I’m in a comfortable situation that I could sell our property in Eastern-Europe, where (I guess most countries in HU-SK-CZ-PL) prices have skyrocketed in the past 5 years to ridiculous levels - but trees don’t grow into the skies…
So… my target is to use that money to pay mostly pension for my mom… so I’d like a fix income concept that bears more than the usual 0.01% interest I’d get from my friendly advisor at PF
We’re relatively well invested (property, equity, bonds), but our cash portion is already way higher than I’d want to see it, and adding more cash will not make things better - although, at these valuations I’m not comfortable dropping a 6-figure amount into the VOO/VWRL bucket either - I’d not sleep well.
I’m thinking of “safe” or dividend investments - Swissre is still at 6.93% (although with a payout ratio of -200% ), Zürich Insurance is at 5.3%, Helvetia following close with 4.96%. As long as I don’t intend to cash these positions, these seem rather safe investments for me (with the risk of the board reducing payout and the intrinsic risk of losing value on the stock price should I ever want to cash them).
Anything else I could be looking into in the 4-6% range, with some relative stability?
USDC is a stablecoin which is bound to USD I :l .
Usually you see volatility with cryptos but not with
stablecoins. The advantage is an APY of ca. 11 %.
But we are talking about cryptos. You should know
what vou do. But stocks or etf’s are not risk free too.
Avadis seems to be a funds-of-funds aggregator. It certainly minimizes your risk with wide diversification, but I’m concerned about flexibility to jump out and also fees (I didn’t quite check that) vs just buying a passive tracker on the open market.
Smartbroker seems to be a brokerage like IB, is there any particular reason/product for your recommendation there?
The main reason I recommend Avadis is simplicity, not cost. You can pay a lump sum into one of their funds according to your risk profile and then tell them to regularly pay you a certain amount from the fund. They will just sell a part to match the amount and the remainder stays invested.
There are no transaction fees, just a fee of around 0.68 TER.
Yes, it has almost the same feature Avadis but you can choose your own ETFs. No Swiss or foreign broker I know offers such a feature. It costs a bit to buy and sell some funds, but the cost is very reasonable (around 0-4 EUR, depending on the fund).
I did this for a few months, and although it did “generate” some interest, the value of it versus CHF (I guess due to being pinned to USD) just kept creeping down so I am at a 2% loss.
Pulled the money out, it’s useless for me.
…and you guys are talking about crypto? Come on, that’s the opposite of safe and stable! If you want stability, forget about anything crypto. Wasn’t there just days ago some big implosion of a ‘stable’ coin? And @PriorBall talks about 11% returns on staking. Do you have any idea what kind of risk that implies?
Anyway, @user137, can you please define a bit more what you define as ‘safe’? Max drawdown of 10%? Or 20%? And what kind of return do you target? Are you looking for anything above 0.01% at PF, or do you look for something like 2%? Or an unrealistic 20%?
How is that better (safer) than just putting it into VWRL? Isn’t VWRL hugely diversified as well? Or are you just looking for someone to tell you what to do / psychological safety (nothing wrong with that fundamentally, but please be honest with yourself)?
Now, to limit your max drawdown, there’s certainly ways to do that. Just using Fundsmith is one way that springs to mind because they have quite stable investments, but you need to trust them too. IIRC in March 2020 they dropped just 10%. Another idea is to use some volatility index (e.g. VIX - Wikipedia) or any other hedging strategy so that when things go belly up, you have something that balances the downside, but I’m not sure how well that particular one would work.
Re: Dividend stocks. I certainly get why that would be appealing, but from a tax perspective, that’s the wrong thing to do in Switzerland. Also, as an investor, I look for total return, and I’m of the opinion that dividend rates should be ignored. Just sell a bit to create your own dividend. Can you articulate some more what your rationale is for using dividend stocks? And how those would be more safe than using a fund of funds? AFAIK dividends are equivalent with forced sale of part of your holdings (but with the psychological upside that you still hold the same number of stocks as before).
I know what stable coins are, what I don’t know are the risks involved. But seeing 11% yield on a “pseudo-USD”, I feel this is not “relatively stable” as requested by the thread creator.
Whom are your funds borrowed to, and mainly, why don’t they get “regular” USD loan that would entail a much lower interest rate…?
Hell, if I knew what I want to say exactly… I’m rather here to look for any alternatives to SP500 ETF at these high valuations. My thinking, albeit it might be flawed, was to stick to dividend-paying stocks as “nothing can go wrong there” until you liquidate your position. I know about the Swiss withholding tax on dividends, but a practically low risk dividend of 6% (minus 15% taxation) is still a good return if you look the other way on the price of the stock. This could give you a steady 5% net return. Quite the same as my property investments. There isn’t really a drawdown risk until the underlying stock continues to pay dividends.
My current property is drawing in 3.5% of net return so anything in the 3-6% range I think is what I’m looking for here.
My other option is to simply enlarge my positions in FS, SSON, VGT and VOO and other Quality index trackers that I like. But I wanted to do something “different”. Not sure it makes better sense now?
If I believe the informations displayed by SIX, Swiss Re (SREN) dividends have dropped from CHF 8.00 to 7.25 in 2015, then 7.25 to 4.60 in 2016. Zürich Insurance (ZURN) ones have dropped from CHF 17.15 to 8.00 to 2.50 between 2001 and 2004, then from CHF 15.00 to 11.00 in 2009.
I haven’t checked what has happened to the shares in those periods but there seems to have been real drops among those. Dividends are not exempt from getting cut down when the need arises, though that tends to reflect poorly on the performance of executives and they try to avoid it, especially for dividend stocks. If you want to pursue that direction, I’d try to diversify, either by buying a dividend ETF or adding more companies into the mix. For the Swiss market, you may take a look at Swisscom, Novartis, Basler Versicherung or Adecco and probably a slew of others.
Alternatives for “fixed income” could be real estate, or riskier bonds (all the way up to junk status), that carry default risk. I’d stay diversified and follow @CryingSofa’s approach of aiming for total returns and selling stocks when needs be rather than searching for dividends to compensate for the negative coupons government bonds have.
If the goal is to reduce volativity, at the expense of some expected returns, strategies like the All Weather Portfolio or the Golden Butterfly could be used. They invest heavily in bonds, though, and the examples provided by Lazyportfolio are centered around the US market. Swiss or global oriented versions could be crafted, though the bonds part becomes tricky.
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), Zürich Insurance is at 5.3%, Helvetia following close with 4.96%. As long as I don’t intend to cash these positions, these seem rather safe investments for me (with the risk of the board reducing payout and the intrinsic risk of losing value on the stock price should I ever want to cash them).
I’m rather here to look for any alternatives to SP500 ETF at these high valuations. My thinking, albeit it might be flawed, was to stick to dividend-paying stocks as “nothing can go wrong there” until you liquidate your position. I know about the Swiss withholding tax on dividends, but a practically low risk dividend of 6% (minus 15% taxation) is still a good return if you look the other way on the price of the stock. This could give you a steady 5% net return. Quite the same as my property investments. There isn’t really a drawdown risk until the underlying stock continues to pay dividends.