switching from Truewealth to Interactive Brokers

[Riches1]

I'm planning on switching from Truewealth to Interactive Brokers, in order to avoid unneccessary fees. My plan is to invest the money long-term (20+ years). I currently have the standard 10 risk profile from Truewealth, which seems reasonable for a long-term investment, so I would likely want to keep this same portfolio on IB as well. My portfolio has around 70k CHF in it, and I want to add around 2000 monthly.

Questions:

- what's the best way of making this switch? I want to avoid cost as much as possible. I also want to avoid staying out of the stock market as much as possible (I guess it would be only a few days to liquidate the truewealth portfolio and put that money into IB, I guess, but still)
- is there perhaps a way to directly move the Truewealth assets to IB, without transfering the money back to my bank account and then reinvesting it again on IB?
- anything else to consider?

Thank you!

 

[Baptiste Wicht]

Hi and welcome to the forum!

- what's the best way of making this switch? I want to avoid cost as much as possible. I also want to avoid staying out of the stock market as much as possible (I guess it would be only a few days to liquidate the truewealth portfolio and put that money into IB, I guess, but still)

You need to make sure your IB account is ready in the first place. You will need to transfer from TW to your bank account and then from your bank to IB.

- is there perhaps a way to directly move the Truewealth assets to IB, without transfering the money back to my bank account and then reinvesting it again on IB?

No, no shortcuts here

 

[Riches1]

Thanks. I just hope the cost for these transfers is not very high. I'm assuming that for a portfolio of this size (~72k CHF), fixed pricing would be better on IB, to rebuy all the assets on there? And then for the monthly 2000, I would switch back to the tiered plan?

Also, another quick question regarding asset purchasing on IB: If I want to basically mirror what Truewealth is doing at the moment, which is the following portfolio:

REITS:
ISIN: IE00B5L01S80
ISIN: IE0009YEDMC6

Equities:
ISIN: IE00BJ0KDR00
ISIN: LU0136234068
ISIN: IE00B9F5YL18
ISIN: IE00BKM4GZ66

If I look up these ISIN numbers on IB, oftentimes there are different entries for the same ISIN. Sometimes they differ in currency, sometimes they don't. As long as the ISIN is identical, and the currency is the same as one Truewealth (which I want to replicate), it shouldn't matter which one of those I pick, correct? In terms of ongoing cost, etc.

 

[Baptiste Wicht]

I'm assuming that for a portfolio of this size (~72k CHF), fixed pricing would be better on IB, to rebuy all the assets on there? And then for the monthly 2000, I would switch back to the tiered plan?

It depends on your portfolio. 72/6 (assuming equal split) is not that large of each option and may be better for tiered already.

If I want to basically mirror what Truewealth

That's not a very sound strategy. With IB, you have access to US ETFs which will lower your costs significantly, you should adapt your portfolio to take advantage of that. Also, maintaining 6 different ETFs is likely too much of a hassle.

it shouldn't matter which one of those I pick

Apart from currency, you should also use the stock exchange with the highest trading volume.

 

[Riches1]

With IB, you have access to US ETFs which will lower your costs significantly

But doesn't Truewealth use those as well? For example, this one:

Xtrackers MSCI USA UCITS ETF 1C
ISIN: IE00BJ0KDR00

It's in USD on Truewealth. Isn't that a US ETF already? Or do you mean that it's a bad idea to buy a lot of non-US ETFs when using IB? I wonder what a good portfolio would look like for my purposes. If the Truewealth 10/10 risk standard portfolio doesn't make a lot of sense on IB, I'm of course open to suggestions.

Are there any "standard" portfolios by people smarter than me in these things that would make sense for someone like me (Swiss person, 20+ year investment planned, monthly 2000 added to portfolio)?

The way Truewealth does it in their standard 10/10 risk portfolio is like this:

REITs:
~5.9% HSBC FTSE EPRA NAREIT Developed UCITS ETF (ISIN: IE00B5L01S80).
~6.4% HSBC FTSE EPRA NAREIT Developed UCITS ETF CHF Hedged (Acc) (ISIN: IE0009YEDMC6).

Equities:
~48.6% Xtrackers MSCI USA UCITS ETF 1C (ISIN: IE00BJ0KDR00).
~17.2% UBS ETF (LU) EURO STOXX 50 UCITS ETF (EUR) A-dis (ISIN: LU0136234068).
~11.3% Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF (ISIN: IE00B9F5YL18).
~9.0% iShares Core MSCI EM IMI UCITS ETF USD (Acc) (ISIN: IE00BKM4GZ66).

