[ITA] First time investing

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tobson
Posts: 2
Joined: Tue Mar 21, 2023 9:48 am

[ITA] First time investing

Post by tobson »

Residence in Italy.

Not going to move.

Currency: euro.

No debts.

Age: late 40s.

I won't have retirement money in the future.

I got money from donation/early inheritance (more or less, it's all i can count on for the future).
Money are in a bank account. High inflation in Italy right now.
No portfolio: i never invested before in my life. Lack of knowledge in the investment field. I'm trying to understand as much as possible: what i have learnt until now, brought me on this forum.
I'll appreciate any advice.
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tre3sori
Posts: 460
Joined: Wed Jul 24, 2019 3:13 am

Re: [ITA] First time investing

Post by tre3sori »

Hi tobson,
Start here: https://www.bogleheads.org/wiki/Getting ... _investors
Than read that as suggested: https://www.bogleheads.org/wiki/Boglehe ... _investors
Finally decide on asset allocation and instruments using this as a guide: https://www.bogleheads.org/wiki/EU_investing
That should provide enough material to get you started with actually investing your money.

A good core portfolio would be:
x% in a global stock ETF like Vanguard FTSE All-World ETF or iShares MSCI ACWI ETF
(100-x)% in a global bond ETF hedged to EUR like Vanguard Global Aggregate Bond ETF EUR Hegded or iShares Global Aggregate Bond ETF EUR Hedged.

Or the appropriate ETF from the Vanguard LifeStrategy x% Equity ETF series.

The percentage x% is to be determined by your own assessment of your risk tolerance and your return expectations.

A common choice for x% lies in the range from 50% to 80%.

:)
The information provided is intended to be entertaining. It is not to be construed as professional advice. Use it at your own risk.
Topic Author
tobson
Posts: 2
Joined: Tue Mar 21, 2023 9:48 am

Re: [ITA] First time investing

Post by tobson »

Thanks for the reply.
A single ETF like Vanguard LifeStrategy seems the easiest choice.
Is it a common choice to invest in just one ETF? Could you tell me about the % of profit and the expenses (buying and mantain) for such ETF? Not precise numbers of course, just something for me, a complete noobie, to have a rough idea.
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tre3sori
Posts: 460
Joined: Wed Jul 24, 2019 3:13 am

Re: [ITA] First time investing

Post by tre3sori »

tobson wrote: Wed Mar 22, 2023 6:01 am Thanks for the reply.
A single ETF like Vanguard LifeStrategy seems the easiest choice.
Is it a common choice to invest in just one ETF? Could you tell me about the % of profit and the expenses (buying and mantain) for such ETF? Not precise numbers of course, just something for me, a complete noobie, to have a rough idea.
Is it a common choice to invest in just one ETF? No. These kind of ActiveETFs that do rebalancing automatically are fairly new. So they did not have the time to become a common choice. (I guess the worst thing that could happen is, that the ETF gets closed because of low demand and you would have to pay capital gains taxes)
The TERs for LifeStrategy ETFs are 0.25%. When you buy and sell there will be bid-ask spreads in the range below 50€ per 100.000€. The xetra liquidity measure XLM gives the exact price for a round trip from money into the ETF and back into money (at least for the german stock exchange, don't know if there is something equivalent in Italy). There will be brokerage cost and exchange cost in the range of 5€ or so, IF you go with a broker that DOES NOT charge you a percentage fee on the money you want to invest. Per law the broker is obliged to give you a detailed overview of the cost of the transaction before you complete it. So if you have 10.000€ and a flat fee broker than it will cost you in the range of maybe 15€ to complete the transaction. The yearly TER of 0.25% will result in 25€ that you have to pay to the fund. You won't see these -0.25%/year. They are deduced within the fund. What will be the profit? That is looking into a crystal ball. Don't have any. There are educated guesses about the future nominal return of stocks and bonds. Here are some conservative estimates about the returns of a portfolio that consist of 60% global stocks and 40% global bonds (not to say you should choose that combination. When you are young and a little bit risk tolerant you should probably rather go with 80%/20% ...and here is also the drawback of such LifeStrategy ETFs: it is a strategy for life. If you want to change strategy, you would have to add a bond fund for example. A 2-Fund portfolio is easier to adjust in this respect. But you have to do the rebalancing yourself.)...ok back to return estimates: conservative nominal return estimates for global stocks 4-6% p.a., conservative estimates for the nominal return of global bonds 2-4% resulting in a combined return of 0.6 * (4-6)% + 0.4 * (2-4)% = 3.2 - 5.2%. For 10000€ that would be in the range of 320-520€ total return for the first year. You could use the formula "(initial investment) * (1 + (return as a percentage)/100)^years" to get a feeling how this will develop over time.
Hope you get a rough idea from that. :)
Last edited by tre3sori on Wed Mar 22, 2023 11:58 pm, edited 1 time in total.
The information provided is intended to be entertaining. It is not to be construed as professional advice. Use it at your own risk.
roger83x
Posts: 25
Joined: Mon Nov 07, 2022 3:55 pm

Re: [ITA] First time investing

Post by roger83x »

One of my pension funds result was -11,46% in 2022.

https://www.fondofonte.it/i-comparti-di ... /#dinamico

the other one had similar results (dec 22 - dec 21 = (19,586 - 22,331)/22,331*100 = -12,29% ):

https://www.cometafondo.it/quota/crescita#tab-2022

Lifestrategy 60/40 2022 result: -13,88%

https://www.justetf.com/en/etf-profile. ... 68#returns

It was not the fault of their managers - they reflect the market conditions.

Nobody knows what will happen.

This graphic makes me bearish (pessimist):

https://fred.stlouisfed.org/graph/?g=ZV ... rce=direct

It shows the market yield of US Treasuries - I imagine a fall in yields and a recession in the future, but I may be wrong.

I don't fully understand the implications of this other one, but it makes me think that not everything is cyclical:

https://fred.stlouisfed.org/series/RRPONTSYD

I made many errors in the past, so don't take my example for good: I am likely doing new mistakes.

For the liquidity part of my money, I have more than one bank account and I keep a few thousands EUR there. So, if a bank has an outage, I can use another. I don't keep too much money there because I don't think that the 100k€ guarantee on banking deposits will be honored if a major bank fails. I keep 12k€ on Libretto Postale (see https://buonielibretti.poste.it/offerta-supersmart.html ). I don't like too much the post office, but if the banking system fails, and if the stock exchange is suspended, maybe I can get back some money at the post office (while they oftern make it unconfortable to get your money back).

Then for the "safe" part of my portfolio I bought short-term (less than 2 years) EU government bonds (of highly-rated countries - Germany, France, Netherlands, Austria, Belgium).

For the "betting" part of my portfolio, I bought an all-durations US Treasuries EUR hedged ETF (XUTE - LU1399300455), and yesterday I swapped a BTP Italia with a long duration US Treasuries EUR hedged ETF (U10H - LU1407890976) - it is riskier than the other ETF - a riskier bet.

The bet is that the yields will decrease in the not too distant future, and that inflation will not eat all the expected gains. But the bet may be wrong.

Likely, now that I betted on the US, it will default :^)

I think that I will gradually switch to a 60/40 portfolio if there will be a market crash in equities.
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