This is my first post here, I hope the thread is the right one.
TL;DR at the end!
After a difficult divorce, my mother (Italian, 56 years old) moved a couple of years ago to Switzerland, where some relatives and I live. Since then, thanks to the family’s support, she rebuilt a life, found a small flat and she’s able to sustain herself and make some little savings every month.
She’s very risk-averse, financially illiterate, and has some savings (around 80k) currently not invested, just sitting in a current account. This should be her nest egg for the retirement, which she will most likely spend in Italy.
I finally convinced her to make use of this money, but now I find myself confronted with the crucial question: where should she put it? I thought about purchasing some bonds (to be held until maturity), but since I’ve never done it myself I would gladly appreciate some tips on how to do that. I have an IBKR account which I use to purchase some ETFs monthly, but given her risk aversion I’m not sure this would be a strategy that suits my mother (even though the investment horizon is around 10years). I could create an account for her, but from what I read IBKR has not a lot of choice when it comes to bonds, and I’m also somewhat reluctant to buy Bonds ETF, but I’m happy to change my mind if you can make a point for these instruments.
What would you think it could be an appropriate investment strategy?
TL;DR: mother with 80k, very risk-averse, time horizon ~10 years, goal is to protect the savings from inflation in the safest and most efficient way.
If she indeed spends the 80k in Italy, options for investing the money with risk increasing going down the list:
buy Euro inflation linked government bond ETFs (e.g. IBCI)
buy Euro government bond ETFs (e.g. IEGA, VETY)
buy Euro company bond ETFs (e.g. EUN5, VECP)
Might also be useful to think about where her tax residence might be over the time holding that investment and whether this or that ETF might be better whether she’ll hold the security mostly in Switzerland or mostly in Italy over its lifetime.
Lot of questions to be answered, and even then it’ll be impossible to give a proper recommendation.
The thing is, safe bonds currently hardly yield more then a good saving account, money market etc. (i.e. 0% in CHF, some 3% in EUR not sure), let alone if you have some ETF fees on top of it. 80k is well within the deposit insurance, so that might actually be one way to go.
How certain is the retirement in Italy? You could make wild guess about interest rates and FX movements between CHF and EUR, but that would be one factor.
How important are those 80k for her retirement? Like, what are the other pensions etc.? Does she need all of it in 10 years, or some of it only in 20? There’s a good chance for higher returns with some risks in the stock market or other assets, but it might not be what she’s looking for.
Does she have access to pillar 2 or 3 for buy-ins?
Isn’t there a common misconception that it doesn’t preserve value against inflation (not like TIPS in the US) but instead will react on unexpected inflation moves (so it’s more for advanced investor who want to make inflation bets rather than a retail safe play)
Seems you’re right, at least according to Gemini:
Over the past 10 years ending December 2024, the iShares € Inflation Linked Govt Bond UCITS ETF (IBCI) generated a total return of 16.72%. During the same period, the Eurozone experienced a cumulative inflation of approximately 27.37% as measured by the HICP.
I asked Gemini to compare VETY instead, and it came up with a 17.67% return over the past 10 years.
Perhaps my answer is useless. Perhaps the past 10 years were “exceptional” from an inflation perspective. Unfortunately, you only know after the 10 years have passed which regime ruled over those 10 years …
Edit: I guess the only thing that really protects against inflation are real assets, i.e. equity. But then again, you’re exposed to the volatility and market risk that come with those …[$]
Edit 2: Then again, here’s what Gemini claims about TIPS:
Comparison: TIPS Performance vs. US Inflation
TIP 10-year Total Return (as of July 25, 2025): 28.10%
US CPI Cumulative Inflation (June 2015 - June 2025): Approximately 34.72%
Given the disciplined financial approach of the Swiss government compared to European governments, I would choose CHF as the core currency. Your mother might understand the slow penalty of EUR inflation and be willing to exchange everything in CHF.
She might have heard of the wealth preservation effect of gold and willing to buy a few ounzes?