Again, thanks a lot.

 

[gaijin]

I think it's considered by many as a great advantage of IB that you can trade VT (Vanguard Total World) at very low cost. So I would include VT in your portfolio.

 

[Riches1]

I see. That would make more sense then, I guess. I was checking the website a bit more and I saw this article: https://thepoorswiss.com/portfolio/

In here, this portfolio is described:

• 80% World Stocks (Vanguard Total World, VT)
• 20% Home Switzerland Stocks
  • Switzerland Stocks (CHSPI)

I'm new to investing in general, so I'll gladly just follow something that people with experience have found to make sense. If I wanted to copy this portfolio in my IB account: Would these be the correct ones to pick?

• VT VANGUARD TOT WORLD STK ETF ARCA
• CHSPI ISHARES CORE SPI CH EBS

Also, since I'm planning on investing long-term, would it perhaps make more sense to even go 90:10, instead of 80:20?

Another quick question I had: I saw mentions of a W-8BEN form. Do I need to fill this out first, or does IB take care of this for me automatically if I'm registered as a Swiss user? Are there other such things to be aware of?

 

[Baptiste Wicht]

But doesn't Truewealth use those as well? For example, this one:

Xtrackers MSCI USA UCITS ETF 1C
ISIN: IE00BJ0KDR00

It's in USD on Truewealth. Isn't that a US ETF already? Or do you mean that it's a bad idea to buy a lot of non-US ETFs when using IB? I wonder what a good portfolio would look like for my purposes. If the Truewealth 10/10 risk standard portfolio doesn't make a lot of sense on IB, I'm of course open to suggestions.

No, that's a EU ETF with US stocks But it's confusing many people indeed.
UCITS in the name indicates it follows EU regulations. As a result, you will lose 15% of US dividends.

 

[Baptiste Wicht]

I'm new to investing in general, so I'll gladly just follow something that people with experience have found to make sense.

It's not a bad idea to start with someone's else portfolio, but make sure you understand the portfolio and do not copy it blindly.

Would these be the correct ones to pick?

• VT VANGUARD TOT WORLD STK ETF ARCA
• CHSPI ISHARES CORE SPI CH EBS

Yes

Also, since I'm planning on investing long-term, would it perhaps make more sense to even go 90:10, instead of 80:20?

It could totally make sense. Some people even do 100% VT and it's not wrong. I should update this page because we switched to 85/15 now since we have a large second pillar in CHF and a house in CHF.

The home bias mostly serves as a local protection.

Should You Have A Home Bias In Your Portfolio In 2024? - The Poor Swiss

Many investors invest more in domestic currencies than in foreign currencies. Should you do the same? Should you have a home bias?

thepoorswiss.com

Another quick question I had: I saw mentions of a W-8BEN form. Do I need to fill this out first, or does IB take care of this for me automatically if I'm registered as a Swiss user? Are there other such things to be aware of?

Normally, IB takes care of that during the onboarding. At some point, there should have been a question about whether you qualify for tax treaty, but you can also change it later.

 

[Riches1]

Thanks. I just tried buying around 1700 CHF worth of VT stocks on IB. Before that, I bought some CHSPI stocks with no issues. The VT stocks purchase does not seem to go through for some reason. The status is "Submitted", but under "Filled/Remain" it says 0/14. Do I have to convert my CHF to USD first? I thought that IB does this automatically these days (according to this article). I have a cash account, so shouldn't it just work?

I bought the shares at market price, so it should just go through, unless I'm missing something.

Edit: It went through now, guess it just took a while.

Another question, by the way: If I simply want to add the 2000 monthly, with as little work as possible, and with the goal of long-term investing: Would it make sense to simply log in the first day of the month, and buy the shares for the 2 assets at current market value, without really checking for ups and downs / trying to "time" it? Or is this a dumb way of doing it?

 

[Baptiste Wicht]

I have a cash account, so shouldn't it just work?

Edit: It went through now, guess it just took a while.

It makes sense, the US stock exchange is open at US hours, which is 6 hours difference from us. Most of the year, the US stock exchange is open starting at 3pm Swiss time. So, if you submit before, it will have to wait.

Another question, by the way: If I simply want to add the 2000 monthly, with as little work as possible, and with the goal of long-term investing: Would it make sense to simply log in the first day of the month, and buy the shares for the 2 assets at current market value, without really checking for ups and downs / trying to "time" it? Or is this a dumb way of doing it?

It's not dumb, it's exactly what I am doing on the 25th of the month.