Simon Ramseier Finance & Money

Finance & Money

How I invest

I have learned a lot of things about money from The Motley Fool, a site where "normal people" learn about financial matters together. Their most important lessons are:

• If you have any debt, pay it down first.
• Think before you buy something. Buy only what you can afford.
• Before you invest any money at all, have enough money in a savings account to live for three to six months - you never know what could happen.
• Invest money that you don't need for a long time in stocks.
• Buy only stocks of companies you have studied and understood.
• If you don't want to study individual companies, simply buy an index fund.

What is an index fund?

The last point is important. Banks tell customers to buy their mutual funds. However, mutual funds are good for the bank. 90% of all mutual funds perform worse than their index. For instance, mutual funds with Swiss stocks try to beat the Swiss Market Index SMI, but only 10% of all funds can do that over several years. Mutual funds with a lot of technology companies might try to beat the Nasdaq Composite Index, but 90% fail to do so. Customers pay a lot of fees to the bank, but most funds deliever very little for that money. That's why you buy index funds. Index funds are good for the customer. Index funds don't try to beat the index, but simply match it. For instance, a Swiss index fund buys exactly the same stocks that are included in the Swiss Market Index SMI. You don't need a lot of smart (and expensive) analysts to do that, and therefore index funds are cheap. A normal mutual fund costs 2 to 5% fees every year. An index fund costs less than 1%, many cost even less than 0.2%. And remember, 90% of all mutual funds don't beat the index. So, if you buy an index fund, you pay only 0.5% a year insted of 5%, and you have a better performance!

Index funds in Switzerland

Many traditional banks do not offer index funds. They don't want to sell their customers something for a fee of 0.2% if they can sell something for 5%. In the past, you had to go to the USA to buy index funds. However, more and more index funds are available in Switzerland. Credit Suisse offers a few. However, I recommend the German Internet-only bank Direkt-Anlage-Bank (of which I am a customer). Their fees are not as low anymore as they used to be, but they're still cheaper than the Swiss banks, there are no annual fees etc. They have a Swiss account where Swiss customers can transfer money without incurring the fees for international transfers.

I have made a list of all index funds available in Switzerland (from 2003). This list has originally been posted on The Motley Fool message boards. They cost an annual fee, but if you want to learn about money and investing, it's definitely worth it in my opinion.

Stocks I own

I invest mostly in index funds, but I do own a few individual stocks. I buy only US stocks because it is a lot easier to get good and reliable information about the financials of companies that are traded on a US stock exchange than for companies traded in Europe. My account is at Ameritrade, where every trade costs $10.99 in fees.

I have a list of stocks I currently own and why I bought them.

More information on this site: Index funds in Switzerland, stocks I own
More information on other sites: The Motley Fool

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