Portfolio allocation and lowest fees: Investing from Italy

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Topic Author
jhonny9546
Posts: 32
Joined: Sun Jul 24, 2022 2:45 pm

Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

Country of Residence: Italy
International Lifestyle: None, but I like to travel.
Currency: EUR
Emergency funds: 12 months covered
Debt: None
Age: 26+
Desired Asset allocation: 92% stocks / 7% bonds / 1% cripto (not sure)
Actual Portfolio size: 20k
Time
_______________________________________________________________
Retirement assets
Future inheritance: 2 houses: total value 220k (atm)
_______________________________________________________________
New investments
New annual Contributions: >=€500 per month.
_______________________________________________________________
Time range: I'd like to invest money for 24+ years.
COL: <=8k a year (atm)
Goal: Retire at 50. SWR: Not too low, Not too high, so that the money stay invested for my heirs, even if I don't have sons atm, it could be my brother, nephew or friend.

Questions:
Hi!
I'd like to invest with the smallest fee possible.
In Italy we could use two brokers: Directa and Degiro.

Should I pick Vanguard LifeStrategy 100 or iShares?
(Something I found out browsing)
Image

ps: I don't know how tradition is shaped, and how the thing works in the US, but here in Italy, parents plan to share their inheritance for their sons. I think this is a tradition related thing
Laurizas
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Location: Lithuania

Re: Portfolio allocation and lowest fees: Investing from Italy

Post by Laurizas »

And what about Interactive Brokers?

And I do not think Vanguard Lifestrategy 100 exists.
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tre3sori
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by tre3sori »

What about
90% Vanguard FTSE All-World UCITS ETF Acc, TER 0,22%
10% Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Acc, TER 0,10%
Portfolio TER ca. 0,21%

Vanguard LifeStrategy 100 does not exist.
Closest one ETF solution to your desired allocation would be Vanguard LifeStrategy 80 (80% equities)
or 100% Vanguard FTSE All-World (100% equities).
Note that Vanguard LifeStrategy is indeed a strategy for life! You would have to add a bond fund in order to increase the fixed income part of your portfolio.
If you change strategy and sell Vanguard LifeStrategy 80 to buy for example Vanguard LifeStrategy 60, you would incur capital gains taxes.
That is why I prefer the two ETFs above.

If this is still too expensive for you, this is even cheaper (but more complex):
80% Vanguard FTSE Developed World UCITS ETF (USD) Acc, TER, 0,12%
10% Vanguard FTSE Emerging Markets UCITS ETF (USD) Acc, TER, 0,22%
10% Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Acc, TER 0,10%
Portfolio TER ca. 0,13%

A combination of iShares MSCI ACWI UCITS ETF Acc
and iShares Core Global Aggregate Bond UCITS ETF EUR Hedged Acc would give you a similar portfolio.
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
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

Does directa have less fees+commission, so is the cheapest for my strategy, than degiro, moneyfarm, other brokers for italian country?

When you talk about "this will be more expensive", what are you referring to?
jg12345
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jg12345 »

jhonny9546 wrote: Wed Sep 07, 2022 2:31 pm Does directa have less fees+commission, so is the cheapest for my strategy, than degiro, moneyfarm, other brokers for italian country?

When you talk about "this will be more expensive", what are you referring to?
Hi OP
1) Moneyfarm is a roboadvisor, not a broker.
Degiro is good, and vanguard ftse all world acc can be bought at 0% commission fees.

2) I think the previous poster meant:
if "90% Vanguard FTSE All-World UCITS ETF Acc, TER 0,22%
10% Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Acc, TER 0,10%
Portfolio TER ca. 0,21%" is too expensive, then

80% Vanguard FTSE Developed World UCITS ETF (USD) Acc, TER, 0,12%
10% Vanguard FTSE Emerging Markets UCITS ETF (USD) Acc, TER, 0,22%
10% Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Acc, TER 0,10%
Portfolio TER ca. 0,13%

is cheaper.