I understand that Italians very much have a home ownership mentality. Would she be interested in buying a property where she intends to retire and rent it out until then?
Being financially illiterate can be changed. Maybe she is willing to address this?
For completeness, Gemini did provide a rather detailed answer – multiple pages including return calculations for the securities, calculating the total 10 year return, ditto for the inflation numbers, including sources.
I just copy-edited the summarized response I posted.
I would say it’s highly probable, given the cost of living in Switzerland and the fact she just came 2 years ago (so, lower pension). Also, I believe she prefers the lifestyle in Italy. No final decision has been made yet.
How important are those 80k for her retirement?
Very important, this would be almost the entirety of her savings.
what are the other pensions etc.?
Well, 1st and 2nd pillar, but both will not be that high anyway given the low contribution and the few years she’ll work here. I did a simulation here and the 1st pillar pension would be around CHF 1’000. Unless cost of living changes dramatically in the next 10years, this will be just enough to sustain herself in our hometown, but I’m making a lot of assumptions here (e.g. she’ll keep working in the future as much as she’s doing now). I doubt she’ll get anything at all from Italy, as she was a housewife for most of her life and the Italian pension system is already fucked up.
Does she need all of it in 10 years, or some of it only in 20?
As I said, this would be her nest egg for retirement. Ideally, she would use this money only in case of necessity (healthcare, home maintenance etc.), but given the not-so-generous pension I assume she will withdraw some money from time to time.
All good . I just wanted to give OP a fighting chance to get advice before the topic digresses.
Hence, I’ll also refrain from answering with a LOTR movie meme of Eowyn facing the wraith king
I think it’s a lost game to try to find risk free solution and beat inflation. You should look for anything that give you back at least the amount you put in. so >=80k.
That’s why I ask. She might consider buying in if the pension fund is stable and gives some return above bonds, get some (likely low) tax benefits. Then get the pension or take the capital out.
I’d go with higher risk, respectively at least pitch the up- and down-sides to her. But then, I’m in a different position, wouldn’t want to force my risk-taking prefernences to others, and I would be willing and able to support my parents if needed, even more if “my” investment strategy would go south.
Just saying, since you’re asking for your mother, she should be aware of the options, it’s her money and retireument. But if you advise or manage it for her (which I highly applaud), you should be able to keep up on it.
does she want to withdraw all upon retirement? And if so then why?
No, but she will withdraw in case she needs it. I explained it on another comment: the pension she’ll get will not be very large, it will probably be just enough to live a modest life. This money is meant to pay for anything else that is not strictly basic needs + unforeseen expenses (healthcare, house maintenance etc). Something that can give her (and myself) some peace of mind.
it’s impossible to not have to live with a drop and beat inflation, even if the drop is on paper.
Not sure what you mean by “drop”, probably it’s a saying I’ve never heard of
Perhaps I did not explain myself adequately: I am not looking for the secret formula to achieve returns with zero risk. I am conscious this is not an option. But at the same time I am also aware that keeping money parked in a current account is practically never a good financial choice, and I’m trying to get some advices in that direction.
By drop I meant a temporary (months to years…) drop in asset value, a market crash etc.
Perhaps she could put a part of the money in stocks (say 50%) to get something going and leave the rest getting whatever’s possible? Hopefully when she’s close to retirement that part would have grown some, possibly doubled? Then she can leave it working and take from the cash?
Is she planning on working in Switzerland until normal retirement age? How much can she buy into the second pillar?
If available to her and compatible with her retirement plans, doing buy-ins and turning her 2nd pillar into a pension may be her most reliable option to best fund her life in retirement.
Probably better returns than bonds, probably better conversion rate than a private annuity, more reliability than stocks over a 9 years timeframe, compatible with a risk averse mindset. The forex risk is the riskiest part (and it’s a real risk so it should be assessed too).
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
. I just wanted to give OP a fighting chance to get advice before the topic digresses.
