28-year-old boy, in the world of work and resident in Switzerland (permit B) for 2 years, with a current income after expenses and taxes of around 3,000-2,500 CHF, without current car leases (I’m thinking about it, I tore up the contract after reading “poor father, rich father”), open accounts on IB, DEGIRO, Crypto.com. What would you do with these inputs?
I am studying economics books and courses slowly due to the high workload, but I would not like to waste too much time and start investing, perhaps refining more when I have everything clearer. I was aimed at mainly equity ETFs (given my young age) and making up 5% of my portfolio with cryptocurrencies.
What would you do in my place?
Most people in this forum (and that includes me) will say: “IB account, invest monthly in VT until you have a very clear idea that persists ove 6 months of something better. Or invest 95% in VT and 5% in BTC”
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Thanks for your reply. Is a single ETF differentiated enough? I read that below 100k USD DEGIRO is preferable, is this true? Is BTC the only one to take into consideration? Starting with an initial investment of 5.000 chf and then a monthly investment of 800-1000 chf, would it be a good accumulation plan to start?
This. And “pay yourself first” like the author of Rich Dad, Poor Dad talks about = make a standing order to invest 2000 CHF or whatever you are sure you can commit to whilst still enjoying life
I also suggest to model how much money you will have in the future and therefore when you are likely to reach FI. Depending on whether you are happy with the result you can decide whether to spend more or save more (search for “future value of regular investment”)
I would also say that increasing your salary & savings amount will have a big impact so don’t forget to stay motivated at work (it can quickly become demotivating to go to work if you are thinking about FIRE all the time…)
Personally I do not believe in fundamentals of the currently available cryptos as an investment but if I was at your age I would consider gambling a small amount each month to ride the current wave upwards. If in doubt you could model the impact of losing that 5% and decide if you are happy to take the risk
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About Degiro vs IBKR for accounts < 100k, this is no longer the case. IBKR was charging a 10$/month fee for accounts below that threshold, which made it less competitive than Degiro for small accounts, but they removed it last summer.
About crypto, BTC and ETH are considered blue chips in that space, if you’re looking for the “safest” bets in that asset class. I wouldn’t put a dime in BTC out of those two, but that’s just me (not financial advice yada yada 
). In any case, be sure you properly document yourself on those to understand what and why you’re putting your money in.
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It’s very encouraging you are thinking about investing now, it’s never too late but better earlier.
Some simple suggestions I wish I was taught years earlier.
- Invest regularly (standing order every month / good and bad weather)
- Simplicity is key to success (for now choose only one fund - ideally globally diversified ETF with low cost e.g. vanguard. One fund simple to track and clear performance. Don’t get fooled by friends stating they generated x by investing in this y fund in the last 6 months. People show off wins but rarely losses. It’s not a race vs other s but your own race - winning is defined by yourself for yourself)
- Keep costs low (everything from broker custody fees to ETF costs. This won’t change your life but help you to achieve your goals faster)
- Playing money is OK (sometime it gets boring follow #1-3. It’s ok to have 5% of your portfolio or some money even outside your portfolio to play with some thematic ETF, some momentum strategy (e.g. china is down 30-40% this year, I will throw some money to that)
That is it! If you think it’s a too simple recipe. It’s! It’s just that people struggle to follow simple guidance and get stuck in getting rich quick schemes.
Wish you best of luck!
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I was thinking to invest in the Chinese market due to what you mentioned. I just currently hold VTI, but I have no idea in what to invest in the Chinese market, is there any ETF recommendation that you can give me? Are they available through IBKR?
Yes everything is available on IB. From msci china to China ftse, China tech, triple ETFs and etc.
However, I would not recommend you invest in this now. I said now because you are at the beginning of your journey. China stocks may continue to go down and never recovers or they can jump back 50%. None knows. The point is that if you get burned at the beginning of the journey you are likely to stop investing fully or part time because of that memory.
