Advice on portfolio for beginners

Hi everybody,

I’m thankful for asking advice, as a beginner Swiss investor, to such a fantastic community of experts, which I have regularly followed for a while.

As I am a novice, I’d like to ask your feedback on my portfolio ideas.
I believe this discussion may help other people who are beginners in DIY investing. I found indeed related threads, but not very recent ones.

First, as I am a complete beginner, I decided to split my investment budget (currently around 20k chf/year, may increase over time) into two parts, 50% to be allocated to a roboadvisor (True wealth, the cheapest I found), 50% for DIY investing (with De Giro). Not ideal from a fee standpoint, I know, but it helps me to get started faster and not procrastinate too much :slight_smile:

As for the DIY part, I’d like to keep my portfolio as simple and diversified as possible (ideally, a buy and hold strategy). As I am relatively young (around 30yo) and without specific goals at the moment (e.g., buying a house, car, etc), I’d like to simply focus on long-term growth: only keeping a fixed amount of my money in a “sleeping” savings account, and try to make the rest grow as much as possible in the long-term, regardless of temporary losses.

I thought about two possible asset allocations, to be realized via low-fee ETFs:

Portfolio A: 80% world stocks, 20% Swiss stocks.

A pitfall is that it relies entirely on stocks. Usually I would add a percentage of bonds, but to my current understanding (please correct me if wrong!), it is not convenient to invest in Swiss bonds for a Swiss investor, due to their negative yield.

An alternative:

Portfolio B: 70% world stocks, 20% Swiss stocks, 10% gold.

If I understand well, gold seems roughly uncorrelated to stocks, so it might be a good addition to the portfolio to decrease its volatility.

My questions are:

  1. Do you think it is reasonable to disregard Swiss bonds, as a Swiss investor, because of their current negative yield?
  2. Should I focus on specific Swiss stocks? (e.g., only mid cap if large-cap ones are covered in the world stock etf).
  3. Do you think that adding gold may increase long-term returns (as somehow implied by these simulations: https://thepoorswiss.com/invest-in-gold/ ), or do you think it may not have such an effect?

In general, do you think portfolio A/B above could represent reasonable asset allocations for somebody in my situation? By only considering asset allocation, am I neglecting any important elements?

Thanks,

Mario

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Why do you want to delegate part of it at high cost if you are willing to do it yourself for the other half ? I don’t get it.

  1. Yes, buying bond is a bad idea at the moment. You can use “high” interest savings account, bank bonds, real estate mutual funds to replace the bond part (real estate mutual funds are replacing a mix of your bonds and stocks, not bonds directly).

  2. No.

  3. Adding gold will definitely lower your global volatility. Do you intend to retire early and sell your investments progressively when time will come or do you intend to only use dividends (like in working to 65 yo for ex.) ?

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Good question. Although I’m willing to do it myself, I could not predict how much time it would take me to learn all the details to implement the strategy. So I preferred to have already some minimal capital invested in almost zero time.

Medium/Long-term, I plan to substantially increase the weight of the DIY-part.

At the moment, I could get savings with 0.1% interest rate, and could not find higher rates in Switzerland.

Will look into the other options you recommend.

Retiring early and progressively sell when the time will come.

Do you have any recommendations as for the weight of gold in the portfolio? Should I run a simulation similar to the one in the linked blog post to understand its impact on volatility and returns?

The best banks are small and local and I don’t know where you live, but basically, the companies that are not the best, but have a wide presence on the territory are

WIR Bank : 0.1% (0.3% from the day you add at least 5000CHF to the account. Reset every 1st january)

Coop Caisse de Dépot / Depositenkasses (NOT a bank. Only protected by the assets of the Coop group). 0.2%

Best local bank is the Caisse d’Epargne d’Aubonne : 0.5% with a Compte d’épargne placement (= lower limit for withrawal without notice). Even 1.25% if you have not reached 30 yo. They have a real e-banking to get your money back.

Bank Cler also seems to have higher interest rates, but I have not looked into it in detail and don’t know what special conditions there might be.

