I hope the haters enjoy it.
Long Term Dollar Decline and Living Outside the US
- Thread starter Bryan Barnfellow
- Start date
I have some long term liabilities in the Eurozone and my main strategy has been to invest part of my portfolio in a broadly diversified, unhedged international equity fund. It is not a perfect strategy to hedge the USD vs. the Euro, but it has worked well enough for over a decade. I think that the Swiss have a vested interest in keeping the CHF from appreciating too much vs. the Euro, so following a similar strategy might work for someone living in Switzerland and unwilling to hold too much in CHF. Housing is expensive in Switzerland, so purchasing a home there (if you don't own one already) would be a good way to decrease the currency risk.
I can believe that based on the six days I spent there in August. But I also saw why anyone should love it there.
OP
OP
Bryan Barnfellow
Thinks s/he gets paid by the post
We rent...we could never ever afford to buy our place, even if it were for sale. This is true for something like 60% of the Swiss...all renters. Not enough flat land to build more apartment buildings and houses I guess
And most live in apartments. It's a shame because the interest rates are really low here and inflation is non-existent. BTW, landlords cannot raise rents unless there is serious inflation/interest rate rises or they do some renovation in your flat or house. So, our rent hasn't changed in almost 8 years. Our next door neighbor said hers hasn't been raised in over 20 years (!). And if interest rates go down significantly the renter has the right to request a decrease in rent.
Another problem: the longest fixed mortgage is only 10 years, then you have to renegotiate new terms at the current interest rates. So, there is some risk there. Also, because of the US IRS demand that all Swiss banks keep detailed records on all US persons with accounts, the cost of all that information system change made it basically not worth it for nearly all Swiss banks to deal with Americans (or even a Swiss married to an American!). I was tossed out of my first bank (with their apologies) and am using the Swiss postal service bank, which by charter must take all applicants. So, mortgages are hard to get as an American, alas.
We have considered buying some real estate here and renting it -- like a studio apartment (only about 400K-500K CHF gulp); but it is complicated, even with permanent residence permits, which we now have. And, we don't want to get new jobs as landlords!
-BB
Last edited:
Seems the franc has appreciated 2.5x vs. $ since '73. In same period, gold has appreciated over 10x vs. $, or 4x vs. franc. Net to me, holding some Au vs. U.S. $ assets could help.
OP
OP
Bryan Barnfellow
Thinks s/he gets paid by the post
It is the best place I've ever lived in -- social and economic stability may be boring as hell; but it sure works. It's an amazing country in so many ways.
That said, it's an insular system with very protective barriers for imports and not much competition from abroad. Here's an example, the person who cuts my hair decided, after a small, contested accident, to have a video camera installed in her car as insurance against future incidents. The estimate was 5,000 CHF (about $5,100)!!!!!
-BB
aja8888
Moderator Emeritus
OP
OP
Bryan Barnfellow
Thinks s/he gets paid by the post
Even she, a Swiss citizen, saw that as outrageous. But yes, to install a camera. It can be ridiculous at times. That said, electronic items in stores, bread, and certain other food items are reasonably priced. Eating out is mostly a fool's errand, except for lunch at a small cafe. One reason is that the people serving you, washing the dishes, etc. are getting a very competitive, living wage with all benefits due them. No "externalities" that make things seem cheap by hiding who is really paying for them (e.g., low wage earners). I feel good about that. In addition, taxes are fairly low and are put to very good use in infrastructure, social benefits, culture/arts, general maintenance of public places. It helps that we only have, like, 6 jets in the air force, of course, and a few small patrol boats on border lakes
Finally, wages are relatively higher. My admin. assistant made about 65,000 CHF (around $66,300). My own salary (I worked in the nonprofit sector) was much higher than it would have been in a comparable organization in the US. After time, you get used to the prices and act defensively so that you stay within your budget.
-BB
Finally, wages are relatively higher. My admin. assistant made about 65,000 CHF (around $66,300). My own salary (I worked in the nonprofit sector) was much higher than it would have been in a comparable organization in the US. After time, you get used to the prices and act defensively so that you stay within your budget.
-BB
Living in Switzerland is definitely a luxury. I have a condo on the border between France and Switzerland, near Geneva, and an increasing number of Swiss people are moving to the French side of the border, where real estate is more plentiful and affordable. And even for those who live on the Swiss side, many cross the border for a quick shopping trip to France to keep the cost of goods and services down (one just has to take a quick look at the license plates in the parking lot of grocery stores close to the border).
Hopefully, you can find a way to make it work because you got yourself a very nice place to retire.
Hopefully, you can find a way to make it work because you got yourself a very nice place to retire.
NYEXPAT
Thinks s/he gets paid by the post
I have been living in Peru for about 15 years and exchange rate monitoring is part of my morning ritual.
I moved all my assets overseas many years ago in order to take taxation out of the equation.
