Beginner Investor

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Topic Author
Graves
Posts: 2
Joined: Thu Oct 03, 2019 8:41 am

Beginner Investor

Post by Graves » Thu Oct 03, 2019 8:56 am

Country of Residence: Italy

International Lifestyle: No, but may move in the future

Currency: EUR

Emergency funds: Yes

Debt: Nop

Age: mid 20s

Desired Asset allocation: 75% stocks / 25% bonds (Currently European bonds have negative interests so I think that 25% could be in a Deposit).

_______________________________________________________________

Hi I am a Software engineer from Italy and I'd like to start investing. The goal would be to have money aside for retirement but would like to reach financial independence.

Right now I am able to save 1200€ per month. I was thinking to invest maybe something like 400 every 3 months in ETFs:

I was thinking about
iShares Core MSCI World UCITS ETF USD (Acc) (EUR) ETF

and maybe adding an ETF for emerging markets, something like 80% World + 20% EM.

Currently I am reading The Intelligent Investor and I am planning on reading many other books. I am not the type that randomly put money but more of a conservative type. I need to understand what I am doing and the risks of it.

I have some questions for example: how long should I continue to put money in the funds? I get the Average dollar pricing gets better the more time you average but when to stop?

Thanks to whomever will help me!!

Chris K Jones
Posts: 245
Joined: Sat Jan 20, 2018 6:54 pm

Re: Beginner Investor

Post by Chris K Jones » Thu Oct 03, 2019 9:17 am

Greetings and welcome to the forum. The usual advice around here is to decide on an asset allocation and just stick with it. Your asset allocation seems fine to me. So, if I was you, I would just continue to invest according to your asset allocation. When something changes in your life, you might want to change your asset allocation, but otherwise, I would just invest any money that I get according to the plan.

I would suggest that you work on an investment policy statement. It has proven very helpful to me. It makes you think about what you want and how you plan to get there. It helps you "stay the course". I hope this helps. Best wishes.

User avatar
BeBH65
Posts: 1555
Joined: Sat Jul 04, 2015 7:28 am

Re: Beginner Investor

Post by BeBH65 » Fri Oct 04, 2019 8:57 am

Hello Graves,

Welcome on the forum.
Graves wrote:
Thu Oct 03, 2019 8:56 am

Desired Asset allocation: 75% stocks / 25% bonds (Currently European bonds have negative interests so I think that 25% could be in a Deposit).

Hi I am a Software engineer from Italy and I'd like to start investing. The goal would be to have money aside for retirement but would like to reach financial independence.

Right now I am able to save 1200€ per month. I was thinking to invest maybe something like 400 every 3 months in ETFs:

I was thinking about
iShares Core MSCI World UCITS ETF USD (Acc) (EUR) ETF

and maybe adding an ETF for emerging markets, something like 80% World + 20% EM.

Currently I am reading The Intelligent Investor and I am planning on reading many other books. I am not the type that randomly put money but more of a conservative type. I need to understand what I am doing and the risks of it.

I have some questions for example: how long should I continue to put money in the funds? I get the Average dollar pricing gets better the more time you average but when to stop?

Thanks to whomever will help me!!
Your chosen asset allocations seems ok.
Indeed European bonds do not have a high yield. Alternatives could be world bonds hedged to the euro or a savings account with government guarantee.

Key to reaching a financial independence early is spending a lot less then you earn and saving/investing the rest. Starting early is great as it allows the "compounding" to work.

The MSCI world fund that you have chosen is a good fund to get a worldwide diversified portfolio. You could add emerging markets for about 12%. For example once every 8 months.

You say you save 3600 euro per quarter and invest 400? Where are you putting the rest?

Have a look at the wiki page on investing start up kit for additional ideas. For example: think about an emergency fund.

Your MSCI world fund could be your fund for life; until you start withdrawing the money.

The site networthify.com has some rule of thumb that link the savings % to the years one needs to save to reach financial independence.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

imperia
Posts: 192
Joined: Tue Feb 21, 2017 6:31 am

Re: Beginner Investor

Post by imperia » Fri Oct 04, 2019 2:10 pm

You need to invest much more.
400€ every three month is almost nothing.

If you save 1200€/month,than invest 1000€/month or more.

Schlabba
Posts: 151
Joined: Sat May 11, 2019 9:14 am

Re: Beginner Investor

Post by Schlabba » Fri Oct 04, 2019 2:44 pm

Hello and welcome!

For starter portfolio's you can have a look at https://www.bogleheads.org/wiki/Simple_ ... portfolios.

The Intelligent Investor is a great book to read to give you a context on investing, however its not the way we follow. The book that really sold me on index investing was "The Little Book of Common Sense Investing" by John Bogle. If you haven't read that one yet I would recommend it.
Graves wrote:
Thu Oct 03, 2019 8:56 am
I have some questions for example: how long should I continue to put money in the funds? I get the Average dollar pricing gets better the more time you average but when to stop?
Put money in whenever you have money that you don't need to use for a while. So when you are working it is hopefully at least 30% of your take-home pay. If your goal is financial independence, you can stop putting money in when you satisfy "the 4% rule" (more information: https://www.bogleheads.org/wiki/Safe_withdrawal_rates).

