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 🔗

Weighted equally.

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.

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.

Past Allocations 🔗

With more emerging markets 🔗

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

For 50% of my investment, I used to give equal weights to US, Developed (- US) and Emerging Markets. This meant under weighting US and over weighting Emerging Markets vs their market caps at the time. This might avoid bubbles across funds but not inside each fund.

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