I’ve got a % allocation but am currently pondering if a CHF amount allocation doesn’t make more sense, that is:
whatever amount I feel comfortable with in cash as an emergency fund (for me, CHF 25,000) ;
5 to 10 years of expenses in bonds, in which I could dip if the market falls and until it recovers ;
the rest in stocks.
That would work once I’ve reached a certain threshold but as an early accumulator, I can’t fully fund the bonds part and am not willing to invest solely in bonds until I have, this means I must take additional risk for the time being, which would probably send me in the first category (EF in cash, rest in stocks).
How do y’all account for real estate (own homeownership and rentals/commercials investments) and 2nd pillar?
I’ve also thought of another alternative in which, stocks that have been invested for more than 10 years already have a >0 return and can be sold in a downturn, reducing and/or negating the need for bonds. It’s just a thought for now, though, and I haven’t explored it to put numbers on it. I’m absolutely not sure it holds in case of 50%+ downturn.
For second pillar, what I’m pondering is whether or not to account separately for homeownership. With current returns, my second pillar serves mostly as a reserve for own home buying. What kind of home I am willing to buy is not really a financial decision to me, but more of a personal comfort one so I’m wondering if I shouldn’t rather count it as an expense (with a resell value) and just neglect 2nd pillar and own home when considering my actionable portfolio or to account for it all (in which case 2nd pillar is bonds for me).
I invest everything in stocks what I’m able to save. My overall stock allocation (including emergency fund and pension fund) is 80% and will probably stay there till retirement. Can’t see me investing >4x more than my total 2nd pillar contribution.
And that tricky question raises another one: I was about to reply that, right now, my 2nd pillar covers my bonds allocation so I haven’t delved deep into the question as of yet, but that’s not exactly available money in case things go dire, so if I go for the 5-10 years of expenses in bonds route, I’ll have to count it outside of my 2nd pillar.
To answer your question, right now, I’d go for a term deposits ladder in some trusted banks instead of bonds. I’d stay away from most corporate bonds so, when/if rates raise, I’ll check those issued by the Confederacy, the Kantons, the kantonal banks provided they’re backed by their Kanton and a few cities I deem trustworthy. If I’m able to find a decent bond fund, I may go for it (but haven’t found one that strikes my fancy as of yet).
Dotcom bubble must have been brutal from the hearing I heared some never got back in the stock market again…
That is probably the reason why most private investor without advisory end in quadrant 2, 3 and 4 but rarely in quadrant 1. Not that it would be bad for every person, but assuming that about 90% of the population are risk adverse it paints a special picture
I dont get the thing with booking.
Your portfolio sounds very elaborated. I assume you work/worked in the finance sector? Maybe in a family office How did you get to your current SAA? I would like to hear more about it, to implement it in the future. My current net worth is too low to implement such a SAA concerning the trading costs/invested capital
Well -80% is for me a whole other deal than -60% Gladly I could hold my feets still during the -35% and bought (unfortunately a little too early) the dip.
So basically it is “just” a mental book keeping, to trick yourself? Because your sheet shows 8k but in your broker it still shows the full 10k.
That is what I dont get. If you buy your Shares worth 10k and hold them in your broker, it doesnt change the actual return of your 10k if you take an instant loss of -20% and smooth out adjusted to the actual return your annually return of the 8k unless you do the whole thing with a counter-party in a swap like contract.
Doesnt have to be that way. Just because you check the tickers, doesnt mean you log into your broker and start shifting around your allocation.
Yes that is what you do if you rebalance.
Agree but your mental bookkeeping loss is not an asset. Your “loss” is classified as stock and has vola, if you acknowledge it or not.
I agree on the anti-cyclical part, but in reality you dont act anti-cyclical, because you already have the stock, you just start to acknowledge it part by part. Anti-cyclical would be buying the stock if everyone is selling it, because then your balance in your broker changes.
If I got it correctly it is all about the mind game. I would say the Gretchenfrage is if vola disappears just because you dont acknowledge it, because during the whole period you hold 10k worth of VT with the vola of VT.