I hope you’re all having a fantastic day! I’ve been reading up on some hypothetical financial scenarios recently, and I came across a question that got me thinking, “What would I do if I suddenly had a windfall of 1 million Swiss Francs? How would I invest it to grow my wealth and secure my financial future?”
So, I wanted to pass this question onto you all, fellow members of this brilliant community, and get your insights and ideas. How would you invest 1 million Swiss Francs if you found yourself in this situation overnight?
Would you put it all into the stock market? Dividend stocks? Real estate? Bonds? Start a business or go into venture capital? Or maybe you’d choose a mix of these? Perhaps you have some unique, creative, or unconventional investment strategies that you’d like to share?
There are no right or wrong answers here. I’m simply curious to see the diverse range of ideas that this community can come up with.
Feel free to share your thought processes and investment strategies, and let’s have a productive and insightful conversation!
I would put it with an allocation similar to a pension fund (they are public). Stocks, bonds, real estate, commodities, cash.
Except that 1 million CHF is not enough for investing directly into private equity. Even 10% of it, 100’000 CHF, cannot be spread across enough different companies to have an acceptable risk.
The balance between risky assets and non risky assets depends on the yearly expenses and if there is income from a job, and on risk friendliness. The very least at these levels is to have 5 years of expenses in cash and short term bonds.
first time reading your threads/posts here, great story!
from your first thread in july '19:
I am not a huge risk taken to be honest and am only just starting to take my financial health and freedom more seriously.
from your second thread in february '21:
The value of my portfolio has grown to 450K and I expect it to reach 1.5 million by 2022. I am holding on to shares in 4 different companies, the majority of the value being in just one company (I know, I should diversify and I will). I plan on selling the shares of this one company in 2022, for around 1.4 million
from same thread in november '22:
I’ve still got my 165k shares of CDEV now under ticker PR. Waiting for $18+ in 2023
so, you went from ‘not a huge risk taker’ to a being a huge risk taker within a couple years, hehe. also, your main investment (pr / ex cdev) has been super successful (20x or so) - congrats!
not sure if you already sold some of it (and are now pondering what the best new setup / asset allocation might be) or you’re just considering it. in case of the ladder, my 2c would be: greed as well as complacency can be very costly. i’m not saying a reasonably concentrated portfolio is insane, though.
The question is what the combination of CURRENT ASSETS plus the 1M Equates to both in terms of:
i) % of future savings per annum? Makes a big difference if you every year ad another 10% (100k) or 0.5% (5k)
ii) X of your current / sensible future cost of living (increase it in case you currently live super frugal)
IF the Percentage of future Savings was less than lets say 5%; I would go from an “aggressive accumulator” to a “balanced and risk focused” asset allocation. Whatever that means, you should have no less than 30% of INDEXED shares and no more than 70% of shares. We can have a detailed conversation what else to add to a balanced portfolio, if you want.
IF the X exceeds a factor of 50; I would put an amount worth 25 X into an annuity. Potentially just deferred from Age 65 and if you can without a right to withdraw from the contract. Or better said in 2, 3 annuities from respectable Insurance Companies with great solvency and from a Jurisdiction where Insurance is sufficiently regulated. Will be the worst investment you will ever make BUT it ensures that no matter what; you will be financially save even if you turn crazy, bancrupt or gamble all your money away.
You should NOT burn your money, not even part of it. One-Off Money Burn won’t give you pleasure but it is gone. Its better to invest for the long term and then front-load the first 2, 3 years anticipated investment returns and just burn that one.
Of course, if you had any debt (financial, relationships, health, …) THAT must go first at all times.
Dont trust investing into RE. CHF-bonds are not lucrative to me, together with tax implications. I’d DCA following same 2-3 ETF strategy over 2-3 years and look for opportunities along the time. Yet use a small part of the money to invest in self. Could be side-gig, a personal project, a not-immediately-see-a-profit-behind-it action. Bringing connections, exposure and experience with something new that I’m passionate about.
Most certainly not use even a part of it as reward or midlife-crisis instrument of instant satisfaction. There has to be some benefit behind. Temptation would be large to instantly buy a few fine watches though, but that can be justified as invest-in-self, right?
If I receive 1 million net (and if I have money set aside to pay the tax that will come with it) :
I’d put the majority in ETFs, for example 800-900k. With that, I’d take a margin loan of around 15%, i.e. 120-135k + the 100-200k left over so in total 235-320k in a rental building for just over 1 million. And in the years to follow why not go on to develop a property portfolio to replace a salary while growing my assets through the stock market, given that I have a long investment horizon.
You are right. This tread is hypothetical of course but indeed I was looking to selling part of my PR investment (182k shares as of yesterday) and having one million put away, as my wife would say, so that something concrete ca,e from all these years of investing. Only problem is that PR acquired another company yesterday and potential SP looks to go higher this or next year, so I may now hold. The mental challenge of what to do with that money once I pull it out remains, something safe but palpable is my wife’s preference. I just want this money with the rest of my investment portfolio to make us financially independent in the future. The ideas and feedback here is great!
Another somewhat less palpable solution: a normal or high dividend distributing all world fund that would regularly distribute to your joint or her bank account. Not very tax effective, but impressing to have a passive income for someone who haven’t really looked into it.
That changes the picture. You suffer from greed, hence a very clear and directional message. Sell at least 90% of it and put it into a combination of Vanguard High Dividend, VWRL, CHSPI, Swiss RE Funds and Bonds. What combination is less relevant but sell TODAY. You can keep it (in CHF only) for 6 months to come down with a plan for the future.
You can afford not making another plus 100%. You already are ready to FIRE and if you now just work to cover your living expense, you will in 20 years fat fire. What can you win?
Imagine anything goes terribly wrong and the share goes back to 50 Cent. This not only costs you the Fat Fire Prospect but maybe even your marriage.
If you are emotionall stable to not care about lost upside, kep 5-10% max. If it made you bitter to see you lost another 50%; sell all and delete the tracker from your watchlist (ghost the tracker).
yes, it’s what stocks usually do - on aggregate and over time - they go higher. so there’s also risks, mostly in timeframes being too short (macro etc.) and number of companies being too small (enron etc.).
my perception: you’ve done a ton of research on that one company and you were super confident that its stock will at least get back to the levels seen in 2018. you’ve been right so far (as it’s on its way there) and are still holding roughly the same number of shares. again, huge congrats - i know how hard it can be to go through a -40% with a single stock being a huge position and still multiply the invested money after all.
what’s different now? two things, one being the absolute amount of money. it’s obviously a different animal putting 2m at risk. the other one being the return prospects. after a huge run already behind you (20x or 30x), there’s now another 1.5x or 2x. in other words, the risk-return profile is vastly different by now.
your statements so far tell me you’re still too attached for a change right now, and that’s ok. i wish you luck and hope the lessons you’ll make (as an investor) are going to be reasonable.
Thank you all, much appreciated! I’m actually ready to move on, it’s mentally draining to follow the stock market on a daily basis. I was always very confident in that one company, did a ton of homework and thankfully it turned out more than great. I’ll look all of your recommendations above and plan the future best I can.