Portfolio advice for beginner

Investing / Portfolios
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Hi everyone,

First time poster seeking help for creating my first portfolio. I am 38 years old, have a secure job with medium income. I do have some spare money on my bank account, and I would like to invest part of it now. I would probably start with a small sum now (maybe 5000 CHF), and then seek to invest maybe 200 or 300 CHF every month. If things go well I might add more funds at a later point.

Why do I want to invest: I have a bit of money in my bank account, doing nothing. I want to use part of that money to support good causes. Now, I am not really interested in markets, bonds, investing per se. I don’t want to spend too much time with it. Why do I still want to invest then? Well, if I leave all my money in my bank account. In the background, the bank will use the money for investing. And it will invest in markets and companies that I don’t want to support. If I invest myself, I can decide where to put my money.

Goals, plan: I want to invest long term. Two important considerations for me are 1) low risk, 2) invest in ecology, and ESG. Performance optimization comes after these two for me.

As I don’t want to spend too much time with it. IB looks too complex for me for now. To reduce complexity (and fees!), I decided to use Investart as my platform. If there are good reasons for it I might change to DeGiro. But DeGiro has fees, while Investart has not.

Now I used Investart to create a Portfolio and would love to get some feedback on it. It’s just a dummy, I haven’t invested anything yet. All can be changed if needed.

As said, goals are low risk and supporting environment/ESG. Here is what I have:

5% Foreign Currency

26% CHCORP SW Equity (CH Unternehmensanleihen)

25% DNRG SW Equity (Saubere Energie)

44% AWESGS SW Equity (Globale ESG)

For this, Investart states a relatively low risk (3 on a scale from 1 - 9).

Does this strategy make sense? Points that I need to take into account? Does the Portfolio need adjustments? Is it diversified enough?

Any help and pointers are greatly appreciated.

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Welcome!

What do you mean?
Investart certainly has fees, and Degiro actually has a set of ETFs that are “free to buy”.
You could adjust your monthly to quarterly/half-year purchases, if there are some fees to incur; and to reduce your time spent with fiddling around it too.

On risk:
Well equity is certainly not low risk (your condition No1).
Depends of course what you are comparing to.
ETFs probably are of “lower” risk than individual stock picking.
But expected returns follow along.

Exercise/curiosity: If you make a strategy on Investart which consists of a single global all cap fund (or a mix matching it, VT-like), which risk rating do they assign it?

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Have you filled your 3a accounts already?

There is a ESG strategy at VIAC.

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Hi Linos
my recommendation for you

  1. Due to the planned amounts: start sum a few thousand, monthly contribution a few hundreds, i recommend a roboadvisor such as truewealth, viac, franly,
 there are a few more. no problem to cash out/transfer somewhere else later. Set this up, including a recurring bank transfer, and be done with it. Forget about IB or other manual brokers as long as we talk a few hundred franks per month.
  2. Due to your desire “low risk” i recommend you to come up with a general desired portfolio. To figure out the numbers, you should take some time (“Risk appetite/aversion”). I think you did that to some extend.
  3. Due to “ecology, ESG” it is up to you to find products that reflect this. But hey, do it!

I think overall you are going to be successfull, you are on the right track.

we can now argue on whether you really need a CH-Bias, but that’s fine tuning.

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By the way I’d question the premise. (I’m not sure your deposit has much contributions to those things, it’s hard to separate things for a bank, but I’d be surprised it’s a large contributor).

Are you ok with losing money? Or do you want to preserve capital? (I think that’s an important point, with equity, you can’t guarantee you’ll end up with more than you started and with bonds, you’ll guarantee you end up with less :wink: )

Alternatively find a bank more aligned with your goals, this might be simpler (e.g. a quick search found Pro-environment, socially responsible and transparent | Alternative Bank Switzerland)

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Thank you all for commenting!

Would IWDC SW Equity match these criteria? It is considered mid to high risk by Investart (6 out of 9).

