About 4 years ago my very risk averse wife finally agreed to let me move 300k into investments. Although I am not particularly market savvy I opened a brokerage account with IBKR and opened positions with 2 USD-denominated ETFs (QQQ and IVV). When covid hit I transferrred some of the portfolio to Netflix and Amazon. I’ve now sold the Netflix and my current portfolio stands at:
60% QQQ
27% IVV
13% AMZN
My wife has now seen that having our money working for us in a stock portfolio gives us far greater return than leaving it as cash in our bank accounts, and so she is coming around to the idea of our putting another 200k chf into stocks.
I’m 63 and my wife is 60, so retirement is just over the horizon. I am not a stockpicker (hence the passive index buy and hold strategy to date), and my wife has only very reluctantly come to terms with the risk of holding part of our assets in stock.
I’d be very grateful for suggestions here on what to do in terms of strategy with the new 200k that we can invest. I’m not sure if the received wisdom from here would be to bias towards the home market and put these new funds into some Swiss-based ETF vehicles and remain denominated in CHF, or transfer the funds over to IBKR, and plow the money into USD-denominated ETFs, or some other strategy.
You are at a very important road junction of your life now. If you haven’t done it already, I suggest to do an overall financial planning with an independent advisor. If you have no other ideas, Vermögenszentrum seems to be a good option.
Of course, use this community for a second opinion .
17.4% if you count IVV and QQQ (and QQQ is a pretty big bet, did extraordinarily well past 5y, could have a reversal to the mean)
(Which also mean I wouldn’t anchor too much on past 5y returns, next decade is likely to not get those returns which are double the historical returns)
I second that. You should get an overview of all assets to both your names and go for an asset allocation that makes sense for your age, your plans and the current state of the world.
I think you should watch this podcast. It gives some insights into approach for asset allocation. This can help you prepare a bit for your discussion with financial advisor
We did already have a recent meeting with a BCGE financial adviser (we also met with her about 3 years ago for some earlier discussions and planning). The outcome of these meetings has been a rather detailed forecasting model set up on a proprietary excel sheet that tracks our expenditures/income and wealth generation/depletion out till we are about 95 or so. It was on the heels of our most recent meeting that the suggestion came from the financial adviser that we could shift another 200k into investments. I suspect if that view had come from me my wife would not have accepted it.
We have an action plan with dates and key steps to take and it does include increasing some pillar payments for my wife’s pension.
I will re-look at AMZN and my entire portfolio as I have simply bought and held these index trackers when I first allocated the initial 300k.
Was there a view on the issue of whether I should convert the new tranche of 200k into USD and invest through IBKR or keep the funds in CHF and invest through Swissquote into some CHF-denominated assets? I will do as much reading as I can and check the video.
The main thing to consider is whether you could afford to wait 10+ years for stocks to recover from a crash, as there is always a risk of that happening at any time. For a person nearing retirement, my personal advice would be to keep enough of their portfolio in cash/fixed deposits/pensions to cover their budget for around 10 years (the 10 years it would likely take for the stock market to recover from a bigger crash). The rest can be in stocks. That’s obviously a very general approach, but I would consider it a good basis.
You got very lucky with that highly concentrated portfolio. Especially with the extra bet on tech.
The last decade has been basically the greatest tech (and US stockmarket in general) bullmarket there has ever been.
It could very well have been a 2000 into 2008 Situation, where you lost.
Being 100% stocks at your age is already very risky, being 100% US is even more risky, and being very concentrated on a few tech stocks is extremely risky.
Watch the asset allocation videos from Ben Felix.
I would highly think about diversifying globally and allocating substantially to less volatile assets, like bonds.
A classic globally diversified 60/40 stocks/bonds portfolio (i.e. VT/GLAC) would be a standard approach, that stood the test of time.
Some amount of home-bias (swiss stocks/etf like SLICHA) on the stock side is also prooven to be a good strategy historically.
That‘s a pretty sub-optimal approach. A regularly rebalanced stock/bond portfolio is way more efficient and the recovery time of a 60/40 is about 5 years, and you can easily withdraw still in the mean-time.
That’s actually the ‘standard financial planning approach’, to have different buckets of money/investments depending on the time horizon, e.g:
Bucket 1 for the first 5 years of retirement, “invested” in a savings account
Bucket 2 for the next 5 years of retirement, invested in a balanced portfolio (for example 50/50)
Bucket 3 for everything that’s 10+ years, invested in a stock portfolio
That way one doesn’t immediately have to worry about the whole portfolio, in case of a market crash.
This method certainly doesn’t have the highest expected return. But IMHO what helps people sleep best is knowing that they are safe for at least the next five years, no matter what.
From a historical perspective, assuming a 10-year recovery period is pretty sound.
However, I certainly would not recommend holding a 10-year cash buffer. The question is rather how much income and savings you would need to survive in the absence of capital gains. This “buffer” if you will includes pensions, interest, possibly dividends, rents, and other fixed income.
Of course, that is under the assumption that the money could/would be needed to cover one’s budget. If that is not the case, and the money could safely sit for 10 years if need be, then stocks could make more sense, at least if historical data is anything to go by.
Naturally, a stock/bond portfolio would likely have a shorter recovery period, as might a portfolio that includes real estate, commodities, cash, etc. But that is for the portfolio as a whole. The stock component would have the same recovery period as a pure stock portfolio.
I’m sure I might be too conservative, but a 10-year waiting period capacity is my general recommendation for stock investments.
You’re not too conservative for stock investments, most backtesting shows recovery within ~10 years other than 100 years ago. A 10-year cash buffer is pretty unthinkable, anyone should be able to find SOME revenue within 2-3 years even in the most dire circumstances. One needs to consider the stage of life, taking into account how drastically life changes from 20-30, 30-40, 40-60, 60+. What I saw somewhere years ago was:
The maximum amount you can buy pack should be listed on your “Vorsorgeausweis” of your pension fund. To buy back contact your pension fund admin or just fill out the designated form. Some more general info (VZ) here.
What happens if stocks drop massively, as is certain to happen from time to time?
I see the risk that your wife demands this witchcraft sold. Her argument will be the strongest when those stocks reach their lowest point. I would prepare for this eventuality. Maybe have figures of authority in the loop or get a verbal commitment to not sell in such circumstances.
The second thing I see is a 100% concentration in the US market (and a high concentration in the technology sector). I would really think about diversifying this.
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