Cash an alternative to bonds?

Hey there, fellow Mustachians!

I’m a person in my early twenties who is very tempted by the idea of financial independence. Especially, as I haven’t spent much money before for my lifestyle :slight_smile:

About the current state: We’re talking about monthly savings of around 4’500 CHF and a current net value of around 120’000 CHF. Summed up this includes:

  • 60’000 CHF on my Raiffeisen savings account (0.5% interest – I don’t need this money, I have a pretty secure job and income)
  • 6’768 CHF in 3rd pillar at Raiffeisen
  • 56’000 CHF on (trading via SwissQuote, I know IB may be cheaper but I prefer Swiss banks and the IB interface confuses the hell out of me and I am scared of clicking somewhere wrong by mistake):

Now, a normal three fund portfolio would also include around 20% of bonds. As far as I understand also for allowing me to purchase more ETFs in case the index drops. But looking at the bonds such as SBI Government bonds show a yearly return of -1% to -5% which makes me think if it wouldn’t make more sense to just keep the money instead of bonds for this reason? Even the current inflation seems better than investing in a CHF bond which has inflation + losses every year.

I’m asking because I’m considering putting around 55’000 from my savings account also to the ETF and would either keep around 10-20% in cash or as a bond. What would make more sense here?

I’m far away from being a finance specialist and appreciate any feedback. And nice to be part of this community :slight_smile:


Hi, you’ve saved up a nice amount for early twenties, impressive.

I was asking myself the same question as you about the bonds. I only own a stock ETF as you. I was wondering who buys bonds that yield negative interest. Somebody (maybe even on this forum) told me, that private banks have negative interest on current accounts. So if you have millions, the bond will be a better option.

But bonds are not just government ones, also corporate. In USA there is the Vanguard total bond ETF. AFAIK, we don’t have this kind of thing in Europe.

Regarding buying more stocks, I am hesitating. I read today that the Warren Buffett index (US stock market cap / US GDP) is at its record highs, the Price/Earnings ratio is also high. So basically they’re saying it has to end with a crash. The numbers are there, but investors don’t seem to mind.

If we are in for a crash, it will be my first, and I just hope I have the nerves not to sell.

Currently I keep cash and gold, but slowly after bonds yields will normalise I’ll move to Vangurad BND. If they won’t normalise, I’ll stick to cash and gold. Unless inflation will start eating my cash, then I’ll move to gold. It’s crazy situation because there is no good option for safe heaven. Corporate bonds are highly correlated with stocks. So I’d just diversify more stocks in terms of geography, sectors and companies capitalization, instead of buying corporate bonds or junk (bankrupt governments) bonds.

The problem is it may go on a year, two or three. You don’t know when the crash will happen. Of it will happen tomorrow then, you saved some loses that you’d have to wait to regain for few years. But if it doesn’t happen then you lose beacuse you’re not invested in current bull. My strategy is to just invest all the time some fixed part of my income, and just invest even more during the crash, by taking more from my cash reserves.