I’ve discovered your place not so long ago and I have been reading a lot.
I’ve been wanting to invest for the last 15 years and I never had the courage.
My investing profile would be “I want a sure thing” and I know no such thing exist.
In the past I’ve read often on reddit that the easiest and risk-free thing would be to buy SP500 or VTI funds. I never really took a good look until today only to find out, holy moly, even after 2008 crisis, Covid, Ukraine war those two funds have doubled the money in just the last 5 years! Looks amazing and hopefully the increase will follow in the following years.
So my question, how would a swiss citizen purchase these funds? What would be the easiest solution and if indeed for a swiss citizen living in Switzerland these 2 are the best solution out there?
To expand on dbu’s remark: the future returns could be as good as they’ve been but they could also not be by any stretch of mind. We could have a rerun of 2000 then 2008, with a 50% drop, then a slow way toward recovery, then another 50%+ drop right when recovery was reached (where it felt on top of that like your bank, your broker and the whole financial system with them were going to go belly up).
The closest thing to a sure thing would be sovereigh bonds with a duration matched to your needs or other insured/sovereign fixed income tools like medium term notes. Their guarantee of returns is only nominal, though, that is inflation, if it manifests itself, can eat through them. I wouldn’t recommand a 100% bonds allocation but I wouldn’t recommand a 100% stocks, even less so a 100% US stocks allocation as the easiest, risk free thing either.
Nothing beats your own experience in dealing with your investments.
A kick-off portfolio of mine was as simple as 60/40 after reading my first real investment book* in 2011.
60/40 is kind of a “sure thing” approach to me, even if it did not work well in the last dowturn after 2020.
Adapt from your “sure thing” approach only as you feel comfortable (probably slowly).
Read up on things (books, forums, etc), see what works and what does not, experience it yourself in small tranches and in real time.
Only adapt from your own “sure thing” approach as you feel more comfortable, ideally adapting from your own hard-earned conclusions (versus the Internet’s advice to buy this ETF/stock, follow this or that strategy, etc).
If you are Superman and all macro is just noise to you, immediately go all in with an all world index. Good luck!
As for the mechanics of it – “how would a swiss citizen purchase these funds?” – I would open up an account with IBKR and Swissquote and start deploying funds there. You will arrive at your own conclusion of what works best for you, whether “Switzerland” vs “fees” is a thing for you, etc.
Oh, and welcome to the forum!
* The Behavior Gap* by Carl Richards. I was hooked by his back of the napkin drawings like
First of all, it’s always good to see history to understand what’s possible but also important to think about future because that’s what matters
And it’s tough to know what will happen, so looking for sure thing will actually lead you to „not invest“
Maybe have a look at this report from JP Morgan to read a bit about what their expectations for next 10 years is for various asset classes. This can give some ideas
But one thing I can say is that investors are typically rewarded for their ability to embrace uncertainty. Less uncertain the asset, the higher the returns
Just to have expressed the other opinion as my previous commentors. My sure risk-free thing is Bitcoin. It’s deflationary cryptocurrency, digital gold and property for the Internet century.
Everything else is investment and it’s not risk free.
With Bitcoin you can save and have no fear to loose value of your wealth as with cash (2%+ infaltion CHF others even worse). Want some broad shares ETF? Well, they have managed to keep the fight against the inflation by ca. 0.5% the last decade or so, but with RISK of business attached to it.
I agree with others: just start and DCA and read a lot about it.
I don’t know if you’re serious or if this is a joke that fell flat, but either way this is a pretty cruel thing to do in a thread like this. The OP has missed out on 15 years of returns, has finally decided on an approach that’s sensible, and is looking for a final push and advice on how to actually start executing it.
Proposing an exotic and highly volatile alternative and selling it as a “sure thing” is like the least helpful thing possible. (It doesn’t really even help them with overcoming the initial inertia, because the steps to take for speculating on bitcoin will be totally different from investing in securities.)
