Mustachian portfolios

IB will loan you CHF currently at 1.5% on the margin. But at 50% it’s very risky, they’ll start selling stocks once the market goes down. You need to be below 50% at the end of each day

Some banks I’ve heard accept stocks as collateral and would give you a higher than 80% mortgage then, but you need to pay them custody fee and mortgage rate on this extra money, so in the end it might not be much better than IB. I don’t know though what margin they allow in this case, so possibly you could loan more through bank than IB

You should be able to arrange something with brokers linked to banks like cornertrader with cornerbank.
I don’t know if Postfinance offers it
Exactly if you have stock to pledge they may go higher and give you 85/90% mortgages.

Well I’ve heard cantonal banks do it, e.g. ZKB. But you’re looking at paying 0.3-0.4% custody fee for parking stocks with them, in addition to mortgage interest. Amortization payment will also be higher, this part of the mortgage has to be fully amortized linearly within 15 years

I’m targeting following portfolio:

  • Cash 5%
  • db x-trackers Global Agg Bond ETF (USD) + Swisscanto 3rd Pillar 30%
  • iShares Core MSCI World UCITS ETF (USD) 55%
  • SPDR MSCI Emerging Markets UCITS ETF (USD) 5%
  • SPDR MSCI World Small Cap UCITS ETF (USD) 5%

By the way, do you have any sensible alternative to keeping cash in bank account (for daily expenses and emergency situations)?

Update: I switched to VT and BND at Interactive Brokers.

traditionally this was the purpose of the money market (short termed bonds <1 year, even down to 1 day) but since the low interest area, it hardly serves al alternative to cash anymore.

1 Like

So, here I come up with the last draft of my new portfolio. the old one is here. By extending my investment universe to US based Vanguard funds, It is now much more consequent in terms of how my dream-portfolio looks like. Again, this would be an equal amount of $$ in every liquid stock in the world, with some value weighting. 100% stocks, at least for that part of my stash that i can freely define (unlike pillars 1,2,3):

  • 15% VTI: US total stock market
  • 15% VXF: US ex large cap (US minus SP500)
  • 15% VBR US small value
  • 20% VXUS exUS total stock market
  • 20% VSS exUS small cap
  • 15% VWO emerging markets

with a total expense ratio below 0.1% :muscle: and an weighted average of 3’700 stocks per ETF :facepunch: but be aware of some overlaps.

the regional distribution is close to that of VT, with EM somewhat overweighted:

  • 50% north america
  • 20% Europe
  • 20% emerging markets
  • 10% rest
  • rest: others

the size factor is clearly different, with mid caps overweighted and small caps significantly overweighted: 40/34/26 where VT has 77/18/6.

I also want to overwight Value stocks, but when i wrote down the value-blend-growth distribution according to morningstar, I found i cannot do too much about it unless i sacrifice diversification and low TERs. VBR seems the only value fund that does ok with both, but is actually not that valuey, according to altruist advisors. it has about 50% value stocks according to morningstar, somewhat more than 1/3rd.

I also dropped the home bias since SPI stocks are already contained in VXUS. Nestle is the top position there, and roche & Novartis #4 and #5 :slight_smile: my beloved SMPCHA simpy shatters at the diversification argument.

I have not commited yet as i feel no pressure, so i keep tweaking here and there. any suggestions welcome :slight_smile:

6 Likes

What exactly are you trying to achieve with this value and size tilts? Value’ is not a defensive play, everything will crash just as fine as general market. Small caps even more, with their 1.10 beta at the moment

1 Like

i again forgot to mention i have a 30-60 years time horizon. small & value is believed to grant a risk premium on the long run. this is exactly what i try to achieve^^

1 Like

Here is my first draft of my portfolio as a stock/bond newbie. When i compare this to @nugget or others i have to get way more precise. I am looking into ETF’s right now, but it is still a big jungle to me. Next step is to find the right products for equity/etf’s and fixed income/bonds. If you have suggestions or good experiences, that would be very welcome.

Portfolio

  • 50% ETF/Bonds
  • 25% Säule 3a (in progress to max out stock portion)
  • 20% Sparkonto (yes, this could be less and will decrease overtime anyway)
  • 5% Cryptocurrencies

Another dumb question which relates to both portfolios. When a position grows, but you don’t sell it (cryptocurrencies in my case, but could be Emerging Markets as well). Do you sell it to stick to your plan (rebalance porfolio) or do you let it grow and change your plan? I do not want to sell my positions for now in crypto, but they grow like crazy - but the risk is of course high as well.

Portfolio ETF/Bonds

  • 20% Bonds
  • 10% World Value (MSCI)
  • 10% Europe (MSCI)
  • 10% Emerging Markets (MSCI)
  • 10% USA Large Cap Value
  • 10% USA Small Cap
  • 10% USA Small Cap Value
  • 10% Dax or Swiss Stock (home-biased)
  • 10% MDax or Swiss Medium Caps (home-biased)

This is the profit oriented portfolio recommended by Gottfried Heller from his Book (‘Der einfache Weg zum Wohlstand’). He explained a lot of the basics for me and i am surprised that the main strategy is actually very similar to mustachian portfolios (although with a strong german focus) - makes me even more confident to take this route.

Next Step is to select the products and buy them somewhere. I would like to keep it simple and have only one Broker. It seems Interactive Broker is the favourite here or has anyone another suggestion or maybe bad experiences with IB?

The ratio of Bonds/Stocks would depend of your age/risk.
If you have stocks/bonds in the 3a, take them into account in the stocks/bonds allocation.
8 stocks funds are maybe too much and some of them are overlapping other. 10% for each fund seems quite arbitrary.
Why do you prefer MSCI instead of FTSE or S&P ?

1 Like

hey wapiti

ratio: yes, i should have more bonds for my age, but bonds are at the moment quiet low and i am ok with more risk.
3a: Thanks, this is a huge error - i will include it.
8 Funds: Maybe too much, i am not experienced. It’s about diversification.
MSCI: No preference, was just mentioned like this.

thanks for your reply :smile:

hey rogerized,
if you find some value-ETFs please let me know :slight_smile: i intend to do some value weighting in my portfolio, but i hardly found any good etfs for me, except VBR.

Hi guys and gals.
We have some pretty experienced investors in this forum and i have a simple question. If you could put 200k in a passive ETF Portfolio - what would you do for a longterm lazy version? And would you split it over different brokers?

I would put it on exactly my described portfolio with IB.

the general investor probably would also put it on vanguard funds with IB unless he has special interests that vanguard doesn’t offer.

for the splitting, i don’t know tbh. if i have chf 200k in vanguard funds with IB and IB goes bankrupt? @hedgehog maybe?

1 Like

IB’s money is supposed to be segregated from clients’ money and securities, so that the firm’s creditors wouldn’t be able to reach clients’ assets.

The easier would be to buy VT (Vanguard Total World Stock ETF) with IB

2 Likes

is there any conflicting issue with regard to

?

Segregation is required in UK as well AFAIK

IB’s money is supposed to be segregated from clients’ money and securities, so that the firm’s creditors wouldn’t be able to reach clients’ assets.

Indeed, if IB goes bankrupt, ETFs are segregated under your name. But for cash, situation is a bit less clear: cash is considered as “invested” - not kept in a vault (as ETF).

Like a lot of US brokers, IB is a member of SIPC: cash is insured up to USD 500k.

For us, what matters is the limit of FSCS insurance for IB UK: 85.000 GBP.