Long-Term Investing: Which Asset Classes to Consider

Many people want to build up assets and provide for their own old age without dealing with the details of investing money. Often there is also a concern about losing invested money.

This article sets out the common asset classes for a long horizon, describes their characteristics, and outlines the questions to clarify before an investment decision. It does not replace an assessment tailored to your own situation.

What is a long-term investment?

A long-term investment is a capital investment with a horizon of several years, usually starting at five years. The long period gives price fluctuations an opportunity to even out, and it distinguishes investing from trading, where buying and selling are often only days apart. Duration alone carries no assurance of any particular return.

Short-term investments, by contrast, have a term of a few weeks or months. The difference lies not only in the time period but also in how much weight individual price movements carry: anyone who invests over several years does not need to react to a single downturn, as long as the capital is not needed during that time.

Key facts at a glance

• Pillar 3a, maximum contribution 2026: 7’258 francs with a pension fund, up to 36’288 francs without a pension fund (Source: BSV, as of 2026).
• Withholding tax: 35 percent on Swiss interest and dividends, reclaimable if declared correctly in your tax return (Source: ESTV, as of 2026).
• Capital gains on private assets: tax-free for private investors. Circular No. 36 governs the point at which trading crosses into professional status (Source: ESTV, 2012).
• Securities-based savings in Pillar 3a and vested benefits accounts: for stocks, a guideline of 50 percent applies. Under the extension rule of BVV 2, higher allocations of up to 100 percent are permitted. This requires that you choose the strategy yourself and that your risk capacity has been assessed and documented (Source: BVV 2, OAK-BV circular on securities savings, as of 2026). In this case, the price risk is borne by the beneficiary.

Why can’t return, security and availability be maximized at the same time?

Availability, return potential and security exist in a trade-off that investment theory calls the magic triangle. Maximizing all three at once is not possible: anyone who wants access to their money at all times and takes on no volatility risk forgoes return potential. A longer investment horizon shifts this trade-off; it does not eliminate it.

In practice, this means every investment decision involves weighing these three factors against each other. Which weighting is appropriate cannot be answered in general terms; it depends on when you need the capital and how much price fluctuation you can bear, both financially and personally.

Which asset classes work for a long horizon?

For a horizon of several years, four asset classes are mainly used: stocks and equity funds, exchange-traded funds (ETFs), real estate and real estate funds, and bonds. They differ in volatility, availability, cost structure and the expertise required. Which one fits only becomes clear from your specific circumstances.

Stocks and equity funds

Stocks and equity funds are among the classic forms of long-term investment. For stocks, a horizon of five to ten years is often cited, so that longer downturns on the stock market can be ridden out without the need to sell.

A portfolio made up of a few individual stocks depends heavily on how those individual companies perform. Spreading investments across several stocks or an equity fund diversifies this individual stock risk; the general market risk remains.

Characteristics in favor of stocks and equity funds:

• Return potential over a long period.
• Some companies pay out dividends, though this is not obligatory.
• The capital can be traded on every stock exchange trading day.
• Directly held stocks form part of custody account assets and are not included in the custodian bank’s bankruptcy estate if the bank becomes insolvent.

Characteristics against them:

• Prices can fluctuate significantly in the short term.
• You need a custody account and generally pay fees for buying and selling.
• Selecting individual stocks and funds requires expertise.

ETFs

An ETF (exchange-traded fund) tracks an index, such as a broad stock index, and is traded on the stock exchange. This makes it possible to invest money for the long term without selecting individual stocks. Performance follows the index, both up and down.

Characteristics in favor of ETFs:

• Generally lower ongoing costs than actively managed funds.
• Broad diversification across many stocks through a single instrument.
• The invested capital can be traded on every stock exchange trading day.
• Fund assets are legally segregated and protected if the provider becomes insolvent.

Characteristics against them:

• ETFs follow price fluctuations on the stock market in full.
• You need a custody account.
• Choosing the right index and replication method requires expertise.
• You buy the entire index; individual companies cannot be deselected.

Real estate and real estate funds

Buying or building a property ties up capital for many years. Those who do not want to invest directly can access real estate investments through real estate funds, which also allow participation in this market with smaller amounts.

Characteristics in favor of real estate investments:

• Rented properties generate ongoing rental income.
• Owner-occupied property replaces rent in old age.
• For rented properties, maintenance costs and debt interest are tax-deductible.
• As a tangible asset, real estate can offset part of the effects of inflation, for instance through indexed rents. This does not constitute inflation protection; property prices can also fall.
• Real estate funds allow entry with less capital.

Characteristics against them:

• Direct real estate investments require substantial expertise.
• Sufficient equity capital is required.
• Debt interest and purchase-related ancillary costs apply on top.
• The capital is tied up; real estate funds are sometimes subject to redemption periods.

Bonds

With a bond, you lend money to a company or a government and receive interest in return. At the end of the term, the nominal value is repaid, provided the issuer remains solvent.

