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The choice of asset manager is critical.

Investing money: 66'000 francs with a single decision

16.02.2024
Felix Niederer

If you invest CHF 100'000 for 20 years with a 7 percent return instead of just 6 percent, you will end up with CHF 66'000 more money. Just one percent difference – what starts small becomes huge. Compound interest ensures this year after year.

Investing, but the right way

If you want to achieve gross returns of 6 percent or more, you need to invest in shares. And, as in the last 15 years, experience a good stock market cycle.

With shares, investors can participate in the growth of the economy. However, a good portfolio should also include bonds and ideally other asset classes. The right individual mix ensures diversification and an acceptable level of risk. But how do you achieve a good investment mix?

What a good portfolio can do and how to build one: Felix Niederer, CEO of True Wealth, explains in five minutes (spoken in Swiss German with English subtitles).

Managed – but how?

If you didn't want to manage your assets yourself, you didn't have much choice in the past. Banks offered strategy funds for smaller investment sums – not flexible and not individualized. Only those with sufficient assets were given access to asset management. Neither was cheap.

There has been a real alternative for ten years. Online wealth managers, also known as robo-advisors, use technology behind the scenes to provide everything that makes asset management valuable:

Regular rebalancing. Market movements can cause a portfolio to deviate from the optimized investment mix. Corrections are then necessary. With the digital offering, they happen automatically.

Individual portfolios. Every investor is unique. Risk profile and tolerance must be determined individually. But this can be done online – without an appointment with an advisor.

Suitable investment proposals. The algorithm creates an initial investment mix. If you want, you can accept it. Or change the proposal intuitively with sliders – gradually or fundamentally.

Technology makes processes efficient – the new generation of wealth managers is passing on this advantage. The Swiss pioneer True Wealth charges less than active strategy funds. It is also cheaper than other robo-advisors, as independent comparisons show time and again.

This cost efficiency is crucial. It is often the reason for the one percent difference in returns – in our example, CHF 66'000.

Simple, affordable and transparent

Many wealth management services are not only cheaper digitally, but even better: if the investor wishes to change the investment mix, the True Wealth dashboard immediately shows whether the portfolio is still well diversified.

At the beginning of the year, the eTax statement is automatically available, just as the tax office wants to see it. In the meantime, performance reporting is available at any time in real time. Including how many fees have been incurred. (Or rather: how few fees.)

Only those who have nothing to hide can afford this level of transparency. Unlike many banks, True Wealth selects funds independently in the interests of its customers – and does not market any of its own products.

All fees are openly disclosed. And, also in contrast to most banks, True Wealth does not charge its own surcharges when switching into foreign currencies.

Everywhere, for all your assets

True Wealth's online wealth management is not only available for free assets. Customers can also use the same platform to manage their Pillar 3a tied pension provision and individual portfolios for their children.

Transparency at True Wealth also means that customers can try out all offers beforehand – without investing a single franc of their own money, with a test account.

Opening an account is just as easy as everything else at True Wealth. The platform is available everywhere: For smartphones on iOS or Android – and for every operating system online at truewealth.ch.

Think like scientists – act like entrepreneurs. At True Wealth, you can tell immediately that the founders are not traditional bankers. Oliver Herren was previously a co-founder of Digitec Galaxus. CEO Felix Niederer is a physicist and, as a portfolio manager, takes an empirically based investment approach (spoken in Swiss German with English subtitles).

Note: Investments are associated with risks. Past performance is not a reliable indicator of future results. The amounts used in this article serve to illustrate the compound interest effect.

The annual management fee is 0.25-0.50% per year, depending on the investment amount. The external product costs (TER) are on average 0.15% for a global portfolio. Pillar 3a included with 0.0% management fee. Click here for the complete fee overview.

Disclaimer: We have taken great care with the content of this article. Nevertheless, we cannot exclude the possibility of errors. The validity of the content is limited to the time of publication.

About the author

author
Felix Niederer

Founder and CEO of True Wealth. After graduating from the Swiss Federal Institute of Technology (ETH) as a physicist, Felix first spent several years in Swiss industry and then four years with a major reinsurance company in portfolio management and risk modeling.

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