Medium term notes vs. Money Market - What to do?

[lasiilea]

Hi all,

I need a support to sort it out the following case. I have some EUR in a saving account in my bank. As of today it is giving a 0.8% interest. This money is intended to be part of the emergency fund and I'm not planning to touch it unless it is strictly necessary.

I would like to find a solution that could pay me more interest than the 0.8% that I actually have (especially considering that the actual interest rate for EUR is around 4%).

I was exploring the options provided by my bank and I short-listed the following:

1. Medium term note (block the money for 2 years at 1.80% per year)
   1. Pros:
      1. No extra costs or fee
      2. I know how much I will get for the next 2 years
   2. Cons:
      1. Exit costs unclear: they mentioned that the costs that I need to pay depends on the market interest rate without giving me more details
2. Money market product (Pictet - Short-Term Money Market EUR)
   1. Pros:
      1. Should replicate the actual interest rate for EUR (close to 4%)
      2. Easy to get out of it
   2. Cons:
      1. TER: 0.18%
      2. Potential loss of money

About the last point, my main concern is the following: if I buy now (April 2024) and in June the interest rate is cut down, I will most probably lose money. Maybe this is not a problem in the long term but I would like to ask to the community some advice about it. What would you do in my situation?

 

[dowaito]

@lasiilea The LLB (Liechtensteiner Landesbank) has pretty high interest rates, especially on their EUR and USD cash accounts:
https://willbe-invest.com/en/willbe/product/money-market-account

3.80% for up to 50'000 EUR and 3.50% for up to 150'000 EUR.

I myself am using them for USD and the interest just got paid out a few days ago (as it's paid per quarter) so this is definitely legit.
There is also no withdrawal limit and they have the typical Swiss "Einlagensicherung" for up to 100'000 CHF even though they are in Liechtenstein, see https://www.bankenverband.li/bankkunden/einlagensicherung#:~:text=Einlagensicherung%20Einlagensicherung&text=Die%20Stiftung%20hat%20die%20Verpflichtung,CHF%20100'000.00%20zu%20entsch%C3%A4digen..

 

[lasiilea]

@dowaito Thanks for the info.

Question: the fact that the account is in Liechtenstein, creates more complications from tax repoerting point of view?To be honest my approach was to keep the money in my bank to avoid opening of new accounts (I'm quite lazy) but I would keep this option in consideration!

 

[dowaito]

@lasiilea You would declare it like any other bank account so there is no difference there as far as I know.