{"id":8732,"date":"2020-03-26T22:31:23","date_gmt":"2020-03-26T21:31:23","guid":{"rendered":"https:\/\/www.smolio.ch\/wissen\/corona-and-shares-everything-you-need-to-know\/"},"modified":"2024-12-01T15:28:28","modified_gmt":"2024-12-01T14:28:28","slug":"corona-and-shares-everything-you-need-to-know","status":"publish","type":"post","link":"https:\/\/www.smolio.ch\/en\/wissen\/corona-and-shares-everything-you-need-to-know\/","title":{"rendered":"Corona and shares: everything you need to know"},"content":{"rendered":"Lesedauer<\/span> 7<\/span> Minuten<\/span><\/span>\n

Many people are currently dealing with coronavirus and shares, as we can see from the questions we are receiving.\nWhat should I do with my shares now?\nShould I buy or sell?\nWhat does it mean for my 3rd pillar?\nWe provide answers to the most frequently asked questions. <\/span><\/p>\n\n\n\n

What does the coronavirus mean for the stock market in the near future?<\/span><\/h2><\/div>\n\n

The future development of the stock market depends on which opinion prevails on the market on two questions.\nFirstly, how quickly can economic life, which is currently severely impaired, return to normal?\nSecondly, how well can the various government and central bank aid programs limit bankruptcies and unemployment? <\/span><\/p>\n\n

The market currently expects that there will be a “<\/span>U-turn”. in growth. In other words, a longer economic dip followed by a recovery in the fourth quarter of 2020. As the number of cases in Europe and the US will continue to rise, fluctuations on the market will remain high. Accordingly, share prices will probably continue to <\/span>\n obsi and nizi<\/span>\n<\/a> go. <\/span> <\/p>\n\n

Experts agree that an economic recession is coming. Nobody knows how long it will last. Depending on how long the recession lasts, the markets may well fall even further. Or they could soon rise again, because on the stock market the rule is “no bells are rung to get in”. <\/span><\/p>\n\n

Every day there is more bad news about Corona and shares are falling daily. What should I do? <\/span><\/h2><\/div>\n\n

Don’t let the market fluctuations or the barrage of bad news upset you now. You bought your investments with a long-term horizon (7-10 years and more). From 1926 to 2018, you have always achieved a positive total return with Swiss equities over any investment period of more than 13 years. You can see this from the <\/span>Yield triangle<\/span><\/a> for the Swiss Market Index. From the beginning of 1926 to the end of 2018, the Swiss equity market gained 7.6 % on average. Even when investing in the first year of a sharply falling market, passive investors in Swiss equities were able to achieve an average annual return of 3.73 % over a 7-year period. <\/span><\/p>\n\n

Corona and shares are compatible, because as things stand today, corona will not pose a threat to the existence of a relevant number of companies around the world.<\/span><\/p>\n\n

Risk appetite and risk tolerance<\/span><\/h2><\/div>\n\n

If you can’t deal with the fluctuations mentally (anymore), then your risk-taking obviously doesn’t match your actual willingness or ability to take risks.\nSorry, you’ve taken your mouth too full. <\/span><\/p>\n\n

You lose <\/span>\n more <\/span>\n<\/i> More money than you can afford. “Afford” has two meanings here: You can afford <\/span>mental<\/span><\/i> You can’t afford it, it stresses you out too much. Then you’re too much of a risk taker. Or you can’t afford <\/span>financial<\/span><\/i> You can’t afford (any longer) for prices to fall, you need the money in the foreseeable future. Then you are taking too much risk in terms of risk-bearing capacity. If one of the two reasons applies, you have made a mistake in your asset allocation. You should therefore consider whether you need to adjust your asset allocation<\/a>. Sell now? We still wouldn’t do that. <\/span><\/p>\n\n

Prices are falling.\nEveryone is selling.\nShould I sell too? <\/span><\/h2><\/div>\n\n

Keep your head down, no. Corona and shares don’t mix, because you’ve set up your investment portfolio for the long term. That’s why you should keep a steady hand now. If you sell now, you will probably realize a loss compared to when you bought. If you don’t sell your investments, they will only be worth less, but you won’t have made a loss yet. Therefore <\/span>“buy and hold until you’re old<\/strong>“. <\/span> <\/p>\n\n

So just wait<\/a> until the situation<\/span> has <\/span>calmed down again.<\/span> “Gambling back and forth” and stressing out every day with a look at your portfolio won’t help you.<\/span><\/p>\n\n

Should I stop my ETF savings plan?<\/span><\/h2><\/div>\n\n

No, you’re getting a lot for your money right now. The savings plan will continue to run automatically. Regardless of whether it’s securities for pillar 3a<\/a> or in the free private pension plan pillar 3b. Because you are now getting much MORE for your money. <\/span><\/p>\n\n

Should I start with an ETF savings plan now?<\/span><\/h2><\/div>\n\n

It’s best to listen to your gut feeling and be pragmatic. Don’t feel quite right? Then wait a little longer until the situation is clearer again. Your gut feeling will now give you a good assessment of whether your portfolio matches your risk appetite<\/a>. And in any case, you should only invest as much money as you can really spare each month. If you start with a savings plan now, you won’t have much to start with. Even if the stock market continues to fall, you won’t lose much money. <\/span><\/p>\n\n

In our own experience, crashes like this are good long-term buying opportunities. With a savings plan, you can benefit from the average cost effect if you follow it through consistently and over the long term. Coronavirus and shares play into each other’s hands so well. <\/span><\/p>\n\n

