Very basic "behaviour" question(s)

[OxygeN]

Hi all.
I've very recently started to take (more) care about my finances (you might come across other posts of mine in this forum going in almost the same direction).
Now I got some really basic behaviour/how-to questions, which probably could go under the "ELI5" title - sorry for this! :-/

I've started with 10k on IBKR, fully invested in VANGUARD TOT WORLD STK ETF (VT). ATM I'm losing some money, but this is nothing that shakes me: I still have 20 years to go before retiring, therefore I'm looking at long-term investing. Here we go already with my first questions:
If/when my invested 10k will be worth more (e.g. 11k), what's suggested to be doing with the surplus? Just leave it there on VT? Or sell stocks? Or what else?
What would be the strategy to be followed in the next 20 years? I'm referring to the risk reduction when getting near retirement: I would understand that at some point (age 60? or earlier?) it would be safe to reduce the risk by lowering the amount of stocks in my portfolio in favour of bonds. Would that be correct?

Last (for this post) but not least: I've got around CHF 200k invested at UBS (75% stocks, 25% bonds - I can detail further if needed) which as of now are doing good (YTD ca. +7%). I'm willing to move this chunk over to IBKR and do a lump sum investment. Assuming that I'd like to maintain the same risk level (75% stocks, 25% bonds), what could my portfolio look like? VT is stocks, right? Therefore I would put 75% on VT (or would you suggest using different ETFs instead of just VT?) and 25% in bonds... but here I am stuck: I don't know which bonds could be good/worth it.

Also: UBS is of course "managing" my investments, whereas with IBKR I would be the one managing it. What's your way of dealing with this? Do you actively manage your portfolio (e.g. selling ETFs to buy other ETFs or bonds) on a daily basis? Or how do you handle it anyway?

TIA!

 

[Baptiste Wicht]

If you are looking at long-term investing, you should not sell before your term. So you should reinvest dividends and keep everything into VT. Most of my portfolio is in VT and I am not planning to sell anything before retirement.

You are right that there are two phases: the accumulation (you are in) and the withdrawal phase (when you need the money). But even in withdrawal phase you could have 100% stocks, it really depends on your risk capacity. In fact, some people do the contrary: they start retirement with more bonds and then switch to stocks to use both advantages.

For your portfolio, it will depend. VT is fine for international stocks. Maybe you will want some Swiss stocks ETF as well (optional). Bonds are not great, unfortunately. There are few bond ETFs (from iShares mostly). I generally recommend the long-term one with 7-15 years to maturity. But you could also keep it in cash in a good savings account. Or you could simply use a COD in your bank directly and get some fixed amount of interest.

For my strategy at IB: I transfer money each month, I login once a month to IB to buy more shares, logout and forget about it for the next month. There is no management to be made if you adhere to passive investing.

 

[OxygeN]

If you are looking at long-term investing, you should not sell before your term. So you should reinvest dividends and keep everything into VT. Most of my portfolio is in VT and I am not planning to sell anything before retirement.

OK, so just keep the money in VT and let it do what it can/has to do Basically just look at it and wait.
Am I right understanding that I should keep track of how much money I put into VT (or anything else), so that I can calculate if the gain I'm making is in fact surplus for me? For example: I put CHF 10k on IBKR, converted that amount in USD and invested into VT. Of course I had to pay fees (conversion, but also investment/buying ones). So now I do have less than CHF 10k worth. The actual performance is e.g. 1.80% but with this I'm still below CHF 10k. Therefore I thought I should separately keep track of how much money I put in there, to avoid being "fooled" by a positive performance (in percent) which still wouldn't give me surplus. I hope I explained my doubt...

You are right that there are two phases: the accumulation (you are in) and the withdrawal phase (when you need the money). But even in withdrawal phase you could have 100% stocks, it really depends on your risk capacity. In fact, some people do the contrary: they start retirement with more bonds and then switch to stocks to use both advantages.

Ah, so you mean that even when retired (and thus needing eventually some of the invested money, in addition to what the three-pillar-system will pay out), it can make sense to keep invested money? And not necessarily in bonds?