3) because you're in italy, remember to buy first into the 5000 EUR of the Piano Individuale Pensionistico, which are tax deductible. I do not know which is the cheapest PIP available, sorry
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

3) Why would you buy that instead of ETF? I just found this article : https://rischioerendimento.com/2020/10/ ... azionario/

In short, ETF would be better for a range of 15+ years, considering that I will invest a range of 5 to 7k a year?
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Tyler9000
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by Tyler9000 »

jhonny9546 wrote: Sat Aug 13, 2022 12:18 pm Country of Residence: Italy
...
I'd like to invest with the smallest fee possible.
This tool can help you identify the lowest-cost ETFs for any portfolio:

https://portfoliocharts.com/portfolio/fund-finder/

Set the home country to "Italy" and enter your portfolio percentages in any of the asset fields. The table will update with fund options for every asset (for Europe it gives the ISIN code that you can search for at your brokerage), and you can see more options with the dropdown menu. If you need help interpreting the asset acronyms, this page will help.

For European investors, I also recommend JustETF.com to search for ETF information. It's very thorough.
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

Tyler9000 wrote: Thu Sep 15, 2022 4:06 pm
jhonny9546 wrote: Sat Aug 13, 2022 12:18 pm Country of Residence: Italy
...
I'd like to invest with the smallest fee possible.
This tool can help you identify the lowest-cost ETFs for any portfolio:

https://portfoliocharts.com/portfolio/fund-finder/

Set the home country to "Italy" and enter your portfolio percentages in any of the asset fields. The table will update with fund options for every asset (for Europe it gives the ISIN code that you can search for at your brokerage), and you can see more options with the dropdown menu. If you need help interpreting the asset acronyms, this page will help.

For European investors, I also recommend JustETF.com to search for ETF information. It's very thorough.
I think what you've shared, it's a very very interesting tool, and since I'd like to learn more about it, would you mind to help me understand "allocation"?
This is the situation, How should I put the value?
Image
jg12345
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jg12345 »

jhonny9546 wrote: Thu Sep 15, 2022 3:30 pm 3) Why would you buy that instead of ETF? I just found this article : https://rischioerendimento.com/2020/10/ ... azionario/

In short, ETF would be better for a range of 15+ years, considering that I will invest a range of 5 to 7k a year?
Hi Johnny, are you clear about the meaning of tax deductible?
with current taxation in Italy, it means that you you put 5k in PIP and you can decrease your "base imponibile" by 5000. if you pay 43% tax, that means investing 5000eur there would give you 43%*5000 eur right away. for whatever an equity pension fund can have a somewhat lower performance, I doubt it'll be so low to offset the tax deduction.

Of course, I am assuming you do not need the money: if you put them there you cannot access them until 65yo
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

why 43% tax?
jg12345
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jg12345 »

jhonny9546 wrote: Fri Sep 16, 2022 11:28 am
Tyler9000 wrote: Thu Sep 15, 2022 4:06 pm
jhonny9546 wrote: Sat Aug 13, 2022 12:18 pm Country of Residence: Italy
...
I'd like to invest with the smallest fee possible.
This tool can help you identify the lowest-cost ETFs for any portfolio:

https://portfoliocharts.com/portfolio/fund-finder/

Set the home country to "Italy" and enter your portfolio percentages in any of the asset fields. The table will update with fund options for every asset (for Europe it gives the ISIN code that you can search for at your brokerage), and you can see more options with the dropdown menu. If you need help interpreting the asset acronyms, this page will help.

