Its name is Inflation, and it’s one of the most underappreciated forces that can impact your life financially.

So, what is inflation? To put it as simply as possible, it is the decrease in the purchasing power of your money over time. For instance, think about what you can buy from the supermarket for 100 CHF today, and then what you might be able to buy with the same 100 CHF, but in 10 years’ time.

Each franc is worth less because the price of goods and services is more expensive. Even a low rate of inflation, if persistent, can have a significant impact on the long-term purchasing power of money. At just 2 percent per year, if sustained, inflation will double the price cost every 35 years. So, in reality, a franc would lose half of its purchasing power. Imagine what the effect would be at 5 percent per year or 8% like we are seeing in parts of Europe or the US now.

If someone took out a fixed-rate, 10-year mortgage at 1 percent and inflation turned out to be 2 percent over the life of the mortgage, the debtor (borrower) would end up paying a real interest rate of negative 1 percent. That’s a good deal for the debtor, but not for the creditor (lender). As you can see from this simple example understanding inflation and its effects can have a significant bearing on your financial assets.

For those that may remember Switzerland, which is now considered a low inflation rate country, has seen multiple occasions of high inflation rates most notably in December 1973 when the headline rate hit 12%, far above where we are today. As the world recovers from the effects of Covid-19, we are starting to see a rapid acceleration in inflation for advanced and emerging markets, driven by firming demand, supply chain shortages, and rising commodity prices.

As the cost of oil rises, the cost of fuel increases which has a knock-on effect on just about everything we purchase. This is especially scary for retirees with large holdings of lower return assets, such as cash and bonds. Fortunately, a common secondary effect of inflation is rising interest rates, as upward price pressure eventually prompts Central Banks to increase borrowing costs and dial back bond-buying programs to cool a heating economy.

To ensure your investments can weather the effects of rising inflation, one should always seek the advice of an industry professional. For more information and advice contact a qualified adviser at Swissential on tel. 022 786 2020 or email info@swissential.com

You do however also have to meet a number of other requirements which can vary across the cantons but which typically include:

• demonstrating written and spoken knowledge of a Swiss national language
• integration into Swiss life and culture
• compliance with Swiss law and customs
• not being considered a threat to Swiss national security
• no time spent on Swiss social welfare in the last 3 years, unless you pay back the money received

What parameters do you check or tick? Is it something that you would consider for you and your family in the near or longer term future…? It is really a beautiful country and is most definitely worth it! Count me in!

The 4 myths about sustainable and socially responsible investments

Clearly, there’s a desire to make a difference. What seems to stand in the way is a number of misperceptions about the actual risks, the returns that can be achieved and the actual impact these investments can have. To answer the question ‘Is this for me?’ – let’s start by dispelling the four common myths surrounding sustainable and socially responsible investments.

• Myth #1: They only come in green

The concept of sustainable investing can mean different things, but it essentially boils down to this: Aligning traditional investing with environmental, social, and governance-related (ESG) principles to improve financial well-being over the long-term. The range of sustainable financial products out there is very diverse and investment choices will entirely depend on the investor’s personal values and preferences. It’s not limited to specific stocks in green energy or organic farming, either. If the investment is in a fund, those companies or activities that don’t meet the investor’s social and ethical standards are filtered out. Investments can also be earmarked for projects that have a positive environmental and social impact. Another option is thematic investing, for instance in renewable energy, biotechnology, healthcare or sustainable forestry, to name the major areas. Between 2018 and 2019 alone, the number of funds that operate under ESG criteria went from 434 to 582 (up 34%)