Characteristics in favor of bonds:

• Regular interest payments.
• Prices generally fluctuate less than with stocks.
• If the bond is held to maturity and the issuer remains solvent, repayment is made at nominal value. This is a nominal view: it does not account for the loss of purchasing power caused by inflation.
• Bonds can be traded during their term.

Characteristics against them:

• Depending on the issuer’s creditworthiness, a default risk exists, which can be substantial for corporate bonds.
• If market interest rates rise, the market value of an outstanding bond falls.
• Depending on creditworthiness and the interest rate level, returns can be low.

Reading tip: The development of the correlation between stocks and bonds

Other forms of investment

Other options include precious metals such as gold and silver, cryptocurrencies, derivatives and private equity. These investments differ significantly in volatility, availability and access requirements; some are open only to qualified investors.

Spreading investments across several asset classes diversifies the risk of individual markets. What such an allocation looks like in practice depends on your goals, horizon and risk capacity. Diversification spreads risk; it does not rule out losses.

What should you clarify before a long-term investment?

Before choosing an asset class, six questions come first: what goals are you pursuing and how much time do you have, how much liquidity do you keep in reserve, how much price fluctuation can you bear, how well do you know the asset class, whether you invest a lump sum or stagger your entry, and whether you want ongoing distributions or reinvestment. The answers narrow down the range of suitable investments.

What goals are you pursuing, and how much time do you have?

The investment decision is first guided by its purpose: provision for the time after your working life, a property purchase in ten years, and funding your children’s education each lead to a different horizon. The horizon, in turn, limits what degree of price fluctuation is bearable. If retirement is ten years away, financing a property over the market-standard amortization period of roughly 25 to 30 years no longer fits the timeline.

How much liquidity do you keep in reserve?

A common rule of thumb is to keep funds equal to about three months of expenses available at all times. It is not a standard, but a guideline. The purpose is practical: without a liquid reserve, an unexpected need for funds forces the sale of investments, potentially at an unfavorable time.

What is your risk capacity?

Risk capacity and risk appetite are two different things. Risk capacity describes how much loss in value you can absorb financially without jeopardizing your goals. Risk appetite describes how much fluctuation you can tolerate personally. Whichever of the two is more restrictive is what counts. What needs to be assessed is whether you could withstand a loss phase lasting several years without having to sell.

How well do you know the asset class?

Anyone who does not understand an asset class cannot properly assess its risks. This applies in particular to structured products, derivatives and leveraged instruments. Before investing, it should be clear what drives the value, what costs apply, how liquid the investment is, and under what circumstances a total loss could occur.

Lump sum or staggered entry?

A lump sum is fully exposed to market movements from the moment it is invested. A staggered entry through regular amounts spreads the entry timing over time and thereby smooths the average purchase price; however, it does not prevent losses. Which of the two fits depends on whether the capital is already available or is being built up continuously from income.

Distribution or reinvestment?

Distributing investments such as rented real estate, dividend stocks and bonds generate ongoing income, taxable as income in the year it is received. Accumulating funds reinvest their earnings. For tax purposes, what matters is not the distribution itself but the taxable income the fund reports.

Reading tip: Investment strategy in focus: the power of the income strategy

How do taxes and costs affect the outcome?

Over long periods, ongoing costs and taxes weigh more heavily than individual price movements, because they recur every year. In Switzerland, capital gains on securities held as private assets are exempt from income tax for private investors, while interest and dividends are taxable as income.

Withholding tax of 35 percent is deducted directly at source on Swiss interest and dividends. Anyone who declares the income correctly gets it refunded. Regarding costs, what matters more than any single line item is the total burden over the planned investment period: custody fees, product costs and trading costs together. For an overview, see the article on fees when investing.

Holding securities in Pillar 3a or in a vested benefits account follows a separate regime: these balances are exempt from income and wealth tax during the term and are taxed separately on payout. For more on this, see the articles on the vested benefits principle and on vested benefits accounts.

Frequently asked questions about long-term investments

From what point is an investment considered long-term?

An investment is usually considered long-term from a horizon of about five years; for stocks and equity funds, five to ten years is often cited. There is no binding definition. What matters is less the number of years than whether you can genuinely do without the capital during that time, without having to sell during a price decline.

Where can you find information about investment options?

Banks, wealth managers and independent bodies offer conversations about investment options. Client advisors at a bank are sometimes compensated through commissions, meaning the advising party earns money when a specific product is purchased. Such conflicts of interest must be disclosed. It is worth asking about the compensation structure and gathering several opinions.

Should every investor make long-term investments?

No. That depends on risk capacity, liquidity needs and investment goals. If you need your capital in the short term, volatile investments are a poor fit. A long horizon gives you more time to ride out price fluctuations, but it carries no assurance of any particular return. Pension planning also depends on individual circumstances, including how your overall old-age provision is structured. Past performance is no indication of future results.

Which providers exist for long-term investments?

Providers active in the market include traditional banks, online banks and online brokers, wealth management firms and wealth managers, digital wealth managers, fund companies and insurance companies. Providers differ in cost structure, minimum investment amount, investment universe and how much control you retain over decisions. Comparing total costs over the planned investment period is more informative than looking at a single fee.