries, currencies and company sizes in order to keep the risk for you low. Thus, losses of a company or an industry affect your portfolio only minimally and can be well balanced.
Depending on how long you want to tie up your money in one investment, it is also worth splitting your money between stocks and government bonds. While stocks can be very volatile in the short term, they offer better returns in the long term. The advantage of government bonds, on the other hand, is that they are hardly susceptible to fluctuations and are therefore also suitable for a short-term investment – of course with a smaller profit distribution.
Can I also invest little money?
Now you may think: That sounds all well and good, but that is only something for those who have a large sum of money at their disposal.
Although this rumor is persistent, it is actually a misconception that only large amounts can be invested. The stock market offers opportunities to invest in shares even for investors with smaller budgets. It is not worth waiting for the fact that you might have more budget later to start investing.
The minimum for a good investment basis is about CHF 2’000. But there are also possibilities for those who have a smaller budget. With the help of a savings plan, where you automatically transfer money every month, you can start with as little as CHF 500 at Inyova.
Save taxes in Switzerland
It is well known that there are different taxation of income depending on the canton. However, one thing is the same throughout the country: If you want to save taxes and money at the same time, you should take a look at retirement planning through the 3. Throw pillar.
Saving money through the 3. Pillar
One way to save money in Switzerland is to make private provision through Pillar 3a, the amount of which can be deducted from your taxes. Holders of a 3a-account have to accept interest rates of less than one percent, but benefit from tax savings.
Those who pay in the maximum amount of CHF 6,826 per year (as of 2019) can later deduct this amount when declaring their income and thus benefit from maximum tax savings. The money saved can then be invested in the next year’s pension plan. Attention: In principle, an unlimited number of 3a accounts can be opened per person. However, the maximum amount of CHF 6’826 applies per person and not per account and can therefore only be deducted once.
A study by the research institute Demoscope shows that we now start paying into the 3. Start pillar. If in 2012 it was still every fourth, today already every third Swiss pays before the age of 25. Pillar 3a savings at the age of.
The advantages of starting to save early are mainly that you benefit from the compound interest effect, even if interest rates are currently very low. Retirement savers can take advantage of a long investment horizon to increase their chances of earning more money.
Most boys care about a 3. Pillar account, even though the greatest earnings potential of Pillar 3a lies in the investment form. Currently, however, only every fourth person uses the possibility of paying into a pension fund, because the risk of losses seems too high to many people.
In your private investment portfolio, the private pension through the pillar 3a should not be missing, as it represents a good and safe investment. However, the optimal investment for retirement planning should be more diversified and supplemented by other private investments. In the composition of an additional long-term investment, our experts from Inyova will be happy to help you.
Saving money made easy
In summary, it is always worth saving money in different ways. Doing without in everyday life and following savings tips is good, but the money saved must also be invested sensibly in order to grow. Here it is true that each person has different needs, different income, obligations and demands.
Avoid sleepless nights and uncertainty around your retirement savings by finding the right strategy for you.
Are you still asking yourself how you can best save? Then it’s time for you to create an individual savings plan that is tailored to your needs and in line with your values – easy at Inyova.