• Myth #2: Good conscience, bad return

The market shows that sustainable and socially responsible investments are on a par with conventional financial product offerings. Stock companies that subscribe to ESG principles are more than a safe bet. Well-managed businesses that are concerned about their impact on the environment and society are ready to adapt and often more open to innovation. Their employees are well taken care and that makes them better at their job. These companies have a better reputation and are better equipped to weather crises. Which means their business may keep growing. The facts bear this out, especially in the current turbulent market: In the US, for instance, most sustainable funds finished in the top halves of their Morningstar Categories for Q2/2020, and 18 of 26 ESG-focused index funds outperformed conventional index funds. For the year to date, 72% of sustainable equity funds rank in the top halves of their Morningstar Categories and all 26 ESG funds have outperformed their conventional index fund counterparts. Just as the way companies treat their employees and stakeholders has become a differentiator, the way they invest in their employees’ health and safety will become even more important. Sustainable and socially responsible investing will keep up the momentum for this dynamic. And no, the fees aren’t higher than for conventional investments.

• Myth #3: It’s just a fad

The concept of sustainability as an investment driver, which inherently has an ethical component, has been around since the 18th century. Back then, some investors would have nothing to do with the slave trade, preferring to make a healthy profit in other areas. A preview, so to speak, of sustainable and socially responsible investing as we understand it today.

Fast forward to 2009. At the time, sustainable investments accounted for CHF 32.4 bn (up from CHF 7.4 bn in 2005), and by the end of 2019, the volume increased to CHF 1,163 bn. From 2018 to 2019 alone, the share of sustainable funds in the overall Swiss fund market more than doubled from 18% to 38%. Another key reason why sustainable and socially responsible investing is here to stay is regulation. In 2018, based on the results of the Paris Climate Agreement 2016 and the United Nations’ Agenda 2030, the EU launched the Action Plan for Financing Sustainable Growth to:

• Direct capital flows towards sustainable investments

• Mitigate financial risks linked to climate change, natural disasters and environmental and social issues

• Enhance transparency in investment and economic activity (i.e., better governance.)

In other words, the positive momentum developed over the past decade will continue to build. In Europe, we see that investing sustainably is increasingly the new normal, as borne out by the strong rebound after the coronavirus pandemic market sell-off, more than doubling to USD 54.6 billion over the second quarter of 2020.

• Myth #4: It’s not for me

One of the study’s findings: 48% of those surveyed felt that the responsibility to act sustainably rests with companies, about the same for those who felt that sustainability starts at home (45%). As companies are aligning themselves with the new normal, the possibilities for private individuals to make a difference through their investments – while achieving their financial health and well-being goals – are increasing, too. More important than diversity of investment options perhaps, is the fact that the market is open to all, regardless of how little one wishes to set aside for letting sustainable and socially responsible investments grow into a nest egg or a dream come true. Though it’s never too soon or too late to get started, seasoned investors (44%) would recommend starting with a small amount and taking a step-by-step approach. To get a basic understanding of how a capital investment works, click here.

Friends and family can be a good source of advice if they have some experience. Also, the fact that financial advisors may charge a fee should not be a red flag. Their main objective is to make investing work for their clients – who usually are the first to say that good advice is always worth the price. Besides very competitive rates, advisors can also provide tools that allow maximum control over the investment.

But what about after the crisis?

According to ratings agency Moody’s, the Covid-19 pandemic is likely to have far-reaching effects on the financial sector over the coming years, specifically on the way investors and companies approach risk and how they will increasingly focus on ESG factors. The trend towards sustainability and social responsibility was already well underway before the crisis began, it’s just that the crisis has intensified the spotlight on environmental, social and governance factors. In our rapidly changing world, businesses and projects run according to sustainable, i.e. ESG-based principles, are proving to be more resilient and therefore in a better position to offer more stable returns over the long term.

Sustainable investing also plays to one of Switzerland’s strengths: a longstanding tradition in sustainable finance, not least due to an openness that allows for new trends to be recognized and acted upon early on, combined with stable economic and political framework conditions. The result is a financial environment that contributes to a more sustainable world through smart investing, proving time and again that securing one’s financial future and doing the right thing for the planet and society can go hand in hand.