I know you are not fully serious, but I want to expand on that. I think that lump sum is only in a very narrow theoretical sense superior to slowly rolling in with cost averaging. Three reasons:
Cost averaging only reduces the expected return by about half the expected opportunity cost during the allocated time to reach the new target allocation. Example: If we cost average over a year, and lump sum should get about 7%, cost average will get about 3.5%.
The outcomes are much closer for cost averaging.
The point in time where newbies first start to seriously think about investing is not random. I hold it likely that the bigger the bubble the more FOMO drives them to pile on. Conversly, very few do so when everything is doom and gloom during a big crash.
I ran some calculations on the SPX (S&P 500 price index):
The fat tails to the left are better visible in this log-log-scale (histogram bucket width also sized on log scale). The lowest values were around 0.294 vs. 0.483. Geometric means were therefore also a bit less in favor of lump sum (1.0584 vs. 1.0321).
I’m serious, no joke. I wanted to point out that there is an alternative view of things opposed to the views here. One should read about it. I’m not illusional that with few posts I can convince about Bitcoin.
There are facts, there are opinions, and then there are fringe views.
I hold BTC myself, but this:
is a fringe view (and only under very specific assumptions not provably false). It is irresponsible to present it to a newbie without this disclaimer, even if you are fully convinced yourself.
On the other hand broadly diversified stock indices have been strictly better than cash (or short-term government bonds) for intervals of a couple of decades. The data goes back longer than a century. This can change in the future, of course, but so can hyperinflation wipe your cash/bonds.
That’s what I initially said, it could beat inflation by 0.5% in last decades whereas cash lost. But it’s an risk investment. You are forced to take risk, because of a stupid 2%+ inflation target by central bankers. Yes, it’s a different view than yours but equally valid. Keynes vs Austrian etc. A newbie and everybody else should be aware of this.
Inflation-adjusted return of MSCI ACWI in CHF in nearly 37 years: 6.14% p.a.
Agreed. However, Bitcoin is also far from being risk-free. The risks may be different but claiming Bitcoin is risk-free in a topic for a newbie is absurd and terrible advice. You may believe that you get at least as many goods for x Bitcoins in the future as you do now but that is not guaranteed at all. And Bitcoin massively lost purchasing power only a few years ago, and much more so than CHF cash did in decades.
I agree that additional information about @rew342343’s background, situation and goals would be helpful. At the same time, I’d say that we might then just tell him to go consult with an independent professional financial advisor … because, let’s admit it, we’re not …
(at least I am not – YMMV).
Actually, if @rew342343’s capital to invest is sufficiently large, my advice – given their apparent lack of experience/knowledge – would indeed be to just do that – consult with an independent professional financial advisor instead of trying to make sense of the cacaphony voices expressed here.
Given the original post I sense
a desire to want to invest but a lack of courage
a desire for “safe” investments (“I want a sure thing”) and acknoledgement that this does not really exist
rudimentary looks on reddit into what might have worked in the past, even just in the past 5 years or so (S&P500 or VTI “the (US) total stock market”, as defined by CRSP US Total Market Index)
a little bit of FOMO expressed between the lines
seeking advice on how to express the approach researched on reddit
Even if @rew342343 provides us with additional information about his situation, I’d stick with this:
start now, start small, start simple
adapt as you learn more – and do learn more!
Even if we have the full understanding of @rew342343’s financial and personal situation, we’ll only pitch our (often) sophisticated opinions about this (%) ETF versus that geopolitical view, etc. etc. As we’ve seen here, some people – no offense! – think Bitcoin is the beginner’s best option.
Personal guess only, but I’d say we can present @rew342343 with very sophisticated investment suggestions given his more detailed profile, but he’ll then still be faced with either
choosing to “be dumb” by following some guy’s sophisticated advice on a mostly anonymous forum
or
analysis paralysis given the (too) sophisticated advice we hand out
Anyway, I’m repeating myself: keep it simple if you follow our advice @rew342343, or consult independent professial advice (which will cost you money).
Provide us with additional details about your financial situation and brace for the impact of our follow-up recommendations.
You got everything right. I think part of my lack of courage, desire for “safe investment” comes from my upbringing where putting money in something non-tangible was considered risky and bound to disappear.
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