Best Portfolio for a retiree?

[Padawan]

Hello guys, I see a lot of information here on planning retirement but less on what to do exactly with your money once you retire:

My mother just retired, she has only the AVS with CHF1’900/month and around CHF300’000 at the bank. She needs to take around CHF1’500 per month to live.

Most info I find says to invest most of it in bonds. I’m not a huge fan of this approach after seeing what happened with them since 10 years.

I hear also about dividend ETFs. I think it is a valid option since it simplifies the withdraws.

Any advice or similar story is welcomed. Thanks

[Dr.PI]

@Padawan

CHF300’000 at the bank. She needs to take around CHF1’500 per month to live.

Withdrawing 6% p.a. of original portfolio value? For how long? Sorry, there are no miracles.

You can check for example simulations by The Poor Swiss to see what is possible.

My guestimate is: 60% stocks, 40% cash portfolio should last for 20 years.

[TeaGhost]

She won‘t be able to manage funds herself and there is major risk for you if you did on her behalf. Therefore, you are stuck with a ‚managed withdrawal plan‘. You could go to the Bank and pay an arm and leg (and watch your mother run out of money)… the next best alternative is viac invest or Avadis.

Choose 40-60% Stock Max set up. Monthly withdrawal of 1‘500 and do not adjust for inflation. Chances are that the money outlives her (you should get about 20 years, maybee you get 30+). To ensure you don‘t choose a bad start date (aka sequence of return risk), invest 100k each over the next 3 years.

If she runs out of money, she had a solid plan and management so that she can claim Ergänzungsleistungen, which is absolutely deserved at that age and not like social security something she needs to be ashamed off.

Maybe only invest 280k and tell her to keep 20k for emergencies in a savings account. You are not in the US, she will be good. Not perfect but good. Actually, you should recheck once in a while where she stands and you can lready claim ergüänzungsleistungen once she still had funds but was already below the threshold (100k i think).

[Wolverine]

With the 4% rule, she should be able to withdraw CHF 1000 per month (12k per year), adjusted for inflation. That’s less than what has been assessed as her needs so there’s a real chance that she’ll draw her assets down to less than 100k, which would allow for her to qualify to the supplementary benefits of OASI.

I would study those and be ready for if/when that occurs.
[DE]: Ergänzungsleistungen zur AHV und IV | Merkblätter | Informationsstelle AHV/IV
[FR]: Prestations complémentaires à l'AVS et à l'AI | Mémentos | Centre d'information AVS/AI
[IT]: Prestazioni complementari all'AVS e all'AI | Opuscoli | Centro d'informazione AVS/AI

With that in mind, in this particular case, I would aim less at portfolio preservation and more at favoring more upside, if she can stomach the risk, that is (I know my parents won’t consider anything more exotic than a medium term note for their own assets so the full range of investment products may not be available).

For the discussion about fixed income products, I would refer to the Wiki: Short guide to CHF fixed income options

In the current times of likely future negative interests, I may put some assets in medium term notes but would favor keeping cash on bank accounts (ideally max 100k per bank to benefit from esisuisse insurance. If not feasible, then I would still assess if a money market or bond fund would not be suitable (taking a bit more risk for neutral or positive return expectations rather than eating negative interests).

For a discussion about dividend funds, I would refer to this topic: Monkey-brain ETFs: Dividend ETFs

I’d keep in mind:

• that dividends and interests are taxed but that capital gains (selling shares) are not.

• that selling shares usually incurs fees and costs that dividend distributions don’t.

• that dividends are distributed in the base currency of the fund, not that of the shares (double check if they’re distributed in USD, EUR or another currency when planning what fund to buy).

There is a psychological effect to recieving distributions but also one that goes with spending more than the distributions one get (having to sell assets anyway). Some argue for high dividends, I would personally make a case for using accumulating funds and selling as much as required according to the plan so that psychologically, the fact that selling assets is the normal process of funding retirement becomes more ingrained and less disturbing.