When the pandemic first hit in 2020 and most of the world had accepted extensive use of masks I was slightly horrified by the amount of waste they produce. The image of a mountain of garbage in our oceans followed me around every time I went outside. As a responsible adult, I thought of what changes can I make to provide a bit of relief to the environment and reduce my own carbon footprint? As I looked around my own house, I noticed that my bathroom has quite a grand collection of plastic. The most-used material for shampoo bottles is HDPE (High density polyethylene) which is recyclable, but my closest recycling station only has a PET (Polyethylene terephthalate) bin making it harder for me to recycle. So I thought, there must be a better way to care for my hair while caring for the Earth at the same time, so I decided to switch to solid shampoo and conditioner.

Initially I was very happy with my choice. I got a few bars from local bio shops and a few more from well-known brands. Unfortunately, the solid hair care market is relatively new, so the options are limited compared to the thousands of traditional products. There are multiple benefits that I didn’t even realise, such as I didn’t have to worry when taking it on my travels as it didn’t take up so much space. Also, it seemed my hair reacted well to it as I now had more days in between the washes. It also built some new habits, such as buying some products in a refill system since I became a regular at a ‘green’ shop.

The problem arose towards the end of COVID measures. When it got safer to go to public places and see other people. To pick up my social appearance I found a hair stylist from a higher-end salon who works with my type of Asian hair regularly. This measure was necessary since the treatment I wanted is not very well known in Europe. I was born with naturally straight hair so to give it volume I spend hours styling it. The hair structure is very different to European hair so instead of getting them permed, I wanted to try a Korean perm which would create a soft big curve instead of a twingling shape. I booked an appointment 2 weeks in advance and travelled 2 hours to get to Aarau from Geneva. Upon arriving the hairstylist gave me a critical look but didn’t comment on the state of my hair. She then went on with the preparations of setting up the machine, giving me all kind of gowns and finished preparing by taking a ‘before’ picture. She worked on my hair for 6 hours all the while asking me all types of questions like if I spend a lot of time in the sun, how do I dry my hair and finally what shampoo am I using? By the time that question rolled in I felt too self-conscious to reveal that I use locally made hair soap, but she didn’t even wait for an answer “Your hair is too dry, it doesn’t retain moisture. You must change your products.” We then spoke about how to treat it: shampoo, conditioner, hair masks and oils. She asked me to send her a photo of the ingredients next time I go to buy my products so she can advise on whether it will suit me. After everything was done and I was putting on my coat something dawned on me – she never took an ‘after’ picture.

I was very disappointed that my efforts to save the planet resulted in dull hair and pitiful looks from hairdressers. The result of a 6-hour expensive procedure didn’t even deserve an Instagram story. As I was travelling back home, I contemplated whether I had really helped anything or was I trying to solve an environmental crisis with some nonsensical actions? In the end, I think my heart was in the right place: if there is a demand for more sustainable solutions then producers will adapt. These questions can and should be discussed on a greater scale. None of the big problems have easy solutions and people should be prepared to make greater sacrifices as no goal will be attained by small convenient solutions. A commitment, be it a shampoo change or a savings plan, should not be short-term. Nowadays I think about it often on my way to recycle the HDPE bottles and when checking my sustainable investments.

Now, that being said – this is a blogpost from the perspective of a Financial Consultant, so let’s talk figures. A latest study from the “Zurich Office for Youth”, Credit Suisse and the OECD shows that the average direct cost of raising a child in Switzerland for a couple is 22’200 CHF per year, meaning over 18 years a direct cost of 400’000 CHF.

Beware, this does not include school fees – so if you think of sending little Heidi or little Einstein (I know he was German, but he became Swiss later on, so it still works) this amount can go up quite significantly.

