Just starting out: a sanity check

Hello, everyone :slight_smile:

Here’s my situation: I am 27, currently making 95k/year, and I have some money on me that I would like to invest. I have been researching and reading for the past months, but I find it difficult to gather enough confidence to actually pull the trigger.

  • 5k on a rent deposit account (sigh)
  • 54k on my checkings account
  • 7k on Finpension 3a (maximum amount for 2023)

I would like to keep some 10k on my savings at all times, and not consider those in my calculations. And the rent deposit will just stay there for now.

Meaning I have 51k to move (of which, 44 in checking account + 7 are in finpension 3a). Which is not a lot of money, but it’s enough money to make me second guess myself 30 times when I try to actually committing to a strategy and purchasing assets

My plan is to have 58% in equities world, 15% in equities CH, and 27% in bonds world

My ETFs of choice are:

  • Vanguard Total World Stock Index Fund ETF for equities world
  • iShares Core SPI (CH) for equities CH
  • iShares EUR Ultrashort Bond UCITS ETF EUR for bonds CH

My 3a accout is already invested 39% in equities CH and 61% in equities world, taking that into account it would lead to an allocation of:

equities world: VT 29580 (-4300 in 3a) => 25280 CHF
equities CH: CHSPI 7650 (-2700 in 3a) => 4950 CHF
bonds CH: IS3M 13770 => 13770 CHF

After this initial setup, I plan to make new purchases every 3/4 months, and gradually increase the percentage of bonds as I get older (+1% yearly)

Does anyone see anything glaringly wrong with this? Or maybe someone has alternatives / modifications that they think could make sense?

In particular, I need to do more research on IS3M to see if I can find better alternatives

As for the rest, I need to decide if I want to go lump sum or send cash to my IBKR account gradually over the course of some time.

Anyway, thanks for any input:) wish you a wonderful day

Don’t forget your 2nd pillar in your overall AA calculations.


Is that hedged to CHF? If not it would only make sense if you have specific links to eurozone countries (eg plan to retire there).


These are unhedged, short corporate bonds in EUR. Unless you intentionally want EUR exposure (e.g. future expenses will be mainly in EUR), I think this is the wrong choice. You either want a CHF bond fund or a CHF-hedged international bond fund. I don’t know whether such a bond fund with a similarly short duration exists, though.

Possible ETF options with a longer duration but still shorter than the total bond market:

  • iShares Swiss Domestic Government Bond 0-3 ETF (only Swiss gov bonds, might be tax inefficient)
  • UBS ETF (LU) SBI® Foreign AAA-BBB 1-5 ESG UCITS ETF (foreign CHF bonds)

Possible mutual index fund options:

  • CSIF (CH) Bond Switzerland AAA-BBB 1-5 (CHF bonds)
  • Swisscanto (CH) Index Bond Fund Total Market AAA-BBB 1-5 (virtually identical to the above)
  • Vanguard Global Short-Term Bond Index Fund - CHF Hedged Acc (CHF-hedged global bonds; don’t know whether this is actually available anywhere for retail investors)

This is a good ETF. Keep in mind that Nestle, Roche and Novartis currently have a weight of 20%, 14%, 13%, respectively, of the SPI, though.

Age in bonds is fairly conservative. This is a personal decision, of course, and depends on a lot of factors. However, you may want to compare your plan to common strategies: Glide paths - Bogleheads


Should I count my 2nd pillar in my bonds percentage?

It’s actually taken from MP’s own book, which references John Bogle. From what I see in the portfolios around here, it seems to be quite cautious compared to most

And this is exactly the problem. In your situation it is not unreasonable to have leveraged stocks allocation.

1 Like

The question I would ask myself is whether you are ready to see the value of your assets drop, with the hope of it going higher later on (as well as puting an horizon on that, can you hold 1 year? 2 years? 10?).

Other than that, there are no taxes on capital gains in Switzerland, so you can easily switch your allocation later on if you realize it’s not fitting what you want (which is likely at some point, we learn things about ourselves while being invested). You can also completely switch one or more holdings if you come to think later that another fund would better suit you. That will cost you some fees, but you’ll get to gain experience and confidence by having money on the line.