For your portfolio, it will depend. VT is fine for international stocks. Maybe you will want some Swiss stocks ETF as well (optional). Bonds are not great, unfortunately. There are few bond ETFs (from iShares mostly). I generally recommend the long-term one with 7-15 years to maturity. But you could also keep it in cash in a good savings account. Or you could simply use a COD in your bank directly and get some fixed amount of interest.

So VT is 100% stocks, right?
What's the idea behind having also some Swiss stocks ETFs?
I'll search for some bond, maybe I will increase to 85/15% (stocks/bonds).
What's a COD and would it really make sense to still have something to do with UBS? I'm bound to UBS until 2028 with my mortgage...

For my strategy at IB: I transfer money each month, I login once a month to IB to buy more shares, logout and forget about it for the next month. There is no management to be made if you adhere to passive investing.

So you're actually doing DCA on a monthly basis. Did you start with a lump sum? Because this is what I was thinking about: lump sum my CHF 200k and when I have accumulated like 10k I would put them into VT.

 

[Baptiste Wicht]

Am I right understanding that I should keep track of how much money I put into VT (or anything else), so that I can calculate if the gain I'm making is in fact surplus for me?

Not necessarily. IB should do that for you.

it can make sense to keep invested money? And not necessarily in bonds?

Yes. That's the whole point of my retirement strategy, based on the Trinity Study.

All You Need To Know About The Trinity Study - The Poor Swiss

Find out all there is to know about the famous Trinity Study, the origin of the 4% Rule that started the entire FIRE movement.

thepoorswiss.com

So VT is 100% stocks, right?

Yes

What's the idea behind having also some Swiss stocks ETFs?

It's to have a home bias.

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

What's a COD and would it really make sense to still have something to do with UBS?

It's a Certificate of Deposit. It's basically the bond that bank sell you directly.

Did you start with a lump sum?

Not really. When I started investing with IB, I had about 25K coming from PF. I would not call it a lump sum.

 

[OxygeN]

Not necessarily. IB should do that for you.

I've found this:

So if I add more money (let's say another 20k), my portfolio value should increase to 9256,88 plus the 20k - but I still don't know how to see (without taking a note myself separately that I put 30k total into IBKR) if I'm doing surplus or not. Because the performance expressed in percent does not tell this...

 

[Max]

If you go into "Portfolio" menu item, you will find "Unrealiserter G&V" (Gewinn und Verlust).

 

[Baptiste Wicht]

As pointed out by @Max, you can either look at the global results in your portfolio view or at the positions in your portfolio.

 

[OxygeN]

View attachment 39If you go into "Portfolio" menu item, you will find "Unrealiserter G&V" (Gewinn und Verlust).

Thanks. But of course the sum of "Nettoliquidität + Unrealisierter G&V" (if the latter is negative, as it is now) won't add up to the initial 10k I put in, because there were currency conversion fees applied and investment fees, right?
If so, then it's still good for me to keep track of how much I put in separately: like as of now, after putting 10k into VT, I will only make surplus when my "Nettoliquidität" will be greater than 10k - or am I missing something here?!
Thanks for your patience with a newbie like me

 

[Max]

Thanks. But of course the sum of "Nettoliquidität + Unrealisierter G&V" (if the latter is negative, as it is now) won't add up to the initial 10k I put in, because there were currency conversion fees applied and investment fees, right?
If so, then it's still good for me to keep track of how much I put in separately: like as of now, after putting 10k into VT, I will only make surplus when my "Nettoliquidität" will be greater than 10k - or am I missing something here?!
Thanks for your patience with a newbie like me

I agree, it is a good idea to track your investments with e.g. Excel (I do so).

 

[Baptiste Wicht]

Thanks. But of course the sum of "Nettoliquidität + Unrealisierter G&V" (if the latter is negative, as it is now) won't add up to the initial 10k I put in, because there were currency conversion fees applied and investment fees, right?
If so, then it's still good for me to keep track of how much I put in separately: like as of now, after putting 10k into VT, I will only make surplus when my "Nettoliquidität" will be greater than 10k - or am I missing something here?!
Thanks for your patience with a newbie like me

You are not missing anything here!

It all depends on the level of accuracy. There is nothing wrong with more tracking. If you want that extra level of accuracy, you can track it easily in Excel indeed!

 

[OxygeN]

Thank you guys - so my math is right A positive performance in % does not necessarily mean that I'm making surplus.