2021 Portfolio Strategy

Hi all,

Now that lockdowns are ending, inflation is (temporarily?) increasing, interest rates are at an all-time low (and still negative for bonds), and VT is at an all-time high, what is your portfolio strategy for now?

If you could change your portfolio, would you still go for 100% VT/VWRL?

Thank you!

Hi tophat

I don’t have all I have in stocks. I have roughly half stocks half bonds and am sticking to this no matter what. The decision for the stocks/bonds ratio should be guided by your own risk appetite/tolerance and not by the current situation in my opinion.

If you feel uncomfortable with 100% VT, since it is at an all time high, it is not the worst time to reconsider your stocks/bonds ratio, but it should be done as a long term decision, not as a reaction to the markets.

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Hi tophat

100% VT/VWRL or something like 70% IWDA and 30% EIMI. As I have 40+ years until retirement age, I will not think about bonds the next 30 years :smiley:

Inflation: consider a scenario with inflation rates oscillating around 3% in the next few years, then 4%, and so on.
Bonds: be on the right side of the trade, i.e. have some mortgage :grinning:.

Welcome logitacher!

EIMI is a good point. It’s important to not miss emerging markets.

Bonds are because you want to sleep at night, not because of returns. If you sleep well at night even when your portfolio is 50% down, and you are not tempted to sell, then this probably works for you. I know I wouldn’t be able to deal with 100% stocks.

Thanks for the great advice so far!

What bond ETFs do you recommend?

When you say 100% do you also consider second pillar, third pillar, cash…?

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I’m just out of a session of trying to theory-build a permanent portfolio for the part of my money that I may need on the shorter term. My conclusion is that we have crises, nowadays, where all assets can drop simultaneously that make that impractical if the purpose is for that money to be there when it’s needed (there’s something to be said about it if the purpose is to fit your risk tolerance).

If your risk tolerance is less than 100% in stocks, I’d follow an allocation that reflects that. As I have a low net worth, a high human capital, no dependents and a good apetite for risk, I’m keeping in cash the money I plan to use in the short term (emergency fund, opportunity fund and savings for a downpayment on a house in less than 2 years) and have the rest invested 100% in stocks. Given the relative size of my second pillar and farmlands in regards to my total net worth, that still places me at a conservative allocation.

I’d be more conservative with my liquid investable money if I had more to loose (more accumulated wealth, dependants or closer to retirement).

As a wise man once said: “making predictions is tough, especially about the future.” As @ProvidentRetriever states, it’s good to have a strategy that we can follow as much through good as through hard times and to just stick to it.

Edit: just in case that was part of the question, the permanent portfolio I’ve landed on was pretty close to the Golden Butterfly, with CHF as short term bonds and all world stocks rather than US centric.

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