You are free to do what you want. It’s your money. My recommendation is not to invest in China as of today, or if you are really willing to do so, buy a full country ETF like MSCI and buy little amount. It won’t change you life either way.
Don’t forget about your 3rd pillar.
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If he is on B Permit it is not so clear if he should invest in the 3rd Pillar, it depends on where he lives.
Hi and welcome!
I would try to identify my “why” (what am I trying to achieve by investing?) and write it down. I’d say finances are only part of the picture and life optimization should also take into account how we use our time, how meaningful our relationships are and how fulfilling our actions feel.
Crypto is a high risk, high reward bet. It can absolutely vanish overnight and go to zero and necessitates a good bit of due dilligence. It can also 10x in a few days. I’d say it makes sense in a “buying a lottery ticket” way if huge gains in the short term would have a meaningful effect on your life going forward at the expense of safer gains on the longer run. I wouldn’t recommand it to anybody but those who decide to go in it don’t need my recommandation.
Financially speaking, I would keep reading a lot (congrats on jumping on that!). This board, Mr. Money Mustache’s blog (the early posts are really good, he has lost some of his sharpness in the later ones in my opinion), Get Rich Slowly, Early Retirement Now, the Bogleheads board, articles about risk parity and other articles of interest to you.
Then I’d dive in, choose my broker, choose my own strategy and see how I react to it. I’d highly recommand keeping a journal of your investing journey so that you can read back later how you felt at specific times (during a crash, when your assets were not holding to your expectations, when they were, when other assets were skyrocketing, etc.). If you don’t want to wait, it’s hard to go wrong with VT so I’d feel safe investing some money I can afford to loose in it, while keeping in mind that stocks don’t only go up and being ready to take any potential losses as a learning experience.
In investing, patience and taking the time to set a course are key. You won’t ruin your financial career by taking a few months to read and decide where you want to go and how to get there, quite to the contrary, by observing the space while sitting on the sideline, burning to get in, you’ll forge your own determination and learn to properly assess your investment options before jumping in on the last craze returning billions to everybody… until it doesn’t.
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A thing I’d recommend (to everyone) is limiting the times you check how the portfolio is going. «Investing is about sleeping a lot». I invest 4 times a year and try not to check my assets more than once a month, the less the better.
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Thanks for your answers. In theory, my salary should have a steady increase every month, and there is also the possibility of reducing rent costs by halving them (which is not cheap).
2000 chf would be a nice investment, I could probably hold it having sufficient liquidity behind me, but I’ll be honest I was thinking of something lower (800-1000 chf) at least initially and then aiming upwards in periods of decline (like one smart PAC).
For cryptocurrencies I was thinking of a 5% given the volatility so as not to regret it later if I don’t take advantage of the moment.
Thanks for your advice, they will be very useful. Unfortunately in my career as a doctor I have always had to depend on other people and for only two years I have had economic independence, but I expected to have a solid foundation to start with.
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Technically I can, but I have been advised against (even if 2 years have already passed since my entry) to do so if I am not sure I will stay here at least 10 years and therefore have 10 years of payments.
Why does the length of stay matter?
Wow … your tips on managing experience with a diary are a great starting point! Actually I hadn’t thought about it but they are a great thing. I will definitely read the articles you speak to me about.
Unfortunately, while waiting, I am losing a bit, perhaps by procrastinating and knowing myself often, I have learned more by making initial mistakes and correcting later. Is an initial investment of 10,000 chf with a subsequent monthly commitment of 800-1000 chf a good idea? On a single ETF com VT? Would I have excessive fees if I wanted to sell in 6 months and change ETFs or add another?
Because they spoke to me of a minimum period for an effective gain, something more tangible. Maybe I’m wrong, I admit that I relied a lot on an acquaintance who manages these things and who was born in Switzerland.
Urgh you probably should look into that, sounds a lot like one of those insurance products?
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Well, you didn’t forget it and I think you are right in your decision not to invest in 3rd pillar for now.