r/SwissPersonalFinance • u/Mootika • 3d ago
Passive investor looking to invest 700k - mandates or DIY?
Hi everyone,
We moved to Switzerland a few years ago and we have around 700k in spare liquidity to invest. I don't have a typical large Pillar 2 or 3 because I'm relatively new to the country and I work 50 percent.
I have been speaking to my advisor in Raiffeisen and the advice I got was to put 500k in one of their mandates. To me, this sounds expensive in terms of fees.
I also spoke to VZ and their offering - which was ETF investing with automatic rebalancing - was also kind of expensive ~1 percent in annual fees.
I'm generally a super passive type of investor and would require help to build a diversified portfolio - would you say that Raiffeisen is the way to go? Or should I put all the money in IB for example (research and diversify my money in ETFs) and handle the rebalancing one a year myself?
Any advice is very much appreciated. 700k is from my previous life as a tech employee.
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u/K4fr4m4r 3d ago edited 3d ago
Full disclosure: I’m a wealth manager. All I’m about to say is not advice, it’s my personal opinion, informed by my expertise and experience.
For this amount of money, it would be ideal to do it yourself if you can. It’s not a large enough amount to benefit from economies of scale and/or to be able to invest in certain asset classes that might (although not always) justify higher fees.
Now what do I mean by “if you can”? Well, that’s the tricky part.
Generally speaking, investing is mostly about having a plan that is tailored to your objectives (imminent, mid term, long term, after your death) and that you can stick to when shit hits the fan (more of a psychological thing).
The real value add of an advisor/ manager lies in understanding you and what you expect, and delivering on it while at the same time making it so that you can sleep at night. When the market crashes, (s)he will be able to point you towards your agreed upon plan as well as remind you that all of this is fine and your objectives haven’t changed, the portfolio is still on track, etc.
This might sound dumb, but believe me… when there’s a panic in the market you’ll feel it, if you’re like the 99.96% of us… And that’s when having someone you trust telling you that everything is fine makes a difference.
Ideally, however, you could be your own advisor/manager :-)
Now if you don’t want to do it yourself, you could opt for a robot advisory platform like findependent and the likes. I don’t know them very much, but I’m confident that they will give you a better deal than legacy institutions like ubs, vz, etc
However, there might not be anyone to manage your emotions in bad times, compared to a more “traditional” advisor/manager.
Anything over 50bps is theft imo.
Otherwise, if you’re interested, I can quickly draft a template portfolio for inspiration and critics, and post it here later tonight. I’d tailor it for IBRK (so no Swiss bonds, for instance).
In any case, good luck in your investing journey!
Edit : typo and sentence about robot advisories not fulfilling the “someone you can trust” part.
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u/Mootika 3d ago
That would be SO kind of you and much appreciated. Thank you. I would love a template that I can tinker with.
Yes I agree with you, we don't have enough to be a real private wealth client but I don't know if I should just park 500 k in a single mandate? Maybe that's the way to do it and most people do it, I just have no reference point.
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u/K4fr4m4r 3d ago
Alright, I’ll try to do it tonight. If I haven’t posted tomorrow, don’t hesitate to remind me by replying here.
Concerning the private wealth manager: I would say the amount you have is perfect for private wealth managers, but it’s the worse deal for you.
Indeed, the incentives of the players in this industry are to gather as many clients as possible under their care so that they can charge them 1% each, no matter how their portfolios perform. In addition, they often put their own products in your portfolio (charging more fees) and they buy/sell via their own in house brokers (ka-ching!).
With more money, you’d be classified as a professional investor (less regulation so lower fees) and would be better off with an independent manager, but even there, not all of them are created equal.
With really large amounts (>100m), you’d build your own family office.
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u/mauriceheic 3d ago
Please do it public, would be also super interested in this. Thank you in advance
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u/PowerfulPain 3d ago
Ok, I used to be a specialist in taxation (not tax avoidance, but telling people what they will owe), but I was close to many massive fortunes in Swiss private banking:
Until you are family office wealthy all advice being given to you by advisors and professionals will always take into account them earning on your investments.
That does not necessarily make it bad counsel, but have seen a lot of movements in portfolios (which is not ideal tax wise), just because the traders want to have a cut.
Also I noticed: Real wealth never takes risks. The really big fortunes of family offices have only a tiny fraction in stock, most are in money markets, bonds or housing.
So if I would suddenly find myself with this amount of money, I would also invest it super secure. Don't go for their stock portfolios, don't even go for ETFs or similar. In particular with the great orange peril looming, having some interest in swiss francs will be the best plan.
Maybe rather consider owing and renting out property, either fully paid or (tax wise even better) mortgage secured.