Coming back to the figure of 400’000 CHF, it is split as follow:

• 32% on accommodation (the more children you have, the more this number goes down in terms of proportion of income)

• 18% on day-care (unfortunately Swiss day-care is the most expensive in the world)

• 17% on food (such costs go up as your baby becomes a teenager that can literally eat anything without putting on weight – I know, so unfair…)

• 13% for healthcare

• 6% on clothing (again, as you can imagine dressing a 13 – 18 year old is much more expensive than a baby considering you pay mainly for the brands our youngsters/teens so desperately need to forge an identity)

• 1% for telecoms (only considers here children above 13 years old – so if little Heidi comes asking for a phone at 10 years old, don’t hesitate – it’s not in the official budget from the Zurich Office – and if you can get away with this explanation, you’ll know as a bonus you have an aspiring public official in the family)

• 14% on entertainment & miscellaneous incidentals and accidentals

Now, this is where I must promote what we do before letting you go. So here it is: you can’t plan for the above “ongoing cost” of raising a child, but you can certainly make sure you plan for higher education needs so when university cost of living and tuition “hits you”, you are ready for it …

Until then, we love our children …

I remember it vividly… Driving to the alps for a ski weekend. Happily going about my daily routine like nothing was happening. Fresh in Switzerland and excited for my new adventures. We were hearing these murmurs, rumours, whispers… that there was this outbreak on the other side of the world… There is no way this is going to end up worldwide, more like an isolated scare … That certainly was not the case, as came to be apparent very quickly, no this was an outbreak of unparalleled size. How was I going to believe that this was just the beginning of a GLOBAL Pandemic? The start of shutting down, my first thought, ABSOLUTLY NOT. But in reality, life as we know it was about to completely change! Entire industries shutting down, the economic effects long lasting. How could countries, suddenly have complete control over the way their populations move, live, interact?

Many of these changes have now become the norm, a complete change in the way we go about life, unfathomable amounts of hand sanitizer, masks for every occasion and social distancing… what next, who knows?! But one thing I have come to realise is, life is short, very short, and these events no matter how big or small, can occur at what seems, like the drop of a hat… Overnight. And they have long lasting effects, the extent of which we do not yet know exactly but we have had a taste of. Almost as if we have just scratched the surface. For me at least I will not be so naïve in the sense that this could so easily happen again. And I for one will be much more prepared, set up for the future, protected… because if the next one personally affects me, I want to be in the best position I can be to head-off the negative effects.

…and who knows, I may have a family of my own to look after by then and even this, as I have come to learn over the last year and a half, is not beyond the realms of reality.

A friend from the next village was going away for a few months so was more than happy to ‘lend’ us the cat she had adopted from the local farm. In the end a few months became a few years and ‘Bugalugs’ as we named the wily, black and white farm cat successfully terrorised the resident mice until our house became an (almost) mice-free zone – apart from the mice that he actually brought into the house of course!

As Bugalugs had no pedigree and was ‘just’ a farm cat, he had no value as such and so we gave no thought to taking out any pet insurance. But as the years went by his sentimental value increased beyond all our expectations and when after 10 years he became very poorly and needed an operation we were faced with a difficult dilemma. The operation was going to cost a small fortune and that was without taking into account the expensive aftercare he would need. Having no pet insurance to fall back on we agreed to make financial sacrifices elsewhere and go ahead with the operation. Bugalugs pulled through but after running up some more hefty bills in aftercare he sadly passed away leaving us with a huge vet’s bill to pay and worst of all no cat to show for it!!

By this time we had two small children who although they were fond of Bugalugs seemed to accept his untimely demise with glee – ‘’Now we can get those kittens that I want’’ cried one of them. No-one knew which kittens this statement referred to – any kittens would do, the important thing was cute kittens rather than a rather ageing scraggy cat.

So back to the farm we went and returned with the requisite two cute kittens and once again the pet insurance question was raised and dismissed – ‘’They’re only farm cats, they’re not valuable enough to insure’’. How quickly we had forgotten the tugging at the heart strings dilemma we had faced when Bugalugs needed an expensive operation.

Fast forward a couple of years and the kittens are now two fully-grown, healthy cats. And whilst they keep the local mice population at bay we’re still spending a considerable sum on vet’s bills as their regular turf wars with the neighbourhood cats result in some serious battle wounds!

