Beginner question: Depot or Fondsparplan

[micah111]

Hello lads and lasses

I wan‘t to start investing a part of my savings but I‘m unsure how to approach this. I‘m an absolute beginner since I haven’t invested any money, except of my pillar 3a.

I know that people here recommend internet banks or platforms because the fees are lower. But that’s not the question since I already know that i want to stay at my curr bank, despite the higher costs. What I‘m unsure is if I should open a Wertschriftendepot where i could buy stocks (probably won’t do that too much, if at all) and more important ETFs and fonds. Or a classical Fondsparplan, where i could pay in every month a couple of hundreds franks. In addition to that I want to make. One bigger innitial buy in.

The disadvantage of the depot is in my opinion the fees for buying. Especially if I want to buy / pay in every months lets say 400 to 500 chf the fees would be a huge percentage of that.

The disadvantage of the Fondsparplan would obviously be the yearly fees (which would be way lower than the buying fees of the depot in my opinion) but also the the fact that i can only choose of the fonds my bank offers. On the other hand monthly payments are basically free.

What would you recommend to a bigger like me? One or the other? Possibly both? Or am I missing something completely or am I misunderstanding something?

i hope this wasn’t asked 100 times already.

Thanks for you help, it’s much appreciated.

Edit:
- to give some data: the Fondsparplan I‘m looking at has yearly costs if 0,9%

• the depot has vosts per buy in of 40 chf, so in my case 480 chf per year plus 0,23% per year plus the cost of the etf per year

 

[tobiahjude99]

@micah111 Why are you attached to your current bank?
What are the costs there?

Just to illustrate what 1% cost would make for a difference:

500/month for 30 years at 6% = 505,268

500/month for 30 years at 7% = 614,043

Over 100 000 !

https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php
you can calculate yourself

 

[micah111]

@tobiahjude99 Thanks. I will look into that. But it’s besides the question.

My dilemma is to decide if i should get a depot or a fondsparplan.

 

[tobiahjude99]

@micah111 We need more info regarding costs and products available to give you a recommendation for that.
You bank funds may be actively managed and therefore should be avoided.

In general: the cheapest possibility to invest in a world stock market index fund.

Running fees are more important to keep low, so a yearly % fee that‘s higher is almost certainly worse than having higher initial transaction cost.

See the calculator to play around with that.

 

[evietheturtle]

@micah111 In Switzerland there sadly are no cheap Fondssparpläne. It's pretty much always a rip-off by the bank.

Absolute best case you could maybe find some that is "only" 0.5% more expensive than doing it yourself. If you seriously want to invest that will quickly become 100s or even 1000s per year.

 

[strobertofsalzburg]

@micah111 Don't make the same mistake as I did by choosing a Fondsparplan (in my case, it was at BCGE) ...
They lure you in with the fact that you don't have to pay buy fees but if you look at their product, you will see that the hidden fees are even higher than what you would save by having no buy fees; by hidden fees I also include the fact that those funds underperform heavily the market and you will lose money by choosing them instead of Indexes, for example).

 

[micah111]

@strobertofsalzburg Noted. But you can always change, right? There’s no obligation to stick with a Fondsparplan. Of course it would be smart to not cash out while it’s below the value you have put in already.

And what are the hidden fees? It’s nit just this percentage (0,9% in the one i was looking into)?

And what did you choose eventually or to which product did you change afterwards?

 

[strobertofsalzburg]

@micah111 Yes you can change but there surely are conditions:
for example, at BCGE, you pay 200 fr fees the 1st year, 100 fr fees the 2nd year and 0 the 3rd if you want to get out.

I reduced my monthly contributions to the minimum for the moment.

The hidden fees would be my first sentence, but you should also include in then the underpeeformance of their funds so you should compare them with the overall market (for example, one of the BCGE is a world fund and it is underperforming a similar one (VT) by 2% ytd, which is huge.

I chose VT as an alternative.

 

[micah111]

@strobertofsalzburg Good to know. Although i believe under or overperfomance should equalise on the long run. Even though your fund might be lower at the moment, it could exceed VT (vanguard?) in another year.

And do you plan to change now to a depot at bcge or do you change to one of the internet banks such as swissquote?

 

[strobertofsalzburg]

@micah111 I don't think it will equalize on long term; for example, look at this bcge fund that is underperforming the reference index: https://www.swissfunddata.ch/sfdpub/docs/fsm-1351_06_01-20240331-en.pdf

I have already changed since December; transfered everything to IBKR (30 cents to buy an american ETF (VT, for example), no custody rights, and one of the best exchange rate on the market).

Furthermore, I took a look at one of Migros funds (https://www.migrosbank.ch/public/file?id=5803) and you can see its 5 years performance compared to the reference index: +31% migros and +42% index so you will lose a lot of performance by choosing that product...

 

[micah111]

@strobertofsalzburg Interessting. Thank you for you analysis! Much appreciated!

I really need to look into that!

 

[evietheturtle]

@micah111

of course it would be smart to not cash out while it’s below the value you have put in already.

If you immediately put it into some other similar fund it shouldn't matter.

 

[micah111]

I will try out the calculator. And yes, the Fondsparplan would come with higher running costs. But buying in would be free. With the depot every single buy costs a fee a 40 chf, which is a lot for someone like me that only wants to put in 400 to 500 every month. I mean that’s close to 10%. Would the lower running fees really make that much of a difference?

The Fondsparplan I‘m looking at has yearly costs of 0,9%

 

[tobiahjude99]

@micah111 Depends, but a buy cost of 40 chf is really a lot.

You could for example buy every 3 months for 1500 instead. That‘s almost certainly better in the long-run.

What bank is it?

Just for comparison: at intercative brokers I pay 35 Rappen for a buy and the Vanguard VT etf has running costs of 0.07% per year.

There are also cheaper alternatives for swiss brokers like Swissquote, if you want to have a swiss broker.

 

[micah111]

@tobiahjude99 Thats migros bank. Chances are that I don’t fully understand the fees and am misinterpreting them

https://www.migrosbank.ch/dam/jcr:a...be4bff5/produktinfoblatt depot 11.05.2022.pdf

Thats the reason why i consider the fondsparplan. But i guess i should check the fees of swissquote and how this company is structured and if it’s a company that could gain my trust and therefore my money.