Small scale savings plan for a student?

Hey all,
does anybody know about a good place to start a small scale regular saving? You know, low cost, etfs,…
I saw truewealth, but they have 0.5% allin fee, together with an average of 0.27% product TER, so quite expensive with an effective TER of 0.77.

I am looking for something for a friend of mine, who currently is a student and does not have a lot of income :slight_smile:

Thank you!
-nugget

If I had to advice a student, I would probably head him towards Degiro and tell him to buy some iShares/UBS ETFs, everything in CHF to avoid Forex conversion. As Degiro fees are very low and considering the low income of this portfolio, he could probably increase his exposition twice or once a year. Two candidates to start with CHSPI (TER 0.1), CHCORP (TER 0.15) maybe. Depends upon his income to compute the overall TER with broker fees.

I don’t know much about products provided by banks, I had looked at UBS XTRA funds but they have a higher TER (1.06%, just looked at the factsheet)

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Hi @nugget, @albert,

I am reviving this thread to ask similar question tuned for my particular case: I just graduated and decided to stay in research (PhD) and move to another European (EU) country. I do have some savings as well as (moderate) income and I project I could hit the 100’000 USD mark in about ~3-4 years (if following 1), see below). Being still de-facto a student, my needs are relatively modest and nobody depends on me. I am well informed on the general investment strategy throughout this forum and agree with it. I am not interested in FIRE, but being still quite young and having some extra savings, I am considering how put them to work and have compound interest work for me the longest.

My questions are:

  1. If I invest for long term, should I invest at Degiro or IB? So far I looked almost chiefly into US domiciled, USD based ETFs (sth like this). Although IB would incur higher fees (inactivity below 0.1M mark), I would run up some extra costs in currency conversions at Degiro and overall I the differences over the few years would not matter much. Ultimately, I reason IB is the best choice (wider selection, lower fees, forex), but it may be worth considering to start with Degiro and transfer later (which would again come at costs, but would be a natural opportunity to diversify also between brokers).

  2. Shouldn’t I invest for short-term instead? Due to some aspects of my job (mainly the need to move around few times) I cannot predict when and where I would be settling. I approximate that this would be in about 7-10 years. At this point, I am not hugely inclined towards buying a property at that time and it may not even be a wise idea, but it will certainly be an decision I will revisit once its conditions become more concrete. It is possible that buying a property would be a financially sound decision at that time and if I decide to start investing long-term now, I will limit the sum I would be able to use as down-payment (mortgage would be anyway necessary) at the time of property-purchase. I estimate that following 1), I will cut my disposable funds to about half (assuming I do not withdraw from 1) and hopefully still allowing 15-20% of property buying price). I have an option to put my money to 6-yrs government bonds with inflation-adjusted (= inflation rate + 0.5%; expected around 2.5 %) interest. Which would be low-yield, low-risk alternative to what I described in point 1 and even would allow me to pull out the money once-a-year and at no charges. Although low-yield, I am wondering whether this option may not be a good idea also due to the fact that following 1), I may be jumping in relatively high-up the curve (but this is purely speculative and as I aim for long term, this should not matter anyway).

Please do not hesitate to ask me any questions, should you have any!
Thanks for your input.

In any case, if you’re elsewhere in EU, you most likely won’t be able to invest in those ETFs. Also taxation might be fairly different from Switzerland so what’s favorable here may not be in other places.

Do you have pointers to those? At least for Europe that sounds almost too good.

in the big picture, clearly neither would be a mistake. maybe you can squeeze out some sub-percent returns the one way or the other, but it will be overall very good. take 1h time to make a dedicated excel, and you will know the answer to you question afterwards.

big question. however, “moving around” will not affect your long-term investments any different than other (normal) forms of investment. your bond alternative is also a valid way to invest your money. you seem aware of the tradeoff between risk and return.

to me the question boils down to whether you want to reallocate your fund for real estate later or not. if so, the bonds are the safe bet (assuming you need the money for the house). They are less prone to a potential market crunch that might come and might not be overcome 7 years from now.
If you won’t reallocate, then the clear answer is to go more equity.

since you can’t tell for sure what will happen, all this is speculative. one (arbitrary) answer to uncertainty is splitting your portfolio into equity and bonds, like the classic 60/40.

in the end you need to sleep well with your decision on inestment. there is no way around you making up your mind yourself. feel free to post any questions :slight_smile:

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Hi @nazbalhf,

Thanks for your reply.

  1. The remark is general, although still useful. I moved out of CH recently and thus I am still clarifying details, but so far it seems that the conditions here are very similar. In particular, dividend taxation can be brought to nearly 0 for US-domiciled funds. Also, AFAIK, buying US-domiciled funds via IB should work from EU, although this indeed seems to be blocked for Europe-based brokers.

  2. These are specific to my country of origin and require you to show up personally as part of the process of acquiring them, thus most likely not viable for you. Also, the yield will be subject to taxation, which will reduce it somewhat.

Afaik IB won’t let you unless you clarify as a professional investor.

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