On the topic of dollar-cost-averaging, that only applies if you have a big sum of money ready to invest. You could divide your money into, 6 to 12 chunks and invest it. Or you could simply invest it all at once. (https://www.bogleheads.org/wiki/Dollar_cost_averaging)
IWDA: MSCI World | EMIM: MSCI Emerging Markets | AGGH: Global Aggregate Bond Hedged to €

Grt2bOutdoors
Posts: 21368
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Beginner Investor

Post by Grt2bOutdoors » Fri Oct 04, 2019 3:57 pm

imperia wrote:
Fri Oct 04, 2019 2:10 pm
You need to invest much more.
400€ every three month is almost nothing.

If you save 1200€/month,than invest 1000€/month or more.
You don't know what the OP plans to do in the near future. How can you suggest that OP needs to invest more?
OP says they are conservative and will not place money in any vehicle until they fully understand it - which is the first rule of investing. Don't put your money in anything until you know what it is you are buying, why you are buying it and when you need your money back (if you can get it back!).
Read my signature line.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Topic Author
Graves
Posts: 2
Joined: Thu Oct 03, 2019 8:41 am

Re: Beginner Investor

Post by Graves » Mon Oct 07, 2019 2:23 am

Grt2bOutdoors wrote:
Fri Oct 04, 2019 3:57 pm
imperia wrote:
Fri Oct 04, 2019 2:10 pm
You need to invest much more.
400€ every three month is almost nothing.

If you save 1200€/month,than invest 1000€/month or more.
You don't know what the OP plans to do in the near future. How can you suggest that OP needs to invest more?
OP says they are conservative and will not place money in any vehicle until they fully understand it - which is the first rule of investing. Don't put your money in anything until you know what it is you are buying, why you are buying it and when you need your money back (if you can get it back!).
Read my signature line.
Yes I know the more money I put the more I get from it. But as Grt2bOutdoors said I don't really feel comfortable investing almost all of my savings.

I think I understand the mechanics behind ETFs and their advantages but the thing that scares me is the market itself. What if recession hits? I need to let those money in until it recovers, right?

So if I wanted to buy a house, say in 5 or 10 years, and all my money are invested there. I have two options: to sell or to get debt. The first one doesn't really appear like a sound decision to me, maybe only if I can sell with a profit. But who knows.

The second way maybe makes more sense?
BeBH65 wrote:
Fri Oct 04, 2019 8:57 am
Hello Graves,

Welcome on the forum.

Your chosen asset allocations seems ok.
Indeed European bonds do not have a high yield. Alternatives could be world bonds hedged to the euro or a savings account with government guarantee.

Key to reaching a financial independence early is spending a lot less then you earn and saving/investing the rest. Starting early is great as it allows the "compounding" to work.

The MSCI world fund that you have chosen is a good fund to get a worldwide diversified portfolio. You could add emerging markets for about 12%. For example once every 8 months.

You say you save 3600 euro per quarter and invest 400? Where are you putting the rest?

Have a look at the wiki page on investing start up kit for additional ideas. For example: think about an emergency fund.

Your MSCI world fund could be your fund for life; until you start withdrawing the money.

The site networthify.com has some rule of thumb that link the savings % to the years one needs to save to reach financial independence.
Thank you. The rest will be split between the emergency fund and the remaining will be in savings accounts.
Schlabba wrote:
Fri Oct 04, 2019 2:44 pm
Hello and welcome!

For starter portfolio's you can have a look at https://www.bogleheads.org/wiki/Simple_ ... portfolios.

The Intelligent Investor is a great book to read to give you a context on investing, however its not the way we follow. The book that really sold me on index investing was "The Little Book of Common Sense Investing" by John Bogle. If you haven't read that one yet I would recommend it.

Put money in whenever you have money that you don't need to use for a while. So when you are working it is hopefully at least 30% of your take-home pay. If your goal is financial independence, you can stop putting money in when you satisfy "the 4% rule" (more information: https://www.bogleheads.org/wiki/Safe_withdrawal_rates).

On the topic of dollar-cost-averaging, that only applies if you have a big sum of money ready to invest. You could divide your money into, 6 to 12 chunks and invest it. Or you could simply invest it all at once. (https://www.bogleheads.org/wiki/Dollar_cost_averaging)
Yes I took a look at the simple non-US portfolios. Basically I think I'd like a 3-fund portfolio (but for now using safety deposit instead of bonds ETFs).

Thank you for the Trinity study about the 4%. Really interesting. That's what I would like to achieve.

The book you suggested is in my to-read list. Along with many others, time is the constraint here :)

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