I always recommend to take the time to get ready to face market turbulances but I’d also recommend to dip into the water early in order to get accustomed to it. You don’t need to dive in fully right off the bat, but opening a taxable account and investing something like 5K (for example) might let you do some of the mistakes you need to make at a relatively low cost (being aware that you are likely to not invest optimally for your specific situation right on and, as such, are very likely to make mistakes at first, like most of us).

It might be suited for you, or it might not. Standard advice/allocations like that one are good to get you started, because they stop the process of trying to overoptimize your allocation at a point when you actually can’t really know it (because you haven’t experienced the markets yet). They’re probably not the best for your personal situation, though, and you are likely to move toward something else at a later stage. I would consider it good enough, and good enough is, well, good enough to get going with.

1 Like

Nothing glaringly wrong with your plan, if you ask me - though the bond allocation does seem high and a choice of EUR currency somewhat questionable.

Do they include other parts of your portfolio for your net worth and portfolio allocation, such as…

I‘m not even sure bonds are the best comparison, given that bond prices may fall (with rising interest rates) but the value your pension benefits normally should never decrease. And there’s no negative interest either, but a minimum interest rate set for mandatory pension benefits.

Sure, a small risk of underfunding in the pension fund remains, as does issuer risk with bonds though.

Maybe it’ll be more appropriate to consider it something like a term deposit with variable interest rate and variable „bonus interest“.

1 Like

In my opinion yes.

The 2nd pillar system means that Swiss employees accumulate a high amount of safe assets relative to other countries and so we should count it. The rate of accumulation increases with age so the “plan to increase by 1% per year” element is covered to an extent too

As an aside, with CHF bond yields close to all time record lows the return and diversification argument for a 60-40 portfolio applied to CHF bonds is questionable to me, again this is just my opinion. In comparison we are lucky to have 2nd pillar since the value cannot decrease (usually)

1 Like

Yield is up 2.5 percentage points (from -1.1% p.a. to 1.4% p.a.) for 10Y Swiss gov bonds since the low in August 2019. I.e., it’s not quite as bad anymore.

Absolutely, but from a return perspective investing for ten years at 1.4% (before tax) is not attractive for my personal situation.

Rates still look incredibly low historically:


What is your reasoning for 15% CHSPI ETF? The Swiss market is roughly 3% of the world, you weigh it at 20% of your stock portfolio. I’m not saying home bias is always a bad thing, just wondering what your rationale is. Keep in mind that the Swiss stock market is heavily concentrated into Nestle and Roche/Novartis, this is a huge risk cluster.

For bonds I would recommend AGGS or GLAC, both cover the world bond index hedged to CHF. Unhedged bonds don’t make much sense IMO.

First of all, THANKS to you all for your contribution.

I really appreciate the general push to reflect upon the rationale of my choices, I see this kind of contribution as extremely healthy. Overall, the feedback I received really left me a great impression of this community

So, to reiterate, I am a 27 year old guy trying to move his first steps into the market. After a (probably too) long period of research, I am committed to making my move

Thanks to you, I highlighted the following problems in my previous plan:

  1. I was not taking my 2nd pillar into consideration for AA
  2. My bond allocation was (arguably) too conservative, being 27%
  3. My Bond ETF of choice is not hedged to CHF, and it’s Swiss market
  4. Home bias too big, and I was overexposed to a small set of companies (Nestle, Roche, Novartis)

This is how I decided to tackle them:

  1. I was not taking my 2nd pillar into consideration

Take my 2nd pillar into consideration, and count it towards my bonds allocation. Considering the low-risk-low-return, I think the two are “similar enough” to be put in the same basket.

  1. My bond allocation was (arguably) too conservative, being 27%

This was based on a rule-of-thumb that is commonly suggested to beginner investors, probably as a way to mitigate volatility as one starts out, and also to stop beginners from overthinking.

Still, I am a beginner here, and although I am convinced I won’t be bothered by volatility, I can’t really say until I’ve seen it happen. This is why, even though I am decently young, I will still start with a 20% in bonds.

If, down the line, I realize that volatility isn’t bothering me at all, I will reduce it in the next couple years, to then increase the allocation as I get older.

