A Swiss Way to Save Thousands on Your Margin Loan

The basic idea is simple.

In the US, it’s fairly common to leverage a portfolio to increase returns. Between 4-6% is pretty typical right now.

The same technique can be applied to Switzerland, except the rates are much lower. As low as 1.25%.

When I first shared how this works, readers started looking for the “trick”.

But the truth is, the “trick” was not a trick at all. It’s the fundamentals of two very different markets.

The US currently has high debt and a massive deficit. Inflation is much higher than what most central bankers would like. No doubt that was a key factor in the increase in the federal funds rate to 3.75%-4.00% last month.

The Swiss economy works very differently. Government debt is low. Inflation is extremely low – the Swiss central bank expects just 0.7% for 2026. And so, for quite a while now, they’ve held their key policy rate at 0%.

Because banks in the US and Switzerland rely on the Fed and the SNB respectively in how they price their loans, that explains the difference in the cost of borrowing for everything from mortgages to business financing to securities-backed lines of credit (SBLOCs).

Now, as with any strategy, there are pros and cons. Techniques like this happen to be both – an advantage and a drawback at the same time, depending on what you expect to happen to the dollar.

And now for something slightly different…

After that first article, readers wrote in asking if it was possible to essentially “shift” their US portfolio to Switzerland, pay Swiss rates instead of American rates, and pocket the difference. It would look something like this:

… Set up a bank account in Switzerland with a minimum USD 1 million mandate.

… Transfer your existing portfolio to Switzerland and borrow at Swiss Franc rates.

… Pay back your margin loan in the US.

… Put all that interest saved to more productive uses.

You don’t have to give up your USD holdings unless you want to. And, done properly, you typically shouldn’t trigger a US tax bill either.

Most clients have the potential to save thousands of dollars per year in interest. Larger accounts could save more. (In one instance, hundreds of thousands of dollars.)

And all of these clients will now be able to enjoy the other benefits of Swiss investing we talk about in these missives – banking system diversification, currency diversification, and access to top-tier wealth managers, among others.

The last question then is, how long will this last?

Until…

… US inflation comes down or…

… Swiss inflation kicks up…

… we see this as an opportunity.

And perhaps one that might even become more attractive, especially if (as seems likely), the Fed is forced to raise rates again.

P.S. This idea isn’t new, by the way. It’s called a “carry trade” and simply means borrowing money where it’s cheap and putting that money to work where it pays more.

Although by no means for everyone, it’s an interesting arrow in the quiver. If you’re interested in exploring if and how this might work for you, feel free to get in touch.

Please note, however, that this strategy won’t work well for retirement accounts. And, as noted earlier, you’ll need a minimum mandate of USD 1 million.