Seeking Advice First Investment Portfolio [Portugal]

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Topic Author
joaommota.me
Posts: 5
Joined: Tue Jul 21, 2020 4:19 pm

Seeking Advice First Investment Portfolio [Portugal]

Post by joaommota.me » Sat Jul 25, 2020 5:34 am

Hello, my name is João and I'm about to start working and wanted to start early in investing so I can save up and retire early.

Income: ~1000€ After Taxes
I pay no rent and have pretty few expenses because I still live with my family and have no plans to move anytime soon (5 years) since I'm studying at night too.
I'm a Software Developer and I'm studying Computer Science.

I plan to use half my income (500€) every month in this Portfolio.

Age: 21
Country of Residence: Portugal (Income from capital gains are taxed at 28%, no treaty with the US)
International Lifestyle: Plan to move to a European country (Switzerland Probably) in the next 10 years.
Currency: EUR
Emergency funds: Only 1 Month
Debt: No Debt
Desired Asset allocation: 80% stocks / 20% bonds
Boglebot Suggestions (https://www.boglebot.com/play/index.html):
  • 70% IWDA iShares Core MSCI World
  • 10% EIMI iShares Core MSCI EM IMI
  • 20% AGGH/EUNA iShares Core Global Aggregate Bond (EUR Hedged)
I plan to invest long term (30 to 40 years) and probably using Degiro but if there's a better one please tell me.

Thanks so much for your help ;)

DJN
Posts: 694
Joined: Mon Nov 20, 2017 12:30 am

Re: Seeking Advice First Investment Portfolio [Portugal]

Post by DJN » Sat Jul 25, 2020 7:15 am

Hi,
I like your suggested portfolio.
You might think about increasing your emergency fund.
I use Interactive Brokers (IBKR) they are very good and excellent with currencies (and deGiro).
When you have some time I would suggest that you prepare an investment plan as set out in the Wiki format. Maybe have a read of this section:
https://www.bogleheads.org/wiki/Boglehe ... _investors
Good luck.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.

IcedTea
Posts: 56
Joined: Thu Mar 12, 2020 4:12 am

Re: Seeking Advice First Investment Portfolio [Portugal]

Post by IcedTea » Tue Jul 28, 2020 3:00 pm

Hi,

Like the DJN mentioned the overall portfolio components are fine and very standard.

It's great that you are investing at such an early age. Judging by my path it will be easy to allow for life circunstances to change your mind regarding your investment related actions.

So I'd stress the need for an investment plan, something that you can follow and revert to.

On another line, small things like holidays and bigger things like buying a house need to be funded. That's where your emergency fund or other short term strategies can help.

Don't assume that your investment Will always go up, specially your stock component will show loads of volatily and may not be there when you need it.

1thinkitthru
Posts: 2
Joined: Wed Jul 29, 2020 10:38 pm

Re: Seeking Advice First Investment Portfolio [Portugal]

Post by 1thinkitthru » Wed Jul 29, 2020 11:37 pm

joaommota.me wrote:
Sat Jul 25, 2020 5:34 am
Hello, my name is João and I'm about to start working and wanted to start early in investing so I can save up and retire early.

Income: ~1000€ After Taxes
I pay no rent and have pretty few expenses because I still live with my family and have no plans to move anytime soon (5 years) since I'm studying at night too.
I'm a Software Developer and I'm studying Computer Science.

I plan to use half my income (500€) every month in this Portfolio.

Age: 21
Country of Residence: Portugal (Income from capital gains are taxed at 28%, no treaty with the US)
International Lifestyle: Plan to move to a European country (Switzerland Probably) in the next 10 years.
Currency: EUR
Emergency funds: Only 1 Month
Debt: No Debt
Desired Asset allocation: 80% stocks / 20% bonds
Boglebot Suggestions (https://www.boglebot.com/play/index.html):
  • 70% IWDA iShares Core MSCI World
  • 10% EIMI iShares Core MSCI EM IMI
  • 20% AGGH/EUNA iShares Core Global Aggregate Bond (EUR Hedged)
I plan to invest long term (30 to 40 years) and probably using Degiro but if there's a better one please tell me.

