You can find part 5 of the Stock Series by JL Collins here.
Notes from MP
These bankers and insurers with their bonuses and Porsches!
I can only agree with JL when he explains that the more complicated a product is, the more disadvantageous it is for the buyer — and the more advantageous it becomes for the vendor (in terms of the fees they rake in).
I experienced this when my Swiss insurer told me they had hired an investment specialist in order to be able to explain the financial mechanisms behind their 3rd pillar linked to life insurance.
The worst thing about this? When I started to scratch the surface with my questions of a novice passionate about personal finance, I realized that the so-called expert couldn’t even clearly explain his financial product to me!!!
You can read the details in this article where I explain how to close your 3rd pillar linked to life insurance (NEVER TAKE OUT THIS PRODUCT) as well as my personal experience with my insurance and mortgage company (LIKEWISE, NEVER TAKE OUT A MORTGAGE FROM AN INSURER!)
PS: if you were an insurer in another life (since repented haha), and you know about their financial incentives to sell their rubbish pillar 3a combined with life insurance, I’d be interested to know more!
Simplicity is great (and creates riches!)
I remember when I started out in the stock market in 2013, where I saw myself with an investment portfolio to maintain regularly… as if being active with my investments was going to make me more intelligent, or even more in control.
I spent (a lot of!) time reading and learning about the subject of the stock market, before ending up with my stock market portfolio in one sole ETF (well 3x, but 1x).
Hiking rather than having my eyes glued to a screen monitoring my ETFs and stocks in the stock market
And how can I put it…
Since I’ve been investing so simply (all my savings in VT), I’m so much more relaxed and I have the peace of mind to be able to go hiking at the weekend instead of having to look at the stock market every morning with a knot in my stomach!
Keeping your money in cash under your pillow is also a risk
Another point that I didn’t really understand before I became interested in personal finance.
If you leave your cash in an account (let’s say CHF 15'000), in 10 years this cash will no longer enable you to buy things currently worth CHF 15'000 but more like 12'000-14'000 Swiss francs.
And that is also a risk, like investing in the stock market also carries risks.
All this is to say: keeping cash in so-called “security” also carries this risk of losing purchasing power against inflation…
Bogleheads
Ah, the well-known Bogleheads strategy where you put your age in bonds and the rest in stocks.
I must say that for a few months now, I’ve been thinking about going in the same direction as JL who says, in sum, that while you’re in the wealth accumulation phase of your journey towards financial independence, then you should have everything in stocks. Period.
I’ve already talked about this in this previous article.
Especially as for Swiss investors, we can largely count on our 2nd pillar money for the compulsory part (that’s actually why I’ve never bought my hypothetical bond ETF).
I’m still planning a detailed article on my thoughts about this and my updated strategy for 2025. Patience.
Swiss bank for keeping your cash
If you’re new to this Swiss blog and you’re wondering which bank to use for holding your liquid assets that you want to keep in cash, I currently recommend this Swiss bank (it’s the one I use myself).
Photo credits: jlcollinsnh.com