Will31 presentation

[Will31]

Hello everyone,

I am new to the forum. French recently naturalized Swiss, I live near Nyon where I work. I had promised myself to "launch" on the stock market as soon as the markets had dropped a little, which I wanted to do in March, seeing good values on the floor. Of course, as I did not have an account with a broker and it took me almost 3 weeks to open one (Saxo), I could not go "all in" as I had planned.

My project, firstly, is to be able to build a portfolio of returns to retire with sufficient income. Indeed, the cost of living in Switzerland being what it is, and even if we do not know what the future will bring, it will be almost impossible to live there with the 2nd pillar system (we put everything or almost everything into the purchase of our house) and 3rd (at 2 the capital will be +/- 500KCHF in 20 years...).

My strategy – without any originality – is therefore buy and hold on stocks with a high sustainable dividend. I have a very positive bias on oil values which for me will take off again very strongly in 2/5 years, with a strong rise in prices. Not only the majors, because the Midstream sector benefits from a good business, and, if it is heavily taxed at source (37%), it is because it is not taxed locally and distributes a large part of its cash flows.

Last point, I plan a 20-year investment base, around 25KCHF/year (it will be hard but I have cuts to make in the budgets) to put into a company through monthly loans.

Several advantages:

– the company pays 13.8% in income tax, less its expenses.

– the company can repay, upon withdrawal, the loans first, therefore completely without fees/social charges/taxes

– from 1MCHF of portfolio, the company benefits from the reduction for participation, therefore taxation: 0% at its level.

– For personal wealth taxation, it will be easier to underestimate the value of the investment company (in particular by keeping the securities at cost on the balance sheet) than to declare a portfolio.

In any case, I look forward to sharing with you all these experiences, and, of course, all the mistakes that I will (and have already started to) make!

 

[Jerome]

Hello Will

And welcome to you. You are right to plan ahead because despite all that is said about it, the pension system in Switzerland is far from being a panacea. Moreover, since you have about twenty years left, you will most certainly be able to retire earlier.

You are right to have used your 2nd pillar to buy your house (as long as you bought it at a good price of course).

Hey, there's someone who's still investing in oil, it's not really trendy and you're not going to make any friends 😉

I must say that you have piqued my curiosity a little with your investment company story. Given how you explain it, it seems interesting. However, it still raises a lot of questions (anonymity, double taxation, complexity to create and manage, etc.)

In short, we look forward to reading your experiences on this subject, it may interest more than one person.

 

[Will31]

Thank you for the welcome.

The principle of the company is very simple: it is that of the Swiss Holding which aims to avoid double taxation. If you create a "simple" company, the dividend is taxed at 35% in the company and then, when you pay yourself a dividend, again at 35%.

So, a dividend of 100 paid to a company ABC, taxed at 35 becomes 65 of income for ABC. It pays me 65 taxed at 35, or 42.25. That is, in total 57.75% of taxes (!)

If I create a company in Switzerland, Vaud, since the RIE 3 (and therefore the removal of the Holding status), the rate will be, to simplify, 14%. However, after certain criteria (1MCHF of portfolio or at least 10% of the capital of another company), we are entitled to the reduction for participation which has not been removed. Basically, if 95% of the company's turnover comes from investments, then it will be taxed at 14% on the remaining (100%-95%) = 5%.

We therefore benefit from a large tax lever during the investment period, without withdrawal.

The interesting point is also that, if you lend to your company (ex here 25KCHF annually for 20 years), the company has a debt towards its shareholder. If, for example, you plan to withdraw 50KCHF from the portfolio annually, you can make 30 KCHF of repayment and 20KCHF of dividend, taxed on income at "peanuts" because very low in terms of tax rate.

There is a fiscal risk of undercapitalization, but the Vaud tax authorities recognize that liabilities must be less than 60% of assets. So from time to time it will be necessary to pay into the capital rather than lend, but it will not be huge if the portfolio performs well.

It's not really complicated to manage. There are accounting software programs that are very easy to access and we all have a trusted friend who can take a look at the annual accounts. And then we can pass on some expenses to the company, while being reasonable, of course.

 

For oil, it is obvious that it is not really the future. Except that the only truly alternative future is clean nuclear (recycling/reduction of radioactivity of waste, fusion). And for the moment we are heading towards windmills and coal, gas and… fuel oil power stations…

So oil, no, it's not yet the past.

[Jerome]

Thanks for the clarification Will.

Well, your story doesn't seem all that simple to me. In any case, there's a lot of work to do. I might get down to it in a year, when I've finished setting up my side business and I'm no longer an employee. I'll then have more time to devote myself to this idea. Or another one.

[Will31]

When I start investing through a company, I will make a thread on this forum, to share the good and bad surprises...

[Jerome]

Gladly!

[PloutosNX]

Hi Will,

Your analysis is very interesting.

I am also always looking for additional information regarding the use of a company to invest, whether in stocks or real estate.
The interest is great during the accumulation phase, because taxation is limited.

Are you looking for an SA, SARL or other?

Looking forward to reading you,
Xavier

[Author]

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