Swisscaution or traditional deposit?

[briantheophilus]

I’m currently evaluating whether to stick with a traditional rental deposit at Lienhardt und Partner or switch to Swisscaution, and I could use your collective wisdom.

Based on my calculations, opting for Swisscaution seems justifiable only if I can achieve an investment return of over 5%. Given that I’m not a trader and can’t guarantee such returns, I’m in a bit of a dilemma. While the traditional deposit at Lienhardt und Partner hasn’t been lucrative (the return is so low that I jokingly say I can’t even buy the cheapest croissant from coop with the profit), I’m unsure if switching to Swisscaution is the smarter financial move.

I’m curious to hear from anyone who has navigated this decision. How did you assess the potential returns from your investments against the costs and benefits of Swisscaution?

Edit:
Thanks for all the answers. Traditional deposit it is.

I knew Swisscaution and alternatives didn’t make sense, but I wanted to hear some other perspectives.

 

[rodron]

@briantheophilus Traditional deposit, always.

 

[velden777]

@briantheophilus Swisscaution usually costs 6%.

A traditional bank account yields 1% or 1.25% nowadays.

Therefore, you would need a guaranteed 7% yield with your investment to break even. In CHF, that’s kinda difficult to achieve.

Also, you can see swisscaution as a loan. I don’t take 6% loans ever. Neither should you.

 

[mhg]

@velden777 AXA issued Mietkautionsversicherung for me for about 3.5% per year. Is it really 6% in Swisscaution? Way too high.

 

[emtura88]

@mhg Yeah AXA is significantly cheaper

 

[jaz2001]

@mhg same with AXA in NE 3,5%, in combination with mandatory household insurance which gives 10% discount on the caution premium.

 

[virginiaann]

@briantheophilus It's a tossup at best, a gamble at worst. Personality I'd always keep it traditional.

 

[eaglehearted]

@briantheophilus Life is short go long crypto to hedge

 

[ashrei19]

@briantheophilus Swisscaution is a scam directed mostly at immigrants and people with poor financial literacy.

 

[5west]

@ashrei19 I signed up for gokaution when i came to CH as the company recommended it instead of the normal deposit. But they made it seem like this insurance pays the damage claims as well for the money. I trused them and said ok, and only later realised it’s practically only a credit solution…

 

[virtualhope]

@ashrei19 Scam is not the correct word at all. They offer exactly the service they offer and not more. What about it, should be a scam?

I mean sure, it's not financially wise to do that but that doesn't make it a scam.

 

[ashrei19]

@virtualhope It’s preying on people who don’t know that there is a legal framework for free escrow accounts where the tenant keeps property of the money and gets the interest.

 

[virtualhope]

@ashrei19 Or they simply want to use the money instead of letting it rot in an account? I thought about doing it despite knowing very well that I could also transfer the money.

And everyone needs to read what they sign and the contract will list the option to transfer it instead.

 

[igbokwe]

@ashrei19 It can actually be a very useful service when you can't afford to put aside 3 months rent. You can get swisscaution until you saved up the 3 months rent and then replace it with a deposit.

 

[johnstead]

@ashrei19 It can make sense as a bridge between the two deposits as first year is cheaper, or i used once when the landlord looked scammy

 

[ashrei19]

@johnstead Never give the deposit to the landlord directly. There are escrow accounts specifically for this purpose.

 

[graymike91]

@briantheophilus Way too expensive AND way too small of a sum to ever make any significant difference.

Unless we're talking a 5k/month flat but in that case, at that level of income, i'm not sure you should worry about saving 150 chf with such a complicated scheme =D

 

[skyburnsblack]

@briantheophilus Swisscaution only if you have no other option. Keep it simple.

 

[tobiahjude99]

@briantheophilus Keep it traditional. I asked myself the same.

You might go slightly above that 5% with a broad stockmarket etf over the very longterm. But only ever so slighty, that it‘s not worth it.

You can expect some 6% return in chf.

Your deposit often times also accrues some slight interest like 0.5%, that would make it even harder to beat.

 

[darcylbridge]

@briantheophilus For my current rental, I pay AXA for the deposit (some neighbors say they own the buildings) and it’s reasonable (just over 100.—).

For the new apartment we’re moving to, which has more rooms, the rental agency suggested SwissCaution. I ran an estimate and it’s close to 580.— for the first year and 550 for the remaining (with all fees)! I made a deposit using a regular bank account.