Is the crisis a good time to buy real estate ETFs and Bond ETFs?

I wonder if now is a good time to extend my 1-stock vanguard-all-world portfolio by either Bond or real estate ETFs, or both.

Reasoning would be, that real estate should go up in the next 2 years, since it’s now crazy cheap to get a loan from a bank. Or is that not correlated?

Any thoughts?

In particular I was looking at

  • iShares Global Corporate Bond UCITS ETF
  • SPDR Dow Jones Global Real Estate UCITS ETF

Currently my portfolio consists of

  • 30’000 CHF VWRL.SW
  • 13’000 CHF Cash

I wouldn’t buy SPDR Dow Jones Global Real Estate UCITS ETF. The first 4 companies (at least) are part of the S&P500…

If you want more exposure to real estate you can buy swiss real estate mutual fonds but they are more usefull for rich people to save wealth tax (tax in general as well). They are less correlated to the stock market than real estate companies as well. But for a small investor it doesn’t make sense unless you want less risk because bonds are not interesting at the moment.

If those 13’000 CHF are your emergency fund, I would think long and hard about:

  • The chance that you need it.
  • What happens in those cases.

There is quite the social security net in Switzerland, but things like a dead car can still potentially break your back.

If on the other hand you want to sell off stock etf to buy bonds, wouldn’t that be selling low to buy high? Lastly, the real estate etf has performed quite similar to the stock one. About real estate, I read and heard from different sources that rents are too low. Exactly because money is dirt cheap at the moment. Will this go well once quantitative easing stops? Will the tenants be able to pay more rent in case the interest on mortgages rises?

Do you understand those 3 asset classes well enough to do market timing with them? If not, what invalidates all the arguments brought forward to put the money in broadly diversified stock etfs and forget about it for a decade or two?

As you see I don’t have the answers. But I hope questions will do.

@REandSTOCK wouldn’t buy SPDR Dow Jones Global Real Estate UCITS ETF. The first 4 companies (at least) are part of the S&P500…

That’s a good point. Didn’t notice this.

@REandSTOCK If you want more exposure to real estate you can buy swiss real estate mutual fonds but they are more usefull for rich people to save wealth tax (tax in general as well).

Yeah I did not want more exposure to real estate in particular. Just wanted more diversification. Felt like I should do more than just buying a single stock. When looking at all these robo advisors (slema, truewealh), they always add these 5% real estate to the mix. In case of truewealth for example, its 5% swiss real estate only, and no other countries. Tax savings is most definitely not the case on my level :sweat_smile:

@Helix If those 13’000 CHF are your emergency fund, I would think long and hard about:

No no, it’s really the portfolio cash. So money I consider invested and use for rebalancing. Emergency fund is separate, as well as 3rd pillar :slight_smile:

@Helix If on the other hand you want to sell off stock etf to buy bonds, wouldn’t that be selling low to buy high?

Nah, I would start buying Stocks + Bonds from now on each month, instead of just stocks. I’m not selling anything now.

@Helix As you see I don’t have the answers. But I hope questions will do.

Thanks. It did help in the sense that I now feel more that I have no bloody clue about these asset classes :sweat_smile:

@Helix Do you understand those 3 asset classes well enough to do market timing with them?

It’s not short-term market timing I’m talking about. But the 2008 crisis brought forth a few real estate millionaires, since they got into business when everyone else was getting out and running. So my thinking was, that now in the next 2-3 years real estate would see an upswing as well, since opportunities have been created now for people with cash.

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