Thanks so much for your help ;)
Ola João. I'm actually moving to Portugal in a few months to semi-retire...I also work in the tech field with databases. Portugal offers a good tax exemption for foreigners for 10 years, through the Non-habitual Resident scheme. I think you can't be a resident in the last few years though, so you would have to move away then move back to Portugal.
I have two suggestions for you. First, given your age and the current yield for bonds, I definitely would not put any of your savings there. If you have 30-40 years to retirement you will lose a large amount of stock gains over this period and bonds are yielding very close to 0%. If you look at the global, or even country specific stock markets, there is NO 30 or 40 year period in history where stocks were outperformed by bonds. There's also no period of that duration where stocks had a negative return. I think your two other picks are good but I would also throw an unhedged Eurozone based fund in there like VGK, since you live in a country that uses the euro. That way if the euro goes up against other global currencies this will help offset losses from foreign currency derived stocks. I just invested in VGK and IEUS because I plan on spending my savings/investments in Portugal but most everything I've saved and invested until now is in dollars, which is going down against the euro. In any case you are making a good decision by investing in the market while you are young. One critical thing to remember...NEVER sell when the market goes down, as long as you are holding diversified funds like IWDA, VGK, EIMI, etc. And if you can, try to buy more if you see the market is down 20-50%. The market has always recovered. I did this in March 2009 and March 2020... in both cases the market returns were phenomenal. As a reference you can look at this chart https://awealthofcommonsense.com/2020/0 ... ear-market.. this will help you not to sell in down markets.

Boa Sorte!

Topic Author
joaommota.me
Posts: 5
Joined: Tue Jul 21, 2020 4:19 pm

Re: Seeking Advice First Investment Portfolio [Portugal]

Post by joaommota.me » Sat Aug 01, 2020 6:23 pm

DJN wrote:
Sat Jul 25, 2020 7:15 am
Hi,
I like your suggested portfolio.
You might think about increasing your emergency fund.
I use Interactive Brokers (IBKR) they are very good and excellent with currencies (and deGiro).
When you have some time I would suggest that you prepare an investment plan as set out in the Wiki format. Maybe have a read of this section:
https://www.bogleheads.org/wiki/Boglehe ... _investors
Good luck.
DJN
Hello,

First of all, I checked and IKBR is not available in my country so when I start I will use Degiro.

My Allocation after I started reading and getting things together is as follows (1000€ / Monthly):
  • [35%] Fixed Costs (Help Family and Pay College): 350€
  • [25%] Investments: 250€
  • [20%] Savings (All the money will go to the emergency fund till I have one year of fixed costs saved up then start to save for a house down payment (10/15 years)): 200€
  • [20%] Personal: 200€
I was thinking instead of the portfolio I initially suggested what do you think of a 100% Stocks? 100% in VWRA Vanguard FTSE All-World (TER 0.22%) or 88% IWDA iShares Core MSCI World + 12% EIMI iShares Core MSCI EM IMI (TER 0.20%)?

Then later on when I'm 35/40 years old buy bonds and rebalance to 80/70% Stocks / 20/30% Bonds

I'm gonna make use of my investments upon retirement.

Thanks for the help guys :sharebeer

Topic Author
joaommota.me
Posts: 5
Joined: Tue Jul 21, 2020 4:19 pm

Re: Seeking Advice First Investment Portfolio [Portugal]

Post by joaommota.me » Sat Aug 01, 2020 6:25 pm

IcedTea wrote:
Tue Jul 28, 2020 3:00 pm
Hi,

Like the DJN mentioned the overall portfolio components are fine and very standard.

It's great that you are investing at such an early age. Judging by my path it will be easy to allow for life circunstances to change your mind regarding your investment related actions.

So I'd stress the need for an investment plan, something that you can follow and revert to.

On another line, small things like holidays and bigger things like buying a house need to be funded. That's where your emergency fund or other short term strategies can help.

Don't assume that your investment Will always go up, specially your stock component will show loads of volatily and may not be there when you need it.
joaommota.me wrote:
Sat Aug 01, 2020 6:23 pm
Hello,

First of all, I checked and IKBR is not available in my country so when I start I will use Degiro.

My Allocation after I started reading and getting things together is as follows (1000€ / Monthly):
  • [35%] Fixed Costs (Help Family and Pay College): 350€
  • [25%] Investments: 250€
  • [20%] Savings (All the money will go to the emergency fund till I have one year of fixed costs saved up then start to save for a house down payment (10/15 years)): 200€
  • [20%] Personal: 200€
I was thinking instead of the portfolio I initially suggested what do you think of a 100% Stocks? 100% in VWRA Vanguard FTSE All-World (TER 0.22%) or 88% IWDA iShares Core MSCI World + 12% EIMI iShares Core MSCI EM IMI (TER 0.20%)?

Then later on when I'm 35/40 years old buy bonds and rebalance to 80/70% Stocks / 20/30% Bonds

I'm gonna make use of my investments upon retirement.

Thanks for the help guys :sharebeer
What do you think?

Topic Author
joaommota.me
Posts: 5
Joined: Tue Jul 21, 2020 4:19 pm

Re: Seeking Advice First Investment Portfolio [Portugal]

Post by joaommota.me » Sat Aug 01, 2020 6:29 pm

1thinkitthru wrote:
Wed Jul 29, 2020 11:37 pm
joaommota.me wrote:
Sat Jul 25, 2020 5:34 am
Hello, my name is João and I'm about to start working and wanted to start early in investing so I can save up and retire early.

