Investment strategy check: ETF choices and Bond ideas for a new investor

[Rocket]

Hello poorswiss community,
I’d like to take this opportunity to introduce myself and ask a question. I’m 55 years old and quite new to investing, but reading this blog and Baptiste's book has been very informative for me and has encouraged me to start investing—better late than never!

In the past, I used to own stocks from my company, but following the principle of diversification, I’ve decided to move to a more diversified ETF strategy. Since this amount is already in stocks and denominated in USD, I don’t want to convert it into CHF. My idea is to transfer the funds directly in USD to IB and then allocate them to three ETFs: 60% VOO, 20% IDEV, and 20% IEMG.

Does this approach make sense, or are there better options? I know that VT would be simpler, but I find this strategy more flexible as it allows me to rebalance by market and country.

Additionally, I’ve been considering a bond strategy in CHF or EUR for the long term. Are iBonds suitable for Swiss investors? I’m considering using bonds to balance my portfolio and reduce risk, as my age suggests that a 100% equity portfolio may not be ideal. Thank you in advance

 

[Max]

If you have doubts, divide the sum into halves. Invest one half into VT, and the other one - into your strategy. Watch it, say, for one year - and pick what you like more

 

[Baptiste Wicht]

I’d like to take this opportunity to introduce myself and ask a question. I’m 55 years old and quite new to investing, but reading this blog and Baptiste's book has been very informative for me and has encouraged me to start investing—better late than never!

Welcome! I am glad my content was helpful!

Does this approach make sense, or are there better options? I know that VT would be simpler, but I find this strategy more flexible as it allows me to rebalance by market and country.

I think it makes sense. You are maybe overweight in emerging markets and very slightly underweight on US, but as long as you are aware of that, you should be good. I would likely do 65/20/15.

Additionally, I’ve been considering a bond strategy in CHF or EUR for the long term. Are iBonds suitable for Swiss investors? I’m considering using bonds to balance my portfolio and reduce risk, as my age suggests that a 100% equity portfolio may not be ideal. Thank you in advance

The problem with bonds is that if you are in Switzerland, you need bonds in CHF. Otherwise, you have currency risk and it defeats the purpose of bonds. And the problem with Swiss bonds is that they are very low returns. I would personally still use either Swiss bonds or Swiss cash to reduce my risk.

 

[Rocket]

Thank you Baptiste for the kind answer, I will review my current allocation and make sense as historycally the US market is the one performing better on the long term.

The problem with bonds is that if you are in Switzerland, you need bonds in CHF. Otherwise, you have currency risk and it defeats the purpose of bonds. And the problem with Swiss bonds is that they are very low returns. I would personally still use either Swiss bonds or Swiss cash to reduce my risk.

Understood but what if I’ve EUR to invest with low risk? Better iBond or classic short ETF Bonds?

 

[Baptiste Wicht]

Understood but what if I’ve EUR to invest with low risk? Better iBond or classic short ETF Bonds?

I would say it depends on whether you will use the EUR or not. What you have now does not matter much. What matters is how you will need it. If you will need it as EUR later. If you know when you will need the money, ibonds (as long as they in EUR and holding EUR bonds) may work well for you since you expect to hold the ETF to maturity. Otherwise, classic ETF are fine I think.