Setting up wife's accounts

A little help or thinking along would be appreciated. My wife’s slowly accumulating an embarrassing amount (6-digit) of cash in her PostFinance account and we finally talked about what to do with it.

She “doesn’t care about the money” and never was interested in investing, let alone “doing anything in the stock market”, so I’m slowly pushing her into a 33:33:33% strategy, where 33% is in property investments (check), 33% is in cash/bonds (2nd pillar, check) and 33% is (or rather, should be) in equities (partly check: 3a: PF75 fund plus new something).

Her requests:

  • she doesn’t want to actively manage it
  • and she doesn’t want to “risk things with a stock market crash” next month.

My requests:

  • as simple as possible (think 1x setup and auto-transfer every month, ideally with PostFinance)
  • as cheap as possible (ideally buying 12x a year)

To keep it simple I came up with an idea to

  • either buy VOO or VT (I’d tend to VOO with the SP500, please convince me otherwise?)
  • I’d DCA her accounts to max investments in the next 24 months in order to avoid risk of a potential big stock market crash

TrueWealth seems too expensive, IB seems super complicated. Postfinance seems not that bad actually (90CHF yearly) as long as you don’t trade too much.

So the question is:

  • does Postfinance provide such a “Sparplan” or any other auto-investing techniques? Worst case I’ll just ask her to transfer and buy every month, but that seems already a tad too much. :slight_smile:
  • VOO or VT? Any alternatives?
  • She’s in pharma/personalized medicine, so after talking about it, she might allocate some money for this purpose in the portfolio. Besides ARKG (which is probably n/a through Postfinance), would you have any reasonable recommendation for a good ETF for pharma innovation (personalized medicine, cancer therapy, genetics)?

We just turned 40, so the runtime of these things can easily be 10-15 years.

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Sounds like a dealbreaker, before doing equity investing you’d need to accept some amount of losses (because it will happen).

Without equity investing there aren’t a lot of options though.

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Exactly. So the mitigation is equities with DCA and a diversified approach to property and equities.
She already got this far and I’ve explained her the downside potential as well.

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I am in the same situation. I am thinking about setting up a Degiro account and buying quarterly. 50% in CHSPI and 50% in VWRL.

DCA to avoid big looses shortly after investing. Strong home bias to avoid exchange rate loss. Degiro to not pay unnecessarily more. Postfinance would be easier to set-up, but buying 8x on Degiro should be cheaper (around 30 CHF instead of at least 90 CHF with PF).

EDIT:

Out of curiosity I did a quick & dirty comparison of the solutions I know for this scenario, investing 4x per year in CHSPI and VWRL each, starting now. Convenience would be (for us) in this order: PF E-Wealth Management, Avadis, PF E-Trading, Degiro.

Costs is basically the opposite. Including all promotions I could find at the moment, this year would be cheap everywhere:

PF E-WM: 6.25 CHF (100 CHF sign-up bonus, but 50 CHF account fee)
Degiro: 32 CHF (20 CHF trading credit for referral)
Avadis: 47.25 CHF (no promotion)
PF E-Trading: 70 CHF (500 CHF in trading credits, but 50 CHF account fee)

Next year costs would diverge pretty massively:

Degiro: 72 CHF
Avadis: 173.25 CHF
PF E-WM: 221.25 CHF
PF E-Trading: 295 CHF

This confirms my impression when I was looking for brokers for myself. Swiss brokers are not competitive. With <20k and a preference for convenience Avadis is quite good (which is why our children accounts are with them). But beyond 20k and the first year there is not really an alternative to Degiro (or beyond 100k IB), unless you are prepared to pay significantly more.

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How did you get to this number?

4x25 CHF to buy CHSPI
4x35 CHF to buy VWRL
40 CHF ETF TER (assumption, based on assets at year-end, but I assumed 0.1% while VWRL is more like 0.2%)
3x5 CHF for private account, because we’d still be below the threshold at the beginning of next year

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Don’t you get a 90 CHF trade credit with PF E-trading ?

This is independent of the broker, would not take that into account to compare different brokers…
BTW there is also the stamp duty.

Most Swiss companies have a huge export or busines which is not remotely touching Switzerland, Soe even the home bias will incurr currency exchange risk. If this is the only reason you have the home bias, let it be. Don’t get me wrong. I am cool with home bias, but for a good reason and this is not a good one.

I would only compare costs without any starter bonus. On a 25y investment life span, a 500 CHF starter bonus is just a microscopic drop.

Yes, as a refund for the 90 CHF portfolio admin fee you have to pay. The trading credit you get in return effectively lowers the admin fee. You still pay 240 CHF transaction fees in my example, even though in the background 90 CHF of that is trading credits for your admin fee.

PF WM and Avadis only charge the fund TER, no transactions costs or portfolio admin fees, so for a fair comparison the ETF TER needs to be included for Degiro and PF E-Trading as well.

Edit: Yep, didn’t consider stamp duty. That’s one more advantage of Degiro compared to the Swiss brokers…

True and for myself I have ca. 80% in USD for that reason. But the exchange rate risks for CHF shares are implicit, while they are explicit with USD assets. For my wife implicit exchange rate risks are much better than explicit ones.

Yes, in the long-term it doesn’t matter and I prefer to set-up long-term solutions in general. But PF would be the easiest for us to set-up. That’s why I checked whether their promotions might not make it worthwhile to stay with them for a year. Get things rolling this year and optimise next year.

It’s not really tho. The WebUI is not super beginner friendly but once you bought the first shares it’s pretty easy.

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I can agree with you, I thought that IB Web interface will be a total mess in comparison to Swissquote, but it was kind of the opposite. I found it relatively easy to use, especially if you just want to be a passiv investor. The best to do it’s to try their free demo account, this is what I did and yes it took me maybe 20-30 minutes to understand how to trade an ETF or an Equity.

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Well, true. Once you get it set up its easy to keep adding.

E-finance is much easier tho as she could just click to E-trading and have it there.

If the cost of having everything in E-trading (Postfinance) costs about 100 CHF more a year then I’ll not think twice. It’s peanuts compared to the amount getting invested. 250 CHF yearly is not little though.

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Just something on top of your initial post with an ETF on pharma. I work also in pharma and highly recommend you to not getting a pharma ETF on top of that. If for any reason the pharma market’s crashes it could be that your founds are having huge (paper) lose and your job might be on danger as well. So, diversification is the word

on the flip side, if you do your job well you contribute to the success of the sector - you also might have better insights into the future :wink:

True, but do never assume that you know more than others. I’m very familiar with clinical trials and have invested some play money into small bio-tech and Gene-therapies which looked very promising from the initial trials, but two out of these 5 have failed phase 3 → almost total loss. This industry is hard to predict but can have a huge impact.

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so I’m finally here, set up her accounts with IBKR, set up the monthly recurring transfer.
I have two question of convenience:

  • from VWRL I have a million variations on ARCA, FTSE, etc… does it matter where I book this off? Is there a total world ETF buyable on the Swiss market?
  • Can I do a recurring buy, so that I could save logging in and clicking that 5 buttons every month?

Also a bonus question: the missus wants to have a “pharma/biotech ETF” to it, could any of you recommend one?

No, convince her that it’s a bad investment.

And why a swiss ETF when you are already on IBKR and have access to US Vanguards (VT et al.)?

I got confused about all the VTs and VWCE and VWRL… but I guess it doesn’t matter where I get it right? So, US?