Desinvesting in case of uncertaintaties in the market

Investing / Portfolios
1

Hi all,

It might be a very very silly question, so I apologize in advance :angel:

Yesterday I was reviewing my portfolio (200K), which right now is invested in VT, VEUR (it’s overlapping, but we had some EUR already, and we didn’t want to be overexposed to the dollar) and some very marginal shares, below 1% of the portfolio.

I don’t really feel confident that this will be quite a positive year as the last one, and I’ve started looking for how to protect the portfolio.

I then arrived to this dilemma: what is the value of holding, for instance, precious metals right now rather than disinvesting a certain amount of shares and be ready to buy them back if they happen to really go down in the upcoming months/year?

This is what I took in consideration:

  • Right now the inflation is relatively under control in Europe, and especially here in CH it’s not high.
  • Keeping like, for instance, 75% of portfolio invested might beat the inflation in Europe quite easily
  • Even if those 75% of share will go down, for instance, by 40% because of some strange reason, my plan is to keep them and look for the “long term”
  • That 25% of cash I would use it to re-buy the share at the moment (I hope :P) it will be appropriate.

So, am I out of my mind, or am I missing something in the “equation”?

2

There are only uncertainties in the market.

You have a plan… follow it. You don’t have a plan… make one.

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3

Uncertainties in the markets give you your return.

If there was only certainty, your return whee the same as short-term government bonds.

There is always talk about that.

However, if you are uncomfortable now, 100% stocks may be the wrong asset allocation from the start and you need to reevaluate in general.

Check this video:

1 Like
4

What happened to Ben‘s hair? Looks like its. New Job Title, Nei Hair Year? :smile:

5

The hair premium is certainly delivering :joy:

6

You didn’t mention any ability to invest at regular intervalls. That would represent buying additional shares at different future prices without the need to exit part of the portfolio now.

Other than that I fully support the call for a plan, i.e. an asset allocation across these classes for your personal timeframe:

  • Cash
  • Bonds
  • Stock
  • Real Estate
  • Precious Metals
  • Crypto
7

I see.

Right now my portfolio has this long-term strategy (investing on a monthly basis):

  • cash 16%
  • fixed-income (I defined my second pillar as such in my plan) 24%
  • stocks: 60% (50% CHF, 13% EUR, 35% USD)

I have watched the video ( thanks @Tony1337 !) and I simply feel like I need to study more to increase my level confidence and knowledge (which I clearly lack :sweat_smile:)

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8

Currency is irrelevant.
Or you meant the CH, EU, US markets here?

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9

You are right, I forgot to mention that I meant the currency.

10

At any moment , money held in stocks should be assumed to be locked for next 8-10 years. If you don’t need that money during this time, you are better off doing nothing

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11

200k of assets won’t bring you anywhere, so it looks like you have many decades to earn and invest at least double of what you already have. On this scale, there is not much to “protect”, and any “hedges” will just reduce the growth of your portfolio.

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12

Yes, indeed, until the time you need to spend it.

Can I have some of that “not much” please? 200k can cover expenses in some EU countries for 3-5 years, 10-15 years in some Balkan countries, decades in poor places in the world, please be a bit more considerate, especially when millionaires over here nitpick about a few tens of CHF and most people don’t raise an eyebrow.

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13

“Currency of stocks” is what I referred to there. :slight_smile:
One can hold an ETF in USD, CHF or EUR, and still be exposed to the exact same underlying (which is more relevant to talk about in the context of portfolio composition vs. the currency of funds/stocks).

14

Sure. How long will it take you to save 200k? 3 years? 5 years?

15

Wow, 1.57 million CHF median when getting retired. And this is hardly enough for Switzerland. :fearful:

16

That’s per household. So 800k per person, including 2nd and 3rd pillar. Doable, no?

17

I know I know, my first response was a tad sarcastic.

The answer is so subjective that it’s utterly irrelevant.

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18

That is the median of 2200 households, that did a pension planning at VZ. Their annual gross income is between 100k and 214k.
The average household gross income in Switzerland is at 119K.
I therefore suspect that those 2200 households are more likely to be at the upper end of the median wealth and that the national median wealth is below 1.57 million CHF.

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19

That is very possible, but I don’t think it matters. You don’t plan your retirement with a target to be poor, right? Well, at least I don’t.

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20

It matters in a sense that this figure of 1.57 million does not reflect the true median in swiss society.

I think nobody here does. :slight_smile:
The median forum user in here and the median swiss resident are worlds apart.

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