Without that my concerns are limited to inflation/investment returns and of course currency flucuation.
Inflation has been kind, investment returns have been consistant with the exception of my RE holdings tripling the past 8 years since the financial crisis.
Which leaves me with currency. The major advantage I have over most expats is a DUAL CURRENCY
economy. This flexibility provides me the ability to manage my daily expenses using the short term currency swings within the overall trend. As I do not use banks, my transaction fee's are a rounding error.
Over the past 15 years the Dollar/ PEN has gone from 3.6 to 1 down to 2.5 to one, back to 3,5 to 1 at the end of last year. It now stands at 3.26 to one, where it has basicly been for the past 6 months. These flucuations have been gradual and occurred as more or less one long cycle.
When the dollar appears to be in an uptrend, we prepay as much as possible on PEN based credit cards, and use the float to allow the Dollar to appreciate. At the end of the CC cycle, I buy PEN with appreciated Dollars and pay off the credit cards.
When I expect the Dollar to decline, I take three years of expenses in Dollars, convert to PEN and buy a CD ladder at at 6-7%.
I act as an private exchange house for Peruvian Doctors in need of Dollars which I can sell to them at a better rate than they could get at a bank.
I only exchange money on Tuesday,Wednesday, Thursday.
I should have mentioned that I have dual currency credit cards as well to avoid currency conversions at bank rates as opposed to actual FX rates.
I moved all my assets overseas many years ago in order to take taxation out of the equation.
Without that my concerns are limited to inflation/investment returns and of course currency flucuation.
Inflation has been kind, investment returns have been consistant with the exception of my RE holdings tripling the past 8 years since the financial crisis.
Which leaves me with currency. The major advantage I have over most expats is a DUAL CURRENCY
economy. This flexibility provides me the ability to manage my daily expenses using the short term currency swings within the overall trend. As I do not use banks, my transaction fee's are a rounding error.
Over the past 15 years the Dollar/ PEN has gone from 3.6 to 1 down to 2.5 to one, back to 3,5 to 1 at the end of last year. It now stands at 3.26 to one, where it has basicly been for the past 6 months. These flucuations have been gradual and occurred as more or less one long cycle.
When the dollar appears to be in an uptrend, we prepay as much as possible on PEN based credit cards, and use the float to allow the Dollar to appreciate. At the end of the CC cycle, I buy PEN with appreciated Dollars and pay off the credit cards.
When I expect the Dollar to decline, I take three years of expenses in Dollars, convert to PEN and buy a CD ladder at at 6-7%.
I act as an private exchange house for Peruvian Doctors in need of Dollars which I can sell to them at a better rate than they could get at a bank.
I only exchange money on Tuesday,Wednesday, Thursday.
I should have mentioned that I have dual currency credit cards as well to avoid currency conversions at bank rates as opposed to actual FX rates.
Last edited:
OP
OP
Bryan Barnfellow
Thinks s/he gets paid by the post
Nice place for a condo! Congratulations. We live in canton Ticino, very very close to the Italian border. I tease my US friends sometimes on Facebook: "We went to Como for lunch today." Never seems to get old (for me anyway).
But yes, we go on Saturdays for the food markets, wine, etc. Some people get their eyeglasses made in Italy, go to the dentist there, or get their hair cut, etc. The Swiss government limits this in terms of how much in real goods (food, wine, etc.) you can physically bring back over the border on one trip; but services like haircuts or dental work cannot be known of course. At least yet
Re: retiring in Switzerland. We *never* in a million years would have predicted this as our retirement location. It was always going to be in the US with maybe a bolthole in Italy for the winter months and holidays. But a job opportunity gave us impetus to move and here we are, spoiled by all that is nice here such that we are willing to try to make it work. We LBYM'd for 23-plus years to get to FIRE and it takes creative budgeting and smart shopping to stay here.
-BB
But yes, we go on Saturdays for the food markets, wine, etc. Some people get their eyeglasses made in Italy, go to the dentist there, or get their hair cut, etc. The Swiss government limits this in terms of how much in real goods (food, wine, etc.) you can physically bring back over the border on one trip; but services like haircuts or dental work cannot be known of course. At least yet
Re: retiring in Switzerland. We *never* in a million years would have predicted this as our retirement location. It was always going to be in the US with maybe a bolthole in Italy for the winter months and holidays. But a job opportunity gave us impetus to move and here we are, spoiled by all that is nice here such that we are willing to try to make it work. We LBYM'd for 23-plus years to get to FIRE and it takes creative budgeting and smart shopping to stay here.
-BB
OP
OP
Bryan Barnfellow
Thinks s/he gets paid by the post
NYEXPAT,
Yours is a well reasoned system, indeed. Thanks for sharing that. BTW, I use TransferWise for funds transfers from the US to Switzerland. It works very well for me. I have set up rate alerts so that I get a communication from them if it hits a threshold. Then I can act quickly to take advantage. A percent here and there, as you very well know, can help over the course of a year.
