Is that hers or yours goal ? From previous posts of yours, I recall that RE was your goal. Her goal might be “only” a decent, comfy life.
As I said, perspective. I guess I would be happy with much less than you would be (I am actively looking into the tiny house possibility in Switzerland). I see 3.5 rooms/101 m2 from 1.2 MCHF just by typing into immoscout, and assuming you don’t have/want kids, that should be enough (+ a more thorough research might get better options).
Furthermore, as you keep separate finances, it would be fair you add in rent from your side, which allows for a bigger flat, since she increases her income (not sure if this is practically possible).
Also, having 600k as dry powder for an incredible RE opportunity which might come along the way is not too bad for a starting point. It sure gives you some flexibility which you would not have otherwise.
Finally, her money, her choice as long as you do not have combined finances. And you cannot impose life choices IMHO.
Side note : it is a deeply personal topic, I am just some dude on the internet. Not saying how you should do stuff, just looking into different perspectives. I have a similar issue, since my family in law is asking why we do not buy real estate (and parts of my family as well). I only get some weird looks when I explain opportunity costs, that their nominal gain on property price is mainly inflation, too much risk by putting everything in one object, that the rent to own ratio is out of control in CH etc.
She would like to gradually reduce her workload. Maybe start with 80%, then reduce further. I mean, most people don’t get up all pumped up to go to work .
Neither do I, but yeah, if we move to her flat, I should be paying rent. Many people don’t do that, though. Because it’s somehow tactless to “make money” off of your close ones.
I ran the numbers and I guess she could even get a 600k loan with her current income.
I will have to re-check, but I find it that whenever you dig into these postings, then either the place looks bad, or the location is not too sexy. To me, buying real estate comes with the stress of getting yourself anchored to a location. Because if you decide to move, it will cost you a lot of effort and money to sell and buy a new place. And using it as rental property means you need to pay back the 2nd pillar etc.
I think, as long as she works, she will live in Zürich. So buying a flat here makes sense. But if she invested in the stock market, and saw some big gains, she could retire early and we could move to Ticino, or wherever, and we could afford a considerably higher standard of living at the same cost.
How much is long enough is another question, but I guess if you rent out and buy somewhere else, it should not be a problem (basically just transferring the wealth into a new property.
Looking at gross income you state above, she would still have a very comfortable for a single person. With the starting capital she has now, she could achieve the first goal right now.
Well, I think you should push her to educate herself about investment and provide corresponding materials. Argue that doing something without understanding is not good and if she has money, it is better to learn how to use it effectively. Or if she doesn’t trust your knowledge, convince her to talk with an asset manager, Vermögenszentrum looks reasonably priced.
For now I would also suggest her to fill the 2nd pillar as much as possible. She gets tax deductions, it is growing slowly but doesn’t decrease, and in 3 years you can use this money to buy a property if you find one.
You can also try to convince her that she can have an immediate income from dividends that is automatically adjusts to inflation and market conditions while doing nothing and selling none of the assets. Taxwise not very effective, we know, but with 600k invested in for example
You sort of answered the question. 6% of 10-year periods have been negative for US stock market returns. There is no sure way to know whether the following 10 years will become part of the 94% positive or 6% negative. Given the current situation, I’d say anything less than 10 years is pretty risky, but for an 8-year term I personally would still consider investing some of my assets (20% or 30%) in stocks. But I’m an eternal optimist.
I would trust VZ. It’s a serious institution.
They are relatively conservative, which makes sense since they focus on soon-to-be retired clients. They don’t sell their own funds, and give back 100% on any commission they receive.
You basically pay for neutral, professional advice
What does your screenshot prove? That in a recession, blue chip high dividend yielding stock drops more slowly and later? Well, yes. But we’re interested in a longer time horizon than 1 year, and we don’t want to only invest in the asset which loses the least at the start of a bear market. We want an asset that performs best over 20 years.
They don’t sell their own funds but they still sell their own wealth management solutions. They simultaneously mention that it’s important to invest with low fees and then try to sell their own wealth management with >1% fee. I no longer consider them neutral.
My screenshot proves nothing, but you might still be wrong.
Just like low TER, high dividend is like a guaranteed income, from profitable companies, as opposed to gambles on cash-burning “disruptive innovators” with poor performance prospects like Zoom or DocuSign, that are way too heavy in today’s indexes, hence in today’s portfolios.
A reasonable tilt towards low volatility and high dividend can help: -5% instead of -20% YTD is a large difference, that could lead to a large difference also in 20 year’s time.
A typical example: P/E ratios of the likes of Tesla are worrying. Tesla is treated almost as a blue chip now, is usually in the Top5 of S&P500 and has a market cap above Berkshire Hathaway despite a P/E ratio around one hundred.
thanks everyone, this turned into a bigger discussion, which is great.
Question: what about dividends? A good part of investing this money into VT is getting dividends. Any input on VT vs something else that pays better dividends especially if you invest a big amount of money?
The same answer to both: when a company is already generating huge cashflows and doesn’t know how to grow further and reinvest this money, it will return money to shareholders. If you aim for high dividends, you’re then aiming at companies at a particular stage. Historical data shows that you achieve higher overall return if you DON’T focus only on high dividend earners.
I’d say going for high dividend stocks is a form of timing the market, as these stocks outperform in certain scenarios, like at the start of a recession.
Before it turns into our usual argument, may I remind you that high dividend ETF was brought up by me in a discussion how to motivate your girlfriend to invest. So it is rather investing in some type of stocks vs. not investing at all.
Current indexes contain disproportionate amounts of crap.
A tilt towards profitable companies helps mitigate that.
It’s fine to burn some cash when you have actual growth perspectives. It’s not when you want to sell pretty standard products like videoconferencing or electronic signatures.
Tesla’s P/E of 100 cannot be reasonable, on any standard.
It’s pointless to look at Tesla’s P/E, when they’ve only just become profitable a few quarters ago and their earnings are set to increase significantly in the coming quarters. You want to arrive at a valuation, predict future earnings, apply a time discount to the cashflows, the DCF model will tell you the fair value. Comparing current price (forward looking) with past earnings makes little sense for growing companies.
Either you believe you’re dumber than the market, which makes you a passive indexer, or you actually think you’re smarter, which means you should be picking stocks. Statements like this imply the latter. Sure, in retrospect the last few months haven’t been the best, with companies which benefited from covid lockdowns, like netflix or zoom, gaining too much in price. But these things are only obvious in hindsight.
Not only the financial analysis is worrying, but anyone can rent a Hyundai Ioniq 5, an electric VW or Volvo and wonder how on earth Tesla’s hype can still work on retail investors.
Long story short: When Twitter and Reddit drive market valuations to this extent, it might be a good idea to have at least some tilt towards profitable companies. Otherwise, just like the for dotcom bubble, I’m afraid that 10 years won’t be enough to heal from the return to reason.
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, tu confirmes avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
.
