My starter Portfolio

Investing / Portfolios
1

Hi all, I’m finally starting to accumulate reasonable savings after I moved in Switzerland last year and I would like to have others opinions on the investment strategy I’m building for next year.

I already covered the amount for the emergency fund and the one for predictable/planned expenses (e.g. car) and I’m keeping them all as liquidity in my bank account (= ~ 100k).

In December I will probably have extra money (~10k) to invest and they will increase month by month. My description as investor is: time horizon 30y, I’m 33 years old and my risk tolerance is still unknown (now I would say max tolerated loss of 20% but higher will be my liquidity higher will be this tolerance).

Considering that currently stock prices are quite high and that bond rates are decresing, I don’t want to start with the classic portfolio 100%-myage stocks and the rest bond, investing the entire amount of 10k. I thought that maybe could be better to start with a PAC buying only 3k of a global stock ETF such as SPDR MSCI All Country World (IMIE) and keep the rest as liquidity or buy a monetary ETF. Every month I can increase the vested amount of 1k and when interest rates will get higher I’ll invest myage% of the portfolio on European Bonds in € + 10% of stocks will be converted in gold.

Note1: I am also paying a 30y mortage with a fixed 2% interest rate. Initially I was considering not to invest now and use all my savings to close the mortgage but considering the rate is low and the possibility it gets lower, I decided to choise an hybrid solution = start investing now and reduce the mortgage a bit later using the savings after investing.

Note2: I’m still evaluating the idea of doing the 3a pillar. Although the immediate tax savings, vesting ~7k will results on delaying my personal investments and mortgage closures and, additionally, I won’t have control on the investment itself.

Note3: in 4-5 years (don’t know exactly when) I’ll probably leave Switzerland and come back to my own EU contry.

I think I described totally my situation. I am ready to read your thinking and feel free to challange my assumptions (e.g. interest rates) and my choices (global ETF vs 3ETFs, PAC vs no PAC, investing vs mortgage closure, 3pillar yes or no etc).

2

You do have control (the money is locked but you decide how it’s invested). If you have a good salary (high tax rate), might be a good option.

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3

Hi!

I guess this is abroad, so maybe rules are different.

But how can the mortgage be fixed at 2% for 30 years, and still have the possibility to get lower?

And how do you plan to use the money you’ll invest in the next 4-5 years, after you leave Switzerland?

  • Invest it again in stocks in your home country?
  • Pay back the mortgage?
  • Something else?
4

If interest rates go lower, in Italy we can update the interest rate to the new one for free. I know, it’s a great advantage. Another interesting rule is that for the first house you buy, interests are lower. If I close my mortgage and then in future I’ll buy a second house, banks will offer me higher rates. That’s why sometimes could be not convenient to close the first mortgage.

The global ETF I chose is UCITS so in theory after my relocation I should be free to keep it. I’ll do the same with gold of course. Then when I’ll come back in Italy all vested money will stay vested and I’ll continue the PAC contributing monthly with a lower sum (as my italian salary will be certainly lower than the one I have in Switzerland). I’ll close the mortgage only if I have extra money.

No one critizing this part of my post?

5

what to criticize?

You are mainly talking about Dollar cost averaging vs lump Sum. For starters it’s better psychologically to slowly invest because what if market drops 30% next week and you just invested all of your money? You will feel really bad for long time.

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6

You are right. Reading the 3a discussions here I got the idea that keeping 21-28k (7k x 3/4y) in a 3a account until my pension age wasn’t convenient for me because I can take the tax advantage only the first 3-4 years (almost 6-8k). For the rest of the time costs will eat my earnings (if I’ll have earnings). In addition, if I evaluate the option to take money out when I’ll leave Switzerland, it will be quite risky to invest those money on high % of stocks considering the short time horizon. Maybe it’s me but I can’t see the advantage in my case.

Happy to read that I’m not getting it wrong. I was really uncertain about the 1 global-ETF vs. 3 ETFs strategy and the fact I wasn’t incorporating bonds since the beginning.

7

Not really, because if you take it out when you leave switzerland after stocks have fallen, you can simply buy them back immediately in your new country and keep holding them for a longer period.

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