If you’ve never had an offshore bank account, you may be wondering: why do people get swiss bank accounts? What are the benefits of swiss bank account? There are various reasons, the main ones which will be covered in this article are the benefits of Swiss bank accounts, the good interest rates that Swiss banks offer, and protection from certain risks.
They say less is more, but when it comes to money, only more is more. If you have a large amount of financial assets, you’re probably looking for a way to keep them protected and help those assets grow. There are a bunch of ways to accomplish those goals, and one of the best ways is to open a Swiss bank account due to the benefits of swiss bank account.
In the modern age, almost nothing is private, especially not your financial history. Everything that you do with your money and assets can and will be tracked to ensure that it meets certain standards depending on your locale. By law, all of your purchases, sales, and ATM deposits and withdrawals are recorded and filed by certain government entities.
Credit agencies help to keep track of all of this data, ensuring that all of your sensitive financial information is shared to other agencies and organizations. Asset collectors routinely advertise their ability to locate bank accounts, brokerage accounts, retirement savings, precious metal accounts, real estate, vehicles and business holdings. They do this in the case that someone may want to file a lawsuit.
If asset collectors are aware that you hold a large amount of wealth, whether it be in savings, stocks, or non-monetary assets, it can make you a large target for a lawsuit. People use Swiss bank accounts to hide their money and assets from debt collectors or anyone else who wants to get their hands on that cheese.
Placing bank accounts, brokerage accounts, precious metals accounts and retirement accounts such as an IRA or 401K (or both) in a Swiss bank will keep them off the asset collector’s radar. Credit agencies don’t have access to foreign account records or transactions. Domestic properties (this includes real estate as well as automobiles, airplanes and boats) may be titled in the name of a Swiss corporation or trust. In the case of a boat or plane, these assets can even be registered in an offshore country. This ensures that asset collectors can’t find them.
By taking advantage of these methods, an individual or corporation becomes a smaller target, and the likelihood of being sued is reduced. Depositing in a Swiss bank account to protect privacy could mean the difference between keeping, versus losing, what is rightfully yours.
How Much Interest Do Swiss Banks Pay?
Switzerland is known for having some of the highest interest payout rates of any international banking entity. For certain managed equity accounts, Swiss banks will pay as high as 8-15% interest on the account balance. That’s massively high, especially since most banks in many countries around the world will pay only a 1-2% APY interest rate on savings and investments, if you’re lucky.
APY stands for Annual Percentage Yield, and it is the actual rate of return earned on a savings deposit or investment over the course of one year if the interest is compounded. Swiss banks use compounding interest returns just like many other banks around the world, but they are generally higher because of the safety and stability of the Swiss economy.
Any investment is ultimately judged by its rate of return, whether it’s a certificate of deposit, a share of stock, or a government bond. The rate of return is simply the percentage of growth in an investment over a specific period of time, usually one year. But rates of return can be difficult to compare across different investments if they have different compounding periods. One may compound daily, while another compounds quarterly or biannually.
Unlike simple interest, compounding interest is calculated periodically and the amount is immediately added to the balance. With each period going forward, the account balance gets a little bigger, so the interest paid on the balance gets bigger as well.
People deposit in Swiss banks because their interest compounds at a higher rate than most other economies. Also, the franc (Switzerland’s national currency) has risen in value over the last five years in comparison to other commonly traded currencies like the euro or the US dollar. 1 franc now trades for approximately $1.10 USD, making it one of the only currencies on the planet to have a higher exchange rate than the US dollar.
Because of these developments, when you place your foreign money into a Swiss bank account, you automatically take advantage of their economic growth. This is what is special about Swiss banks: the fact that the Swiss franc is doing so well in the global economy makes an investment into a Swiss corporation or into Swiss savings account a lucrative one immediately.
Why Else Do People Use Swiss Bank Accounts?
Protection from Political Risk
People use Swiss bank accounts to protect themselves from certain risks that are not likely to occur in Switzerland’s economic landscape. There is always the risk of loss by way of war and political conflicts. Certain ethnic, racial, or economic groups can be oppressed in the event that there is a regime change. What’s so special about Swiss banks is they are centered in one of the most peaceful countries in world history.
Switzerland maintained armed neutrality during both world wars, and has not participated in a major war to any notable extent. Despite bordering both Italy and Germany, two Axis powers in the second world war, Switzerland was never invaded, mainly because of its nearly impenetrable mountain terrain.
While political safety is never guaranteed, Swiss banks have the advantage of a peaceful alliance with all of their bordering countries. This greatly reduces the risk of loss based on regime change, one of the many reasons why people invest in Swiss banks.
The same can be said of retirement accounts. Many individuals have a significant amount of their overall liquid assets in their retirement accounts. In fact, in most cases, retirement accounts constitute the single largest liquid asset that a person or couple has.
Accordingly, in the event of political turmoil, economic problems or fiscal instability (of governments or banks and brokers or both) having all of your retirement assets in one proverbial basket could be a costly mistake.
Fortunately, moving retirement assets to a Swiss account protects them from exactly these kinds of scenarios. Retirement assets held in Swiss banks are held in a different jurisdiction which protects them from domestic political and economic turmoil and instability. Holding retirement assets in different countries ensures that they remain safely in the client’s control, no matter what happens domestically.
Moving your IRA or 401K (or both) offshore not only provides additional safety and security for the assets, but also opens up a world of investment possibilities. Once retirement assets are moved offshore, they can be invested in literally anything. Of course, traditional investments such as US and international stocks, bonds, options, futures and currency are available.
Additionally, a Swiss IRA and 401K can also invest in precious metals, international real estate, private businesses of any and all types and own vehicles including cars, boats and planes outright or in part. And, offshore retirement funds can be professionally managed by some of the top offshore investment management firms.
Moving an IRA or 401K offshore opens up investment options that are not only endless, but that are simply not possible with a regular IRA or 401K held at a traditional domestic broker.
FAQ about Benefits of Swiss Bank Account
How much interest do Swiss banks pay?
There is not a set interest rate in Switzerland, it will depend on the financial institution that you are banking or investing with. Swiss banks can pay anywhere from 5-15% interest earned on any given investment.
Why do people use Swiss bank accounts?
One of the main benefits of swiss bank account is that people use Swiss bank accounts to protect their assets and enhance the return on those assets over time. It is good not to keep all of your eggs in one basket, so spreading them out to a trusted international bank like the ones in Switzerland is greatly beneficial.
Are Swiss bank accounts the best in the world?
This is clearly subjective, but what is special about Swiss banks is the fact that they exist in a very stable political and economic climate. Other international banks may have certain features that the Swiss bank of your choosing does not, but it is hard to find a country that gives you such a high interest return while also keeping your monetary assets safe from harm, and that’s why Swiss banks are the best.
Why Swiss bank is safe?
The main benefits of Swiss bank accounts are their low financial risk and high level of privacy. Except in cases where serious criminal activity is suspected, Swiss law prohibits the bank from disclosing any information about an account (including its existence) without the depositor’s permission, and that’s why Swiss bank famous for rich people.
Read also: The Ultimate Guide to Swiss Banks