  1. My Bond ETF of choice is not hedged to CHF, and it’s based on the Swiss market

My home bias is already covered in equity and, as someone pointed out in my previous post, CHF bond yields aren’t exactly great.

My solution here is to steer towards a bond ETF that covers world market and is hedged to CHF and, as someone suggested, GLAC seems to be a solid choice.

  1. My local bias was (arguably) too big, and I was overexposed to a small set of companies (Nestle, Roche, Novartis).

Switching from a Swiss market bond ETF to an all world one already moves the focus out of Switzerland.

That being said, as someone pointed out, the swiss market is 3% of the world market, so having 15% of my assets there is a big risk. Especially considering the big participation of a very small number of companies.

I intend to reduce my percentage of Swiss equity to 10%, and possibly even get rid of a home bias in my equity part of the portfolio in the future, if I don’t see enough value in having it

Therefore, my plan after adjusting to feedback looks like this:

Cash to invest:

  • 8.900 CHF in my 2nd pillar account
  • 7.000 CHF in my 3a pillar account
  • 4.800 CHF in my rent deposit account
  • 54.200 CHF in my bank account

[74.900 CHF total]

Target allocation:

  • 10.000 CHF flat cash (emergency fund, to keep in my bank account, excluded from calculations)
  • 4.800 CHF in rent deposit account (excluded from calculations: I will soon move, cash it in, and distribute it)
  • Invest the remaining 60.100 CHF as follows:
    • 70% of the remaining amount in world equity (composed of VT, and 61% of my 3rd pillar)
    • 10% in swiss equity (compose of CHSPI, and 39% of my 3rd pillar)
    • 20% of the remaining amount in world bonds (composed of GLAC, and 2nd pillar)

ETFs of choice:

  • VT (total world equity)
  • CHSPI (swiss equity)
  • GLAC (global bond hedged ETF)

In figures:

  • VT → 42.070 CHF (of which, 4.270 from my 3rd pillar)
  • CHSPI → 6.010 CHF (of which, 2.730 from my 3rd pillar)
  • GLAC → 12.020 CHF (of which, 8.900 from my 2nd pillar)

*my 3rd pillar is finpension 3a Global 100, which is (almost) 100% equity: 61% world and 39% local

So, once again, I ask for your opinions on this updated version of my portfolio as a beginner investor who is trying to enter the market today:)

And thank you again for your contributions, they truly are invaluable and I appreciate them immensely

Pretty clear logic to me, well done.

As a last step and to further optimise I can recommend using Portfolio Visualizer (free) to model how the different allocation decisions you are taking might play out in 20 years’ time (or by whichever target date you would like to be Financially Independent ).

1 Like

How many % of your net assets is your second pillar? I guess with your 2nd pillar you have enough bonds already. Alternatively you might still be able to buy in 2nd pillar, but it is difficult to take money out of it.

Same with the home bias: with finpension “Global” strategy you might have enough of it already.

I currently have 8.900 CHF on my 2nd pillar account (I moved to CH in 2021), and my total assets is 60.100 CHF

So that would be 14.8%

But I expect my 2nd pillar to grow proportionally slower to my overall assets, so that percentage could only decrease over time if I don’t actively buy bonds

So it could make sense for now to not buy any ETF bonds, but it surely will in the future. Because if I don’t, then that 14.8% will drop very low in a few years.

Does that make sense?

1 Like

You might be surprised how fast it is growing. The older you gets, the higher is the obligatory contribution to the second pillar + there are employer’s contributions. Already now you obligatory receive like 5% of your salary as a pension fund contributions. See for example


Nevertheless do as you feel fit, the most important thing is to start.

1 Like

Actually you are right, I didn’t consider the fact that my 2nd pillar contributions grows “automatically” as I age :thinking:

New allocation looks good.

I wouldn’t say that 27% bond allocation is too conservative, especially for a new investor. For someone just starting, I’d say 60/40 is reasonable, or even 50/50.

As you get more comfortable, you can always increase the allocation to stocks quickly by investing new funds purely to stocks.

Most important thing is not to overthink it and get started.