For European investors, I also recommend JustETF.com to search for ETF information. It's very thorough.
I think what you've shared, it's a very very interesting tool, and since I'd like to learn more about it, would you mind to help me understand "allocation"?
This is the situation, How should I put the value?
Image

I find portfolio visualizer to be easier btw, but given your question, this seems not so super-useful to you. once you do:
80% Vanguard FTSE Developed World UCITS ETF (USD) Acc, TER, 0,12%
10% Vanguard FTSE Emerging Markets UCITS ETF (USD) Acc, TER, 0,22%
10% Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Acc, TER 0,10%
Portfolio TER ca. 0,13%

you're set (and up to you about the PIP)
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

I'll try Portfolio visualizer too! Thanks!!
why Vanguard and not iShares, and why not a ready made "LifeStrategy" vs a "manual" portfolio?
Tellurius
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by Tellurius »

Ciao Gionni!

I am not Italian but speak Italian. Do you have any link on capital gains taxes and dividend taxes for Italy (anche in italiano va bene per me)?

I use degiro, due to the low costs, and I’m 100% VWCE (FTSE All-World)
“And how shall I think of you?' He considered a moment and then laughed. 'Think of me with my nose in a book!” | ― Susanna Clarke, Jonathan Strange & Mr Norrell
Tellurius
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by Tellurius »

jhonny9546 wrote: Fri Sep 16, 2022 1:36 pm I'll try Portfolio visualizer too! Thanks!!
why Vanguard and not iShares, and why not a ready made "LifeStrategy" vs a "manual" portfolio?
Why Vanguard? This forum is emotionally linked with Vanguard, Jack Bogle was Vanguard’s founder

I like VWCE because it includes developed + developing world in a single ETF
“And how shall I think of you?' He considered a moment and then laughed. 'Think of me with my nose in a book!” | ― Susanna Clarke, Jonathan Strange & Mr Norrell
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Tyler9000
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by Tyler9000 »

jhonny9546 wrote: Fri Sep 16, 2022 11:28 am I think what you've shared, it's a very very interesting tool, and since I'd like to learn more about it, would you mind to help me understand "allocation"?
This is the situation, How should I put the value?
Image
The basic idea is that each square represents a different asset that index funds track. You’ll want to enter your portfolio percentages (and delete the defaults if necessary) and have them add up to 100%. You didn’t specify whether your “stocks” and “bonds” are Italian, European, or World. But there are options for all three. Just change the xUS setting to DEV to see true global funds that include the US.

For more information on how the interface works, this may help. https://portfoliocharts.com/instructions/
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

Tyler9000 wrote: Fri Sep 16, 2022 3:48 pm
jhonny9546 wrote: Fri Sep 16, 2022 11:28 am I think what you've shared, it's a very very interesting tool, and since I'd like to learn more about it, would you mind to help me understand "allocation"?
This is the situation, How should I put the value?
Image
The basic idea is that each square represents a different asset that index funds track. You’ll want to enter your portfolio percentages (and delete the defaults if necessary) and have them add up to 100%. You didn’t specify whether your “stocks” and “bonds” are Italian, European, or World. But there are options for all three. Just change the xUS setting to DEV to see true global funds that include the US.

For more information on how the interface works, this may help. https://portfoliocharts.com/instructions/
I saw there are many readymade portfolio on that website.
Which one would you think fit the best my scenario?
jg12345
Posts: 421
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jg12345 »

jhonny9546 wrote: Sat Sep 17, 2022 8:40 am
Tyler9000 wrote: Fri Sep 16, 2022 3:48 pm
jhonny9546 wrote: Fri Sep 16, 2022 11:28 am I think what you've shared, it's a very very interesting tool, and since I'd like to learn more about it, would you mind to help me understand "allocation"?
This is the situation, How should I put the value?
Image
The basic idea is that each square represents a different asset that index funds track. You’ll want to enter your portfolio percentages (and delete the defaults if necessary) and have them add up to 100%. You didn’t specify whether your “stocks” and “bonds” are Italian, European, or World. But there are options for all three. Just change the xUS setting to DEV to see true global funds that include the US.

