Heads up - what to do in the future, my current position, advice needed

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1

Hello,

I’m here to give my current position and ask for advice on how to continue on the road down towards FI.

First, a bit about me:
27 y/o, work in IT with a Bachelors Degree.
I currently have:

  • CHF 98’000 in a Savings account doing absolutely nothing
  • CHF 49’000 on Degiro, invested into
    • UBS ETF SMIM A-Dis ETF - 48x, CHF 13’400
      *Vanguard FTSE All-World UCITS ETF USD Dis - 369x, CHF 35’500
  • CHF 40’000 In Bitcoin
  • CHF 45’000 in my Pillar 3A at VIAC, invested into Global 100 Strategy.

Last year, I made around 78’000 before taxes. I live frugally and usually save CHF 3000-4000 per Month.

What irks me most is the ~100k sitting in my bank account - I feel like inflation is eating away at it, but I don’t know where I should put those savings. My ETFs at degiro have not given me any returns in the past year or so.
So, my question is:

  • Does the allocation of ETFs make sense? Are there better ETFs that you could recommend? Given that my 3A is also being invested, am I overinvesting into a single market or is this allocation fine?
  • What do you recommend to do with the 100k sitting around? I am also possibly interested in real estate, also outside of the country. I hold a german passport if that matters.

Thanks for any pointers on the matter. If I need to provide more info please let me know.

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Probably. It’s not insane.
Except of the Bitcoin part.

Which single market?

Think about your desired allocation and invest accordingly. If 50% in cash is your target allocation, then that’s it. If it is not, invest accordingly.

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3

P.S. your assets in a savings account might for example decrease your banking fees, so it is not necessarily doing nothing.

P.P.S. and don’t forget to define and maintain an emergency fund.

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A slight tax optimisation for later will be to open up to 4 extra pillar 3a with viac to generate an equal size of investment in the 5 accounts at retirement age. You will be able to close 1 by year before retiring and lowering tax.
You should stop contributing to your actual 3a until the 4 other reach the same amount.

For the 98kchf cash, you could slightly change your risk aversion strategy by defining an Investor Policy Statement.
Especially the target allocation and focusing on rebalancing it.

I feel you as I am still fighting it but defining one help me through the years. I am following it yearly in my portfolio.

5

I’m in the minus since I started pouring money into VT at the start of 2021. So what? It’s a long game (at least for me). Consider your longtime goals and when you plan on spending the money that is now available to invest.

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6

Having a really long horizon in front of you purchasing land anywhere in EU would save your savings long term. Europe is overcrowded, land is finite.

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Might be true for cities but most European countries will likely face depopulation in coming decades (already acute in some rural areas)

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That has been a myth for the last 50 years or so.

(though it may of course happen eventually - possibly as the EU is under political pressure to tighten their migration policy and enforcement, particularly on irregular migration)

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Hi. I suggest that you start at the top and tackle it down:

Pot 1: “Emergengy” money. From your information, I suggest that that is around 20’000 (money spent during half a year or so). Needs to be available in a bank account with no restrictions.

Pot 2: Your savings. All the money, you don’t need for the moment. Define your allocation (risky vs. non-risky). As a start you can take the Boglehead recommendation: Non-risky part in percent would be you age, risky part would 100 minus you age. If you want to buy a house or an apartment soon, you need to be much more careful.

Pot 2.1. Non-risky part. This would be your second pillar plus whatever you need to reach your allocation in cash or bonds.

Pot 2.1.1. Second pillar.

Pot 2.1.2. Savings account in a save bank, preferably Kantonalbank with state guarantee. When your savings grow, you might consider buying bonds or a bond ETF. Make sure it’s in CHF (or your home currency).

Pot 2.2. Risky part

Pot 2.2.1. 3rd pillar (if 100% shares)

Pot 2.2.2. ETFs, shares, bitcoins, whatever. To be well diversified, I recommend the all-world etf to be the big junk. Maybe you want 90% of this pot to be all-world and 10% playing money (bitcoins, single sharea, special theme ETFs, …).

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11

Not sure why you say that. Italy growth rate is at -0.6%, Germany 0%, Greece -0.5%, France (traditionally had a high fertility rate) +0.3%, etc.

Though immigration can reverse that trend, politically it is very far from being acceptable (if anything most of those countries are taking an anti-immigrant stance).

That said, I’d still expect large cities to grow and be desirable, but some rural areas have already been facing issues in the last decades (hence some places in Italy where you can buy a house for 1 EUR).

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12

Just look at the numbers!?

Fertility rates in major EU European economies (DE, UK, FR, IT, ES) dropped below the replacement level of 2.1 already in the 1970s. That is almost 50 years ago (with only Spain a bit later at the beginning of the 1980s). And they have remained below that replacement level.

Yet those countries substantially increased in population since then, with again all but one (Italy) of them peaking only in the last year or two.

Immigration has obviously been tolerated if not accepted as a replacement so far. That may certainly change, especially given how much of that migration is not regular skilled labour migration.

Germany has had net immigration in the hundreds of thousands year after year for over 10 years (see Migration reports from their Federal Ministry of Migration and Refugees).

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Nevertheless, buying land somewhere is not really diversification. You can also argue, economy will grow, go buy a share.
There are definitely regions in Europe, even in Switzerland, where the price of land dropped. See some eastern Germany regions or the Mitholz region in Switzerland.

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Reflecting on this, Europeans traditionally were not much mobile so “the life” was constantly expanding everywhere. Americans for example are very mobile, whole towns could turn into ghost towns in a season.

Switzerland is a different reality. In the “center”, ZH/ZG/SZ you’ve got huge economic incentive, the best business opportunities and the lowest tax.