What's best to do with euros sitting around

Hi there,

What would be currently the smartest way to invest €s sitting around on an EU account?

I am otherwise mostly invested in VT on IB which is fed in CHF from my salary account + 100% global on VIAC.

  • Can I send the Euros to my IB account ? I have only sent CHF until now.

What are your opinions on the following ?

  • Should it go, business as usual, convert to USD and buy more VT?
  • Keep in EUR and buy MSCI World EUR?
  • Look into a Eurozone specialised ETF ?
  • Something else ?

TIA for your opinions!

F

Of course.

This is mustachianpost.com, so naturally the great majority of people will tell you that VT also “contains VT” and recommend you not do something else.

My own recommendation will only be that you should not base your prospective investment on what currency you (rather randomly) happen to be holding right now. Even if you feel better to invest in a European fund and/or one with European holdings. Cash can always be converted into another currency cheaply.

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My reflection was only sparked because of the current exchange rates. Although the EUR/USD pair isn’t as bad as EUR/CHF. But I suppose, in the long term, this doesn’t really matter ?

It doesn’t matter once you’re invested in a fund.

(At least not to you anymore - whatever that fund’s trading or reporting currency. Only indirectly, macroeconomically may it matter to the fund’s holdings, in terms of sales revenue currency, the supply chain etc. But these are often protected against changes of exchange rates)

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If you want to invest in EUR, I would avoid the currently expensive (that is with a high valuation) iShares Core EURO STOXX 50.
The Vanguard FTSE Europe ETF is broader and less expensive by most metrics, but it includes UK and CH exposure.
As a country-specific ETF, the Vanguard VGER includes large, mid and small cap stocks of companies located in Germany at a good price.
That’s it for the summary and I have detailed a buffet of options in this article if you want to go deeper into the subject: Investments in European indices.

The trading currency has nothing to do with the location of fund’s constituents. You can transfer EUR to IB, exchange to USD and invest as usual. But if you want to have some diversification with respect to brokers, you can open an account with a European broker (degiro, Flatex, dkb, comdirect, …), transfer your money there and invest in any fund you want (European ETFs only, obviously). VWRL, VWRA, whatever.

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You could put as EURT on SwissBorg and earn 4-8% yield.

I already have a crypto “investment” plan. I don’t think I want additional exposure to cryptos.

That’s a really cool ressource, thank you. Does your analysis also take into account the new german coalition? If not, would it change your investment advice?

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Thank you for your feedback; this review of options was done without adjusting for any additional political risk discount - in the UK case, it is obvious that the relatively low valuation is explained by a non-negligible part of political risk…It is less clear with Germany, but the price difference with French large caps is so wide that it should still gives us a good relative margin of safety.

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Partly. I’m not even sure if it’s so much political risk rather than just the sectors composition.

If you look at the Footsie’s 10 biggest constituents, they - with maybe the exception of the two pharma companies - are all in lower-valued sectors: consumer staples and commodities. Plus a bank.

I also tend to think that the alleged political risk is kind of exaggerated in the EU. While the UK is certainly in a period of transition after Brexit, they’re pretty much keeping calm and carrying on.

The big exodus hasn’t come. Financial services providers have created subsidiaries/entities in EU member states where necessary.

And both RELX, Unilever as well as Shell have decided (after Brexit) to consolidate their company structure into running out of London - giving their up domicile in the Netherlands.

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