For more information on how the interface works, this may help. https://portfoliocharts.com/instructions/
I saw there are many readymade portfolio on that website.
Which one would you think fit the best my scenario?
What about
90% Vanguard FTSE All-World UCITS ETF Acc, TER 0,22% ==== Ishares MSCI ACWI
10% Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Acc, TER 0,10% === ishares AGGH
Portfolio TER ca. 0,21%


If this is still too expensive for you, this is even cheaper (but more complex):
80% Vanguard FTSE Developed World UCITS ETF (USD) Acc, TER, 0,12% ==== Ishares MSCI world
10% Vanguard FTSE Emerging Markets UCITS ETF (USD) Acc, TER, 0,22% ==== Ishares EIMI
10% Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Acc, TER 0,10% ==== Ishares AGGH
Portfolio TER ca. 0,13%

you choose whether you prefer ishares or vanguard
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Tyler9000
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by Tyler9000 »

jhonny9546 wrote: Sat Sep 17, 2022 8:40 am I saw there are many readymade portfolio on that website.
Which one would you think fit the best my scenario?
In terms of your stated desired asset allocation, the closest ready-made options are the Total Stock Market and Classic 60-40 portfolios. But in terms of your your goal to retire at 50, some others like the Golden Butterfly might be worth a look. Take a look around, and maybe play with the My Portfolio tool once you get the hang of it. There are lots of good options, so it largely comes down to personal preferences.
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

What do you guys think about gold investing?
jg12345
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jg12345 »

Plenty of posts about it, look for them.

The standard recommendation here is 0%, only bonds/stocks, and <3 or 5% for those who feel strongly about it. It'll probably make almost no difference

Given your objectives, a 90-10 or 80-20 portfolio works perfectly.

I would never even get close to a butterfly portfolio, I don't think I'll be able to not sell when I see it going down. I have much more confidence in the market.
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

I am generally very sceptical about the stock market... dunno why..
Are there any alternatives which would still work? I may allocate 50% to the stock market, and another 50% to those alts (for ex: Real Estate, and?)
jg12345
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jg12345 »

jhonny9546 wrote: Sat Oct 29, 2022 3:47 am I am generally very sceptical about the stock market... dunno why..
Are there any alternatives which would still work? I may allocate 50% to the stock market, and another 50% to those alts (for ex: Real Estate, and?)
In many countries the stock market is seen as more risky than [insert here]

A classic is real estate: older people would suggest buy a house and put it to rent.

I cannot help your inner feelings. However, I might suggest:
1- read a few more books
2- you might want to consider increasing your allocation to bonds

Allocating more to alternatives (REITs, direct real estate, or other alt ETF like long/short or private equity) does not seem to me a very appealing strategies for a small investor that has very little information about what s/he is buying.
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

1) Which ones?
HKexpat
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by HKexpat »

jhonny9546 wrote: Sat Oct 29, 2022 3:47 am I am generally very sceptical about the stock market... dunno why..
You need to think about why that is. It's fine not to want to invest in the stock market if that's an informed decision based on your risk preferences or beliefs about the future. But you really should not stake your financial future on an unexamined gut feeling. Merely suggesting other asset classes is not going to be useful without knowing what your concerns about stocks are.
Are there any alternatives which would still work? I may allocate 50% to the stock market, and another 50% to those alts (for ex: Real Estate, and?)
Why are you not skeptical about real estate, bonds, commodities, etc? All of those have risks and people engaging in unethical behavior -- as do stocks, of course.

Many people who seem to distrust markets are very trusting of crypto. I've always found that amusing: nothing says trustworthy like a completely unregulated market with wild swings in valuation backed by no fundamentals. It suggests that when people speak of what they "trust," they have something very different in mind from those who would give them professional advice.

All of this is to say that it's very important to understand what you mean by "skeptical about the stock market" when trying to advise you on the next steps. If you mean that you think the valuation will change substantially, then yes... stocks are inherently "riskier" than other forms of investment (albeit not crypto). You can manage that risk through your asset allocation. If you mean that the global financial system is a Ponzi scheme that is about to come crashing down, then you need to look outside of traditional assets.
MH2
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by MH2 »

jhonny9546 wrote: Sat Oct 29, 2022 3:47 am I am generally very sceptical about the stock market... dunno why..
Are there any alternatives which would still work? I may allocate 50% to the stock market, and another 50% to those alts (for ex: Real Estate, and?)
Very common feeling, and for good reason. Most people are exposed to the stock market through speculation or gambling. There's also the unfortunate issue that, in many countries, equities haven't been the best investment option.

