Feedback on beginner ETF portfolio

[ndilla]

Hello Mustachian members!

I’m 30yo newbie here and in the investment field also so I’m looking for some advises from the expert ones please A bit about me: I’ve a stable job, no kids, no debts and no mortgage.

I’ve been reading a lot about ETF investment, FIRE, Boglehead etc and I finally made my decision to start investing.

My plan is to become FI around 40 so my investment will buy and hold and maybe pick also few individual stocks.

Currently my investments are :

• 3rd Pillar at VIAC:
  15% SMI
  20% SPI
  15% iShares S&P 500
  37% World
  10% EM

• Swissquote trading:
  30% VOO
  20% SMIM
  20% VT
  10% IJH
  10% few individual stocks

• and ~ 100k cash not invested

What are your thought on my portofolio? Also how do you recommend to invest the 100k : spread over the months with 2-3k or lump directly ?

Any feedback and recommendations will be much appreciated

Thanks in advance for your help!

[Dr.PI]

Well, for a start World is like 50% and VT is like 40% S&P 500 / VOO. Why so?

[San_Francisco]

Seems like a reasonably diversified equity portfolio with a strong Swiss bias.

@ndilla

Also how do you recommend to invest the 100k : spread over the months with 2-3k or lump directly ?

Since you want to become financially independent within 10 years
a) you’re already having a couple of 100k saved “in the bank” or
b) you’re going to be able to save 100 grand each year.

Either way, it shouldn’t matter much how soon you’re going to invest the 100k in question.

[xorfish]

US is a part of the world, so you don’t need to hold VOO or IJH.

I would recommend to just go 100% VT in Swissquote and leave VIAC at the Global default.

Cash has not a positive expected return, so I would dump that into VT asap.

[FunnyDjo]

Is it still Recommended to do not invest more than 60k in an US based etf to not fall under the estate tax treaty ?
Dedicated thread: Estate tax treaty US-Switzerland: the final answer about the VT ETF (with the MP family as concrete example) - #16 by ma0

[San_Francisco]

It depends on your country’s double taxation agreement with the US.
It is assumed on this forum (and the accompanying blog) that it shouldn’t be an issue below a couple of millions of CHF.

EDIT: …with the tax itself. The reporting required could still be onerous.

[FunnyDjo]

This question is more lump sum vs dollar cost averaging investment that you can read here:

Lump sum vs. DCA?

And to be honest, unless you are done with earning for life (which I assume you are not), you will be “DCA-ing” one way or another, whether you lump sum this amount or not. Perhaps compare the amount to your yearly savings, that might give you another perspective on the significance of worrying about this decision. If you will have another 60k saved in a year, then why bother DCA-ing these 60k. I setup a mini-approach in my IPS with windfalls depending on their proportion to to…

As long as you fill comfortable with it

[ndilla]

@San_Francisco

Seems like a reasonably diversified equity portfolio with a strong Swiss bias

Since you want to become financially independent within 10 years
a) you’re already having a couple of 100k saved “in the bank” or
b) you’re going to be able to save 100 grand each year.

Either way, it shouldn’t matter much how soon you’re going to invest the 100k in question.

I’m more comfortable with Swiss bias as I “believe” Switzerland will always be a wealth country and CHF will also be a strong currency.

Probably not able to save 100k a year but trying to save at least 40k (all will be invested).

My question was about the buying price average, let’s say I lump today 100k in VT at price around 100 USD, after that we enter in a bear market and price will drop and it might take one year or whatever to go up again and reach the price I paid.

In the other case, if I spread over the months I will have a buying average price lower than 100 USD. (So recover my loss early)

Am I right with my theory ?

Thanks in advance!

[ndilla]

@xorfish

US is a part of the world, so you don’t need to hold VOO or IJH.

I would recommend to just go 100% VT in Swissquote and leave VIAC at the Global default.

Cash has not a positive expected return, so I would dump that into VT asap.

Thanks for the advise!

I’ve choose VOO to overweight a bit more in the US as historically it had a better return than VT, but I know we can’t rely on past performances…

IJH is just to take a bit of risk but I will not contribute a lot in this one.

