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This is tactical asset allocation, so no b&h. I explain why in my book. The only position I held in b&h was real estate until recently. The latter historically offers fairly stable returns, so tactical allocation does not bring a big plus. On the other hand, it allows to reduce volatility. This is the reason why now all my PF is in tactical allocation, including real estate.
World ETF: this would be redundant and would therefore not help diversify the PF. A world ETF is made up of a very large majority of American big caps and the remaining bits and pieces are shared by the big caps of other developed countries. The correlation between the S&P 500 and VT is for example 0.96. In other words, it is the same thing…
The stocks/ETFs I currently have I either bought because I believe to future performance (e.g. ETF on renewable energies), either because the price has fallen sharply and I think that it will go back up at some point (example: Alibaba).
Be careful with beliefs 🙂 It doesn't always go the way you think. Or it can take much longer than expected. That's why I don't buy a falling knife, like Alibaba. More info in my book. It's better to base yourself on facts: what's happening with the data that is known today.
Hello,
Thank you for registering. For future messages regarding the PF, post directly in the members area of the forum. You have access to it.
Here are my answers:
for the target in % on the right, we are talking about the % of an asset compared to the total of the PF? So if my PF is at 10k and the target of the US stocks is at 12% (stocks and/or ETF), I must total 1200 balls for this asset?
Exact.
– when you say “lightened in action”: we just follow your sales positions (which may be out of sync)?
Exactly. I wouldn't make a purchase in that case anyway.
Regarding ETFs, example of CSSX5E at 1/10: so I do nothing here? I do not sell or buy? But which % of my PF should correspond to this asset then? 0%? So it is possible that I do not have any European ETF (or shares) in my PF?
Nothing to do, unless you were long on this index, in which case sell. And yes, that will make zero percent target, so no more ETF and for the stock that was still there I posted a change this morning.
– How to short an ETF on DeGiro?
You must have an Active or Trader account. If you have a Basic account, you can upgrade it under your trading settings. If you have a Custody account, this is not possible. You must create a new account.
– On my current PF, I have several stocks (and ETFs) currently in loss, what do you advise me? Keep them and wait until I am positive again or sell anyway?
It’s hard to answer like that… why did you buy them and are those reasons still valid?
Also, in order to easily manage my PF, do you have a tool that directly calculates the % of each asset or do you do this manually with Excel for example?
Excel!
Interactive Brokers is very good indeed. Be careful though because it seems that for residents of the European community the rules have changed because of Brexit (see Paul's comment here ). It's not very clear though: the Interactive Brokers page in Ireland, certainly mentions the modest 20,000 euros of coverage, but ALSO the American SIPC guarantee of 500,000 dollars. I wrote to IB to get more information. Waiting for a response for the moment.
Note that at Degiro, it is mentioned that the securities belong to the client, but they also mention these famous 20,000 euro limit… I find it quite opaque in Europe… In addition, you have to be wary of liquid assets which are only covered up to 100,000 euros.
In short, all this to tell you that for a small portfolio, I understand that you don't ask yourself this kind of question, but think about what it will be like when you have several hundred k. Not only are the guarantees not clear, but above all you can have all the guarantees in the world, when an organization goes bankrupt, it's guaranteed chaos anyway. If you have to live off your capital, you are much more comfortable with your assets distributed through several intermediaries.
It's a matter of peace of mind.
Hi Nicolas,
Welcome! A Belgian friend, it's always nice! Thank you for your message and your compliments.
Here are my answers to your questions:
my capital does not reach the 25k recommended in the book but I would still like to continue investing in stocks and small caps. Do you really advise me not to do it or is it feasible? I am the intrepid type and quite fond of risks but that is also why I sometimes have to be held back^^
Of course it is possible. This is just a tip. When you start with a small PF, it is good to get your bearings first with one or a few basic ETFs. This also avoids transaction fees that are too high compared to the size of the PF. However, since you are with Degiro, the fees remain reasonable, so you can of course get your hands dirty with a few stocks.
– I am on DeGiro as a broker and I noticed that many ETFs that you recommend in the book, especially on real estate or treasury bonds, are not listed there. Do you recommend me to use another broker or are other ETFs of this kind available on DeGiro?
Yes, as Degiro is European, they are subject to a stupid rule that only European ETFs are available there... Two-bit protectionism... Fortunately, we can always find replacement ETFs (see my post here). Sooner or later, you will also have to diversify your brokers anyway.
A+
Jerome
Additional clarification on US dividends:
_ at a Swiss broker it is 2×15% (Swiss and American tax)
_ at IB it is only 15% since obviously the Swiss withholding tax is not collected. On the other hand, we are taxed when declaring…Hi,
For FR (or other foreign country outside the USA):
– seeking reimbursement is indeed very complex, slow and does not bring much in
– it is therefore better as you have done via the flat-rate imputation which avoids double taxation
– the amount is not reimbursed but is deducted from the tax payable (as for the Swiss withholding tax)For the USA: the withholding tax must be split into two parts of 15% each in the declaration. 15% for the US tax authorities and 15% of additional withholding. The latter is recoverable and is deducted from the tax to be paid.