When is the best time to buy?<\/span><\/h2>\n\n

We are not clairvoyants. You never find the absolute low point to buy and you didn’t sell at the high point, did you? Don’t worry, even professionals can’t time the market<\/strong>. There is a lot of uncertainty on the market at the moment. That’s why prices are fluctuating wildly. The timing risk is correspondingly high. The maxim is therefore: time not timing. If you want to invest for the long term, the best time to start<\/a> is always NOW. Because you make your returns over a long investment horizon and not by choosing the right time to start. As a young person, you don’t need to worry so much about the coronavirus crash and the right time to start. Even if you don’t catch the low point (which is quite likely): We think you can sit it out with your long investment horizon. And it’s also true that the majority opinion on the stock market is almost always wrong. Corona and retirement provision? Now could be a unique opportunity for your private pension provision. <\/span><\/p>\n\n

Because in all kinds of crises, it pays to “be greedy when others are fearful” (Warren Buffett), or to “pick up the material that the shaky hands give away<\/a>” (Andr\u00e9 Kostolany). After all, how intensely the market reacts to good or bad news depends solely on whether securities are in the hands of the hard-boiled or the shaky. Money, thought, patience – and of course luck – is what separates the hard-headed from the shaky. Investors follow the Fear & Greed Cycle<\/a>. <\/span><\/p>\n\n

Should I buy now or will it be even cheaper?<\/span><\/h2><\/div>\n\n

At the moment (for various reasons) more people want to get rid of their investments than are prepared to buy. This is why the price (=price) is falling on the markets. Basically, the value of a company is determined by its expected future profits. How much one is prepared to pay for future profits is a question of the valuation level on the market. The price\/earnings ratio (P\/E ratio) expresses this at the level of an individual company; the price\/earnings ratio smoothed over 10 years and adjusted for inflation (Shiller CAPE) is a further development of this. You currently have to pay much less for future profits than you did 3 months ago. Many studies<\/a> show that those stock markets that are attractively valued according to the cyclically adjusted price\/earnings ratio (Shiller CAPE) have the greatest long-term return potential. <\/span><\/p>\n\n

According to Shiller-CAPE, many markets<\/a> are currently already favorably valued<\/a>. However, it is impossible to predict today whether a V, U or L scenario will occur in the coming months and what impact this will have on valuation levels. In the long term, the current level probably offers a wonderful opportunity for people who are still building up their retirement provision to buy assets much more cheaply now. <\/span><\/p>\n\n

Which shares should I buy now?<\/span><\/h2><\/div>\n\n

Even though it may be tempting in view of the substantial price declines of many stocks (30-50%), we would<\/span> leave<\/span>the purchase of individual stocks (<\/span>“stock picking”) to professionals and instead focus on entire markets with ETFs<\/a>.<\/span><\/p>\n\n

I have employee shares. What should I do? <\/span><\/h2><\/div>\n\n

Oops. Various shares in large companies have fallen by more than 50 %. We hope that your employer’s shares don’t represent a cluster risk in your investment portfolio? Because despite all your loyalty to your company, you shouldn’t make your salary and your assets dependent on the performance of a company. The proportion should only be so high that you can cope with a two-thirds (66%) fall in the value of these shares without ruining your retirement provision. We generally recommend the diversification rule: <\/span>“Don’t put all eggs in one basket<\/strong>“.<\/span><\/p>\n\n

Corona and shares: what happens with AHV, pension fund and pillar 3a?<\/span><\/h2><\/div>\n\n

Your retirement provision consists of 3 pillars<\/a>. The first pillar, together with the AHV, is primarily a redistribution machine: what comes in goes straight back out again and there is a certain liquidity buffer for a few months. The corresponding AHV equalization fund compenswiss holds around \u00bc of its assets in equities<\/a>, which are currently being revalued. The revaluation does not initially cause any problems for you, as AHV deficits are compensated by the federal government. <\/span><\/p>\n\n

In the 2nd pillar, your pension fund holds your retirement assets<\/a> in various asset classes. According to the latest pension fund study as at the end of 2018<\/a>, around 30% of these are invested in equities, 25% in real estate, 31% in bonds, 6% in cash and the rest in other assets. <\/span><\/p>\n\n

Because prices have fallen, the pension fund has earned less on your retirement assets<\/a>. That’s why you will almost certainly see a lower return on the extra-mandatory portion ( <\/span>“Age credit<\/span>“). As the pension fund has to pay the BVG minimum<\/a> interest rate, the Federal Council could also lower this in 2020. <\/span><\/p>\n\n

In pillar 3a, the consequences of the revaluation depend on the 3a product<\/a> you choose. With a 3a savings account, you are not affected. With a securities solution in pillar 3a, you have a book loss; with a 3a insurance solution, you are affected by the revaluation depending on whether you have chosen a savings account or a fund solution. <\/span><\/p>\n\n

Summary<\/h2>\n\n

Nobody knows the future. Not us, not you. As before, we advise against speculation and gambling (in, out with individual stocks, market timing). Because on the stock market, “time not timing” applies: a long investment horizon is what counts for returns, not the right time to get in. <\/span><\/p>\n\n

Corona or no corona – the same applies to corona and shares: stay tuned. Humbly accept “I know that I know nothing” and stick to your plan: invest money safely and gradually<\/a>. And if you and your gut feeling feel comfortable with it, you’ll get a lot more for your money at much lower prices. <\/span><\/p>\n\n