Why is it exactly this date?
I was trying to pick a date by which the worst would be behind us, but it would not yet be explicitly apparent. February is still a pretty wintery month with high heating needs but March could start to have things go toward an “end of the tunnel”. By the end of March, February data would have been known but March one and Q1 2023 would not have been released yet.
I was betting on some bigger dip before the end of winter, but didn’t want to wait too much if it didn’t happen, and would rather act too early than too late, hence a deadline by which I intended to have acted and it being more early than late in the year.
I also like to pick ends of months as dates, so that settled that “exact” day. There’s really not much exact about it, though, it’s just a date at some rough point early but not very early in the year. Earlier seemed too early for a deadline and later seemed too late.
EDIT: rereading this, it sounds very comical thinking “hey, winter is probably data the market forgot to factor in!” For context, this was all crafted after last June when the market rebounced on what I thought to be deeply illusory expectations (of a Fed U-turn) so I was mainly giving it some time for the market to “come to its senses” without wanting for it to be too much time.
And yet the finance “gurus” are propheting (US) recession hit sometimes around Q3.
Yes, economy != stock market, but nobody knows if/when/how long it might last, and how they will interact this time around.
Best of luck with the plan though!
Just in case you had any doubt: my plan is to invest any money available (after expenses and keeping some cash buffer) when it is available. But I am going to fill 3a first.
If we wait for the all clear and the financial gurus to align on a positive view of the economy and/or the stock market, we will never invest or do so when most of the profits have already been made.
My policy is to invest early, at the risk of still having to face a huge part of the brunt if it is still ahead of us, and invest in a way that I am confident I can withstand it if it happens. My motto: “In case of doubt, be invested.”, which means there is room for tactical moves in my strategy, but that the threshold to enact them is pretty high and I should be invested at my target allocation the rest of the time.
It’s a work in progress but my targeted allocation until I reach my lean FIRE number is 140/-40, with room for some real estate and for adaptations if my situation was to change (most importantly, if I were to one day have children or other dependents). We’ll see how this rolls.
As a side note, I notice that I tend to go full circle, that is, find a reason to implement complicated investing rules, then understand how they work concretely and are best implemented by a simple fixed allocation and rebalancing, adjust my previous one as a consequence (so there have been understanding and implemented gains in the process). My system this year is really simple, we’ll see if I can stick to it.
My FIRE portfolio consists mainly of VT at IBKR and a tiny fraction of Fundsmith Equity Fund. For this year I am changing my strategy by adding a 20% Europe “continent” tilt, if I may call it like that, and hence will start buying some VEUR.SW (Vanguard FTSE Developed Europe) at Swissquote. Swissquote is basically just for the broker diversification (gosh those Swiss stamp duty taxes are expensive btw!). The reason for a tilt to Europe is that VT has a quite high US exposure (>60%) and I believe or basically I have been reading from sources such as Vanguard  that Europe is currently undervalued. So I would just like to have more European stocks without adding any more EM or others continents and VEUR seems to be an adequate ETF for that purpose. For those interested in ETFs with slightly higher dividend yields, VEUR has 3.3% at end of 2022.
I also noticed the low trading volume of VEUR on the Swiss stock exchange (around an average of 1k per day) but if I understand correctly with ETFs there are market makers who are there just to buy and sell. Or is the problem more about the bigger spread in price?
I am also lazy and really don’t fancy having to exchange CHF into EUR first, it is a waste of time and a waste fees.
16 posts were split to a new topic: Swiss brokers 
- 50% VT to capture the market
- 30% XDEM (to overweight shares with momentum, historically best performing strategy)
- 20% EMXC (the Lyxor one - not the iShares US Version - to increase emerging markets share to 30% but underweight China)
This @ Interactive Brokers
Plan is to stay invested 80-100% in this allocation longterm.
I have just convinced myself - I am very risk adverse - to start investing my excessive cash following the “VT & chill” philosophy.
I still wonder if it is a good idea to buy a Swiss ETF, since Switzerland is already covered by my VIAC account and VT itself.
If you’re very risk-averse, you might consider investing only a small amount at first and see how you can handle the volatility.
It would be a pity if you’d panic and sold your investment at the bottom of a bear market at some point in the future.
