new mustachian here, writing from Basel. I will write a small presentation later on, but I need your advice. I have around 70k CHF to invest, thanks to your help I have already managed to open an account in IB, converted a little bit in USD, and placed a first order (20 shares of VTI) successfully.
I would like your opinion on 2 things:
- Is it stupid to put everything on VTI? (is not all my money )
- Should I fragment the buy (let’s say 5k a month, or a week) or should I go all in?
Thanks for your replies!
I think it IS stupid to invest someone elses money. In my eyes you are just asking for troubles except if VTI grows forever.
Not if you take a generous cut for it and structured it legally so that all the risk is on investors and you personally aren’t liable for anything if things go south. Most of finance operates this way
Short answer: no. Warren Buffet’s inherited money by his family will go to VTI by his recommendation.
Long answer: it depends on your taste. Some people (e.g. Burton Malkiel) will sat that it’s better to diversify globally and they would recommend few funds to replicate world market capitalization or just one that already reflects it (VT ETF). I’m on this side and many on this forum are also choosing this option.
It is usually better to go all in, but if the psychological cost is too big, then fragment it to feel comfortable. Remember that if you go all in and the next day there will recession you will lose -50% of the value. You’ll wait few years to regain the value and you’ll lose most likely the best opportunity to invest (that’s why I prefer to invest in regular intervals). If you can live with this, then go all in. If you can’t, fragment it.
Ehm I think it was not clear. I mean, these are not all my money, meaning I have somewhere else money (will explain in my presentation thread). I was not meaning I am using someone else’s money
I have to read a little bit about how to structure my investment, since then I was thinking of buying only VTI (or VT, I will look into it) to have a diversified portfolio from the beginning. I guess with time I will be smarter to understand which ETF toinvest in.
Regardin going all in, that’s exactly what happened to me in January, bought a shit product from UBS and am still -5%, that’s why I fear putting all the money now. From one side, I can lose some immediate gain, from the other as 1MCHF said, there is more risk to be befor an all time high, and having no money to put in the case of a nice correction.
Ok after reading a little bit, perhaps it seems more logical as first diving into investing to split the money in VTI 60% and VSUX 40%, so to mimic VT ETF but with lower fees.
Then, with future payments (and knowledge) I could start adding other etf to my portfolio (perhaps emerging markets, putting some money in 3a pillar, etc…)
of course I still fear going all in I am waiting for a mini correction (-3-4%, looks it happens often) but I know I just want to time the market and this is the first error newbies do. Hope I can overcome my irrational “rationality”
your 60/40 is a rock-solid start for the equities part of your portfolio, you cant be wrong with that.
for 3a you need to carefully analyze if it has the potential to yield better returns than your private portfolio (tax bonus vs. fees).
make yourself an investment plan, for example 1/10th of your stash per month for 10 months and forget about those 3-4% dips. because they never come and when they come you are anxious to wait for another 3-4%
I know we should not time the market, but I do think US equity will come down very soon as there is too much divergence among EM and US. The markets are too much connected.
Well, don’t wait for too long. When I started investing ~1.5 year ago people already then were saying that it’s going to crash soon. Apparently, it’s hard to predict such things and if you tell yourself that it’s gonna crash, then it’s difficult to change your opinion and start buying again (even if evidence shows that it’s keep growing). That’s why I’d recommend sticking to buy-and-hold-and-rebalance and forget about anticipating corrections and crashes.
people claim since years that the next crash is apparent. which is true - it is - but nobody knows when. not investing 2 years ago would have lost you 30% in returns
So, I am the happy owner of 336 VTI shares of course they are already down 0.5% but we are here for the long run!
now, looking at VXUS, I can’t convince myself to buy it…does it actually make sense to invest in something that historically performed so bad, just for the sake of diversification?
then 2 more questions:
1- a.f.a.i. understood, bonds ETF make no sense, right? no need to look into them?
2- cash cushion…do I really need it? I mean, if I lose my job, Switzerland already gives me a cash cushion with unemployment. If I have no big expenses planned I don’t think it makes sense to have money parked at the bank…
So, quite full invested
quick question: do you really stay under the 60k USD with interactive brokers? (because of the US Real Estate Tax?)
how you can then plan FIRE if you need let’s say 1M USD?
you should search on the forum about the 60k rule. Hedgehog already explained it.
Thanks ma0, that was useful.
As beginner I have more and more questions:
I have a cash account, and now something like 1k in cash. I am constantly receiveing a mail warning that my “margin cushion” remaining is 1.47%. a.f.a.I understand I should not be concerned; but to be sure, if my ETF go down, IB will not liquidate them, right?
I transfered 68k CHF, converted to USD, then bought ETFs. Why in my report I see everything as negative proceed?
Thanks to all again
I think it’s negative to track how much you spend on currency conversion.
because you bought stuff and owe people money, that’s why it’s negative. if you’d sell, people would owe money to you for the stuff they bought and it’d be positive.
Had that problem too, you can disable them if you want. Just make sure you have some cash around otherwise they will liquidate as much as necessary when getting their monthly fees and stuff.