Help a 22-year old Dutch student build a lazy portfolio

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NYSE:JST
Posts: 3
Joined: Mon Jan 28, 2013 10:43 am

Help a 22-year old Dutch student build a lazy portfolio

Post by NYSE:JST »

About me:

I'm a 22 year old Master in Finance student from the Netherlands and will be in college for at least another full year. I have no income, but also very little expenses as I'm lucky enough to have my parents pay for tuition and rent. I do have about €9500 in savings and want to invest €3000 in a two or three fund index portfolio. The remaining money I want to keep in a savings/checking account (except for €500 invested in the student investment club I am the president of) because I need it to pay for all of my expenses until I find a job and start to earn an income.

Investment plan:

Apart from €500 invested through my student investment club I have no money invested. I want to invest €3000 in a two- or three-fund index portfolio to keep transaction costs when depositing/rebalancing/withdrawing to a minimum. I plan to hold this portfolio for the very long term. I've decided to buy only ETF's that reinvest dividends and trade in euros on European exchanges. I plan to allocate 80% to equity and 20% to bonds. For the bond portion of my portfolio I want to buy a Eurozone Sovereigns index ETF because I don’t want any foreign currency exposure here. For the equity portion I want to use either a global stock index ETF or a combination of a global stock index ETF and a Europe stock index ETF so I can increase the ratio of European/International stocks.

ETF picks:

I have identified several ETF’s that could fit the bill and saved them in a spreadsheet. Here’s a screenshot:
Image

I’m considering a two-fund portfolio.
For the equity portion I’m leaning towards the SPDR MSCI ACWI IMI UCITS ETF since it is truly global and is the only ETF to also include small caps, it is relatively expensive though at a TER of 0.55%.
For the debt portion I’m thinking db x-trackers II iBoxx Sovereigns Eurozone AAA UCITS ETF since it only includes the safest European government bonds and it has a very low expense rate of 0.15%.

Questions I have:

How do you feel about the two ETF’s I picked?
Should I increase the amount of European equity in my portfolio by adding a European equity ETF so I have less foreign currency exposure?
Should I add inflation protected bonds or possibly a real estate index?

Any other comments are welcome as well.
User avatar
Makane
Posts: 32
Joined: Sat Jun 29, 2013 3:15 pm

Re: Help a 22-year old Dutch student build a lazy portfolio

Post by Makane »

Hi and welcome to the Boglehead forum.

I sat in some lectures of your master program and went to a couple of drinks of your investment club, fun times.

It seems you missed out on Vanguard offerings. AFAK these Vanguard ETF's can all be bought in Euro:
Vanguard S&P 500 ETF (0.09% TER)
Vanguard FTSE All-World ETF (0.25% TER)
Vanguard FTSE Emerging Markets ETF (0.45% TER)
Vanguard FTSE Developed Europe UCITS ETF (0.15% TER)
Vanguard FTSE Japan UCITS ETF (0.19% TER)
Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF (0.22% TER)
Vanguard FTSE All-World High Dividend Yield UCITS ETF (0.29% TER)

They all distribute dividends, but you can simply subtract dividend taxes from your box 3 tax form. (assuming you pay taxes in box 3)
koekebakker
Posts: 39
Joined: Thu Nov 27, 2008 3:44 am
Location: The Netherlands

Re: Help a 22-year old Dutch student build a lazy portfolio

Post by koekebakker »

In your case it would make sense to split your equitypart between a cheap European indexfund like Dx2x and a more expensive global ETF. 0.2% vs 0.5% or 0.55% is a big difference imo.
AppelSienSapFrietjes
Posts: 93
Joined: Thu Jun 20, 2013 5:50 am

Re: Help a 22-year old Dutch student build a lazy portfolio

Post by AppelSienSapFrietjes »

Hi,

If I were you:

- I would invest 100% equities at your age. You are still very young, you want to maximize your returns. In addition, you will learn how to handle severe bear markets over time quite cheaply. Staying on course is the keyword here. It's easy to say, but difficult to do.

- The European market doesn't have cheap global market ETFs. I believe SPDR MSCI ACWI IMI is your best option. You might also want to read my thread from a few days ago (http://www.bogleheads.org/forum/viewtop ... 1&t=119142).

Good luck!
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