Hi fellow Mustachians
Every now and again I come across friends that are somewhat interested in the topic of investing, but lack knowledge or persistent interest into the topic like the typical member of this forum.
So I wanted to put together a very basic one-page-guideline that should help such people to go from zero to hero in a minimal amount of time. The goal is to provide basic educational material for soon-to-be private investors. I am aware that there are other sources out there, but experience shows that saying “I once made something that will help you” really improves chances of actual impact
I would try to frame the slides under the “ability, willingness and need to take risk” framework. I find it pretty illustrative and easy to remember. For an example of the concepts, here’s how they’re framed on the Bogleheads’ Wiki: Risk tolerance - Bogleheads
I don’t find the concept of AFP easy to grasp/remember on its own. I’d try to present it more as finding the balance between agressive and defensive assets, with examples of both (you were probably getting to that and just haven’t yet put in the part about potential diversifiers in case the risk tolerance doesn’t allow for 100% stocks).
I’d link to some litterature for those who want to dig deeper on the topic but you were probably getting to that too.
Overall, the order in which you tackle it and the descriptions you’ve provided look great. Congrats and keep at it!
You might want to check out Financial Indepence Retire Early UK Facebook group. There they have a detailed flow chart geared towards UK residents, but it might give you some inspiration.
Due to the complex rules and products of the UK, it is quite tricky to get right. Switzerland is simpler in some ways and more complex in others.
Kudos on tackling this topic! There are many ways to teach it, but for brevity I would operate with dogmas that can be explained later:
A. What level of finacial freedom do you want to achieve? (1. debt free, 2. emergency fund, 3. support yourself for 6 months, 4. support yourself for a year, etc)
B. Know your budget: what savings rate can you achieve? You’ll need to have a surplus at the end of your fiscal year! Know your wealth: What do you have in your name (don’t forget pension fund and pillar 3a)
C. Invest surplus. Know that an all country world index investment had an average annual yield of 8% in USD but also volatility in the last 100 years. In CHF you can still expect an average of 4% yield after inflation, if you have more time than 10 years. Understand the debilitating effect of high annual fees. Don’t trust wealth managers until you have understood their motivation. Choose your asset allocation based on your risk appetite.
Don’t invest in insurance solutions.
D. Full FIRE is reached when you can support yourself without a job. You typically need 25x your annual expenses. You also need to know what to do with your spare time. Lean fire (turning every Franc before spending it) might not be your thing. Better go to a place with a lower cost of living than CH.
E. Everything else, like tax optimization, stock picking, other asset classes, moustachian tricks could go here.
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