Can I ask your views where to invest 50k at once now? (which is currently sleeping in the bank account). I dont need this money in near-mid future and would like to benefit from dividends in the first quarter of next year but not sure what would be the most ideal option.
Thank you in advance!
What are your other assets, what term constitutes mid future for you and why are you actively seeking dividends vs total returns?
the usual advice applies. Buy large and well diversified ETFs, i.e. our beloved VT, ideally at Interactive Brokers. Dividend focus is for Swiss investors not really interesting, since you are taxed on dividend income, while capital gains are tax free (in most cases).
You might want to buy in over a period of time to do cost averaging. One could make a case to buy all at once into VT now, since it’s maybe not going to be available anymore to Swiss investors come 1st of Jan 2022.
Buy tobacco stocks.
It’s a regulatory slightly risky but otherwise excellent business.
Almost like drug dealing - but legalised and exchange-listed.
And boy do they pay dividends!
Thanks for your reply. I was thinking dividends as we are close to year end but just became aware of tax topic, so it wasn`t a concious idea.
Mid-future I mean next 3 years. Re other assets, I have some stocks, fedex, uber, walt disney,
Generally dividends are calculated in the price, so a stock will cost more before the dividend is paid and less afterwards, so timing around dividends doesn’t really work.
3 years is pretty short, for stocks you should have a longer time horizon.
Safe, readily available, good returns; you can pick two but you can’t get the three all at once.
A safe investment on a 3 year term would mean ESI insured medium-term notes. The best rate I’ve been able to find would be at the Caisse d’épargne d’Aubonne, at 0.5% for 3 years. Those are insured up to CHF 100’000 and present a very high likelihood of being claimable and not having lost nominal value in 3 years (they’d still be subject to potential loss of buying power due to inflation).
If you want the money to be more readily available, savings accounts would be my option.
Anything other than that could loose nominal value under such an horizon. If that’s acceptable to you, then a mix of a low amount of stocks and safer assets could give better returns. I’d go very diversified with stocks, so VT, as presented by @kane would be my go to (or VWRL if you prefer something Irish based). I’d not exceed 20% stocks but you’d have to make your own assessment as to how much market risk you are willing to take. VIAC’s account plus ratio of 5% stocks, 95% cash seems solid to me for limited losses in case of a downturn.
Another alternative would be risk parity portfolios, which are designed to perform not too bad under various sets of cicumstances and usually include a mix of stocks, bonds, cash, gold and potentially other assets. I personally like the Golden Butterfly or Harry Browne’s Permanent Portfolio, which may be slightly tweaked to better fit non-US investors.
The past is no guarantee of the future and any solution you choose apart from the safest ones above is at risk of performing way worse than expectation, you could incur much bigger losses than expected with any of them.
There are other risks than market risks on such a short horizon, I strongly advise doing some research and understanding the solution you consider investing in before doing so. Among them is currency risk, hedging may be required on fixed income assets if they’re not denominated in CHF (assuming you need the spending power in CHF).
Investing and risk assessment is very personal, apply caution and self-judgement before jumping on any solution. It’s hard to assess your situation based on the few informations you’ve given so take everything I’ve written with a big grain of salt.
Thanks a lot for making time to explain different perspectives.
No worries, i am getting views and doing my research as well and will end up with a own decision in the end. Many thanks !!!
I continue investing in VT+KBA+AVUV+AVDV. Although I increased tilt in small caps (last two).
The trade off is:
Keep the 50k in something safe. It will be available to you in 3 years. In 20 years it is likely to be worth 50k or less because inflation is currently higher than interest rates (historically has been the other way around)
Invest in stocks which have returned 6-7% in real terms over the long term. Statistically Your money is likely to quadruple to 200k in 20 years. It is not guaranteed and in 3 years there is a chance it will be worth less
Don’t you mean the opposite?
I think it can be summarized as following:
Money you don’t need in 10+ years should be invested in stocks. The rest should be kept in cash, optionally as a fixed terms deposits.
The rest is - calculate all your assets including 2nd and 3rd pillar, define assets allocation for you and keep up with it.
Thanks. Edited above
Where can I get 1+3? Thanks
I guess real estate?
And fixed feposits (“Kassenobligationen”).
And where are the good returns?
Good question, definitely higher than 0.5-0.75% they are currently yielding.
My mom once told me about a fixed deposit she opened at 8.25%, crazy times.
As @Cortana says, I’d put real estate there.
I’d also put some lower risk diversified strategies including stocks and other assets, when held on the long run (thinking of the golden butterfly and permanent portfolio, historically positive returns on periods of 3+ years, so probably positive on a 20y timeframe). We have to define our concepts of “safe” and “good returns”, they tick mine (though there’s always a risk as soon as you walk away from cash/governement bonds (and even then, there’s inflation and credit risk).
From lazyportfolioetf.com (that’s in USD, so forex changes apply for swiss investors, hence the longer term horizon than just 3 years in my opinion):
(To understand the graph, on the Y axis is the lenght of the period during which the portfolio would have been held. The horizontal bars represent minimal and maximal annualized returns, in USD, that were gained during periods of the Y axis’s length from 1978 to today. The orange dots and lines are the average annualized return, in USD.)
Golden Butterfly rolling returns (studied peridod, 1978-today):
Permanent Portfolio rolling returns (studied period, 1978-today):
For comparison purposes, these are the rolling returns of VT over the 1988-today period):
When we say stocks should be held for the long term, “long term” is 14+ years (plus a bit for safety to account that the future isn’t the past and Great Depression-like crises).
Edit: note that the returns displayed are tricky since VT is worldwide while the Golden Butterfly and Permanent Portfolio use only US stocks (and bonds), which have overperformed on the studied period. I’m using it to see where positive returns could be expected more than for the total returns themselves.
For more fairness returnwise, here’s VTI (Vanguard Total [US] Stock Market) (1972-today):