How it works: Invest in shares with a few ETFs

Last update: 19.05.2018 21:21

The stock market can be somewhat confusing for beginners.
Over the last few decades, we and many investors have gained insights that provide guidance and make investing in shares easier.
We are guided by this.

Sleeping well is important, even when the stock markets are rumbling.

Who wants to worry if a sack of rice falls over in China, but the stock markets are still going crazy?
Returns always go hand in hand with risk, That is why a broad spread of risk is neededdiversification across different asset classes and markets.

Money should not be too much work.

Do you feel like constantly worrying about your money?
To think about whether horse A will run better than horse B?
Hardly, otherwise you might already have horses in the race. That’s why you need simplicity (less is more) and automatisms that do the work for you.
Und jeden Tag zu schauen, bringt bei einem langfristigen Horizont nur eins: Aufregung und unnützen Aufwand, denn morgen sieht die Welt wieder anders aus.

It should be cheap, because my money should work for me and not for others.

This is because the compound interest effect of the fees saved works for your assets. That’s why you need a low-cost custody account provider and simple products.

Now is good.

Even professionals are unable to find the right time to buy and sell over long periods of time.
When they can’t do that, you can do it easily, right? So choose an investment mix that suits you and stick to it.
Kümmere dich nicht um die Frage, ob jetzt oder doch lieber nächster Monat oder in einem Jahr der richtige Zeitpunkt ist, mit dem Geld anlegen anzufangen.
Jetzt ist ok.
Anpassen kannst du deinen Anlagemix jedes Mal, wenn du später weiteres Geld anlegst.
Dann investierst du einfach in die Anlageklasse / bzw. den Markt, in welchem du das Portfoliogewicht erhöhen möchtest.   

  Hence our tip:  With a savings plan on several low-cost ETFs, you can put these insights into practice. 

To start with, your investment mix for the equity component of your portfolio could look like this: 70% in a global ETF and 30% in an emerging markets ETF.
This allows you to participate in the growth opportunities of emerging markets.
With this simple equity mix, you are fairly well diversified in the equity asset class for a long-term investment at a very low cost.

The catch with the simplicity of two ETFs: Europe is underweighted as a region because the MSCI World is dominated by the US market as the largest capital market. You can change this with three ETFs by allocating your investment amount to 50% MSCI World + 20% MSCI Europe + 30% MSCI Emerging Markets. This results in roughly the following regional distribution: North America 32%, Europe 31%, Pacific region 7% and emerging markets 30%.
Within the European region, you can focus on a broad market investment (such as with an ETF on the MSCI Europe or Stoxx Europe 600).
If you want to focus on equities in the eurozone instead, choose an ETF on the MSCI EMU index (EMU stands for European Monetary Union), which comprises around 250 companies.
Alternatively, you can also take on more risk and potential returns by focusing on the 200 smallest of the 600 largest European companies; you can then choose an ETF on the Euro Stoxx Small Index.

In concrete terms, this can be implemented using the following ETFs as examples.
All of the following ETFs report their fund income to the Swiss Federal Tax Administration and, unless otherwise stated, are
both distributing and physically replicating or physically replicating with optimized sampling.   

Source: justetf.com / etfinfo.com, May  2018.
The overview is not a recommendation or invitation to buy individual products.