I have said it before and I will say it again. I was spared from losses in the 2020 coronavirus pandemic induced market crash. As noted here and here. Short summary: I was in the middle of a broker switch from VZ Vermögenszentrum to VIAC, when the market started to go down. It was complete luck that I held everything in cash at that point and was able to hold the money back, before VIAC automatically invested according to the chosen strategy.
During 2019 the overall stock markets rallied, I got greedy and blinded by the profits and thought it would be a good idea to put all of my 3a account money in stocks only. The reason why I switched bank in the first place, was because VZ “only” allows 80% of the balance to be in stocks.
Make a Plan
After speaking with a friend about diversification and reducing risk across asset classes, he suggested the following website: https://portfoliocharts.com
The author of portfolio charts (Tyler, Excel Pro and mechanical engineer) offers some cool tools to stress-test several different portfolios and scenarios over time. After playing around for a little bit, I came to the following conclusion for our 3a pillar account:
- We have a long time horizon and can ride out a lot of market volatility (→ a bit more stock)
- We own a large portion of our house, which automatically diversifies overall exposure in terms of asset classes (→ no need for real-estate ETF’s)
- Of the illiquid accounts (pension account, house and 3a pillar) only the 3a pillar has the flexibility to let me choose the strategy (→ choose a sustainable risk-balanced strategy for the 3a pillar account!)
New Strategy starting May 2020
For the 3a pillar account we decided for the following distribution:
- 20% Emerging Markets
- 15% Global Markets
- 10% Swiss Stock Market
- 10% US Stock Market
- 10% European Stock Market
- 15% Swiss Bonds
- 10% Global Bonds
- 5% Gold
- 5% Cash
Greed is dangerous
Greed is a very dangerous thing. It clouded my judgement and blindsided me from the dangers of being to overexposed in one asset class. Though the markets bounced back fairly quickly from the shock to 2018 levels (at time of writing) it sure gave me the needed wake-up call to reconsider my strategy.
The greedy bring ruin to their householdsProverbs 15:27a
Just as I outlined in my personal mission statement, “… I want to be a good steward of the resources entrusted in me… “, that also means being wise ant thoughtful of how it is invested!
Here a summary of the new strategy:
I switched to VIAC initially, because I was frustrated that VZ Vermögenszentrum. I have come to really like the VIAC platform. Not only is it low on fees, it is also super intuitive and easy to use. I have outlined how to open a VIAC account in this post: http://www.swisspersonalfinance.com/thats-it-i-am-switching-to-viac
If you want a more comprehensive guide, check out the link to a fellow Switzerland-based blogger Investing Hero: https://investinghero.ch/viac-review-best-3rd-pillar-in-switzerland
Either way if you choose to go with VIAC here are some codes you can use that will waive the administration fee on your first 500 CHF (it will do the same for me too 😀):
Give me some feedback
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