Portfolio strategy for a family

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Hi, I’m currently 45 years old (my boyfriend is 47). We want to invest for us and our son. In 10 years, my son will probably begin to work, so, we plan to be able to travel with my boyfriend for a part of the year and work freelance if needed for the other part. We already have a house and an apartment (but without any return on investment). I already have a Degiro account on my side, but doing nothing on it.

Here is my 10 years strategy :

  • I will keep 4% of cash,
  • 16% of LPP & 3P,
  • 40% of Real Estate (but I don’t get any benefit because I don’t rent the property),
  • 40% of Stock Exchange :
    • 30% on Vanguard FTSE All-World UCITS ETF Distributing**
    • and 10% UBS ETF (CH) SMIM (CHF) A-dis**

I will do the same ETF portfolio for my son (but for >15 years of investment)

We bought an apartment in the mountains a few years ago to keep for ourselves. I knew nothing about FIRE and ETF…

Questions:

  • Is it better to join our efforts in one portfolio for the adults (and a second for our son) or do we open one portfolio per person (to diversify)?
  • Do I have too much real estate “investment”?
  • Do you have other advice about the repartition or ETF choices?
  • If I want to diversify, what is your advice with BTC (a simple method) and emerging markets?

Feel free to give me your feedback, comments, questions,…
Thanks for your help

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Putting everything together will lower fees. In most jurisdictions securities (as opposed to cash) do only belong to you in case of broker bankruptcy. Doesn’t shield you from massive fraud (e.g., the broker does not actually have your securities). But there is no absolute security, and risks have to be managed (which can mean accept it and change nothing).

There is the question of ownership. The relationship seems to be stable long-term, but to keep matters simple I would not mix assets. Seems like a headache to separate the assets when the relationship ends (e.g, death, breakup). Also death can lock one of you out of joint accounts for some time. So make sure to have emergency money in separate accounts.

On that note, did you consider marriage from on a purely economic point of view? Marriage contracts are quite flexible.

How will you legally separate the assets of your son? Your or/and your boyfriend’s account? An account on the name of your son?

Owning instead of renting is a possible and common choice. You get a return from that, as in you don’t need to pay rent. You even pay taxes on that virtual income.

But I’ll speak plainly about the appartment: Locking up maybe 15% (?) at illiquid maybe value appreciation, is financial nonsense. If we where speaking of 15% of nothing, you could just save more, and the percentage would shrink rapidly. This is real estate though, and so I guess you can’t.

If you don’t want to sell it, at least look into renting out the property. I don’t know the market there, but there should be options. Maybe Airbnb when you don’t use it yourselves? Maybe hire some local property manager if you can’t be there. Maybe give everything to an agency if you don’t want to bother?

Also what are those 40%? Is it net (so valuation minus mortgage)? Is there any mortgage?

Of course, there is more than the financial aspect. That is why people buy expensive cars on credit, which is arguably a step above regular gambling in a casino. Your property is markedly above that, but not at the level of a real investment.

Edit: Corrected for 40% including your home and not just some remote mountain apartment.

Home bias can make sense. I would go with SPMCHA instead of SMMCHA. More diversified (titles & weight) for the same TER.

The other 30% is a standard choice. There are some small optimizations with their own small drawbacks:

  • US domiciled ETFs have less final US tax burden (0.2%), and less TER (0.1%). But beware of estate tax (or at least the requirement to file). Also many European brokers don’t offer them.
  • Use accumulating instead of distributing ETFs. You won’t lose fees on reinvestment. On the other hand you need to sell to get money from them.
  • Use ETFs tracking the same or similar index for less TER. But they might be smaller and have slightly bigger bid-ask spreads.

For the last point look at UCITS ETFs tracking:

Emerging markets are included in the above indices at about 10%.

Cryptocurrency (e.g., BTC) is more a lottery ticket than a proven diversifier. I made some nice gains myself over the past years, but “Past performance does not guarantee future results”. Is now really the time to enter? Would you even have thought about it if BTC was still at 20000 USD going nowhere like last year?

For a proven diversifier have look at bonds or managed futures (we have a lengthy thread about them).

For a year or forever? Make sure you make some honest spreadsheet simulations. Retirement planing is very different from planing for accumulation of capital. The laws, opportunities and needs are not the same.

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Thank you so much Helix for your advice. I will check the etf you mentioned. My other answers below:

did you consider marriage from on a purely economic point of view? Marriage contracts are quite flexible.

No, marriage contracts seem to be a “fiscal suicide”. But I may not well well-informed

How will you legally separate the assets of your son? Your or/and your boyfriend’s account? An account on the name of your son?

I thought about creating a second account in Degiro with my name. I’ve seen it was possible in the blog

If you don’t want to sell it, at least look into renting out the property. I don’t know the market there, but there should be options.

We just saw it as an investment, you know, investing in “stone”… But now, I regret, I should have invested in stock options instead.

Use accumulating instead of distributing ETFs. You won’t lose fees on reinvestment. On the other hand you need to sell to get money from them.

:+1:

In 10 years, my son will probably begin to work, so, we plan to be able to travel with my boyfriend for a part of the year and work freelance if needed for the other part.

For a year or forever?

For the 10 years between RE and legal age.

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