Advice needed on Portfolio/ investment expert

Investing / Portfolios
1

Hi All,

I needed some advice on Portfolio and investments in general. To give you a background:

We are a couple living in Zug with one child, currently both of us are earning but my partner is taking a break from work next month. So, we started to review the financial situation (which we had ignored for a while) and felt we can get some advice from the community/ experts. We ae also looking for a financial expert to optimize so please recommend if you know someone.

Currently we are earning around 250k (160 me and 90 partner) together and are on C permits in Zug. Here is the breakdown of our life savings:

  1. Cash in bank: 90k

  2. Truwealth : 45k but is 5% down since a while and hasn’t changed in last few months, we deposit 500 every month here

  3. 3a with Viac: Both of us started in 2020 (Global 80 and has given 14% return). For last year we changed the strategy (global and sustainable 100), and I foolishly put all at once in Feb and since then declined by 22% until September 22 and then gained / increased but still -10% since start

  4. Degiro: 50k in various ETFs and stocks but all negative since a few months, I burnt my hands in few wrong ETF and equity investments and stopped trading anything for 6 months.

  5. Selma: 8k invested last year but still in negative, so just holding it until it improves.

  6. P2P: 10k lost in Advanon as the companies failed, stopped it.

  7. P2P with Cashare: 10k locked and getting returns healthily until now.

  8. Gold with UBS worth 4k, planning to hold this for a while.

Now, as you can see, I have my hands in all places and no good strategy. hence, I wanted a to take inputs and seek help to help me organize this.

Any advice will be helpful.

2

What’s your goal with your investments? FIRE? Regular retirement? Any short term goal we should be aware of (real estate, consequential travel, expensive training/ceremony, other)?

What is your expense level? Are the 160K you earn enough to support the three of you? Are the parameters of your partner’s break defined or is the door kept open for longer than just a few months’ break, and potentially a full stop of work?

I’m asking because you seem to put some important emphasis on your losses, which drives me to think that properly assessing your risk tolerance may bring good benefits as you may be invested too agressively as of now.

I like the “need”, “ability” and “willingness” to take risk framework for that:

The need to take risk is your need for returns on capital. If you both keep working with your salaries, your need for risk is probably zero given the Swiss social system. If you have defined financial goals and/or target a lifestyle above what you can currently afford, then you have a need for risk which it would be helpful to quantify, or at least roughly evaluate.

The ability to take risk is your abilty to go through a deep and prolonged downturn with peace of mind. Elements that may interfer can be related to your actual financial wellbeing (potential loss/reduction of income, untimely illness/disability/death (insurance can help with that), increased expenses due, for example, to more children or need for financial help by family members or very close friends, etc.) or they can be related to your psychological ability to stay the course and keep following your investing plan even though your assets are deeply underwater. 2022 was pretty tame in comparison to what can happen in very deep drawdowns happening in times of crisis when the world seems to be about to break.

The willingness to take risk can be visualized as your temperament or lust for risk. Do you properly visualize that even on the long term, stocks can register losses and are you at peace with that? Do you go further and actually enjoy the thrill of having your assets at risk?

It’s pretty hard to give hopefully not harmful advice without knowing your circumstances better.

Edit: after reading your opening message a few more times, it seems to me (though I may be wrong) that you value outcome over strategy. The P2P part looks particularly telling as you have stopped investing in the solution that gave you bad returns but have kept the one that gives you healthy ones, while they’re both probably just as risky and luck may have been a dominating factor in the outcomes you are experiencing.

Successful investing in risky assets requires a big amount of trust in the strategy even when the outcomes are very lackluster.

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First, get your money from P2P platforms as soon as you can.

Secondly, I see that you focus a lot on past returns. The real important information is what do you own ? Do you have 45k of bonds or 45k of stocks with Truewealth ? If I were you, I would consolidate all assets by category on a spreadsheet (stocks, bonds, loans, gold etc.)

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Thank you Wolverine. FIRE was my goal in 2019-2020, before our child was born. But i have realised that it will take a while. So i have reevaluated my goals in last 2 years, for now only have long term is to have enough to sustain that i can choose not to work.

I realize after reading your reply that i need to re-asses my ability to take risks. Thank you for highlighting it, never occured to me before. I have been defining my risk profile as aggressive however i go to my robo advisors on a regular basis to see if things changed.

“Successful investing in risky assets requires a big amount of trust in the strategy even when the outcomes are very lackluster.” This is very apt comment, i did think that i had a big trust in my strategy but i might have mis-judged my apetite in the past.

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Yes, that is what i want to do as well, to more out of P2P platforms. For a while i thought CG24 and Advanon are good solutions but i have burnt my hands. My plan is to get out once my lock in are over, despite i have got good returns on cashare.

I think it s a great idea to consolidate things in one spreadsheet. I will do that in next days.
As i feel that all roboadvisors- truewealth, selma etc. are buying the same kind of ETF and i have never detailed out their ETFs in single sheet to compare. That would be a great exercise to evaluate and close if there are overlaps.

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Could you please provide a breakdown of your annual and planned expenses (e.g. downpayments for house etc)?

Pretty impossible to create a target allocation from scratch otherwise.

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Sure, it may be Zug, but come on! CHF 5000 a month should allow for a decent apartment, and another 1500 per head should pay for health insurance and buy a bit of food, if you live frugally. As a relatively low income household with only 160k for a family of three, they should also pay only 5% or so in cantonal and municipal taxes.

Gold and the P2P investments are a drop in the ocean, considering your income. The latter needlessly risky, when you can buy bonds from trustworthy countries like …Indonesia or Colombia or something, instead.

As for the “robo” advisors/investment services, I do believe they’ll offer a decent portfolio allocation (in equity and bond funds and, possibly, gold). At the same time, I have a very hard time believing that their performance can, over the long term, keep up with a similar equity/bond portfolio. This is due to the performance drag from the added 0.5% or so in additional costs.

So here’s my five suggestions:

  • Close 2, 5, 6, 7
  • Rethink 8, your investment in gold. CHF 4000 is small change and not a serious investment amount (either close for simplification or increase. Personally, I wouldn’t)
  • Decide on the the amount of (emergency) cash you need and the amount of investable cash you want to hold that could be invested
  • Progressively invest your remaining cash in low-cost index ETFs. Keep it simple: you don’t need more than 2-3 equity ETFs and 1-2 bond and/or real estate ETFs. Just two to three funds is probably enough. Keep them - and your overall portfolio - well-diversified.
  • If you have an urge to gamble, pick individual stocks or similar (more risky investments?) with a bit of money, set aside a certain amount. This should probably not be a smaller and not the core part of your wealth (…unless and until you’ve proven yourself successful with that over a longer period of time. Once you figure out a way to consistently outperform the broader market, do report back to this forum and tell us how!). Do this on a separate low-cost securities account/broker, not on your main investment account.
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Can you recommend 1-2 low cost real estate ETFs?

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Both of these conversations should be great for you

Or

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