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.
That’s 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 …
If I am asked for a simplest idiot-proof strategy, I would suggest SPY( or IVV, VOO) with 100% of 2000CHF each month and reinvest the dividends.
I have the same strategy.
I invested my extra cash saving 2 years ago on IB making Forex exchange and VT purchase monthly on 6 months time window.
I wouldn’t fret it too much if you don’t 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 doesn’t change much in terms of acquiring a home. If you can consider yourself happy as a renter, you don’t have a gun to your head and can simply wait for an opportunity that makes sense if you want to acquire something later on.
Would you care to explain why? Is this because SPY is 100% US stocks so it is more tax efficient than VT?
It’s way less diversified.
What if the USA are the Japan of the 90s ?
You may have to rebalance later to another country so less idiot-proof.
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 you’re ok with that (eg getting you’re savings largely wiped for a while).
Little update (fast forward ~6 years):
The peak is more than 33 years behind!
You could optimize it by increasing the weight of high dividend regions in your 3rd pillar and decreasing it in your taxable account. I‘m 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.
Otherwise, all good IMO.
I haven’t put too much thought into it. It’s just simple and naive. I don’t 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) it’s probably not gonna happen.
Yes, its a good plan, similar to mine. You are still young and can ride bumps.
I have 100% stocks in Viac 3a and then all my saving in VTI (VT works as well).
Good luck and welcome.
Hello and welcome to the forum!
You may call your strategy “simple, idiot-proof” 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 don’t 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
But you’d be the idiot that lost it by betting all on one horse (even if may be everyone’s favourite).
It’s easy to err on one horse but hard to err on most or all of them in the same race.
So diversifying would further idiot-proof your strategy.
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 don’t 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.