You say that now but as a young person with a decent income and no family or many responsibilities it's hard to even know where to start.
And I'm not even talking about what to invest in, I'm already confused at which platform/bank/whatever to do it through. The "meta", if you will. I just want to invest the 70% of my salary I don't need every month and not think about it for 40 years but how? Maybe an important detail, I'm from Switzerland, perhaps it's easier in the US with things like Vanguard.
Don't know about Switzerland, but most US brokers offer some kind of "target retirement date" fund, which automatically shifts from higher-risk assets to lower-risk as you approach retirement. VFIFX is one from Vanguard, for example. Pick one you like (just ask a coworker what they use, if you pick a big-name brokerage it really doesn't matter which one), shove your extra cash into it regularly, and forget about it. Then cross your fingers the market isn't actively crashing when you plan to retire (this is unlikely, but it does happen a couple times per century).
If you start to get into truly high wealth amounts (USD$500K+) you might consider hiring a wealth advisor, who can probably do better even after accounting for their fees.
> If you start to get into truly high wealth amounts (USD$500K+) you might consider hiring a wealth advisor
That's not nearly high enough for a "wealth advisor". Maybe a fee-only financial planner, but even then it's borderline.
Even when it crashes it's like 20% no? It's not actually that big of a deal.
The idea is that over a 40 year window that 20% (or more) crash is eventually going to rebound, so just sitting on the target retirement fund is going to do well over it's lifetime. As you get closer to retirement, and don't have the time to recover from the crash, the plan moves to safer investments.
Crashes can be a lot bigger than just 20%.
I’m sorry but 20% of a retirement fund is a lot of money.
It may be a lot of money but it shouldn't matter because you don't need all of it right away.
My understanding is that, if the market generally continues on the rate of return it's averaged throughout its history (that is, if you're not a doomer), then the single most important thing is showing up to play.
People who try to time the market or wait for a perfect time or pick the exact right blend of stocks, on average, don't do as well as people who pick a boring index or mutual fund and forget about it for 40 years.
> People who try to time the market
If you have doubts about the long-term __existence__ of the market, then investing in the first place necessitates "timing the market" since you'll need to determine when to sell before the panic sell-off which inevitably comes before the global minimum is reached.
Mind you, I'm not talking about figuring out whether or not to "hodl" through local minima. I'm talking about rolling into a different store of value (e.g., cattle, crops, ammunition) before the whole thing goes up in smoke.
If it goes up in smoke, you personally can't ever buy enough ammunition to matter. Who's gonna man all those guns?
This depends heavily on geolocation. Experiencing economic collapse in the Montana wildnerness would be very different from experiencing it in Washington DC.
I wasn't thinking of fighting off hordes or anything like that.
Ammunition can be used for barter, hunting, and self-defense. It can also be used as a tool to break locks, start fires, and send signals.
Yes, however: My father in law gave me some great advice: Pick a stock or two and put some small amount of your investments into it, like 1-5%. This makes the investing more fun. And he was very right, not the least of which because the stock I put $7K in exploded and ended up worth over $200K. ;-)
My BIL put money into Underarmor (he's an outdoors guy) and Electronic Arts (he's also a gamer), both of which have done good for him. My son put some money into Roblox (he's a gamer), and that's done well also.
Read "The Four Pillars of Investing". Basically index funds, diverse whole markets, leave it alone and watch it grow.
I did this at 22, and that seed money has grown a ton.
All the choices you have to make can be very daunting. I was very lucky to have a colleague at work who gave a talk at the right time in my life with some plausibly right choices.
In the UK I started out using https://www.charles-stanley-direct.co.uk/ and later moved to https://www.ii.co.uk/. I initially invested in https://www.vanguardinvestor.co.uk/investments/vanguard-life... which is a fund which is available on a bunch of platforms. These days I recommend https://www.vanguardinvestor.co.uk/ to some people as an easy and low fee way of getting started with Vanguard funds in the UK.
I don't know what the best trading platform options are in Switzerland - it looks like all of the ones I'm familiar with are not relevant to you.
The key thing is you want to minimise two types of fees: * Platform fees * Product fees
For example Charles Stanley Direct charge 0.3% platform fees, and https://www.vanguardinvestor.co.uk/ charges 0.15% platform fees.
Vanguard LifeStrategy® 100% Equity Fund charges 0.22%.
The bottom line is that there are lots of good choices, and the main thing is to make a choice and get started. You can always optimise/improve your choices later.