Yes, 3a is filled each year (max. tax deductible amount). But good to know that VIAC offers an ESG strategy. Something I will consider for the future.

Anything speaking against Investart, except it being relatively new? Compared to the Robo-Advisers you mentioned, conditions on Investart are very good. I have also considered Selma and Yova. But Selma takes 0.68% per year on top of EFT fees, and Yova takes 1.2%.

My bank account is with PostFinance currently, so I could invest directly from there. Compared with other platforms, fees are relatively high with any Swiss Banks, aren’t they?

Hm, I thought Investart should be relatively save as they are regulated by FINMA. Also, they open an account at IB on your name. If Investart goes bankrupt, your invested money is still yours at IB.

That’s possibly true. In any case my money will be a marginally small contributor to anything. Still, I’d rather know it’s invested in things that I consider important.

I have investigated Alternative Bank already. I like their approach, but the fees are incredibly high.

Short to mid-term, yes. I won’t invest more money than I could afford to loose.

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How are you supporting anything by buying ETFs? Not a single cent goes to those companies when you buy their stock, because it’s from the secondary market.

ESG is a scam.

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I agree, however it only works if the expected return is lower. Ben Felix has a good video about it:

Personally I think that investing without regard for ESG and donating to an effective charity improves the world more than just ESG investing.

You also increase the expected return for investors that don’t care about ESG.

I haven’t found a way to quantify the impact of ESG investing per reduction of expected return, so that alone is enough to prefer donating to effective charities where there is a measurable impact.

Value alignment is also quite a challenge with ESG funds.

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It is still true that literature is a bit divided on ESG investing impact. It also makes “sin” stock more attractive by rewarding people who invest in them.

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Hi Linos and welcome!

This. The fees are not anywhere attractive but supporting sustainability is their mission statement. They are thorough when they vet their products/the firms they’re willing to invest in. I’d be willing to consider their fees and the returns they get on investments as kind of a benchmark for the costs of an investing policy with sustainability as real first concern and profitability second (instead of sustainability being more of a second thought allowing for the use of a label).

ETA: There’s also more chances they’ll use the voices they get in General Assemblies with their mutual fund to weigh heavily toward sustainability rather than profit.

ETA2: My perspective is close to @xorfish 's: invest with a profits oriented mentality, use the profits to further the causes I want to support. You can aim for individual stocks and use your voice in GA’s to also weigh towards your goals, as tiny as your impact may be.

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Thanks for the friendly welcome everyone. Glad to be part of this community now.

Investart states that they earn money by selling premium services to their wealthy clients. Personal counseling, investment plans. Stuff like that. From what I have read they also plan to add paid extra features. Their online investment service will remain free though for the foreseeable future.

I will read up on Avadis. Currently I do not understand why it is supposed to be a safer and better option than Investart. Will try to find out.

Seems like I have some reading to do about ESG as well. There are definitely sectors that I don’t want to support at all. Excluding those sectors, investing freely apart from that, and then donate some of the profit to NGOs is an option I haven’t thought about. Might be an option as well. Though I liked that the ESG approach simplified the portfolio-building. It limited options, and at least theoretically should have maked sure that my portfolio supported companies that act within certain values.

Edit:

Just browsed through the Avadis webpage a bit. Unfortunately, it doesn’t seem possible to adjust which companies you invest in, and which not. The ESG hedged stock they hold includes Amazon, Alphabet, and Facebook. All companies I most definitely do not want to invest in, due to their invasive privacy breaching strategies. Their biggest stock position is NestlĂ©. Not a single company I can make out is in the renewable energy sector.

Now I am confused. How is Avadis a better choice than Investart if I want to support companies that tackle climate change, for example?

Also, another question if I may. If I was depositing money at Alternative Bank and getting negative interests. Or buying ETFs through PostFinance. Both would mean paying relatively large fees to banks. Wouldn’t it then be more adviseable to accept the 1.2% fee per year and invest through YOVA, which focuses on impact investing?

