New to this investing thing

Hello guys,

I’m Le0, 36 years old from Neuchâtel. I rent an apartment with my partner and we have a soon to be 1 year old little girl. I recently found out about this community and I wanted to share a bit of my story in order to get some advice and also to allow me to brainstorm about the future. Oh and I have absolutely no knowledge about investing.

I found this site while researching on what best to do with my 3a pillar. I heard of the FIRE movement previously, I was aware of the subreddit so I was delighted to find a specific community for Switzerland.

My partner is a bit sceptical (and lazy?) on all of this and also we are not married and still have our individual accounts in addition to a common account. So for now my aim is to start improving my own situation so hopefully later I can convince her of the benefits, it’s also a good way to learn along the way also. Maybe I’ll convince her to marry me also (if it lowers our taxes :laughing:).

My situation is the following, I currently work at 100% as a software engineer with a salary of 110K/year so I manage to put aside some money each month. As said I also have a 3A pillar with 28K on it but it’s at UBS so not profitable. In addition I also have a savings account at UBS where I have another 28K savings plus 10K set aside for a future new car since the current one is already more than 10 years old. This money is just sleeping there at 0.01% I believe? As you can see I’m far from rich but I managed to put a bit aside but it’s been bothering me that this money is sleeping there doing nothing.

After reading around here, the first thing that seemed to be a no brainer is to improve my 3a, so I already opened an account at VIAC and I’m about to transfer my 28K on this account, I’ve selected the Global 100 strategy which seem to be the go to for money that will be there for a long period of time. My plan is to deposit each month a bit of money on this account to reach the maximum amount at the end of the year. I’m not sure if I should be opening several portfolios but I guess this is not urgent for now.

The next thing I think would be to consolidate my budget, we already have a shared budget but it’s not very precise and I guess it can probably be improved. On this note I’m looking for any kind of good resources on this subject, I’m planning on staying with a google spreadsheet for now. The goal of this would be to know exactly how much I can save each month in order to invest it.

Concerning my actual savings of 28K+10K, I’m planning on keeping a part of this as emergency fund at my bank, I believe a good ballpark is 6 * monthly expanse? If that’s the case a good amount of this money would stay there I believe, or are there better alternatives? The few thousands left would then be used to invest in stocks, but before this I need to do more research on how to do that :slight_smile:

Hopefully I’m on the good track, any advice, tips or recommendations are very welcome!

A+

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I would. Transfer the 28k to portfolio 1, open up another 4 portfolios with the same strategy and make 4 standing orders for those 4 with the same amount. Otherwise the other 4 will never catch up to the 1st one as it has a massive headstart. Assuming 0% returns, you’ll need 16 years of contributions to have 5 portfolios with the same amount. In reality it will take longer.

Wait a second, one can not send one 3a to 5 accounts in VIAC?
:frowning: to answer myself, it looks indeed like that when moving pillar 3a one is not allowed to split them in multiple accounts -.-

Back on topic: Welcome to the Forum, do you already know about your expenses and budgets? That might be a better first start than looking into investing the remaining money of the 38k emergency fund (if there are any left…)

He didn’t say anything about splitting those 28k up.

Well, currently I have a single 3A at UBS with 28k, and I don’t think I’m able to move this to more than one portfolio, at least VIAC doesn’t give you the option I believe.

Regarding the budget part, well as I said I want to improve this part but I believe that looking at my current expenses I can probably save around 1000-1500CHF per month.

Welcome!

Three things come to my mind, it’s something I do and might be of interest to you:

  • Don’t forget that if your partner is working, she should be paying into her 3a as well, and she should transfer it to something more profitable than UBS, too. Viac will give you a small discount if you refer her to them.
  • You can set up a portfolio for your daughter as well and pay in monthly. I set up something at Avadis, can be in the name of your children, starts at 50 CHF per month, very flexible and easy. Too expensive if you want to put in serious amounts of money, but for me absolutely fine until maybe around 20k.
  • I personally like to at least match my non-pension savings to my 3a savings, i.e. save at least as much as I pay into my 3a, if possible, of course. You could set up an account at, say, Degiro, set up an automatic monthly transfer and then either buy an ETF monthly or maybe quarterly. You could set up something for yourself at Avadis, too, even easier, since then you only have to set-up the automatic monthly transfer.

As for the emergency fund required, there is a whole threat on this and a wide range of what people prefer to hold. I personally like to have 50k in reserve. Since you already have reserves, you could build that up further in parallel with starting to invest. No. 1 rule of starting to invest is starting to invest. Otherwise you might sit on the sidelines forever, afraid to go in, because the markets increased by so much since you started to think about it.