Income: ~1000€ After Taxes
I pay no rent and have pretty few expenses because I still live with my family and have no plans to move anytime soon (5 years) since I'm studying at night too.
I'm a Software Developer and I'm studying Computer Science.

I plan to use half my income (500€) every month in this Portfolio.

Age: 21
Country of Residence: Portugal (Income from capital gains are taxed at 28%, no treaty with the US)
International Lifestyle: Plan to move to a European country (Switzerland Probably) in the next 10 years.
Currency: EUR
Emergency funds: Only 1 Month
Debt: No Debt
Desired Asset allocation: 80% stocks / 20% bonds
Boglebot Suggestions (https://www.boglebot.com/play/index.html):
  • 70% IWDA iShares Core MSCI World
  • 10% EIMI iShares Core MSCI EM IMI
  • 20% AGGH/EUNA iShares Core Global Aggregate Bond (EUR Hedged)
I plan to invest long term (30 to 40 years) and probably using Degiro but if there's a better one please tell me.

Thanks so much for your help ;)
Ola João. I'm actually moving to Portugal in a few months to semi-retire...I also work in the tech field with databases. Portugal offers a good tax exemption for foreigners for 10 years, through the Non-habitual Resident scheme. I think you can't be a resident in the last few years though, so you would have to move away then move back to Portugal.
I have two suggestions for you. First, given your age and the current yield for bonds, I definitely would not put any of your savings there. If you have 30-40 years to retirement you will lose a large amount of stock gains over this period and bonds are yielding very close to 0%. If you look at the global, or even country specific stock markets, there is NO 30 or 40 year period in history where stocks were outperformed by bonds. There's also no period of that duration where stocks had a negative return. I think your two other picks are good but I would also throw an unhedged Eurozone based fund in there like VGK, since you live in a country that uses the euro. That way if the euro goes up against other global currencies this will help offset losses from foreign currency derived stocks. I just invested in VGK and IEUS because I plan on spending my savings/investments in Portugal but most everything I've saved and invested until now is in dollars, which is going down against the euro. In any case you are making a good decision by investing in the market while you are young. One critical thing to remember...NEVER sell when the market goes down, as long as you are holding diversified funds like IWDA, VGK, EIMI, etc. And if you can, try to buy more if you see the market is down 20-50%. The market has always recovered. I did this in March 2009 and March 2020... in both cases the market returns were phenomenal. As a reference you can look at this chart https://awealthofcommonsense.com/2020/0 ... ear-market.. this will help you not to sell in down markets.

Boa Sorte!
joaommota.me wrote:
Sat Aug 01, 2020 6:23 pm
Hello,

First of all, I checked and IKBR is not available in my country so when I start I will use Degiro.

My Allocation after I started reading and getting things together is as follows (1000€ / Monthly):
  • [35%] Fixed Costs (Help Family and Pay College): 350€
  • [25%] Investments: 250€
  • [20%] Savings (All the money will go to the emergency fund till I have one year of fixed costs saved up then start to save for a house down payment (10/15 years)): 200€
  • [20%] Personal: 200€
I was thinking instead of the portfolio I initially suggested what do you think of a 100% Stocks? 100% in VWRA Vanguard FTSE All-World (TER 0.22%) or 88% IWDA iShares Core MSCI World + 12% EIMI iShares Core MSCI EM IMI (TER 0.20%)?

Then later on when I'm 35/40 years old buy bonds and rebalance to 80/70% Stocks / 20/30% Bonds

I'm gonna make use of my investments upon retirement.

Thanks for the help guys :sharebeer
Obrigado for the tips and I think you're going to have an amazing time living here in Portugal, what do you think of my Investment Plan?

DJN
Posts: 694
Joined: Mon Nov 20, 2017 12:30 am

Re: Seeking Advice First Investment Portfolio [Portugal]

Post by DJN » Sun Aug 02, 2020 1:21 am

Hi,
really great plan, get started and keep going.
Increase your savings when you can.
Reduce the bond element if you think you will not freak out at a downturn in stocks and adjust when you are a bit older.
How is the preparation of the investment plan going?
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.

sfmurph
Posts: 93
Joined: Mon Aug 12, 2019 8:15 pm

Re: Seeking Advice First Investment Portfolio [Portugal]

Post by sfmurph » Sun Aug 02, 2020 12:49 pm

joaommota.me wrote:
Sat Aug 01, 2020 6:23 pm
DJN wrote:
Sat Jul 25, 2020 7:15 am
I use Interactive Brokers (IBKR) they are very good and excellent with currencies (and deGiro).
First of all, I checked and IKBR is not available in my country so when I start I will use Degiro.
Portugal is on Interactive Brokers' list of available countries.

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