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ACA Zurich and Lausanne Town Halls - Nov 20

To view this presentation in PDF format, click here.

ACA Town Hall Evening Lausanne & Zurich

Investment & Financial Planning Ideas for Americans in Switzerland

November 12 & 13, Zurch and Lausanne

Disclosure

The information contained within this presentation is general information and cannot be relied upon for your specific and unique situation.

This presentation is not meant as legal, tax, or financial advice to any individual. There are general explanations of cross-border issues between the US and Switzerland. You are strongly recommended to seek the advice of a professional who understands your specific circumstances before relying on any of the information in this presentation. There may be mistakes and regulations may change or not apply in some circumstances. The presentation may be circulated but should be appropriately cited if used in a professional setting.

IRS Circular 230 Disclosure: Any tax advice in this communication is not intended or written by the author to be used, and cannot be used by a client or any other person or entity for the purpose of avoiding penalties that may be imposed on any taxpayer.

Advice requires consideration of your individual circumstances and needs, none of which can be done within this presentation.

Please consult a professional tax advisor/accountant/return preparer when addressing your person tax matters.

Jonathan Lachowitz

CFP® Financial Planner & Investment Advisor

  • Chairmand, Director & Volunteer at American Citizens Abroad for ~20 years

  • Founder, Financial Planner & Investment Manager ~$1B – White Lighthouse Investment Management in Switzerland and Massachusetts, est. 2006

  • Certified Financial Planner™ - US & CH

  • Strong local and cross-border planning experience and expertise

  • Working with hundreds of Americans/multi-national families on cross-border planning & investments. ~300 American families/clients in Switzerland

  • Has written many articles on personal fnance for the Wall Street Journal and Bloomberg

  • Registered/licensed with SEC and FINMA

Financial Advice & Investing

10 Personal financial Challenges for Americans in Switzerland and how to address them

  • Taxes – US and Swiss

    • Compliance - Keeping up with ever more complex rules and practices

    • Tax Planning - Using the rules in your favor - Why are my taxes so high?

  • Retirement Savings and Planning - The Swiss Pillars and US retirement accounts

  • Social Security and Medicare

  • Estate Planning

  • Investment Management / Financial Services - Many closed doors for Americans in Switzerland

  • Managing Currency Risk - Is the CHF strong or the Dollar weak?

  • Real Estate - US Tax Treatment / Changing Swiss Treatment

  • Education Planning - 529 Accounts

  • Small Business Ownership - What Corporate Form, Banking, Compliance

  • Finding Professional, Trustworthy, and Compliance Services

Investments - 3 Major Types

  • Anything whose value is derived from a currency - Backed by governments

    • Bonds - Government, Company, Entity

    • Deposits in a bank, cash in your pocket, money market funds

  • Items you buy that don’t produce, you hope to sell for a higher price later

    • Gold, metals, collectibles

    • Cryptocurrency

  • Something you value based on its ability to produce goods or services

    • Public and private equity - stocks/shares in companies

    • Real estate

  • Misc: Hedge Funds/Options/Derivatives

All investments have advantages and disadvantages, risks and rewards, cost and complexity

Investments - Accounts (Custodian)

  • Bank

  • Brokerage

  • Direct Investment (funds, share certificates, physical ownership)

Investments - Vehicles

  • Shares

  • Mutual Funds

  • Exchange of Traded Funds

  • Physical Ownership

  • Cash

Investments - Markets

  • Markets are a place where information is gathered to determine a price

  • The larger the market (more data), the more efficient in general

  • Markets are efficient at finding a fair price (most of the time) based on information

    • Cash flow

    • Relative to interest rates (especially US Fed Funds rates)

    • Relative to other investments

  • Markets are subject to some inefficiencies (normally short-lived, based on uncertainty and information asymmetry)

    • Fashion

    • Extreme Optimism or Pessimism

  • Investors and speculators operate in the same marketplaces; most financial news is directed to short-term “traders” not long-term

Investment Planning

Investment Accounts - Planning

  • Investment allocation (not taxes) most important decision driving risk/return

  • Taxes are important, but often cloud decision making

  • Investment horizon

  • Goals: retirement, education, home purchase

  • Risk profile / cash needs

  • Sentiment - also clouds decision making - greed and fear

  • Fees

    • Advisor, trading, custody, funds

  • Ease of management - simplicity is vastly underrated

Investment Principles

  • Market Timing – does not work reliably

  • Diversification - key to lowering risk

  • The longer your time horizon the more risk you can generally afford

  • Invest for a purpose / goal

  • Rebalancing - re-adjusts risk, but costs in capital gains taxes, trading fees

  • Investment location (type of account) matters of tax efficiency

  • Investment vehicles matter: Are you buying a product or is it being sold to you

