Fees kill returns: the part of investing nobody sells you.
You cannot control what markets do. You can control what you pay. Every basis point of fees, FX spread, and custody you remove compounds for decades.
The five fee layers most Swiss investors pay
Cost #1: the fund's TER (total expense ratio). Active Swiss equity funds commonly charge 1.2–1.8% per year. A globally diversified index ETF charges 0.07–0.25%.
Cost #2: custody / depot fees. Traditional Swiss banks charge 0.2–0.4% of assets per year just to hold securities for you. Modern Swiss brokers often charge zero custody on Swiss-listed instruments.
Cost #3: transaction commissions. Anywhere from CHF 0.50 to CHF 40 per trade, plus the federal stamp duty (0.075% on Swiss securities, 0.15% on foreign).
Cost #4: FX conversion spread. If your account is in CHF and you buy a USD-denominated ETF, the bank typically marks the FX rate by 0.5–1.5%. This applies on every dividend too.
Cost #5: dividend withholding leakage. US-domiciled ETFs lose 15–30% of US dividends to withholding tax that you may or may not reclaim, depending on the holding domicile and your tax form.
Why even small percentages destroy decades
Compound interest works in both directions. With a CHF 200,000 starting portfolio, CHF 15,000 contributed each year, and a 6% gross return over 30 years, a 1.5% annual fee leaves roughly CHF 1.66 million. At 0.30% all-in fees (TER + custody + averaged FX), the same cash flows reach roughly CHF 2.18 million.
That is a difference of approximately CHF 516,000. Unlike a fixed household saving, the fee reduction applies to a growing portfolio, so its effect accelerates over time. You did not need to be a better investor. You only needed to stop paying.
"In investing, you get what you do not pay for. Every basis point you save is a basis point that compounds."
- Adapted from Jack Bogle
| Setup | TER | Custody | FX & trade | Total / yr |
|---|---|---|---|---|
| High-street bank, active fund | 1.50% | 0.30% | 0.40% | CHF 2,200 |
| Bank-issued index fund | 0.45% | 0.25% | 0.20% | CHF 900 |
| Low-fee broker, world ETF | 0.20% | 0.00% | 0.05% | CHF 250 |
Choosing your stack
Three sequential decisions, in this order.
- 01
Do you need to keep your money at your existing bank for relationship reasons?
If NO: open a low-fee broker account (Swiss-domiciled or EU-regulated with CHF support). If YES: at minimum move to that bank's lowest-fee online product.
- 02
Should you pick individual stocks?
Almost certainly not. After fees and taxes, 80%+ of professional active managers underperform a global index over 10 years. A global index ETF ends the question.
- 03
CHF-hedged or unhedged?
For long horizons (>10 years), unhedged is fine and cheaper. For shorter horizons or large allocations, partial hedging reduces FX volatility at a small cost (~0.1–0.2%).
Cleanup checklist
- List every investment account you hold and write down the all-in fee load (TER + custody + FX).
- Replace any actively managed fund with TER above 0.30% with a global index equivalent.
- Consolidate to one or two brokers - ten accounts means ten fee schedules.
- Switch to accumulating ETFs to defer dividend tax friction.
- Set up a quarterly automatic buy order. Stop checking prices weekly.
Neutral references
- FINMA - Costs and risks of investing Federal financial supervisor.
- BFS - Household wealth statistics
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