I'm also in Switzerland, currently my approach is to invest in Vanguard VOO (tracks the S&P500) via Interactive Brokers. There is a way to setup auto transfer and invest every month
As a caveat your money will be in dollars and in American companies, which might not be what you want, but it's worked for me well so far
Are you saving for retirement or buying property? Then start filling your 3rd pillar (Säule 3a) first because of the tax cut. Ideally in a low cost provider (viac/finpension), but the bank you already have probably has an offer too. It might be a bit more expensive than viac, but still much better than not investing. Stay away from 3rd pillar at insurance companies, they might be hard to cancel. Do yourself a favor and do this just for the tax cut.
If you max out the 3a, you can start of thinking investing elsewhere. IBKR is the cheapest to buy a US domiciled world ETF. But the UX is not super easy and you will have to fill all transactions manually in the tax report.
Neon with investments is another option I can recommend if you prefer a swiss company and a simple user interface. Fees are low if you set up a savings plan and pick one of the 0% ETFs
Thank you, that seems like reasonable advice!
Your bank probably has an investment platform, you can just use it, it doesn't matter. My portfolio is 70% XEQT 30% CASH.TO—don't bother with anything else.
Oh, that can be bad advice. It does matter a lot if the bank asks for high fees, which would be the case with all(?) German banks, and I'd be surprised if that's different in Switzerland.
Banks don't typically charge any fees for a self-directed account that holds primarily ETFs, beyond maybe a small trade fee or account fee(?) - which we would never pay in North America. Active management of either your account or the products you hold is where they stick it to you. Each product will have a management fee which you should check, but you'll likely avoid the big bank and insurance company products because they do no better than the market funds and take more in fees so the returns suck.
My bank also charges a trade fee which I think is bullshit, but at least it's a major bank. It's like $10 so doesn't matter all that much, not sure how much it would be for Switzerland, but you could just buy the stocks in larger batches if trades are expensive.
With the amount people usually trade $10 is a huge percentage. When you factor that in with the missed compound interest of that money you usually lose tens of thousands of dollars until retirement, likely more.
There is no need for a big bank here, in Europe. If one of those regulated companies goes bankrupt the etf is still yours and transferable to a different institution.
War in Europe is the remaining risk factor, but if that happens it won't matter anyway.
Not sure how it's like over in EU, but in Canada, at this point, I assume all fin tech startups are scam. Neo financial and wealth simple are definitely fucking scam. Major banks may suck but at least you get what you pay for.
Curious about your opinions on WealthSimple, if you can share. I got introduced to them when they bought out SimpleTax, and so far they've been pretty reasonable for investments.
They require a paid subscription to use USD. They claim to have customer support, but the button isn't actually working, it does nothing. At least they respond by email. That's all I found so far, but I haven't actually made any trades yet.
$10 may not feel like much, but it's the proportional costs that you have to figure out.
If that's e.g. for a monthly $1000 investment, it means 1% of your savings is lost in fees each time. That'll be 1% that's not going into savings. If you end up with a million by some time, that small fee will have cost you 1% of that, which is $10k.
"It's just a cup of coffee" -> "that's a 10 000$ cup of coffee". But if you only save 200 a month, that 5% is 200k you've lost by the end.
One percent is often considered a reasonable cost ratio, but it's definitely worth considering what the real numbers are for a given option.
- Your bank's platform will cost an arm and a leg; Interactive Brokers or Degiro are both available in Switzerland and you will save so much on fees (especially if you only buy and hold ETFs of which Degiro offers many with 0% fees) that it's the equivalent of faster returns on your money.
- There are many "getting started" guides available, I found Mister Money Mustache the most straightforward to my liking, but you're golden as long as you understand a couple of basics: 1. investing a high% of your income is more important than chasing returns (you seem to be there already), 2. don't trade, just buy the whole market (you mentioned Vanguard, they offer a "total market" ETF), 3. look for the lowest fees as long as you hold title to your shares (IB and Degiro do this ; eToro does not so if they sink, you're SOL), 4. don't time the market, just buy now and sit on it as it grows
For the plattforms, that also blocked me for a while. But it is easy now. You just get one account at a platform that offers a free broker account and supports buying the etf you want without extra fees.
Typical options in Europe: Trade Republic, scalable, Consors Bank.
Then the usual: Around 10K where you can access it directly, a small amount in an investment with percentage (scalable and trade republic both offer that, limit there is or was 50k), rest in one broad ETF like one that follows the FTSE all world (vanguard or invesco offer that, one is bigger, the other asks for less fees).
No affiliation, and I dont know whether being outside of the EU changes things. And yes, there is the risk that we are in a huge bubble now and it popping would at first significantly lower the money put into the etf. But you certainly do have access to vanguard etc.
Have a look now and at the latest this weekend you have this solved, hopefully forever.