U.S. investors may buy Swiss annuities, which are invested with Swiss insurance companies and custodied in Switzerland. Swiss Annuities are touted as a simple, liquid alternative to U.S. annuities, with the potential for extraordinary returns.
On the surface, Swiss annuities look much like their American cousins. The basic return (the guaranteed interest plus the dividend that Swiss insurers are required to pay out) is now around 3.5 percent, comparable to yields available in the U.S. The kicker: these annuities are denominated in Swiss francs, so investors participate in currency appreciation or depreciation as well.
The Swiss franc has appreciated against the dollar for most periods, over the past 30 years, and that may continue to be the case. In addition, U.S. investors stand to benefit from privacy and asset protection.
On the downside, Swiss annuities are not tax-deferred. Investors must report earnings and pay any required taxes. Generally, taxes are due on the guaranteed interest and dividends each year but not on any currency appreciation.
Currency gains, if realized, apparently aren’t taxed until money comes out of the annuity. If you’re interested, you need to have a Swiss representative to buy these annuities. SwissGuard International (www.swiss-annuity.com) is among the companies offering to fill that role for Americans.