I would aim at some mitigation of fluctuations in case of major drawdown for psychological reasons (not seeing the assets melt at once if things go bad) so I would not personally go 100% stocks but would select a more conservative portfolio (standard would be 60/40. Using standards mimimizes the perceived personal liability of the advice giver as well as the risk of blame throwing if things turn bad).

I would personally see four options:

1. keeping liquidity on a bank account and a single multi-assets fund combining stocks and bonds (ala Vanguard LifeStrategy series).

2. keeping liquidity on a bank account, part of the assets on savings accounts or on medium term notes (check the withdrawing restrictions that can apply with savings account, they’re more and more frequent these days) and a global diversified stock fund.

3. If she’s averse to investment products, keeping it all on savings accounts, drawing it down with time and relying on the supplementary benefits when it drops below the threshold.

4. Resorting to using asset management solutions like her bank or VZ. They may be expensive but the end result will probably be supplementary benefits anyway so if doing so brings peace of mind to both your mother and the rest of the family, that may be well worth the costs. Edit: @TeaGhost’s post above is probably better advice on the issue than I can give myself.

[PhilMongoose]

@Padawan

My mother just retired, she has only the AVS with CHF1’900/month and around CHF300’000 at the bank. She needs to take around CHF1’500 per month to live.

You mean she needs 1500 more than the 1900? Or she’s going to get 400 more than the 1500 she needs?

[TeaGhost]

Actually, I correct my advise. If she needs 1500 on top, set the withdrawal up to give her 1750 on top. This is not the time to keep her from her well deserved nest egg… she has a safety net with Ergänzungsleistungen, privided she does nothing crazy and things are well managed.

[Tony1337]

A robo advisor might be a good solution. You can set them up to automatically pay out a fixed sum monthly, and it handles everything for you.

VIAC invest can do this, finpension invest maybe as well.

It will likely set up something like a 50/50 stock/bond portoflio and then auto rebalance and pay it out. Just need to set up once.

[Guillaume_GVA]

What about the CHF 18’000 being transferred once a year to her current account (extra cash cushion for the year), allowing her to be “more agressive” on the invested portfolio ?

Edit: depending of the canton of residence, you pay little taxes with a taxable income of around CHF 23’000 (1’900*12). An income oriented portfolio may be interesting with an allocation (to be determined) to high dividends and high yield bonds.

[Yanikuza]

Here some “perspective” from Viac invest

Allocation 40/60:

Allocation 60/40:

This simulation should be taken with a grain of salt, given that we don’t know what the future holds. But it’s still pretty encouraging.

[Your_Full_Name]

Invest the 300k into CHDVD.

CHDVD then delivers about 11k in distributions per year. Take out the remaining 7k per year by selling down CHDVD as necessary.

• While the dividends are taxable, it won’t matter much in her tax bracket.
• Selling down parts of CHDVD will likely be addressed by CHDVD appreciating faster^[$]
• Both dividends and capital gains will address inflation.

As others have mentioned, she’s probably entitled to Ergänzungsleistungen.

Edit:

@Dr.PI

Sorry, there are no miracles.

Sir, you forgot compounding.

---

$   CAGR since inception in April 2014 to April 2025 has been a cool 8% or so.

[Tony1337]

This is a pretty bad strategy when we hit a deep bear market. Dividends will be cut and then you need to sell down your position that are in a big drawdown.

The history CHDVD does not include 2000- 2008.

The strategy would have done very poorly and likely ran out of money. And/or having severe psychological drawbacks.

Didends are not free money.

Also I know there is the Cederburg study, but that assume as globally diversifified home biased market cap weighted strategy.

A very concentrated 100% home dividend strategy is very likely a highly failure prone strategy (at the withdrawal rates we need here).

And 100% equity assumes a robot-like iron stomach anyway.

[PhilMongoose]

@Tony1337

The history CHDVD does not include 2000- 2008.

I guess you could look at components of CHDVD to see how they fared. e.g. looking at NVS, that stock recovered within about 1.5 years in USD terms.

[Your_Full_Name]

This is slightly off topic for the original poster, IMO, but here we go:

Surely, you’re joking, Mr @Tony1337 (and everyone who is clapping along).