In my understanding, gold’s return is at best 0% (after inflation; as it should “retain value with inflation”).
I see gold as a “hedge”, rather than an “investment”.
So I decide not to invest in gold (and rather keep cash than that).
But it will for sure reduce your total portfolio’s volatility, as the lesser part of your portfolio is exposed to the higher volatility components (stocks), and it is less correlated with them.

Maybe I would rather consider silver :grin:, or a more general (industrially usable) precious metals ETF.


Edit: “Too late” - SLV has pumped up over 15% in pretty much one day. :smiley:
This situation is pretty “historic” - never before have the metals been at “all time high” at the same time as stocks (as well as dropped back in March with stocks). Quite a weird situation it seems.

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The Bank Cler predecessor Bank Coop used to give a better interest for new deposits in the year of making the deposit. That’s probably still done by Bank Cler, not much help if it’s limited to max. 1 year.

Caisse d’Epargne d’Aubonne seems extremely appealing.

https://ceanet.ch/conditions/

But I could not find more details on the specific conditions (e.g., how much one can withdraw, etc).

As for bank cler, it seems to be always 0.225%, but with an extra bonus of 0.2% for the first year.

https://www.cler.ch/it/clienti-privati/risparmio/conto-di-risparmio-plus

I’ve done some reading in the meantime. The availability of the money is quite limited: you lose all the “bonus interest rate” if you withdraw more than 20kchf during the bonus period (which I think is the first year, then?), and if you want to withdraw more than 50kchf there’s a notice period of six months.

Now I’m not an expert on savings accounts but this seems more strict than others?

The question also is, given the meager interest rates of all savings accounts, does it even matter where you put your money?

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Personally I keep cash in separate bank accounts (and count most of pillar2 as “safe”), not bothering for such low interests rate and don’t want to invest in riskier assets.

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My point exactly, and I do the same.

Cash is my anchor for stability. It’d be nice if I had some returns, but with bonds having even negative interest rates, medium-term notes tying down my money and yielding very little, and time deposits yielding nothing… well, what’s left?

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This is an interesting and insightful perspective.

The article is clear about why silver is more practically valuable than gold, but I do not yet fully understand the possible impact of silver on a portfolio. As you noted, it climber over 15% in such a short time, and I have no idea what one may expect in the future.

At the moment, I’ll probably choose gold over alternatives (bonds, silver, etc) to reduce volatility, but will keep an eye on silver and other possibilities.

Except that the factsheet says it’s 0.025% and not 0.225% as the website says.

WTF?!

https://www.cler.ch/de/-/media/files/bc/privatkunden/sparen/9010042_sparkonto-plus_de.pdf

Those extra 0.2 are probably including that extra bonus for the first year.
Advertising… :slight_smile:

Dropped them an e-mail. Answer:

Der aktuelle Zinssatz beträgt 0.025%. Bei Kontoneueröffnung erhalten Sie einen Zinsbonus von 0,20% für ein Jahr ab Datum der Kontoeröffnung.

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Thanks for all the clarifications about Bank Cler. I will further investigate about CE Aubonne and let you know.

As for the world stock part of my beginner’s portfolio, I would probably go for this ETF:

Alternatives might be:

What do you think about these alternatives? Or would you recommend another ETF?

Msci world does not have emerging market, ftse world does.

You can also get 0.1% at the Banca dello Stato, the cantonal bank in Ticino.

OP, I believe you did not say how much cash you want to keep in a saving account. Are you sure your search is worth it… 100’000chf *0.1% = 100chf interest per year = <2chf/week…

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Good point. As per my original post, the portfolio allocation for the part of my money that I will invest is my most important concern.

As I mentioned Swiss bonds, somebody said that cash might be better to hold now, which then started the discussion on savings interest rates. My view is that 0.1 vs 0.2% is probably too small of a difference to consider switching account because of it. But, 0.5% (Aubonne) may be worth considering if other conditions are reasonable, let us see what they say.

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