So, the question of pet insurance is back on the agenda and I’ve been researching options. One possibility is that Instead of taking out a specialist pet insurance we might set up our own ‘pet-fund’, putting aside a sum of money each month to cover those unforeseen vet bills. Whether you choose this option or the traditional pet insurance is up to you but when a friend adopted a new cat recently and asked me if I thought pet insurance was a good idea I said I thought it better to have something in place even if it’s ‘just’ a farm cat!

Try not to compare everything!

Avoid comparisons between your present situation and what you have left behind. I must admit that within days of arriving in Switzerland I was missing my local pub with a pool table and an “abusive” barman who could within a heartbeat provide a plate of food for a carnivore. As newcomers we tend to over-use the expression, ‘Back in the UK…..at home we have…’. Having made this mistake too many times the advice is simple – focus on what’s in front of you and talk about that; ask questions and seek to understand why melted cheese and bread are so wonderful to share! Remember, the locals here barely acknowledge that cheddar is even a cheese!

Be patient, settling in will take time

The general rule of thumb is to give the ‘settling in’ process at least a full four seasons. Be kind to yourself and others around you!

Arriving in Switzerland during the spring or summer, it is impossible not to be impressed with the country’s natural beauty. The flowering meadows and small streams, soaring snow-capped mountains, lakes and rivers you can dive into and fields strewn with bell-jangling cows all make it feel like you have stepped into a giant jigsaw puzzle scene.

Go hiking in spring and summer, discover the local traditions in autumn, learn to ski or sledge in winter, there is plenty to do and you’ll love every corner of Switzerland. Once you have discovered all there is to offer you will realise that it really is paradise on earth.

Pay bills, make dentist appointment, take cat to vet, help kids with homework, cook dinner, do washing, sort out finances……the list of daily tasks for any parent can be never-ending so add the pressure of work into the mix and it’s not surprising that sorting out those finances is all too often at the bottom of the list, waiting for a day when you’ll have more time.

But……will you ever have more time and when you do will it be a bit too late – a bit late to plan for your children’s education, a bit late to plan for meeting your aspirations in retirement? In reality there’s always something you can do but the earlier you think about putting a plan in place the more options will be available to you.

If you speak to a financial adviser, they’ll take you through the essentials of financial planning for people living and/or working in Switzerland. Your adviser will consider your personal circumstances – family situation, employment history and future plans before providing recommendations to suit your individual needs.

Parents have many of the same questions as everyone else but there are obviously areas of particular interest such as saving for children’s education, how to make the most of tax advantages related to childcare and how to deal with inheritance issues. Key questions parents often ask include:

• How much should I be saving for my children’s higher education?
• Will I have saved enough for when I reach retirement?
• How can I maximize the tax advantages available to me in Switzerland?
• Should I consolidate the pension plans I’ve accumulated abroad?
• How can I pass wealth on to my children in a tax-efficient manner?

Depending on your individual situation the adviser will answer your questions and propose savings and investment solutions to suit your requirements. What action you decide to take based on this advice is up to you but whatever happens it’s one more thing you can cross off your list!

It wasn’t for my language skills that I moved here, but because of the old-fashioned reason of meeting someone and joining them in a new and exciting country. But what ever the reason, knowing at least a basic level of the local language gives a sense of confidence and independence – and can save you when you least expect it.

For example, I found myself alone in Lausanne, having missed my last train and with a dead phone battery- happily even in my (slightly) inebriated state I was able to communicate well enough to the taxi driver to get me home…

So as a newbie to the language what would I recommend?

Of course, practicing with those that already speak the language is great- but when you are very new it can all feel like a blur, and one on one classes are fantastic, like through Italki.

But if you just want to get stuck in before diving into lessons, I recommend an app you can practice on the go such as Babbel or Duolingo – this has helped build up my vocabulary.

And, for useful quick to learn phases that I have found very useful I recommend Paul Noble’s language series. Be warned, I had my French speaking friends tell me that what I was being taught was not exactly correct- but I would argue the way the lessons are taught they are easily remembered even when you’ve had one or two and that’s got to count for something!