It is obvious from your posts that you want to be 100% Vanguard FTSE All-World. I am in a similar situation (German public servant) and it is precisely what I do. Of course the results might be different than in the past but with a paid off flat and your public pension you will be fine regardless. The 100% equity approach is maximum expected performance with maximum simplicity.Thanks so far for all the advice. Ok, I will be more specific:
I live in Germany and am a civil servant with life time employment. I have a very average middle class income but due to a simple life standard I can save 1000€ per month. I have no debts and live in my own small simple flat which is payed and about 15% of my net worth. I have not debts.
I love Vanguards All-World ETF and it's LifeStrategies, especially since different from the UK version, there is no home bias. Germany makes just 2% of the All-World ETF and I appreciate this, since all my income and future pension comes from the German government, the value of my flat depends on the German real estate market, my living costs depends on how Germanys economy is doing...
- I don't believe in REITs and don't want to own more real estate than my flat
- I believe that gold is better than all other commodities since the long term average profit is similar but while commodities are correlated to the stock markets, gold is not. But does this make gold a good long term investment? I think not, I only have something for diversification, but probably it's a bad idea on the long term. Gold does not produce anything, like art, bitcoin or tulip onions, it is a collectible, but the king of collectibles with a long history.... long story short, the best asset of an asset class who does not really convince me....
- I think I don't understand bonds enough. For me it is probably better to buy a broad bond ETF like the Global Aggregate Bond ETF, but what I don't like is that they biggest debtor present the biggest parts of the ETF.... different then market capitalization with equities, this does not sound very reasonable to me and scares me a bit to be honest.
An alternative to 100% equities could be the LifeStrategy 80 ETF for me. But is this to 20% save? I think not, I think the global aggregate bond is not a risk free investment, but also does not gain as much as the equities. Why do they do this in the LifeStrategies? I thought the non-equity part should be stable? Or can I assume that during most stock crashes the global aggregate bond will move more up while a shorter risk free bond etf will not?
If someone is interested, here is my experience:
I startet investing in 1999 with my first salary, bought blue chips Large Caps differnte countries, different industries, I did not sell during the 2001-2003 recession, but I sold 2008 when the market just started to recover, I managed to sell everything on the almost lowest point. The reason I chickened out was that I did believe it might be a systemic crises which could need 20 years to recover, like the recession in Japan. But you must know I had no fonds back then, fonds were expensive, my portfolio consisted of only 20 different companies. I used the remaining money to start paying my flat after it was payed I just piled up my savings on my current account... not very wise, but I was busy with life and did not want to bother myself with thinking about investments. But inflation was eating my money and I knew I had to go back into the market, when the corona crash came in 2020, I realized: "that's the moment, just buy any MSCI world fond...." (I did not now back then about ETF) but during this time I was in hospital and not allowed to leave. I thought, ok 2 days will not make a difference. As soon as I was out I had to create a new depot to be able the buy stocks.... today you can do that life over video camera.... but then only four years back it took so long, almost a week. When I finally was able to buy the crash was over, stock market totally recovered. I've learned it the hard way: "You must always be in the market!"
I believe in the efficiency of the markets and due to the today possibility to by thousands of companies from all over the world instead of 20 companies like I had back then, I believe that with enough patience you can go through every crash. I believe that today and with an all-world-etf I would not sell if there was a 50% drawdown, I would just regret not having much money left to buy....
Due to my age of 45, I could risk now to go in high in equities, maybe 100% and I would have time to go through a long recession, but if I wait another 10 years, I will not have the time for that, with age 65 I want to fall back to 50% stocks and 50% bonds.
Germany has a very strong social security net and many "emergencies" that would be a disaster in other countries are already covered. As a German public servant you won't die broke even if your stock investments perform poorly.
You might enjoy this short article: https://humbledollar.com/2021/10/my-total-portfolio/
Statistics: Posted by Bernmaster — Tue Sep 10, 2024 1:36 am — Replies 16 — Views 1146