Dear Fellow Mustachians
I could need some advise: I am planning to buy a real estate in probably 4 years.
Do you have some good suggestions about how to invest the money that I have saved and that I am going to save during this period?
For stocks, the time frame is not long enough (should be at least 10 years in my opinion) and bonds nearly don’t give any return.
Any suggestions would greatly be appreciated.
How flexible are you on the time horizon ? How much in percentage of your house do you already have today and ho much is what you plan to earn during those 4 years ?
The best answer is maybe bank’s bond at the Caisse d’Epargne d’Aubonne at 1% for 5 years for example https://ceanet.ch/conditions/ . If you choose a bank account with 0.00000X% instead, then maybe you can invest 20% in ETFs now and should the market go down, wait 12-18 more months until you have fresh money to use instead or maybe the market goes up again during that extra time.
Edit : You can also put those 20% in swiss residential real estate exchange-traded mutual funds (or 10% ETFs and 10% real estate funds). They are safer than stocks, they are somewhat corellated to the real estate market, which is what you want to buy with the money. And the probability that both your ETFs and your real estates funds goes down at the time you want to buy is lower.
Many thanks for your valuable suggestions!
Do you have any real estate exchange-traded funds in mind? The last time that I checked, they had an agio of 40%, which was just too expensive for me
UBS Direct Residential, Suisse Romande Property fund, Dominicé Swiss property etc.
UBS Direct Urban and Realstone swiss property have a bit “too much” commercial real estate.
Bonhôte has some agio but not 40%.
You can also check the funds that held the buildings indirectly.
Thanks a lot, I’ll check it out.
If anybody else has some other good suggestions, I’ll still be very interested.
Saving the max amount per year into 3a, so you have the advantage in taxes, which you for sure already do.
Second option as @REandSTOCK mentioned is an AA (asset allocation) which is diverse and very defensiv.
At the end there is currently no big alternative to equities and there as you know it can go up 20% per year or go down 50% someday. Becaus of not really alternatives, that is one of the reasons why it is so heated in the equities market.
What OogieBoogie said, max out your 3rd pillar and if you have an high marginal tax rate ( high salary, expensive canton) 4 years is perfect to do 2nd pillar buy-in for the first two years. You can save up to 35% on taxes and you can get them back in 3 years, just in time to finance your house.
Just be sure to time it well since 2nd pillar is a strict law and do not exceed 10% of the financing amount needed in 2nd Pillar buy-in.