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Welcome!

I like to evaluate what kind of emergencies I could face.

In case of unemployment, unemployment insurance would take on. I like to have a 3 months buffer in case of administrative delays, though.

Cases of disability or death are better handled with insurances in my opinion, so if my 2nd pillar isn’t enough to cover my dependants safety/needs, I may consider purchasing a pure risk life insurance policy (but wouldn’t mix it with a savings solution). There again, a few months buffer may be worth it.

My biggest expense would be if I had to replace my car. I wouldn’t want to take a lease and the options I’m considering would cost roughly 25k.

I’m counting a broad 5k as monthly expenses for my planning (my real expenses are less than that), so my ideal emergency fund is the 25K for my big unplanned expenses (the 3 months buffer would be less than that).

If I get both unemployed and in need of a new car at the same time, I would reduce my expenses and find other ways of financing if I really need it (a lease in this case).

Thanks for the tips, I didn’t really realise I would need several 3a accounts that’s why I used a single one at UBS. My transfer is being processed and I opened 4 more portfolios with standing orders setup, now to wait 16 years!

I still asked VIAC if it was possible to split, but they said sadly that a single portfolio is considered as a 3a account and you cannot split 3a accounts by law.

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Great, so you are all set with your 3rd pillar.

Emergency fund is highly individual. Just think about anything that could happen that wouldn’t be covered enough by insurances. My personal EF is 10k, others need 40k or even more. Leave that cash in a bank account. Anything above that amount can be invested. Once enough liquidity is reached (should be already the case with you), monthly savings can be invested 100%.

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Also spend a bit of time to figure out which asset allocation works for you (the worst thing would likely be to have too much stock and panic in a down market, better to have lower return be sleep soundly at night).

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I gave more thoughts to all of this, following your comments and suggestions.

After looking at my budget I’ll say at a glance that my monthly expense are around 5k. I feel good having 25k as emergency fund. I think it should be quite enough for any bad thing that could happen. I have some doubts about my car tho, it can certainly go for a few more years but it’s 12 years old at 150k km so I’ll have to change it at some point anyway. I currently have 6k put aside for this and each month putting aside more. I guess I’ll have to split my car savings with the money I’ll invest.

I’ll be able to start investing with around 7k, then each month I should have around 900 to 1.3k to split between my car saving and investing. It’s not a lot but it is something. With my 25k set aside I feel pretty good about having quite a bit of my money as stock but yeah I’ve never done this so I’m not really sure how I’d react if it goes bad for a while.

I’ve read it’s recommended to start investing on Degiro with such small amounts, is this still the case? I’ll have to research also on what to invest I guess ETF is the way to go but I have more research to do also on the exact allocation.

I did some research and decided to go for Interactive Brokers. My account is ready and I have my 7k transfer waiting to be accepted on Monday.
I’ll keep it simple and follow MP’s suggestion of 80% VT 20% SMMCHA SW for starters.

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I’m more or less in your situation. I have started and I have:

No bonds (Pillar 2 is my low risk “investment”)
VIAC Sustainable 100
100% VT

So I wanted to start buying another ETF. And I just thought to follow MP’s suggestion too with SMMCHA

But, is there any other ETF to complement VT? That ETF should be a Swiss one? @thepoorswiss has a post talking about CHSPI

VT is enough. If you really need more CH, use a personalized strategy with VIAC. Select SPI extra

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I would just go for 100% VT in IBKR. You already have a big home bias by working in Switzerland, contributing to 2nd pillar (you could look at it as CHF bonds) and 35% of Viac is already CH.

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But one can‘t access 2nd pillar until retirement. So if RE, you should have some currency stability and the swiss franc will probably continue to be strong. I‘m doing 75% world and 25% CH. The 25% come partly from VIAC.

Yes, maybe. It’s quite likely

Yes, currency stability is better

BUT investing in CH companies (through SMI or SPI) doesn’t give currency stability. Most companies only make a fraction of revenue in Switzerland

Company % of revenue done in CH in 2018
Nestlé 1.36
Roche 1.18
Novartis 1.64
Zurich Insurance 8.50
UBS 24.20
ABB unknown - (Number of employee in Switzerland : 4%)

MSCI Switzerland constituents
image

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This. 90% of the revenues of the SMI are made abroad.

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Last year the dollar has lost quite a bit to the swiss franc. Did the swiss shares go down the same percentage? I don‘t think so.

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