Definitely I will invest my 100k but looking for some advise if it is better spreading or lump directly.

Cheers

[Dr.PI]

@ndilla

In the other case, if I spread over the months I will have a buying average price lower than 100 USD. (So recover my loss early)

Or you lose 20k profit if the market goes 20% up. Was discussed over and over again in this forum, just search.

[ndilla]

@Dr.PI

Or you lose 20k profit if the market goes 20% up. Was discussed over and over again in this forum, just search.

thanks I will have a look!

[xorfish]

@ndilla

Thanks for the advise!

I’ve choose VOO to overweight a bit more in the US as historically it had a better return than VT, but I know we can’t rely on past performances…

You are chasing past performance. There is no reason to expect the US to outperform in the future.

Same thing is true for Switzerland.

Here is a good article about the change in valuations:

The Long Run Is Lying to You

[triviamaster]

@xorfish

There is no reason to expect the US to outperform in the future.

Why not? Wouldn’t you say that it is possible that the US will keep attracting the best talents because the best talents are already there? Wouldn’t you say that it is possible that the focus on free market and small government will remain in the future as well as the entrepreneurship culture of the US? I’m not American but there is something special about this place. They will give young people a chance. They will fire the unproductive. They will try and try again. People know that the government won’t take care of them so they have to make it on their own. It’s rough on the people but it’s great for business.

@xorfish

Same thing is true for Switzerland

Again, why not? Don’t you think that the cultural focus on reasonable government spending will on the long term let the swiss franc appreciate versus all other currencies being printed like toilet paper? Don’t you think that the focus on legal stability and business friendliness will remain?

The stock market isn’t just numbers and statistics. It’s actual businesses developing in a real environment and in a real culture with real people.

I’m French and I would never invest in the french stock market as a whole. I know that it won’t do well in the long run because the culture and the regulations are not business friendly. It doesn’t mean that some individual businesses won’t do well though.

But I have no doubt about the ability of the american stock market as a whole to perform well in the future. Not because of past performances, although it is a testimony, but because of the mindset, the sex-appeal (all the good inventors, researchers, and engineers, go to the US), and the government structure.

[xorfish]

I’m not saying that it won’t happen. It is just that there can’t be a reasonable expectation that it will happen.

Have you read the paper I linked? If you account for change in valuations, then there isn’t any US outperformance over the last 50 years.

@triviamaster

I’m French and I would never invest in the french stock market as a whole. I know that it won’t do well in the long run because the culture and the regulations are not business friendly.

That is already priced in with the current valuations.

@triviamaster

But I have no doubt about the ability of the american stock market as a whole to perform well in the future. Not because of past performances, although it is a testimony, but because of the mindset, the sex-appeal (all the good inventors, researchers, and engineers, go to the US), and the government structure.

Again, you can’t assume that this isn’t already priced into the current valuations.

[triviamaster]

@xorfish

Have you read the paper I linked?

I’ve tried but it’a tough read for my small brain.
I’ll just say this: I find his example of Buffett trivial. To say that a strategy centered on valuation (value investing) doesn’t produce more returns once you dismiss the changes in valuation. It’s like… yeah man.

EDIT: I’ve found this example very interesting: “overpriced” companies can still outperform. (correct timestamp, 12 minutes into the video for about 4 minutes)

@xorfish

That is already priced in with the current valuations.

All this “priced in” discussion leads back to the efficient market hypothesis, which is a matter faith. I’ll explain: if you subscribe to the efficient market hypothesis, then everything can be explained by the efficient market hypothesis, even the efficient market hypothesis. It doesn’t make it true or false, but it’s difficult to try to disprove it because it’s like a snake biting its own tail.

When looking at past performances, differences in performance between two markets (let’s say the US and France) can essentially be explained by two theories:

1. It’s culture and government, or
2. It’s a statistical artifact because the time considered is too small. Eventually, in the long run, everything will revert to the mean.

If you believe in theory 1, then past performances can be an indication of future returns (although no guaranty). If you believe in theory 2, then everything is priced in, no analysis is required. Unfortunately, there is no definitive proof of one or the other, although Warren Buffett did try.