Investing 🔗

Goals

Grow more than 4% per year above inflation.

Pay less than 0.1% per year in fees.

Invest 25x my future yearly expenses.

What I currently do 🔗

Most of the money on ETFs. Some cash as emergency fund.

ETFs 🔗

All cells weighted equally inside each column, and all funds also equally weighted inside each cell.

How 🔗

Schwab and CapTrader (Interactive Brokers) for buying funds.

CapTrader (Interactive Brokers) for exchanging CHF to USD.

Buy monthly, fixed cost, target the desired proportion.

Why 🔗

Market cap funds in general provide diversification at low cost. Weighting by market cap invests a quantity of money proportional to the market value of each company / sector / country.

SCH* funds have low cost (low TER, low turnover, low bid/ask spread – and at Schwab also no buy/sell fees). The 3 funds together can be used to approximate VT at a lower cost, with the downside of having to manually rebalance (upside of being able to choose a different proportion), and owning fewer companies (~4k vs ~6k).

The downside of market cap weighting is that when a company (or sector, or country) is overpriced (e.g. during a bubble) it ends up buying more of it, and less of it when it is under priced.

For 50% of my investment, I choose to buy VT with world stocks.

For the other 50% of my investment, I choose to give equal weights to US, Developed (- US) and Emerging Markets. This currently means under weighting US and over weighting Emerging Markets vs the current market caps. This might avoid bubbles across funds but not inside each fund.

Past Allocations 🔗

With small cap companies 🔗

All cells weighted equally inside each column, and all funds also equally weighted inside each cell.

Owning funds tracking small companies reduces concentration and potentially increases returns, with the downside of increasing risk.

With fundamentally weighted ETFs 🔗

All 6 table cells equally weighted, and all pairs of funds also equally weighted inside each cell.

Fundamentally weighted funds (like FND*) weight independent of the price, using other factors like sales, cash flow and dividends/buybacks. In theory this buys more of the under priced companies and less of the over priced companies. The downside is that those funds have higher cost (higher TER, higher turnover, higher bid/ask spread).

Without small cap companies 🔗

With equal weights.

Without fundamentally weighted ETFs 🔗

With equal weights.

Without equal weights 🔗

With weights matching VT (i.e. more US and less Emerging Markets).

Alternatives 🔗

Posts

• JL Collins - Why your house is a terrible investment - Summary
• Banks Create Money To Facilitate Transactions - Example
• Mr. Money Mustache: The Shockingly Simple Math Behind Early Retirement - Summary