Switzerland weight 3% globally so why not calculating your global allocation in an Excel spreadsheet to see the current weight of markets in your investments ?
Aren’t many employees getting their salary increases with the new year?
If am not mistaken, the 3a tilts me towards a Swiss exposure of 8.69%.
Since I am an expat, I am not sure I want a bigger Swiss bias (even if it eliminates some currency risk).
Indeed. I’ll have to see how that pans out. As stated earlier, I’d rather act earlier and with conviction and be wrong than act after everybody else has already made their move.
Can you please provide some more details regarding the Lombard loan plan? (I’m sorry if I missed it):
- What’s the rate/company?
- Are you planning to go for broad market funds like VT?
I’m flirting with the idea too and I would like to hear more about your plans/thought process.
Mandatory warning: I am taking risk, only take leverage if you have assessed yours, and never take more than you can handle. My solution works for me because, being at the early stages of accumulation, I can pony up collateral cash in amounts relatively consequent relative to the size of my leverage. I would probably be more cautious if I didn’t have this ability.
Lombard loans don’t provide the kind of leverage I need. Not all my assets are used as collateral (I’m using stocks in my 3a pillar as part of my calculation regarding how much total exposure I want, so I am way over the pure 1.4x leverage of my liquid assets). I am targeting a x3 actual leverage as a risky but acceptable level, x2 would be a safer one. I am currently at x7 on my assets put as collateral, which is way over the “safe” level but brings me at my target exposure.
I’d ideally use futures, they’re regulated, have good liquidity, offer cheap leverage. My ideal situation would be investing in SMI futures through IBKR. The choice of SMI futures is because I don’t want to have anything to do with regulated US assets and they’re easier to handle than a more global basket of futures using several indexes/ETFs. I’m at ease with the concentration risk, other people might not be.
As I’ve started with very low amounts, and initially wanted to short the market, I’m currently trying my hand at CFDs. CFDs are not regulated, they are basically an agreement between you and your broker, with your broker betting against you. If your broker wants to screw you over, they can, and your only recourse will be paying a lawyer and going to court (where you are not guaranteed to win because your broker can be subtle about screwing you if they want to). For that reason, I feel better with a swiss broker (I’d rather go to a swiss court than deal with a legal system I don’t understand), so I’m using CornèrTrader.
I don’t recommend CornèrTrader and I don’t recommend CFDs. They happen to suit my purpose, which is extremely risky. Chances are they may not suit yours.
- I am using CFDs on the Nasdaq and the S&P500 because they are cheap, offer good leverage opportunities and I expect them to have good rebouncing capabilities if the market starts going up in the short term. I’ll keep evaluating if that choice still fits my assessment as time passes.
The basis of my risk assessment is that I deem not increasing my chances of profits at this stage as a bigger risk to my overall wellbeing than the risk of loosing the few assets I currently have (being close to apparent burn-out counts in that assessment). I am willing to risk loosing all (and some more), and might very well with this strategy. Others may have a different risk assessment and deem the risk not worth the potential prize.
As a side note, leverage is becoming more expensive as rates go up, so that should be taken into account too.
As another side note, using leveraged assets (options, futures or CFDs) puts you out of the safe harbor zone regarding being taxed as a professional investor. That should also factor in your personal assessment.
For those of you who think that we might be going into a recession in the next few months in order for the market to correct itself…
Is anyone putting a pause on monthly dollar cost averaging into their 3a and online broker investments, and pacing purchases to maybe every 3 months instead?
If anything, I’d do exactly the opposite:
Increase to the maximum contribution.
(Well… if I weren’t at the maximum yearly contribution anyway, that is)
There’s been so much talk of a recession already… is there anyone that hasn’t heard of it already? A minor recession has been so much anticipated that it’s probably priced in already. One could even ask: Aren’t we experiencing, sort of, one already? One where activity and output in non-monetary or “real” terms is declining already - and it’s just masked by inflation, so doesn’t show as nominal decline.
And the correction… it has happened already, hasn’t it?
I couldn’t invest last year because I hadn’t the money for, but if I could, I would invest. From january 2023, I can invest monthly and I will continue to invest each month on my paid day