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Among its 10 largest portfolio holdings:

  • Alphabet
  • Facebook
  • NestlĂ©

Among 10 largest single positions, by issuer:

  • NESTLE SA RegS
  • TOTAL CAPITAL INTERNATIONAL
  • SHELL INTERNATIONAL FINANCE BV
  • NESTLE SA
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I see. ESG is definitely not a label I could trust in then. Making everything much more complicated and involved than I would like.

In that case I see a few options currently for me:

  1. try to identify ETFs that include companies I actually want to support. From these ETFS try to compose a portfolio that is still diversified and relatively secure. Then choose a platform to buy these ETFS through. This, at the moment, seems quite involved to me and would need a lot of research and time.

  2. Go with YOVA. It looks straightforward to use. I have a few question marks about security. With YOVA you don’t invest in ETFS, but in single companies. Basically I’d have to trust that the YOVA robo-adviser compiles a portfolio that is relatively low risk and well diversified. Plus I’d have to stomach the comparatively high fees of 1.2% per year.

  3. Transfer my money to Alternative Bank. Live with negative interest, and loose out on potential profits from investing (but also the risks).

Is that a somewhat reasonable summary for my situation?

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Well unfortunately for you it seems that Global ETFs will always include companies that will never suit your opinion and ideas. YOVA seems to be the best suites solution for tou as you can select in which sector you want to invest and they will pick you shares in their selected “green” companies.

Maybe ETF with SRI criteria will suit better ? Try to look at UBS or iShares SRI ETF.

Also note that with YOVA, you have to invest 50’000 CHF to have less fees, this doesn’t include the value of your investment but your own CASH. So if your portfolio has a value of 50’000 CHF but you “only” invest 46’000 CHF, you will not be eligible to less fees :wink:

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  1. You may want to take a look into the UBS “Socially Responsible” funds. From the funds available on JustETF, they seem to be one of the better options at a glance (though they do include Tesla, who have just made a large investment into Bitcoin). Finding an affordable broker to buy them shouldn’t be an issue.

  2. Without being a customer of them, just from info on their web site: YOVA is probably something that I would also recommend looking into as one of the top options. Their approach seems quite reasonable and transparent (though not cheap), and they do offer customisation.

EDIT: Though Yanikuza marginally beat me on it, as an example: IE00BDR55471

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Over the last 4 years, I have donated 25’000 chf to charity. This saved 3-6 lives of mostly children and improved the discounted future income of poor children by 22’500 chf (5% discount rate) or 82’500 chf without a discount.

Instead of trying to invest by aligning your values with your investment for an uncertain impact, you could maximize your return and pledge to donate 1% of your portfolio value every year to effective charities for a measurable impact.

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They also have investing options:

  • A mutual fund: FR DE

  • Their own investing solutions, including the possibility to finance the loans they give to projects/companies that meet their standards: FR DE

  • Their own equity (which they use to finance projects that meet their standards): FR DE

These pages are unfortunately only available in German and French.

I’d give them a call, arrange a meeting/videochat, tell them what you want to achieve and hear what they have to offer. They seem to be doing exactly what you are trying to do. Here’s their investing policy: FR DE

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“Economical” ESG investing, with which you would be 100% satisfied by the choice of remaining companies, is a pipe dream.
You will have to accept a lot of inefficiencies in trying to follow that route strictly.

I second xorfish too on the approach - regular efficient investing + (much more direct and effective) “good-doing” on the side with those gains.

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Regarding costs, I don’t find 1% too bad for actively managed funds.

For the ABS fund though, I’d feel some pain over the 1.55% TER with approximately 50% bonds (and basically all of them in CHF, EUR and USD), at interest rates of late.

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For impact investing (which might be closer to what OP wants), I think one of the issue is that most of them are smaller funds and not open to retail investors. E.g. Funds or Investors - BlueOrchard