  • Very few variables you can control in risk management/retirement planning. Risk level is one, spending levels is another, acting or not during volatility

    • Future inflation, investment return, interest rates, exchange rates, tax rates are best guesses - history is a guide, but an imperfect one - Resilency is about preparing for all

Investment Accounts - Planning (Taxes)

  • Taxes – Income, Capital Gains, Social Security, Wealth, VAT, Stamp

  • Will I be taxed this year or anothr year or both?

  • Tax loss harvesting (realized capital gains)

    • Gains/losses timing can help to defer taxes

    • Lower current year income taxes

    • Investment advisor should know about US tax optimization

    • Much more efficient on low-cost trading platforms (generally in th US)

  • ETFs tend to be more tax efficient than Mutual Funds (US)

  • Qualified Dividends are better than non-qualified Dividends - in the US

  • Tax-free/deferred in the US is sometimes not tax preferre in Switzerland (Roth, 529)

  • Location in investment type between tax-deferred and taxable accounts

  • Potential gifting to non-citizen spouse to avoid some capital gains

Checking Out Your Advisor/Firm

  • US–Federal and State Level Registration

    • SEC Advisor Search: https://adviserinfo.sec.gov/

  • Switzerland

    • FINMA - Firms Licensed

      • https://www.finma.ch/en/finma-public/authorised-institutions-individuals-and-products/

    • Swiss Advisor Registry - 3 Registers (not all individuals required to be registered)

      • ARIF - https://registre.arif.ch/en/registre/

      • Reg Services - https://www.regservices.ch/en/client-advisor-search/

      • Reg Fix - https://www.reg-fix.ch/en/advisers-search

    • FINMA Public Info: https://www.finma.ch/en/finma-public/

    • FINMA - Ombudsman - https://www.efd.admin.ch/efd/en/home/the-fdf/ombudsman-finsa.html

Investments - Accounts Currency / Cash

  • Cash is great as a short-term store of value, in the currency it will be spent

  • Safekeeping - account stability

  • Physical cash

  • Loses purchasing power to inflation

  • Fluctuates against other currencies

Current Issues

  • What to do about the strong Swiss Franc?

  • I am being told to divest from the US, does this make sense?

  • What about AI?

  • Cryptocurrencies?

Is the Dollar weak or the Swiss Franc strong?

  • The dollar has fallen about 10% against the CHF and Euro, mostly in the first half of 2025

  • The largest driver of exchange rates moves is interest rate differentials, or more precisely, the expectation of interest rate changes

  • The decline happened to be correlated in time with the start of the tariff uncertainty, though correlation does not mean causation.

  • Another driver is relative economic growth and trade imbalances (eg Switzerland and Japan)

  • Sentiment and risk - The CHF attracts interest in times of uncertainty, like Gold. Is it warranted?

How to invest in volatile currencies?

  • Currency matters much more for the cash that you hold

  • In matters somewhat in Fixed income, though interest rae differentials often make up the difference

  • It matters relatively little in Global Stock investing

  • The Swiss Market Index

    • Nestle, Novartis, and Roche

    • Does buying an investment denominated in CHF make it correlated to the CHF? Absolutely not.

Sector vs Geography

  • MSCI (Global Equity Model): Found that industry sector explains approximately 40-60% of the variation in returns for large-cap stocks globally, while country factors explain approximately 10-20%

  • Morningstar & Fidelity Research: Consistently show that global sector ETFs tend to have more tightly grouped returns than country-specific ETFs. For instance, tech companies across countries tend to out perform other sectors – regardless of where they’re based.

  • Bekaert & Harvey (2000s research): Found that as capital markets globalized, sector effects became stronger and country effects weakened, especially in developed markets.

  • The US Stock Markets have approximately 50-65% of World’s public and private equity and debt markets, but approximately 4% of the world’s population

  • Roughly 50-60% of the world economy transacts in USD, about 1% in CHF.

  • Approximately 38% of Foreign Exchange trading is in London, approximately 20% in the United States and approximately 20% in Singapore, HK and Japan combined.

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