Portfolio for retired mother

Hi everyone, I would appreciate your advice.

I’m about to put together a portfolio for my retired mom. She has around 500k to invest and would like to stay on the safe side. She is 67, and she needs to draw 20k every year in oder to close the gap to her expenses. She’s received offers from ZKB and VZ to manage her account. While both did a decent job analysing her situation, they take 1.3 and 1.45 percent each year for wealth management, excluding costs for the fonds! Plus they came up with really complicated portfolios, featuring 15 positions and more. Wealth mgt expenses sum up to around a third (CHF 6000-7000) of her annual extra need, which I think is completely out of proportion.

I was thinking a 50:50 portfolio. For the equities, I would choose something along the lines of 25% All World ETF, 20% SMI and 5% Emerging Markets (iShares or Vanguard). On the fixed-income side, however, I am undecided. In the current situation, I think I would go for 40% in cash and 10% CH corporate bond FTE. Once interests are higher, I would inverse that ratio, thus moving toward 40% CH bond FTE and 10% cash.

What are your opinions on this approach and what bond FTE would you recommend to me? Thanks for any input.

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I would definitely take SPI over SMI. It has more companies, lower TER and eventually higher return. I don’t feel capable advising on the big question. It sure feels the big banks are just there to rip her off, though.

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With 500k of capital and 20k of yearly need you are in a situation where you can think on 25 years which indicates a high exposure to stock in spite of the age of your mum. If you invest 100% in stock you get 2% in dividends and you sell 2% for the rest. Alternatively if you invest 80% in stock and keep the rest in cash you can bridge the gap of a big crash without selling a single share in the dip.
If you want to work with a swiss bank go for swissquote for all the investments and half the cash and keep the other half of the cash in a local bank.

I think your reasoning is very well in the big picture. a fire-and-forget solution you can also get with truewealth, at 0.5% fees per year, and for example +0.16% TER from the underlyings for a conservative portfolio.

“to stay on the safe side” is hard to define, but clearly means something else than my 100%stock portfolio :smiley:

Thank you very much for these helpful comments! For my own account, I’m 100% in equities (well, not counting some of my pillar 3a, Pensionskasse and emergency cash), so I have no experience in bond funds whatsoever. Is there any bond FTE you would recommend for that conservative portfolio of my mother?

the gerneal consensus here is that swiss bonds are currently inferior to just cash. you can opt for international bonds, but currency risk might be relevant, especially in terms of “staying on the safe side”.

i am not experienced with bonds myself

SMI is much more risky than world. Don’t fall victim to the big white on red cross painted on it and CHF denominated divs. It’s essentially a USD index of a (very) few giant transnationals, not your neighborhood swiss businesses

I don’t really get it why people tend to overcomplicate simple stuff so much? So you have no clue where to invest the money? It’s ok, many people don’t - either can’t do it and don’t have the time to educate themselfes about it, just buy the world and flow with the market, enjoying low low management fees and simple 1 position portfoiio… Why invent 5-10-15 position portfolio, can you explain to yourself what advantages it has over world? If you can’t, I think the choice is obvious.


Hi hedgehog, it’s simple: Since the regular withdrawals are in CHF, I definitely want some CHF emphasis, hence SMI or SPI. EM is for extra growth.

On the bond side, I understand the reluctance. Will still start (small) and increase the share of bond (versus cash) over time. Any thoughts on ishares core corporate bond ETF? Seems a reasonnable choice to me.

On another note, just got the TER overview from VZ. On top of their whopping 1.45% wealth mgt fee, the weighted average TER of their proposed portfolio amounts to 0.51%. So almost 2% are lost just in fees, unbelieveable! Of course, if I had not asked, they would not have shown it…

This statement makes little sense to me. What is “CHF emphasis”? The SMI companies are multinationals, making most of their business outside of Switzerland. The CHF volatility of SMI is not much smaller than VEUR or VUSA. If you want some CHF emphasis, you can try SRFCHA (Swiss real estate).

For me there is no relation between a multinational company and the currency which is used to buy the shares of that company, because the company is active worldwide. Many examples illustrate this like the sudden drop of the swiss shares when the CHF went up by almost 15% in January 2015 or the stock rally after the drop of the GBP after the Brexit vote. In fact the stock is a protection against the volatility of the currency.

As I already told you if you’d bothered to read it all, SMI is exactly the opposite of what you want, Nestle makes like only a couple percent of revenue from Switzerland, and many other big firms in it aren’t much better

After management fees and taxes it’s a yet another negative yielding piece of shit.

There are no attractive and relatively safe CHF denominated bonds on the market at the moment, forget about it