Etf optimization portfolio

[mathieu]

Hello everyone,

I'm 19 years old and I'm currently finishing my apprenticeship. I finish at the end of June. I started investing as soon as I started earning my first salary thanks to this forum and I thank you for that !

I earn ~1600chf per month. With this money I put every month 1000chf on the VT and 280chf on my savings account.

I'd like your advice on a strategy I'm considering:
- 90% VT
- 10% URNM

Why do this strategy?

• Do a Core/satellite strategy, the Core with VT, which I think is a very good base because it covers so many markets, and a sectiorial satellite on uranium.

• Additional diversification (VT is only 1% nuclear), so by adding an Etf in the uranium sector, I'll be more diversified.

• Why uranium? Because it's essential for one of the biggest problems: global warming (decarbonization of ). Electricity demand is set to grow by 165% between now and 2050. More than 150 new reactors will be or are being built. And uranium is also used in the space industry. It's with all these positive points that I think uranium is a good investment for the future.

• low fees, VT has 0.07% fees and URNM has 0.75%. By doing 90/10, I'll have fees of ~ 0.14%. Why not do 85/15, which would increase my fees to ~0.17% I hesitate.

I thank you in advance for reading and every piece of advice will be very useful to me!

I wish you a very good day !
Mathieu

 

[Baptiste Wicht]

Congratulations on starting to invest so young!

I think your portfolio makes sense and you seem to be aware of the advantages and drawbacks already.
I would not say you are increasing your diversification. On the contrary, I would say you are reducing it by having a large bias towards uranium. Maybe we will see fusion earlier than expected and the need for Uranium will go down (I am not saying it will happen, but you need to take this into account).

As long as you are aware you are betting on Uranium, 10% is reasonable. I would not do 15% though. Generally, almost any strategy with 90%+ VT is great

 

[mathieu]

Congratulations on starting to invest so young!

I think your portfolio makes sense and you seem to be aware of the advantages and drawbacks already.
I would not say you are increasing your diversification. On the contrary, I would say you are reducing it by having a large bias towards uranium. Maybe we will see fusion earlier than expected and the need for Uranium will go down (I am not saying it will happen, but you need to take this into account).

As long as you are aware you are betting on Uranium, 10% is reasonable. I would not do 15% though. Generally, almost any strategy with 90%+ VT is great

Thanks for your feedback, I'll be honest with you, I didn't know that nuclear fusion, if it's ever used, will lower the value of uranium. I've been asking around and they say we're not likely to see nuclear fusion in several decades. The question I'm asking myself now is whether investing in uranium will bring me added value? Or do I stay at 100% on VT and take no risk and track market performance with virtually no fees? What do you think?

 

[mathieu]

Congratulations on starting to invest so young!

I think your portfolio makes sense and you seem to be aware of the advantages and drawbacks already.
I would not say you are increasing your diversification. On the contrary, I would say you are reducing it by having a large bias towards uranium. Maybe we will see fusion earlier than expected and the need for Uranium will go down (I am not saying it will happen, but you need to take this into account).

As long as you are aware you are betting on Uranium, 10% is reasonable. I would not do 15% though. Generally, almost any strategy with 90%+ VT is great

And I'm also hesitant because I'm doing a lot of research on the subject of investing and if there are 3 points that I remember it's:

• Invest in an etf that tracks the general market index for diversification.

• With the lowest possible fees

• Invest the same amount every month

And with that, you follow the market's performance and outperform 80% of investors.

 

[Baptiste Wicht]

I've been asking around and they say we're not likely to see nuclear fusion in several decades.

That's a common belief indeed and it's quite possible. But it's also quite possible that we are seeing expoential scientific growth and this accelerates. The point is that we do not know

The question I'm asking myself now is whether investing in uranium will bring me added value? Or do I stay at 100% on VT and take no risk and track market performance with virtually no fees? What do you think?

I cannot really answer that for you. If you strongly believe in Uranium in the next 30 years, then having 10% of your portfolio tied to Uranium is not a bad bet.

And with that, you follow the market's performance and outperform 80% of investors.

Yes, that's a very fair strategy.

 

[mathieu]

That's a common belief indeed and it's quite possible. But it's also quite possible that we are seeing expoential scientific growth and this accelerates. The point is that we do not know

I cannot really answer that for you. If you strongly believe in Uranium in the next 30 years, then having 10% of your portfolio tied to Uranium is not a bad bet.

Yes, that's a very fair strategy.

Okay, thanks for your feedback. I also have a question about the third pillar. I've looked into it and the best thing is to open an account with FinPension because it has the lowest fees. At the moment I'm not taxable, but I will be next June. My goal is to reach FIRE. Is it worth opening a 3a account to reach my goal?

 

[Baptiste Wicht]

In the future, it will be worth it. But with your apprentice income, it is not interesting because the 3a is only interesting based on the income you get. The condition to enter a third pillar is to be subject to a second pillar (where there is a minimum), so you would likely not even be able to open one now. So, until you pay enough taxes, the best is to keep invest in your free assets.