Obviously, express your opinions as you see fit, but …

While the CHDVD did not exist in 2000 to 2014, you could look at their current top holdings and estimate how their holdings and dividend payments held up compared to “the market” or those “safe” bonds at the time …

There’s actually a reason why dividend paying companies (and actively selected ones as in CHDVD) will continue paying dividends even when your regularly scheduled recession or market crisis occurs.

Roche, currently at 15.58% of CHDVD: no dividend cuts during the GFC.

If you look at Roche during the dot com bubble, things won’t look different.

Novartis, currently at 14.95% of CHDVD: see above.

Nestle, currently at 14.66% of CHDVD: see above.

Zurich Insurance, currently at 14.62% of CHDVD: yes, they cut the dividend. Exactly once after the GFC.

We’re now at about 60% of CHDVD.

Anyway, I didn’t and will not pass judgement on other suggestions in this topic, but I’ll stand by mine.

It’s what I would do, and in a way it is what I am doing with my retirement portfolio as I am retiring, albeit slighty more complicated, so I kind of feel I am not armchair advising like perhaps others advising here many years away from retirement might be enticed to.

If I were in the OP’s mothers situation I’d just do what I recommended.

[Tony1337]

@Your_Full_Name

It’s what I would do, and in a way it is what I am doing with my retirement portfolio as I am retiring, albeit slighty more complicated,

Sure but you are in a totally different position. Judging by your post history you have a very fat portfolio, that probably sustains you at a very low withdrawal rate. You can basically do whatever you want with a low enough withdrawal. OP’s mum needs a 4%+ withdrawal rate and recommending anything that’s not supported by literature and has a statistically significant backing is dangerous at best.
And recommending a retirement portfolio of 20 stocks, that’s highly concentrated, is absolutely ridiculous to me and any financial advisor worth his salt.

Also to make a proper analysis of the past, you’d need to look at exact index weights, including proper decumulation (and the effects of not reinvesting these dividends at the lows).

Edit:

An example:

I only have EWL MSCI Switzerland as a backtest. But can give an idea what can happen:

Start invest 1 year before dotcom 01.01.1999, start with 300K, withdrawing 4.5% inflation adjusted.
We run out of money in November 2023 already after 24 years.

https://testfol.io/?s=9rCuGdlzj2K

[Daniel]

If she plans to stay in Switzerland during retirement, then the possibility of supplementary benefits (EL) should be accounted for in planning, as Wolverine said. If she hopes to retire outside of Switzerland, then how she invests and withdraw her savings is crucial.

The recommendation I personally would make if my mom were in the same position:

1. Set aside an emergency fund.
2. Place the money that will be needed for the first 10 years of retirement in the highest-yield CHF medium-term notes available, with terms between 1 and 10 years to match the withdrawal plan.
3. Invest the rest of the money in a broad stock portfolio. If history is anything to go by, the 10-year term should provide a sufficient hedge against market crashes.

[Padawan]

Thank you all for these detailed inputs. I really didn’t expect so much help! I’ll go through them carefully.

From my online research, I found that Finpension offers an investment plan specifically designed for retirees.

It allows you to invest using the same strategies as in their 3rd-pillar products and to set up monthly withdrawals. While the fees are higher than if you managed the investments yourself through IBKR for ex, it has the advantage of being a “set-it-and-forget-it” solution.

I wouldn’t use it for the entire amount, but it could be a good, simple option. And it would help avoid being in a difficult position if the markets were to drop, as some of you mentioned.

https://finpension.ch/en/investing-pension-fund/

[Padawan]

Yes around 18’000CHF per year in the first years. I expect this amount to lower in the future but then you could have health related costs so this should be a good average.

[Padawan]

Yes, she needs to withdraw around CHF1’500 per month from her capital.

[Tony1337]

This is probably the best solution in this case in my eyes.

[dipstinger]

Have you considered annuities for the 300k? They are products that provide guaranteed monthly income for life or a fixed term depending on the contract, although they might have higher fees.

Because you lose access to the 300k it may not help with wealth preservation but also it’s kind of a life expectancy gamble, live longer and you win, live less and you lose.