Dear fellow Mustachians,
this is my first post but I’ve been already following the forums for quite a while. First of all, let me thank everybody for all the wealth of information that can be found here, I couldn’t have started my journey to FI without everything that I’ve found here!
I am Spanish and I have been living in Switzerland for 7 years with my wife. We currently both work and have a 1.5 year-old kid (with all the expenses). After reading a couple of books on personal finance, I’ve been reading around this forum and other similar ones and I’ve realized that our approach to finance and retirement was far from optimal. Although we have always tried to invest some money, and we currently have a fund plan with PostFinance, we’re clearly paying enormous fees and underinvesting.
To remedy this situation, and after informing ourselves as best as we could, we’ve done the following:
- Put together all our finances in a detailed Google Docs and calculated our NW, along with our asset allocation.
- Written a IPS with our our goals.
- Started to keep track of our expenses, prepared a budget and planned for savings of ~35% to start with.
Our investment plan basically boils, at the beginning, to something very simple: 60/15/25 distribution between International ETFs, Swiss ETFs and bonds/cash, keeping the number of ETFs to the minimum. In particular, since we own a PF Fonds Suisse, we are planning to only acquire one international ETF. After quite a bit of research, it seems that the best option is to invest in the VT ETF with IB (we’d be investing more than 250k CHF). However, even after reading the forums I have three big doubts:
- Given the new regulations I may lose access to US-based ETFs, in which case VWRL could be an option (with the advantage that is in CHF). Since we’re so close to 2020, does it even make sense to buy VT?
- Isn’t putting more than 250k on a single fund too risky? I mean, the fund is diversified by iself, but I think I’m not confident enough to diversify myself yet, so I don’t to complicate things too much at the beginning. Also, my wife is more “risk averse” so it seem easier to convince her to buy only one
*We had a meeting with a couple of wealth managers (they contacted us through work), and instead of EFTs they recommended life insurance/3b pillar, saying that it will grow a healthy 5% per year with virtually no risk. I have read in the forum here that this is not a good idea, but I am not sure I fully understand why. Can somebody help me understand why this is not a good idea?
Also, in terms of investing, and since I’m not confident with IB yet, I guess it’s better to invest in steps, maybe starting with a small sum of around 20k. I have to say it’s quite a big change from my usual dabblings with the stock market (I’ve been doing this for a while, but always through my bank/intermediary, so much safer), so any tips would be greatly appreciated (I’ve already seen quite some on the forums!). However, I want to ramp up fast so I can avoid monthly fees.
I also would like to ask about the forum’s expertise about asset allocation. We’re currently 7/15/78, so there’s clearly a lot of work to be done (I currently count 2/3 pillars also as bonds in the NW computation). However, due to our work we may go back to Spain in a short timescale (less than 4 years), and in that case we would like to use the money in the 2/3 pillars to give a downpayment for a house(*). Then, my reasoning would be to keep a bias towards cash/bonds (50/15/35) such that when we spend the pillars it will rebalance to something like 65/20/15, and then we can accumulate a bit more cash before investing again. Does this strategy make sense? It could also be we don’t leave Switzerland at all, in which case we would start rebalancing by moving the 3rd pillar to an ETF and investing a bit more cash.
So, these are my doubts, sorry for the long post, and hi again to everybody!
Thanks in advance and I look forward to many fruitful discussions,
(*) Incidentally, does anybody have experience/knowledge in using the 2/3 pillar for a downpayment of a house when leaving Switzerland for the UE? At Postfinance they told me it’s not possible, but I’ve read in many places that it is.