My investments - 50k in ETFs at IBKR (feedback)

Investing / Brokers
1

Hello!

I’m an avid reader of Mustachian for some years now and I would need your feedback for my first post please. And again, thank you for the excellent resources.

I want to invest 50k CHF.

I’m already a crypto investor and I don’t want to invest in real estate, PE, or startups.
I used to have a comfortable salary, but since transitioning to a business owner, I now have very limited income. I’m 35 yo, now live in Portugal and seeking long-term investments and recurring revenues.

So I thought investing my 50k CHF in these ETFs at IBKR:

  • Vanguard S&P 500 ETF (VUAA) > over 60%
  • Vanguard FTSE All-World UCITS ETF (VWRD)
  • RMAU Royal Mint Gold (commodities)

I usually follow these guidelines:

  • only buy UCITS, usually on LSE
  • buy ETFs in USD if US market, GBP if UK, EUR if EU etc.
  • buy ETFs that are “Accumulating”
    That way you save on dividend tax (15% vs 30% with UCITS), and Vanguard has the lowest fees.

1- What are your thoughts on investing the full 50k CHF in ETFs? Does it make sense in my situation?

2 - Would you consider investing 50k in ETFs at this moment, considering the high market conditions?

3 - Are there any other ETFs you would recommend for Euro citizens that are accumulating, UCITS-compliant?

Thank you in advance for your feedback! :pray:t2:

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Yes. It is not much. Just think about how much you are going to earn in your life.

Markets are high most of the time.

Just stick with

accumulating class.

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2 posts were merged into an existing topic: Chronicles of fat years [2024-2027 Edition]

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You don’t really share anything about your situation. I guess most people here will recommend investing in ETF for retail investors in a buy-and-hold style.
Combining US with All-World, which includes US and Gold, that’s up to you.

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When you already talk about IBKR, why not buy VT? Do you need to stick to UCITS funds for a special reason?

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  • Irish UCITS ETFs have zero percent withholding tax on distributions to you.
  • There is no (systematic) tax advantage of accumulating funds compared to distributing funds
  • A fund‘s trading currency is irrelevant, expect (possibly) with regards to your own transaction costs. Your buying funds in different currencies though suggests that your transaction costs are not optimal (minimal) - because you‘d likely exchange currencies more often.
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Thank you Dr.Pi

About my first question:
I used to have a comfortable salary, but since transitioning to a business owner, I now have very limited income. I’m 35 yo, now live in Portugal and seeking long-term investments and recurring revenues.

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I’m now a Portuguese resident.

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It depends. Maybe Portugal does not tax the growth (deemed dividends) of accumulating ETFs as it is the case in Switzerland

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Didn‘t notice OP is a Portuguese resident, sorry.

That probably answers the question about VT as well (as being unavailable).

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Thought the same :+1: changes a lot.

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What I don’t understand: you can of course have a small “recurring revenue” from your portfolio if you consume dividends. If you go for a high dividend fund, you can get 3-4% p.a., 1500-2000 CHF/EUR per year (no guarantee) without selling anything. Doesn’t look interesting to me, but it’s your business.

This will kill a significant part of the future growth, so not really compatible with “long-term investments”, which grow through the reinvestment of the income.
And it’s really incompatible with investing in accumulating funds. :person_shrugging:

14

Here is my view. If the purpose is to achieve recurring income, then it can come from a mix of following

  1. Selling shares
  2. Dividend income

You mentioned that you prefer “accumulating” ETfs. I am assuming your personal tax situation dictates that you are better of with realised capital gains versus dividend income

So, now the main recurring income will come from one thing -: Selling shares

If all of above is true, then your goal becomes capital appreciation with lower volatility. Reason being if you have a higher withdrawal rate, the periods of poor returns can really hamper your overall portfolio. So maybe you would be better of with globally diversified portfolio.

I would not recommend to seek highest return. You need to seek a balance of return and volatility.

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If you need(!) the 50k for the next few months to build up your company, I wouldn’t invest it…

But that depends on your plans and only you can decide.

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Absolutely, I have already covered all the company’s expenses, and the operational costs are minimal.

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Thanks for your view!

I want to hold my investments and withdraw them upon retirement.

I prefer accumulating ETFs as I won’t sell them and look for long-term investment goals.

However, I can buy and sell stocks depending on the market conditions with the intention of reinvesting the potential profits into other stocks or accumulating ETFs.

Regarding tax considerations and tax residency, I believe I will not be taxed until I withdraw my gains because gains are unrealized, that is, until I sell there is actually no gain.

Which accumulating ETFs would you recommend for investment?

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Completely agree!

My apologies for not being clear. I am not seeking recurring revenues now.

I want to hold my investments and withdraw them upon retirement, or receive recurring revenues through dividends when I retire.

So that’s why I invest only in accumulating ETFs.

The point is that ETFs and investing the money in the market can return a positive stable long term return with compound interest.

Generally you hold for 20-30 years and sell at a good time when you retire.

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19

You can also have 2 funds split of the global stock market. MSCI World + MSCI Emerging markets or Vanguard/FTSE Version. Bit more hussle but will reduce TER, managing costs.

Otherwise

Is already very efficient and should stay around for long time.

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20

Okay. Now it’s clear

I think the following world ETF is good for European investors with global diversification and also accumulating

VWCE (tracks FTSE all world)
SSAC (tracks MSCI ACWI)

These ETFs might have different ticker symbols depending on exchanges.

If you don’t care about Emerging markets then following will also be good

SWDA (tracks MSCI word)
VGVF (Tracks FTSE developed world)

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21

Thank you for you messages!

Of course, I am starting small as a beginner.

My initial investment is “only” 50k CHF, but I was looking for which ETFs would be the most performant for my situation with this amount. I think I have a good idea now.

Then after, I plan to diversify my portfolio with ETFs covering World and Emerging markets, Asia, commodities, and stocks when I will be able to allocate more money through DCA on a monthly basis.

Now I focus on generate money from my new business.