Setting my IB portfolio - Advice

Dear MP community,

I’m about to set my long-term portfolio on Interactive Brokers and would love to get some advice. Please consider I’m a beginner in this topic.

Note that I’m 40yo, unmarried with no kids, living in CH (and yes, feel I discovered MP way too late…) :slight_smile:

My plan is the following:

  • Available starting sum to invest: 20k CHF (*could add +20k CHF in a 2nd time when I feel a bit more comfortable)
  • Planned monthly deposit to IB to invest: 500 CHF
  • Allocation: 80% World/20% CH

2 questions on my mind:

  • World: I was about to buy 191 shares of VT ETF, but suddenly became hesitant when looking at current price, which is at its historical peak (105 CHF roughly vs. 60 CHF 10 years ago). Consequently, I’m wondering if I should postpone the investment of my 20K CHF lump sum until it goes down and rather stick to my monthly deposit (aka as dollar-cost averaging strategy from what I could read)

  • CH: Any recommendation on which one to choose? I saw different recommendations (USB, CHPI) and I’m a bit lost.

For those wondering:

  • My 2nd pillar is maxed out and optimized for fiscality with an annual buy-back
  • My 3rd pillars are just being moved this month to VIAC Global Fund Strategy 100 (and yes, one of them was a terrible life-insurance on actions, the one everyone should avoid…or how to loose 15K CHF net)

Thanks in advance to the MP community!

1 Like

Why not just VT? If you’re doing pillar 2 buybacks, you’re probably already extremely CH biased.

Also do what you’re comfortable with, but given the sum involved a lump sum seems like a good choice, hopefully you’ll find ways to increase your income/savings which will have way more impact, those 20k will represent very little long term.


Seconded. Your 3rd pillar is already 37% Swiss stocks / 60% foreign stocks and 3% cash. If you will be contributing 500.- per month to your IB account, it’s likely you’ll contribute more to your 3rd pillar (I’d max it before doing 2nd pillar buybacks), so the gap will only widen.

I’d keep it simple: 2nd pillar for bonds, home bia in the 3rd pillar and VT at IB.


re. Portfolio allocation - god, totally true. Did not think it through considering my 3rd pillar funds allocation. On a monthly basis with VT only (and excluding 2nd pillar), this’d mean 1.1K CHF invested 79% foreign, 19% home and 2% cash. Which just sounds about right :slight_smile:

Any thoughts on the VT ETF price? The answer I’m expecting is not to try to time the market - but gosh, this historical price peak makes me really doubtful to invest the 20K CHF upfront.

Maybe the story of Bob :slight_smile: will help you…



Regarding lump sum vs. DCA: If those 20k or 40k would already be invested in VT, would you sell it now and DCA back into the market?


DCA 1000chf per month for 20 months.
You’ll sleep better, apparently.

This is not a technical analysis of anything. Just about feelings. It’s clear that you’d sleep better with a DCA, but 500p/m might feel too low to you.

Long term investing is mostly about sleeping . :smiley:


Long term investment is mostly about asset allocation.

I was in a similar situation recently. What you should do is to look at a more global picture. Calculate your total wealth including cash, 2nd and 3rd pillars. Calculate how much of it is invested in stocks. I guess it will be around 20-30%, but for reasonable returns it should be 50% at least. And it also means you should stop paying to 2nd pillar, although tax deductions are sweet, I know.


Wall of text ahead:

When faced with a downturn (which is what you seem to be expecting), the most important point, in my opinion, is psychological preparation. We don’t need to time it, neither its start nor the time when the market starts going up again. At any point, the market reflects the composite of the bets taken by all the actors in it. Those bets are made with all the information available, and change as new information becomes available. If that new information was known beforehand, it would be included in the bets already taking place in the market. Knowing where the market is going to go is a lost venture.

Right now, there is quite a bit of uncertainty going on : Evergrande in China, supply chains disruptions, inflation in the US, the ECB tapering without naming it that way, the Fed planning to start tapering later this year, Coronavirus shenanigans, potential regulation/ban of cryptos (hello China again),…

This is business as usual. At any given point, there are a bunch of uncertainties going on in the background. When we say that investing in equities bears risks, that’s part of the picture one has to take into consideration. Few are the times when throwing money in the market doesn’t stink. Either stocks prices are too high and due for a correction, or too low and bound to drop lower. Investors have to deal with that.

So, what can we do about it ? We don’t need to sell, or buy, or change our asset allocation, or keep cash on the sidelines, what we need is to be psychologically ready so that we can welcome drawdowns and moonshots with equanimity. If you are investing for the long run, as stated by @nabalzbhf , those starting 20k CHF are only a drop in the picture. It is an important drop, the first drop that will get you started on your journey. Having it fall right after being invested could mark your whole investing career by making you more risk averse than you would have been otherwise. Having it skyrocket right away may make you more reckless than would be advisable. It is a precious drop that you are meant to enjoy, but a drop nonetheless. If you can welcome and use it with equanimity, it won’t make or break your success, you have way more margin for error than that.

If you choose to invest it as a lump sum, you should be ready to see its price go down by 50 % in a few days, because it could, that is the nature of the stock market. Be ready, don’t fret, keep investing your additional 500.- per month at bargain prices. At the start of your career, regular contributions account for a lot, they will carry you when stocks prices will start rising again.

Here’s a rough modeling of what would have happened if you had invested your 20’000 CHF at the height of the dotcom bubble and kept investing 500.- per month after that : Backtest Portfolio Asset Class Allocation

Your portfolio would actually have grown through 2000-2003, when stocks prices lost 43 % of their value. This is how strong a position you are in right now : on the short term, the market returns count for very little, instead, your savings rate and regular contributions do. On the longer run, the compounding effect of the market on those contributions will build your wealth, but you need to have done these contributions first for that to happen.

If you choose to DCA, be ready to keep doing it come Hell or high waters. Using DCA is like tipping our toes in the ocean to test the waters. It works for some but if the waters are freezing cold, it’s also easy to step back and renounce getting in. What’s important is to be deliberate with our actions : take the time to choose how we want to apprehend a situation, then follow the plan and stick to it.

On the long run, starting your investing career with a lump sum or DCA won’t make or break it either. What will make it or not is your ability to stick to your plan once you have set your mind on it. Choose a path, follow it, don’t look back.

On a more playful note (this is a joke, please, don’t take it seriously), our local market timing compass, @Cortana, is all out of dry powder until February next year. We have a good 4 months of market highs ahead of us before a huge correction happens right after he invests his next lump sum. xD


Dear All,

I’m extremely grateful for all the advice and insights you have given to me. I have digested this today and:

1- Did invest the 20k CHF lump sum, 100% on VT (and think I’ll be able to still sleep well @ma0 :slight_smile: )

2- Did my wealth allocation incl. LPP etc, which turns out clearly passive: 62% bond, 24% cash, 14% stocks, on roughly a 500k CHF total amount (*@Dr.PI far from the 30% stocks you mentioned)

3- Now reviewing my DCA plan to have more agressive allocation on stocks, while keeping in mid mid-term plan (eventual house buy)

Again thanks to all of you for taking the time to make recommendation, extremely precious for me as I’m doing my first steps.

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