As a percentage it sounds like a good return, indeed.
But 6% of let’s say invested 100CHF/share is not the same as 6% of 50CHF, if the related stock loses value in the process.
Although some companies (some “aristocrats”) define their dividend as a dollar/CHF amount (and wish to keep increasing it to keep that status), not purely as %.
Nothing is guaranteed in any case, as @Wolverine’s post above depicts.
As an alternative idea for diversification - which of course requires a lot of due diligence and risk management - how about finding some opportunities for private lending / personal loans?
I think I found the critical flaw in your plan My recommendation: Take 5-10 ideas that you like, and see with some historical samples how they worked out in practice. Once you understand the why and how of those, you should be set to define what you like and dislike about them. Once you have your preferences narrowed in, you can start looking in more concrete terms what you want to do.
I think historically, the index is basically at the top for 80-90% of the time. So I’m not sure how much your argument is worth. But I understand your feelings and am not investing too much at the moment either.
Nope, that doesn’t work that way. 1) you can get the withholding tax back. 2) I was talking about dividends counting as income whereas non-dividend gains are not taxed as income in Switzerland.
I’ll take your 100 CHF and pay you 5 CHF dividend per year. And maybe, after 10 years, I’ll say ‘oops, nothing left.’ (Of course I’m exaggerating a bit, but that’s more or less it) That’s the proposition you ‘like’? Seriously, please look into how dividends influence stock prices a bit more.
See, you even agree yourself that this doesn’t make very much sense
If history is anything to go by, then an ETF tracking a stock index or (better yet) a whole basket of stock indexes is really your best bet for an average annual return of 4-6%. You can check this using this historical return calculator based on Swiss stocks indexes:
Bonds would have been an option in the past, but today only junk bonds pay that kind of interest, and coupons are taxable to boot. With dividend stocks you have the risk of the stocks losing value, which would eat at your capital. P2P loans may be an option in the future, but so far there is too little historical data to create a clear picture of average returns.
Sorry again for being sloppy and thanks for aligning me, once again.
Of course you are exaggerating. In times where a dividend stock price is falling you just scoop up more like a good value investor (if the stock is still actually a value pick, that is. Insurances are a good candidate after global meltdowns), for the promise of eventually returning dividends.
What I’m not so comfy with is that everyone suggesting anyone else to buy SP500 ETF all-in, but you even said yourself that you’re not at ease with investing anymore. So what gives?
What do I do with a 6-figure amount that used to be my life savings for quite a while?
Putting it all into the SP500 feels like a Russian roulette
DCA-ing it into the SP500 feels like the same, but slower (I see this the most probably outcome)
Buying Swiss property - I’m already well invested here in capital investment objects, and I can’t buy where I’d like to live (nor do I want to live where I could afford )
The safe withdrawal rate from a portfolio to survive retirement at age 65 is usually said to be ~4%. And to survive for perpetuity more like 3%. Buying shares with 6.9% yield would be too easy. A high yield like that in a low interest rate envrionment implies that investors expect the yield to decrease in the future
Did you already consider increasing the mortgage on the property to gernerate cash to invest? Of couse would only make sense if the property has a steady and high rental yield as % of property value
Well… I misrepresented the facts a bit to show some more empathy for your situation. The main reason for not investing is that I don’t have an income for like 8 months. But I’m also trending more and more towards a more active style of investing because I don’t like to own obviously bad companies in my index just because their share price is >0 CHF.
I don’t think an ETF tracking the S&P500 would be the common recommandation among here. If anything, we’d tend to recommand upping your allocation in VWRL. Thinking about it, why have you overweighted the US in your allocation (and then, why VOO -S&P500- and not VTI -total market-)?
Not leaving the world of stocks, there’s the options of:
I am not in your shoes of course, but I think purely mathematically if you hold around 60% of your new money in stocks (your usual allocation or whatever) and 40% in “cash”, rebalance by regularly withdrawing necessary amount and reallocating (that also means selling stocks when they go up), that would produce income in the range you want. 6 figures is not 7 figures, so concerning the cash part, there are still saving accounts with positive return rate in CHF, there are Kassenobligationen that you can sign regularly in small amounts. They all are insured up to 100k CHF per bank.
I am not Warren Buffet, but I would bet 1 VT unit that this strategy will produce better results than an obscure combination of asset allocation funds, target date funds etc, which imply bonds with negative interest rates or/and in foreign currencies and a rather high management fee on the non-stock part.
If you find a fund where you can open an account with that should work. IIRC Fundsmith offers automatic withdrawals somehow and I’m sure they’re not the only ones. Or you could look into scheduling transactions at different brokers