What to do with my USD

Investing / Portfolios
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Hi Mustachians,

A bit of background:
During 2024, I was quite bullish on the US economy and invested exclusively in VOO through a DCA strategy. It turned out to be a good decision for me, but over time, my risk tolerance for being fully exposed to the US market started to deteriorate — especially after the election of Donald Trump. As a result, I decided to gradually reallocate to VT.

In January, I sold most of my VOO holdings (I’ve kept a small position) but didn’t immediately buy VT shares, as I considered them too expensive at the time. Buffett’s Berkshire Hathaway holding a record cash position reinforced my belief that valuations were high. In hindsight, this worked out relatively well, but now I find myself holding a significant amount of USD, and I’m increasingly uncomfortable with the currency risk, especially given the recent CHF-USD exchange rate volatility.

Here’s what my current portfolio looks like on IBKR:

  • VT: 40%
  • US 3-month T-bills: 25%
  • VOO: 5%
  • USD (uninvested cash): 30%

I’ve been considering several options:

  • Buying BOXX, BIL, or SGOV, though I’m still uneasy about remaining so heavily exposed to USD.
  • Gradually reallocating this cash into VT using a DCA approach.
  • I’ve also looked into CHF-hedged global ETFs, but from what I’ve read so far, they seem to offer limited advantages (I might be wrong here — open to being corrected!).
  • Another thought is to diversify further by adding emerging markets or non-US global ETFs like VXUS to reduce the high US exposure within VT (which is still over 60%).

What I’m looking for:
I’d really appreciate your recommendations on how to handle this cash:

  • Which assets or ETFs would you suggest for improving diversification and reducing USD risk?
  • What kind of buying plan would make sense for the 30% currently in cash? For example — would it be reasonable to invest 10%, 20%, etc. of this cash monthly or quarterly, and over what time frame?

I’m curious to hear how others would approach this situation — any feedback or thoughts would be greatly appreciated!

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“Don’t let (in this case: currency) tail wag the investment dog”. Don’t base your investment strategy on what currency you have. Decide on the strategy, the answer on what to do with USD cash will follow automatically.

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Is VT still too expensive in your view?

You had a plan and seem to be reluctant to follow it now, can you spell out the factors that make you question the choices you had made then?

If VT is at a good enough price now, lumpsumming in would be a way to make your move and be done with it.

On the other hand, DCA is likely to minimize regrets. The psychology behind the approach varies depending on the actual amount you are wanting to invest. I’d set myself a target no longer than 1 year (6 months for lower amounts) and set my investing frequency to the frequency at which I’m having thoughts about the market. Monthly by default but if I’m thinking about it constently, I may go for weekly and if every swing makes me think I timed my investment improperly and I was using a low friction (low fees) investing option, daily may even become an option.

For stocks:

  • Dev ex-US;
  • EM;
  • SCV (US, world or focused on countries whose economy you are bullish on).

Outside of stocks:

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If your main concern is that you are holding too much cash in USD, simplest solution it to pay 2 USD conversion fee and convert all your USD into CHF. This can solve your problem about dealing with currency risk.

Post that deploy your strategy as you deem relevant.

I feel that you don’t want to invest in USA but you also don’t know where to invest otherwise. I suggest to first do some thinking and decide where you want to invest and in what asset.

It’s a common problem these days where most people are in dilemma. US administration is acting more and more like autocracy and understandably people are questioning their investment decisions. But since for years people have been blindly investing in US because of „exceptionalism“, there are very few who did any research about other regions because let’s face it „they were not interesting“.

P.S -: even though it might not feel like , but holding cash or 3 month T-bills in USD is more or less equivalent to holding CHF cash in savings account in Switzerland. The „interest“ you earn is market‘s way of compensating you to bear the risk of currency losing its value.

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It worked very well, you caught the unicorn of timing the market relatively well :wink:

You already got three great answers and you’ll probably get more and better than mine :slight_smile:

If I were you I would think carefully about whether staying in IBKR lets me sleep well at night. If this didn’t AND WOULDN’T worry me in the future I’d simply DCA in VT, that’s my two cents.

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Thanks a lot for your detailed reply!

First of all, you’re right about this point:

What made me start questioning my choices is the increasingly unstable situation in US and global politics, and the potential impact this could have on my plan. I’ve begun to take the consequences of radical political decisions — especially those coming from the US — more seriously, not just in the short term (which I’m fine with), but over a much longer horizon. Things like deglobalization, intense protectionism, and similar trends could meaningfully affect long-term investment outcomes.

Also, thank you for the other recommendations — especially the suggested DCA timeline for investing in VT, and the options you mentioned for CHF fixed income option.

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Thanks everyone for all the advice!

I think I’ll stick with the following plan:

DCA into VT over the next 12 months.

However, I’m wondering whether it would be worth placing the not-yet-invested USD amount into T-Bills and rolling them as I continue my DCA, so the cash doesn’t just sit idle. Alternatively, maybe there are some interesting short-term bond ETFs that could serve the same purpose.

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If you want to avoid currency risk, just move it to CHF (and with 0.25% interests, probably not worth heavily optimizing).

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If you want to keep your cash in USD – I would – I would also park the USD cash in US government bonds. Ideally pick one with a low interest coupon (as you’ll pay income tax on the interest). It won’t matter from a yield perspective, as low interest paying bonds will yield as much as higher interest paying ones, just via capital gains, for which you won’t be taxed.

Given your strategy (DCA into VT over the next 12 months) and in order to optimize fees I would probably pick any US government bond (with a low coupon) that matures in about 12 months and just sell parts as you DCA into VT. If you buy shorter term bonds and roll, you’ll probably occur higher trading fees (of course you then also would benefit from raising rates if those take place over the next 12 months, but as pointed out in more graphic topics, I expect the bond market to yank its chain on the Orange Swan if necessary.

(Any other scenario might play out, too, of course, from Trump firing Powell to lower rates or the bond market not being the big guy with a heavy club but us me just being reliant on the Treasury Secretary being able to talk to the Orange Swan without Peter Navarro being in the Oval Office.
Anyway, as always with the future (and IMO any macro deliberations): it is by definition not predictable).

If you wanted to get real fancy, you could even put those Treasuries to additional work via Treasury Secured Puts on the VT (rough outline here), which is what I would do if I wanted to buy VT over a given and defined time period as you seem to plan.
You’ll be paid (roughly) the Fed rate on your remaining USD cash (equivalent), you’ll additionally collect option premiums on the VT Puts you sell, and in the “worst case” you’ll occasionally be assigned VT shares (even without having to shell out a trading fee for buying them) that you wanted to buy anyhow.
Of course sizing and timing the option selling adequately is key, so stay away from this variant if this all sounds a little too funky for you.

Good luck!

Edit: fixed link to the Treasury Secured Puts discussion

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Deleted this post as I apparently replied to a different topic (where I copied my reply to) but the forum software somehow made me believe my reply here was a valid option?)

At any rate, if you’re interested in my deleted reply, I’ve copied it to the appropriate topic. where it probably should have been posted anyway: Chronicles of 2025 - #1559 by Your_Full_Name

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I don’t think that’s linking where you intended it to.

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Indeed, fixed the link in the post and adding it here as well: Treasury Secured Puts (TSPs)

Thank you for pointing it out!