Peru has got a really nice natural environment, no? -- seaside, flatlands, desert, and mountains with snow. Congrats on your success!
-BB
Yours is a well reasoned system, indeed. Thanks for sharing that. BTW, I use TransferWise for funds transfers from the US to Switzerland. It works very well for me. I have set up rate alerts so that I get a communication from them if it hits a threshold. Then I can act quickly to take advantage. A percent here and there, as you very well know, can help over the course of a year.
Peru has got a really nice natural environment, no? -- seaside, flatlands, desert, and mountains with snow. Congrats on your success!
-BB
NYEXPAT
Thinks s/he gets paid by the post
Thanks and Congrats to you on your choice! I am of Swiss extraction (Interlaken/Thun) in the Bernese Oberland myself and have spent much time there. Peru also has a high jungle and low jungle. Many Swiss now call Peru home (originally drawn here for mining) and we have a very famous Swiss restaurant " La Tiendecita Blanca" La Tiendecita Blanca just down the street that has the most amazing Rosti.
In the high Jungle there is a town that reminds many of the Switzerland of yore. Getting there is an incredibly dangerous trip, but well worth it.
I came across transferwise today oddly enough. I had no ties to the USA for many years. Recently, I received a extremely large sum of money in the USA and had no place to put it. I had to establish a banking relationship stateside to receive it. Now that I must start moving it offshore, I came across transferwise when I was validating some swiftcodes. Thanks for the recommendation, I will look further into it.
In the high Jungle there is a town that reminds many of the Switzerland of yore. Getting there is an incredibly dangerous trip, but well worth it.
I came across transferwise today oddly enough. I had no ties to the USA for many years. Recently, I received a extremely large sum of money in the USA and had no place to put it. I had to establish a banking relationship stateside to receive it. Now that I must start moving it offshore, I came across transferwise when I was validating some swiftcodes. Thanks for the recommendation, I will look further into it.
If you aren't willing to purchase a Swiss income-producing asset on your own, perhaps a partnership would work. If you don't want to manage it, you could be a passive partner. This approach definitely has risks - you would need to find the right partner(s) and the right asset(s). Plus, you would have the joy of learning how the Swiss regulate partnerships. 
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
First, I am not critical of what you said. I just could not parse the sentence structure.
What is the difference between a share fund and a stock fund and a share fund fund?
Ha
I'm not misunderstanding any thing, for 7 years you have a trend of higher highs and lows, all which started about the time the US and Swiss started serious talks about their banks. I'm not going to say much about the Swiss but they have dark history and its not pretty like their landscape.
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I view it's bad for landlords that they cannot raise the rent, as even 1.5% inflation per year over 20 years is well over 30%.
So it would be bad for you to become a landlord as landlords must have a tough time there.
My bad, sorry about that, the common terminology here is “stocks and shares” ISA’s and I didn’t even get that wording right. An ISA is the UK equivalent of a Roth but the IRS does not recognize the pension wrapper and taxes the gains as they are produced. (I have a cash ISA and as interest accumulates free of UK tax I still pay US tax on it)
10 steps to finding the best stocks and shares Isa - Which?
I am also a regular user of Transferwise to transfer funds which matches those who want to sell with those who want to buy to give very low forex transfer fees. I have an HSBC account in both countries and transfer money either way in minutes at good rates but still prefer to wait a few days for Transferwise to do its thing.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
tmm99
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- May 15, 2008
- Messages
- 5,221
Bryan,
The exchange rate fluctuation is also my concern since I have 90% of my assets in USD, and I live in Canada. The exchange rate has been in my favor for the last couple of years ($1 USD worth about $1.20-$1.35 CAD), but CAD has been slowly rising. Only a few years ago, $1 USD was worth $0.98 CAD, so we'll never know how far CAD may rise.
I don't have a good solution to this dilemma. I initially moved about 10% of my asset to CAD and invested, but I don't want to move much more due to tax implications. I will move some more USD to CAD when my US CD's mature (if the rate is still favorable.)
All I am doing right now is to make sure my spending budget is low enough that I can weather the storm when and if it comes.
The exchange rate fluctuation is also my concern since I have 90% of my assets in USD, and I live in Canada. The exchange rate has been in my favor for the last couple of years ($1 USD worth about $1.20-$1.35 CAD), but CAD has been slowly rising. Only a few years ago, $1 USD was worth $0.98 CAD, so we'll never know how far CAD may rise.
I don't have a good solution to this dilemma. I initially moved about 10% of my asset to CAD and invested, but I don't want to move much more due to tax implications. I will move some more USD to CAD when my US CD's mature (if the rate is still favorable.)
All I am doing right now is to make sure my spending budget is low enough that I can weather the storm when and if it comes.
Last edited:
Similar threads