The good news is that there is a large enough pool of data now available to everyone to show that stocks are relatively safe investment as long as 1. you are sufficiently (heavily) diversified, 2. you are willing to invest over long periods of time, and 3. you lean heavily towards companies in developed countries/regions.

You may want to educate yourself before going any further. There are a lot of books on the wiki reading list. There is also a lot of good, basic content online.

You may also want to play around with one of the many online portfolio simulators. Portfolio Visualizer (portfoliovisualizer.com) is the go-to for many people on this forum. Firecalc.com and Rick, Broke, or Dead (https://engaging-data.com/will-money-last-retire-early/) are other good options.

Go to Portfolio Visualizer and play around with, e.g., a back tested 60/40 portfolio and a 50/50 portfolio. Look at what happens during large global downturns, such as the current bear market, COVID, and the Great Recession. Consider whether or not you're interested in adding in REIT exposure.
MH2
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by MH2 »

jhonny9546 wrote: Sat Nov 05, 2022 4:56 am 1) Which ones?
https://www.bogleheads.org/wiki/Book_re ... nd_reviews

suggested-reading

I would start with Thomas Stanley's The Millionaire Next Door. Investing is 90%+ about personal finance and savings. How you invest matters less than how much you invest.

From there, I would read Taylor Larimore's The Bogleheads' Guide to the Three-Fund Portfolio and John Bogle's The Little Book of Common Sense Investing. Read Taylor's posts on this forum as well for more insight.

Also keep in mind that most countries follow an OECD Pillar 1-3 retirement framework (US included). The particular advice you'll read on here about investing in 401Ks and IRAs won't apply to you, but the general ethos of prioritizing tax advantaged investment accounts is absolutely relevant.

Edit: Italy :?
jg12345
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jg12345 »

jhonny9546 wrote: Sat Nov 05, 2022 4:56 am 1) Which ones?
Dear Jhonny
Apologies I did not notice your questions. The suggestions made by the other poster are great!

Also The Nine Rules of Wealth You Should Have Learned in School by Hallam is a decent choice. For your specific feeling about the stock market, I think Bogle "little book" would fit even better.

Best
Topic Author
jhonny9546
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jhonny9546 »

Hi!
I'm finally able to invest!
I found a broker in Italy which is Directa! (Here https://www.directa.it/commissioni/commissioni.htmlpage)
My portfolio would be something like:
80% Stocks
15% Bonds
5% Crypto

Which are the best assets for the lowest TER and broker commissions and best results?
jg12345
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Re: Portfolio allocation and lowest fees: Investing from Italy

Post by jg12345 »

jhonny9546 wrote: Fri Jun 30, 2023 8:12 am Hi!
I'm finally able to invest!
I found a broker in Italy which is Directa! (Here https://www.directa.it/commissioni/commissioni.htmlpage)
My portfolio would be something like:
80% Stocks
15% Bonds
5% Crypto

Which are the best assets for the lowest TER and broker commissions and best results?
Hi
People from Italy I know usually use degiro, Fineco, IB.

80% stocks => vanguard FTSE all world Acc or Ishares MSCI ACWI ACC (alternatively Vanguard Ftse developed/MSCI World + Vanguard FTSE EM/MSCI EM)
20% bond => Ishares global core aggregate bond EUR hedged AGGH
0% crypto => do not invest in those

Degiro has 0 commission for vanguard FTSE all world Acc , IIRC

No one can tell you these assets provide "best" results. you will always find ex post some combination giving better results.

However, as we know nothing about where the market will go, we invest in the whole market following the ETFs I just noted
Best of luck
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