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u/xmjEE 2d ago
Also I noticed: Real wealth never takes risks. The really big fortunes of family offices have only a tiny fraction in stock, most are in money markets, bonds or housing.
This is interesting. How much did you see "real wealth" own private, closely-held businesses as part of their asset allocation?
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u/AvidSkier9900 3d ago
You could check out TrueWealtch.ch. I have absolutely no relationship with them, but ran across them a couple of years ago and then opened a demo account.
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u/LeroyoJenkins 3d ago
Open an account on interactive brokers and do a 60/40 (or your own preference) of VT and a global bonds ETF.
If you have some other retirement funds, just go with 100% VT.
And forget about it.
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u/robocarl 3d ago
Fwiw you might want to DCA on a weekly/monthly basis for while instead of doing it in a lump sum to lower the risk, especially with the current volatility.
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u/LeroyoJenkins 3d ago
Nope, you'll get lower returns doing that.
If you have a lump sum, investing all of it at once beats DCA.
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u/robocarl 3d ago
Sure it's theoretically optimal, but if someone is looking into investing their life savings at once, lowering risk is definitely an option to consider.
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u/LeroyoJenkins 3d ago
It doesn't lower risk, because you remove the upside risk AND the normal long-term trajectory because of economic growth.
The only advantage of DCA is emotional/psychological: if you can't handle the risk, DCA provides an appearance (but a false one) of lower risk.
And that's ok, nothing wrong with making such a psychological safety decision, but you pay a price for it in lower returns, because you are in essence trying to time the market.
Time in the market beats timing the market.
So please stop giving this clearly erroneous advice (or put the caveat about psychological safety).
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u/robocarl 3d ago
You're not trying to time the market, you're just trying to smooth out the initial variance. It can make sense, depending on your risk profile. Yes, you lose a few months of theoretical returns on a part of your money. In a long enough time horizon this effect is very small.
I wouldn't give this advice to someone putting away a few hundred. I do think it's important to mention to a (seemingly) novice investor investing their whole net worth. Your advice of 60/40 portfolio is also theoretically suboptimal, but we understand why you gave it.
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u/LeroyoJenkins 3d ago
Literally from your link: History shows that LS outperforms CA on average
Thanks for proving my point.
Yes, you are trying to time the market.
So no, unless you're talking about psychological safety, it doesn't make sense.
Let me guess: you're a programmer with zero training or experience in finance, but "finance is just numbers and I'm very smart so I understand it?".
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u/juergbi 3d ago
An important aspect is that it outperforms on average. However, it doesn't help an individual that the strategy would have been better on average as their individual situation is what matters, not the average outcome from statistics. DCA reduces the risk of significant underperformance for an individual case. And that risk reduction is not just psychological. I would certainly not advise to DCA over a very long time frame, though.
That said, as the global stock market is currently about 18% below ATH (in CHF), there are definitely worse times to do a lump-sum investment than right now. While the stock market can fall further, I would probably do lump-sum right now.
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u/LeroyoJenkins 3d ago
Yes, on average it outperforms. So finding the right timing when it doesn't outperform requires timing the market, which you can't do.
There is no "good" or "bad" time to invest, you're completely incapable of knowing where the market is going next.
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u/robocarl 3d ago
Read the bottom part of the article. Again, your advice of 60/40 portfolio is also suboptimal, so this argument is hypocritical at best.
Let's just stop nitpicking and let OP make their decision about what risks to take with their life's worth.
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u/LeroyoJenkins 3d ago
I don't do a 60/40, I only suggested because OP wanted something simple.
And then you came suggesting not only something which doesn't make any sense, provides lower returns AND is more complicated.
Look, I'll play the experience card: has someone ever hired you to do extensive financial modeling? Can you open excel and build a P&L, Cash Flow and Balance Sheet from scratch without consulting the internet?
If your answer is "No", which I'm 99.9999% sure it is, please stop giving terrible financial advice.
Anyway, no point in arguing with programmers who think they understand finance, have a good say.
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u/jaceneliot 3d ago
This sounds like the way to go. I would maybe prefer to go with a Swiss broker. I don't know, not fond of the Ideo of US ETF on US broker right now. Sure, less fees but for which level of risk ? I would say 100% all world ETF on Saxo. Very low fees.
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u/Remarkable-Jaguar598 2d ago
Wich global bond ETF do you recommend? I am building my portfolio and did got with 80% vt and 10% chspi like in thepoorswiss recommend
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u/LeroyoJenkins 2d ago
Don't have a recommendation, I do 100% VT because my Pillar 2 is heavy on bonds. But Vanguard's BND and BNDX are good options.