Should You Contribute To Your Third Pillar In 2025? - The Poor Swiss

The third pillar has lower returns than a low-cost index portfolio but will save you some taxes. Should contribute to your third pillar?

thepoorswiss.com

 

[mathieu]

In the future, it will be worth it. But with your apprentice income, it is not interesting because the 3a is only interesting based on the income you get. The condition to enter a third pillar is to be subject to a second pillar (where there is a minimum), so you would likely not even be able to open one now. So, until you pay enough taxes, the best is to keep invest in your free assets.

Should You Contribute To Your Third Pillar In 2025? - The Poor Swiss

The third pillar has lower returns than a low-cost index portfolio but will save you some taxes. Should contribute to your third pillar?

thepoorswiss.com

All right, thanks. I'm finishing my apprenticeship in June. So theoretically, if I manage to find a direct job, I should directly exceed 10% (marginal rate). If that's the case, would you tell me to fill up my 3a to the maximum, i.e. 7056.-? Or not completely and use the rest for my investments?

 

[mathieu]

All right, thanks. I'm finishing my apprenticeship in June. So theoretically, if I manage to find a direct job, I should directly exceed 10% (marginal rate). If that's the case, would you tell me to fill up my 3a to the maximum, i.e. 7056.-? Or not completely and use the rest for my investments?

In the future, it will be worth it. But with your apprentice income, it is not interesting because the 3a is only interesting based on the income you get. The condition to enter a third pillar is to be subject to a second pillar (where there is a minimum), so you would likely not even be able to open one now. So, until you pay enough taxes, the best is to keep invest in your free assets.

Should You Contribute To Your Third Pillar In 2025? - The Poor Swiss

The third pillar has lower returns than a low-cost index portfolio but will save you some taxes. Should contribute to your third pillar?

thepoorswiss.com

Is there a rule for how much you have to contribute to 3a? For example, if I have a marginal rate of 15%, I have to contribute 6000chf and if I have a rate of 30% I have to contribute 7000chf...?

 

[mathieu]

In the future, it will be worth it. But with your apprentice income, it is not interesting because the 3a is only interesting based on the income you get. The condition to enter a third pillar is to be subject to a second pillar (where there is a minimum), so you would likely not even be able to open one now. So, until you pay enough taxes, the best is to keep invest in your free assets.

Should You Contribute To Your Third Pillar In 2025? - The Poor Swiss

The third pillar has lower returns than a low-cost index portfolio but will save you some taxes. Should contribute to your third pillar?

thepoorswiss.com

And for 3a investing, is it the same principle as normal investing? Do I set up a strategy, personally 100% stocks because I can afford to take risks, and then make an instalment each month and invest? Or do I put the amount I want into my 3a directly and invest it all at the beginning of the year?

 

[Baptiste Wicht]

All right, thanks. I'm finishing my apprenticeship in June. So theoretically, if I manage to find a direct job, I should directly exceed 10% (marginal rate). If that's the case, would you tell me to fill up my 3a to the maximum, i.e. 7056.-? Or not completely and use the rest for my investments?

I would not really invest in the 3a with a 10% marginal rate, but would wait for something like 20% and then invest fully.

Is there a rule for how much you have to contribute to 3a? For example, if I have a marginal rate of 15%, I have to contribute 6000chf and if I have a rate of 30% I have to contribute 7000chf...?

I am not aware of any such rule. I would say you can wait until 20% and then invest everything.

And for 3a investing, is it the same principle as normal investing? Do I set up a strategy, personally 100% stocks because I can afford to take risks, and then make an instalment each month and invest? Or do I put the amount I want into my 3a directly and invest it all at the beginning of the year?

It depends on the provider, but with a good 3a like Finpension 3a, you can set up your portfolio and then when you put money into your account, everything will be invested according to your portfolio.

 

[mathieu]

I would not really invest in the 3a with a 10% marginal rate, but would wait for something like 20% and then invest fully.

I am not aware of any such rule. I would say you can wait until 20% and then invest everything.

It depends on the provider, but with a good 3a like Finpension 3a, you can set up your portfolio and then when you put money into your account, everything will be invested according to your portfolio.

Thanks for any feedback. So as soon as I have a marginal rate of more than 20%, I invest the maximum, i.e. 7056?

 

[mathieu]

I would not really invest in the 3a with a 10% marginal rate, but would wait for something like 20% and then invest fully.

I am not aware of any such rule. I would say you can wait until 20% and then invest everything.

It depends on the provider, but with a good 3a like Finpension 3a, you can set up your portfolio and then when you put money into your account, everything will be invested according to your portfolio.

And do you by any chance have your 3a strategy to share with me?

 

[Baptiste Wicht]

Yes, that's what I would do (it does not necessarily mean you should do the same).

My recommended 3a strategies are:

1. Use Global 100.
2. Use a custom strategy based on Global 100 but removing the hedging.
3. Use a fully custom strategy with only a Quality World Fund. It's what I am doing now, but I have no good reason for it, just experimenting.

 

[mathieu]

Yes, that's what I would do (it does not necessarily mean you should do the same).

My recommended 3a strategies are:

1. Use Global 100.
2. Use a custom strategy based on Global 100 but removing the hedging.
3. Use a fully custom strategy with only a Quality World Fund. It's what I am doing now, but I have no good reason for it, just experimenting.

Ok thank you for all your advice !