This is my first post here and I am pretty much new in this world.
Let me introduce myself quickly - I am married (both of us working with regular 2nd pillar), in my mid 30s, 2 kids, my horizon of investing is long term (hopefully 25+).
I started with my 3rd pillar (saving account in UBS) 3 years ago, but with stocks etc I started in May this year.
I have 2 portfolios at IBKR:
for me and my wife. Currently is CHF 10k. In the future I plan to invest CHF 12k per year. I was thinking of DCA on monthly/quarterly basis
for our kids. Currently is CHF 15k. In the future it should be CHF 7k per year. Also DCA.
So far I did some stock picking + ETFs - for the time being it’s not that great (-4/5%) - I had to pay for some lessons
Now I think to make it more simple.
For the kids portfolio I would sell everything and buy only VT. The aim is to get in average 7-8% annually.
For me and my wife I would go for VOO (80%) + stock picking but only (Apple, Microsoft, Nvidia and Tesla). I can bear that risk - having cca 33% in this 4 stocks. Overall this portfolio is obviously more risky with the idea to get 11-12% annually in average. (already have some Nvidia and Tesla).
For the 3rd pillar I would move it to Finpension. I like the idea of investing it 99% to MSCI Quality index. Is it clever to it under CS after all? Is there something similar within UBS part of Finpension? I was passing by their office in Geneva, but it’s not possible to meet them in person - isn’t it weird? I called them but they explained me that only video call is possible.
Furthermore, my wife will open for the first time her 3rd pillar as well. So far she didn’t have it. She did only some buy back of her 2nd pillar.
What do you think? I am open for all feedbacks
Cheers
why so much investments for your kids relative to yourselves? The kids will benefit from the stability and peace of mind of a more secure financial situation (which you could also use to trade working time for time spent with your family). You can always gift to your children whenever you feel it is warranted.
You say that you can bear the risk of a portfolio concentrated in US stocks (VOO) and 4 (volatile) positions making up 33% of it. Is your wife on board with that and have you taken her own risk tolerance into account when making those picks?
Otherwise, your expectations of returns seem high to me. 7-8% is what a portfolio invested 100% in US stocks has brought up on a long term average basis, in USD, in the past but:
VT isn’t 100% US stocks, it is globally diversified, which means it’ll guarantee you to hold the winners but it will also hold the loosers (which is a good thing, if we could pick winners, we’d only need to invest in those stocks and should forgo index investing entirely).
The future isn’t the past: another set of stocks may outperform going forward and US stocks may underperform.
25+ years isn’t a long enough term to make earning the long term market average a statistically likely occurence. For example, since 1970, a VT equivalent would have returned between -0.83% and 10.33% yearly (on average) for all possible 20 years periods (with a median at 4.65%), inflation adjusted, in USD: All Country World Stocks Portfolio: Rolling Returns
Unless you are planning to spend in USD, the returns significant for you will be in another currency (I’m guessing CHF). I’d be more conservative with returns in CHF than in USD.
I am personally using 5% nominal returns for global stocks (VT) in CHF for planning purposes. I don’t see a reason to expect I can outperform that other than by a defined strategy that I’d be able to assess properly. My own ability at stock picking isn’t it (the only one I’m currently considering is using leverage, which also increases risk).
If you haven’t already, I would also make sure that you are properly covered, with either insurance and/or enough low volatility liquid funds to protect your family in case of hardship, that is, keeping enough short term money aside for potential short term needs.
I’m not sure if this is what you mean by this but yes you can choose to invest your 99% Stock plan via Credit Suisse, UBS and Swisscanto. According to their app they are all similar but somehow UBS has a TER of 0.0% when I checked the other day (I was thinking about changing my strategy).
investments for our kids are coming directly from children allowance (Allocations familiales) they got from the Canton of Geneva (if I am not wrong). We were saving it since they were born (4y and 1y) and will just transfer this amounts to IBKR.
Overall yes. The idea is to be, let’s say, more aggressive now and then over the year % of stock picking in total will decrease. According to that scenario in total Apple would be 11%, Microsoft 12%, Nvidia 6%, Tesla 5%. I believe that this 4 companies in next 5-10years would perform well. This portfolio (VOO + stocks) is CHF1k per month. You think that it doesn’t make sense? Or it’s a gamble that I should avoid?
Currently we can save I would say in average 3-4k per month.
The rest is sitting in our saving account - one part as you said in case of hardship to protect us, while another part - we are trying to save enough for buying a real estate here or something back home.
With the rest of your comment I agree. Especially with the part that the future isn’t the past.
Coming back to one of your points - we are planning to spend in EUR.
I know that the custody bank can be Credit Suisse, UBS or Swisscanto.
First I am not sure if it’s clever now to opt for CS, then UBS or Swisscanto are there.
In case that I would like to individualize my strategy I was keen to follow 99%: CSIF (CH) III Equity World ex CH Quality - Pension Fund DB. However this is a CS Fund, so I was wondering if there is something similar under UBS or Swisscanto funds offered in Finpension? I believe you can’t mix funds and banks.
According to investopedia S&P500 long term return in USD was 10% through Dec 2022, before inflation.
After inflation real return was ~7% - see this link.
I agree it is likely stocks will deliver lower returns than the long term average for the next 10-20 years due to the consequences of unwinding loose monetary policy.
What exactly are you worrying about? It was discussed here already in length and I said thrre already that not much will happen to your assets in CS funds.
There’s no alternative from UBS (which makes it even more likely that UBS will keep that fund and will at a max. relabel it, they will most certainly only merge funds where they already have an equivalent UBS fund, they don’t want to lose the assets) or Swisscanto. As a sidenote, Ihave around 50k invested in this fund at Finpension.
Personally I don’t believe something serious can happen to this deposits/funds, but on the other side after everything we heard/saw - I believe that a kind of fear is reasonable to feel when you want to invest today in something which has in its name CS
What would be your expectation of that portfolio?
And how should look like a portfolio of 11-12%? I know that no one here has a crystal ball and on the other side that quite aggressive scenario over the years would have some bad results etc.
Even if I work in finance, I am new in this world so I am open for all feedbacks, suggestions etc
Cheers
Main feedback would be to base your investment strategy in function of your risk tolerance not target returns.
IMO 10% is not realistic without having a huge amount of risk and very non trivial probability of large losses. Even 7% is on the aggressive side and can end up with large losses (it’s not volatile for nothing ).
Also worth remembering: one should discount 1 to 3 percentage points over the usually quoted S&P 500 return expectations long term, given that they are quoted in USD and we’re interested in CHF.
I’d expect real return to be similar in USD or CHF tho, so that part shouldn’t make a lot of difference (assuming you’re looking at real, not nominal returns).
Right, I guess what I meant in a roundabout way is that most return numbers you see will be nominal/non-inflation adjusted (which is perhaps where this 10-11% expectation might come from?)
50k is enough for 1 account, I have a second account with VIAC and there I also use the CS funds. Once this one reaches 50k, I’ll open another one, but this will take a few years now and then I’ll see what other providers I could use.
If the CS quality fund would be available at VIAC, I’d invest in it without blinking an eye.
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