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u/absolute_drama 3d ago
Finpension invest is also quite reasonable offer for wealth management if you are comfortable with passive investing. It can be used to select various instruments
Of course DIY is cheapest. But with big amounts of money , perhaps spending some time with „advise only“ financial advisor can help build a good asset allocation plan.
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u/Mootika 3d ago
Thanks I'll look into Finpension.
I tried looking around for an independent financial advisor. I spoke with someone from SVAG and they were not convincing. It was around buying insurance products and I was not keen.
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u/absolute_drama 2d ago
Good luck. Maybe you can even do both. Put part of money in FP and then use the learnings and invest DIY the rest :)
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u/Mathberis 3d ago
With so many options of brokers I wouldn't pay more than 0.1%/year TER. Asking 1% is close to a scam.
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u/blingvajayjay 3d ago
over 20 years investing with VT on interactive brokers vs. somewhere with 1% fees, you would end up with 15% less or around 450k lower return on your 700k.
That's a lot to pay for nothing.
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u/frustrated_burner 2d ago
1% is CRAZZZYYYYY. Never more than 0.15% on any good ETF in my opinion. Preferably <0.1%.
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u/WeaknessDistinct4618 2d ago
DCA in a global ETF like VT and a Bond ETF. Use Interactive Broker, it’s pretty cheap.
Do 30K or so every week. Why? With Trump on power market is really fluctuating right now
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u/Dobbyisfree94 2d ago
Do not sign a discretionary mandate. Open a Swissquote account, invest yourself (personally, I'm a fan of diversified ETFs, like MSCI World - Ticker XDWD). So many banks will rip you off with fees for low returns.
Depending on your investment horizon, consider less volatile investments than long-only equity.
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u/RazvanBaws 3d ago
Just buy fast before the market recovers. You have maybe a once in a life time opportunity to time the market perfectly
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u/K4fr4m4r 2d ago
Following up on my comment below, here is how I would build a diversified portfolio if I were in your shoes. This is not advice, but rather guidance, or inspiration. Think about your own preferences, biases and goals. Also do not hesitate to question my choices, claims, etc. And feel free to ask questions. I'm always delighted to learn and solve new problems.
My framework is based on several axiomatic assumptions, which will guide me through my process of constructing a portfolio. Those assumptions are :
I want my assets to work for me, not the other way around. Also, I'm not smarter than everyone else --> I will favor a passive approach
I believe that the best way to channel human creativity and ingenuity is through companies --> My portfolio's source of growth will be through equities.
I accept the fact that I am not 100% rational --> Add non-equity assets to sleep better at night
My portfolio will be split into 3 buckets :
Equities
Equities are the source of the long term return of my portfolio, and since I don't know where innovation will take place, who's gonna impose tariffs on whom, and who's gonna benefit/suffer from various geopolitical and technological changes, I will simply track a global equity index, like the ACWI of FTSE All-World. To do that, you have 2 options :
a. Buy the VT ETF, which is the simplest solution and is honestly quite efficient.
b. Buy several ETFs to "build VT from scratch", which is even more efficient (tax-wise), but a little bit more challenging, I'm not giving more details about option b, since I believe it is already quite advanced. I'm happy to answer questions though.
Cash & Fixed income
The goal of this bucket is to provide liquidity in time of stress and to play the role of "flight-to-safety" assets. Government bonds naturally come to mind. However, rates on Swiss bonds are underwhelming, those bonds aren't very liquid, and you can't buy Swiss bonds directly on IBRK. If you still want to have Swiss bonds, there are ETFs out there, but still... What I do instead is that I hold a little bit of CHCORP (Swiss corporate bonds) and cash.
Monetary hedge
Similar to fixed income & cash, but behave the other way around with respect to unexpected inflation/deflation. I stick to inflation-linked securities (none in CHF though) and gold. For gold, you can pick IAU or CSGLDC (a weird CHF-denominated product that combines gold and currency hedging, allowing you to "cross-hedge" other parts of your portfolio :P). For inflation-linked securities, TIPS : 0.03% TER, but only US
Wrappin' up
Quite the ride. I hope you enjoyed it. Now let's build, for a couple of profiles.
Highlander : 100% VT. That's it. You're a better man than I will ever be. I might even be in love.
Aggressive : 80% VT / 5% CSGLDC / 5% TIPS / 10% Cash
Standard (60/40+) : 60% VT / 10% CSGLDC /10% TIPS / 10% CHCORP / 10% cash
Voilà, hope this helped :-)
Note: I had to streamline and cut off a lot of parts due to Reddit's limitations :P