Hello, I am 30 years old. I was very poor my whole life but I finally saved for an emergency fund and got a good raise by moving to Switzerland. Which means I can save around 2000 CHF per month.
First, I would like to thank everyone for everything I read across all posts. I might not have understood everything but this is very helpful.
Basically, I am looking for a simple, idiot-proof strategy. I read the blog, some forums, and talked with some friends. In the end, I decided for:
3a Pillar: Finpension: Replicate VT with 75% World, 11 EM, 10% Small Cap and 3% Switzerland. All Credit Suisse funds. I automatically transfer money at the end of each month.
IBKR: 100% VT. And I reinvest the dividends. I basically read that this was the most efficient combination of simplicity (tax-wise) and performance. I also transfer money at the end of each month.
Thatâs it. I consider that I am already exposed to Switzerland since I work for a Swiss company.
Should I transfer money yearly?
Should I consider a different portfolio for buying a residence? After all, Switzerland seems to be cheaper as a renter, at least for now. But maybe I will consider buying in 10 years âŠ
I wouldnât fret it too much if you donât have a specific plan to buy a house in the near term. It is a matter of opportunity: if your portfolio has crashed but so has real estate, the situation doesnât change much in terms of acquiring a home. If you can consider yourself happy as a renter, you donât have a gun to your head and can simply wait for an opportunity that makes sense if you want to acquire something later on.
Maybe one note: while this is a fine allocation, this is also very aggressive and could go down quite a lot. If this is all/most of your wealth, make sure youâre ok with that (eg getting youâre savings largely wiped for a while).
You could optimize it by increasing the weight of high dividend regions in your 3rd pillar and decreasing it in your taxable account. Iâm doing that by underweighting the US in my 3rd pillar and overweighting the US at my broker. But this adds complexity. Never calculated the real effect of doing that, might not make a significant difference.
I havenât put too much thought into it. Itâs just simple and naive. I donât mind 100% US stocks at all. Period.
OK, if I have to think of some reasons, as now I am trying to squeeze out some reasons, here it goes. Most big companies I know are US companies. Most clever friends I know are working for US companies. Thus, I am willing to bet 100% US.
Well, then I lose money. Still simple. I am willing to take the bet because I think (probably with no ground) itâs probably not gonna happen.
You may call your strategy âsimple, idiot-proofâ if you want, but I find it probably the wisest first post in this forum that I have seen. I will contrast some previous posters and encourage you to stay with
VT is the most market-neutral investment, packed into one fund with a low TER. You can say it is a slice of the global stocks market. If you donât want to take any active bets on future development of the market, this is exactly what you should invest into.
VT might be not the most fee and tax efficient way how you invest in the whole market, but I would not bother with optimisation at least until you have few hundred thousand invested. Especially if you can recover US withholding taxes.
You can do like this if you want, but you can also drop Switzerland. Small caps and EM can be also dropped for simplicity. Another thing you can think about is: instead of keeping one portfolio with all funds, make a separate portfolio for each fund (maybe even 2 portfolios for World), and every time contribute to each portfolio according to the current market cap ratios.
In the short term this is why I have an emergency fund. My horizon is 20-25 years, if it gets wiped out then that probably means we have bigger problems. Or capitalism got destroyed by our AI overlords
You did not mention your withdrawal strategy from 3A. You can have multiple 3A (5) portfolios and withdraw ad different ages (60-65) to lower down the deferred tax rate. More details here at tip 5 frankly. | 5 tips saving taxes with pillar 3a
I see no point in changing from monthly to yearly investing. Unless it helps younreach your investment goals earlier over the course of the year. I receive a 13th salary in December each year and use that to contribute the maximum yearly contribution to pillar 3a in one go in January.
There are certainly less volatile investments than VT. That said, you donât sound as if buying a property is a concrete project or plan for you.
Also keep in mind that you can withdraw from your 2nd pillar pension fund - and even 3a - for the purchase of a property.
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