Investment dilemma >> Real Estate VS ETF?

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21

I like a 50:50 approach when starting out:

50% lump sum (probabilistically superior*)
50% DCA over 6 months (psychological safety net)

If at any time you feel the urge / confident to throw the rest in (which might happen if the market continues to go up), just throw the rest in.

“*” ETA: Historically lump sum is superior in about 60% of cases and DCA over a certain length about 40% or 2/3 vs 1/3, something around that.
Don’t sweat it though, as long as you invest - time in the market beats market timing, so lump sum or DCA to start out won’t matter much in the long run.

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22

In my opinion, the time frame is too short to tell. Do whatever you are more comfortable with.

You could invest all at once and be annoyed if the market tanks the next day. You could carefully spread it out over months, miss the gains in the meantime, and once it’s all invested… the market tanks the next day. :woman_shrugging:

That’s not to scare you off, it’s to promote a buy and hold mindset and not worry in the meantime.

Take the bright side. You do have a lot of other assets, and while 200k is a significant sum for most, it’s a yearly saving for you and you could easily sit out a bad scenario that may or may not happen. Warnings about corrections have been there as long as I can remember :roll_eyes:

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23

You are probably aware of public mood in France turning almost hostile vs. ‚the rich who can afford secondary homes‘ who then ‚withdraw housing from tight local rental markets‘ turning them into ‚Airbnbs for affluent tourists or expensive furnished rentals‘.

In line with the above, taxes for owners have steeply increased, both fonciere and habitation. The latter was supposed to be eliminated, instead, now any commune within a remotely attractive area is eagerly levying up to 60% surtaxes on it. More action may be to come. So, the idea sounds quaint, but…

24

I couldn’t bring myself (psychologically) to lump sum invest, but as pointed out by @Moustachienne it’s probabistically superior.

Also, check out Ben Carlson’s What if You Only Invested at Market Peaks?

25

Personally I prefer liquid investments like our index ETFs to RE (and my reasoning is very similar to Mirager‘s).

And if you do decide to go the ETF route, I don‘t see how the difference between 2k or 20k available cash a month should influence the investment approach, especially if you expect the cash flow to remain constant for the years to come.

Any concerns of volatility are no more valid than for someone who invests 2k a month and for whom this all their excess cash, but this is something you just have to assume beforehand as an inherent aspect of investing in the stock market.

26

First congrats on your great revenu stream and managment.

Do 100% option 1 ETF tracker ! Unless you have a insider tracker record in real estate investment, don’t do RE even in Paris ! If i may guess it could sound like something Ego driven. Put that far away from your money.

Don’t do Tax reduction s*** with “Fake” present form the governement which is even more killed my cracked managment fees on top of the cake.

My advice would go for :

  • SP500 50%
  • MSCI World 50%
    They will do the job perfectly for you with close to 0 risk with almost 0 fees.
    Bonus : add 10% in Bitwise Bitcoin ETF, if you can stomach a little more volatility.

This will work no brainer, peacefull of mind and NO tax on capital gains !
Best regards.

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27

With your investable income I’d rather call it luxury of choice than a “dilemma”.

That’s “fake” (or an illusion of) diversification.

Why fake diversification - when you can just go all in, on what you obviously want to bet everything and the house on anyway?

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28

Stock investments are definitely not close to 0 risk…

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30

Did not understand your quote sorry.

31

If you have a long term horizon (+20years), DCA on ETF not “stock picking” is the safest bet or by far the best R/R. Bank account is Way riskier.
Prove me wrong and I would be happy to follow your better proposal.

32

That may be true, but that’s not the same as “close to zero” risk.

Just one example, you invested 100k in a largely diversified ETF in 2007 and then 2008 arrives, you lose your job and need the money to cover expenses and your car breaks down at the same time, you need 60k overall, but your ETF is only worth 40k due to the financial crisis. The same money on a bank account would have grown to 103k, not much, but definitely less risky than the stock investment.

In 2009 you would have recovered stock investments back, but people tend to act irrational and many people sold all their stocks out of fear in the financial crisis, or may have been forced to sell at the worst point.

I’m not saying anything about the particular situation of OP, just stating that stock investments are not close to zero risk.

33

They certainly mean your focus on the US/S&P 500. As 70% of the msci world is the s&p 500 already.

So you have 30% of 50% in something other than the s&p. That‘s 15% or barely anything.

My opinion:
Either buy only s&p if you want to bet on the US (I would not recommend that, especially looking at current valuation)

Or buy only msci world.

The latter is already extremely concentrated in the US, but you actually have some diversifcation there.

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34

:point_up_2: This.

You can just as well simplify and bet everything on the S&P500.
Probably more tax efficient as well.

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35

Both.
Each can outperform the opposite side of VS, under specific conditions. So there is no clear winner.
Whereas…
‘=’
makes it working for you under every condition.