For UK: yes indeed but you will obviously be taxed on income, which ultimately does not change much. And then it would be a shame to close the door to other titles with potential for tax reasons which ultimately carry very little weight in the balance.
A +
Hi,
Not sure about 100% but in my opinion they are still taxed at source for foreign tax.
And as you say, not great in terms of volume.
I've never been very keen on these replications.Hi,
Thank you for your comment.
Here are my answers:
– Relying on a real return of 7% seems a bit ambitious to me. Especially since the more securities you have to part with to finance your annuity, the less return you will have. Personally, I calculate with a maximum of 5% per year (real).
Be careful not to confuse dividend yield and portfolio profitability. Profitability does not change, even when you sell securities (nor does the dividend yield in percent). The real profitability of 7% is that of the stock market on average over the long term. It is also the one I have had on my investments since 2010. Since the introduction of the determining PF (from 2020), I expect an increase in this annual profitability, to reach 16%. For the moment, it is lower, given the market conditions, but the PF is not performing so badly. I will soon be doing a review of the first half of the year, which is very rich in lessons!
To this day I have not found the person who can do this (be hyper versatile, diplomatic, know economics and accounting, have the entrepreneurial flair etc.). And I will add that for a sole shareholder like me, I would never really be "without worries".
Yes, you are right and it is a real problem. I know several entrepreneurs in the same situation as you.
– Broker: Historically, my stock PF is with Tradedirect from BCV. I find it a little behind compared to swissquote or others. But given my strategy, that's enough for me. And it's still a cantonal bank behind it... Personally, I avoid brokers abroad (freezing of assets in the event of a serious diplomatic problem, bankruptcy, etc.). Is anyone else with Tradedirect? The tax statement fees seem exaggerated to me (around 500 francs for 40-50 positions)
I am an old defector from BCV and e-sider (ancestor of tradedirect). I left in particular because of the fees. For buy & hold it can indeed work. And yes, 500 bucks for a tax statement is theft. Even Postfinance is cheaper (100 bucks).
– French stocks: I have some nice French dividend stocks (total, sanofi, danone, bouygue etc). But after my calculations, the French withholding tax of 30% is purely lost. Right? These positions are worth 5000-8000 EUR each.
Lost, not quite. Either you apply for reimbursement from the French State, but it is a complicated, slow procedure and you only get a small amount, or, much simpler, you ask for a flat-rate deduction on half of the amount, via your annual tax (the other half is already withheld by the Swiss tax authorities). It is much simpler and it prevents you from being taxed twice. The two amounts withheld at source (Swiss and French part) are then deducted from what you owe on your annual tax.
Courage to those who will have to get up tomorrow morning (including me)
I will be united, I also stand up for my kids 😉
Hello and welcome,
Here are some links that may provide answers:
Thank you Yakari for this valuable information. It confirms what I thought intuitively, without going into as much detail as you did. It's nice of you to share your conclusions, in any case, and it reinforces my choice. I'll have to see if there are other avenues to explore.
Hi,
Apparently it's a newly listed company with negative momentum and losses.
So it's a pure gamble on the future. I'm not saying you can't make money with it, but you can also lose a lot, and that's more of a lottery than an investment.
At least at this stage.
A++
Hi
Indeed, there are several red flags:
– high market level as rarely in the past (cf. PE Schiller Ratio And Buffet Ratio)
– threat of inflation (already very present in the USA), of rising rates and unemployment (recently rising in the USA) => risk of stagflation.
However, it is always difficult to make sound predictions. The market can still rise for a long time before falling, or it can collapse tomorrow.
The simplest in context, and as always, is:
- of diversify, not only the actions, but Above all asset classes
– to buy at a good price, and to sell off speculative stocks, which are almost all stocks, except in Japan.
– to adopt a capital protection strategy, by limiting losses.
A+
Jerome
There are two payment options at IB, either to a foreign IBAN or to a Swiss IBAN.
It is possible that from ZAC you use the Swiss IBAN. Obviously, from Swissquote you use the foreign IBAN.
Hi,
I don't have a Swissquote account, so it's difficult for me to answer you.
Can you tell us a bit more? When does the blocking happen? Do you receive an error message? To which IB account do you transfer the funds (Swiss or foreign IBAN)? Is the problem only when transferring dollars or also in CHF?
Thanks for sharing. I am always wary of bankers' opinions, for the simple reason that they have obvious conflicts of interest, depending on the investments they are involved in. So, when it comes to an opinion about their own bank, I am even more wary!
That being said, I find the elements you cite surprisingly quite neutral. They explain at least part of the negative pressure on the share price. I still think, however, that the momentum is not optimal and that it is better to let this negative spiral settle down before considering entering it.
