Actionable investment guide

• Why investing in the markets
• Financial situation and plan
• Investment principles
• Investment practice
• Investment instruments
• Final thoughts

Why investing in the markets

Financial charlatans are today doubling their efforts with claims of easy riches and you have probably come across such misleading financial promises:

• online videos of pseudo self-made millionaires with Italian sports cars,
• investment offers with hot stock picks or leveraged real estate schemes or
• speculative offers from the new Bitcoin alchemists.

Beside these financial proposals that usually enrich the intermediaries and not the investor, you also have to worry about outright fraud, like Ponzi-system where you will never recover your money or the transfer of your funds that will disappear in offshore locations.

In the face of these dangerous and potentially ruinous forces, this little book will help you avoid some glaring pitfalls and put your finances on solid ground. The principles outlined in this short free book could benefit you if you are…

…new to the financial world   because this short book will prevent you costly mistakes by enabling your to gradually build your wealth in the long-term

…already investing   as you can ensure that you are on the right path as well as compare your situation with reference points and improve it.

Even if these few pages will not solve all the problems and questions, you can avoid crucial mistakes. If you want to go through the most important elements, the essential is in bold.

You may feel that you need to take your finances into your own hands because of retirement systems having reached their limits, future expected inflation and distrust of financial intermediaries. Then, this primer is for you because and result from a solid investment philosophy been applied to navigate the market waters for many years. The few basics, principles and practical tips explained here will help you avoid the most important pitfalls.

Most pension schemes in the world are showing sign of weakness and many have moved from defined benefit plans to defined contribution plans, which shifts the responsibility of retirement from institutions to individuals. Consequently, it is important to save and invest, even small amount, to compensate for the collapse of the state pension systems and the inflation resulting of Central Banks’ money creation.

Education is your best protection against financial offers that are disadvantageous to you. This short guide should help you to understand solid investment principles for equity investing. If you feel overwhelmed, look for a good fee-only advisor not influenced by commission from insurances or banks or confront the options proposed here with your own analysis.

Financial resources are means to peaceful retirement and happiness in life. While the American investors had proper investor tools for a long time, European investors had little access to it, but this is changing and you can now take charge of your financial future.

The goal of this book is to help you become wealthy as smoothly as possible by showing you the safer way. 

Rest assured that the content is worth your attention and that it will be a good investment of your time. Have an excellent reading!

Financial situation and plan

Financial situation and savings

The understanding of your financial situation and long-term objectives (leading to the preparation of a long-term investment plan) constitutes the cornerstone of your financial future. Those first steps will define all your other investment decisions.

The key aspects of your financial situation are your wealth and savings.

To assess your wealth, you should look at your situation from a total portfolio level. Consider all your pensions assets, funds and bank accounts in one place. This allows you to determine what your net worth is and how liquid are your assets. In order to increase your wealth, you will have to start investing in a structured way

While this is not the focus of this guide, you will have to start saving a share of your income. In general, it is better to live slightly or well below your means, depending on your goals. You may find it difficult to set money aside if status and image are paramount to you. You should try to buy good quality for price products without sacrificing what brings happiness to your life. Unless you want to retire early or leave a financial legacy, even moderate saving can contribute to accumulate wealth. If you manage to control your expenses and increase your savings, you will have less financial stress and be able to find cheaper financing (for a real-estate mortgage) or invest amounts that are more significant. It is good to start by saving fifteen to  twenty percent of your income because it will provide you with the regular basis to invest progressively.

Unless you are a natural frugalist or like to count every penny, some effort will be required. You may focus on the big expenses such as trips, house, car and insurances in order to achieve the best impact with limited efforts.

Investment objectives

As mentioned by Paul Crafter in its “Investment Guide”, “Writing down your objectives, goals and strategies declares you are serious, helps you remember the details and stay focused.” Just owning random investments is not the same as meeting clear goals with discipline. Only a well-planned strategy based on your situation and objectives will help you navigate economic good and bad times in the end.

You should define reasonable long-term return expectations (which may correspond to a long-term history after deducting a conservation margin regarding the level of valuation. Let us start with a reasonable 5% nominal return and a 3% real return. Due to the very high recent growth of earnings, a reversion to the mean is likely and potential lower real returns in the future may occur.

You should try to invest early in life in order to avoid a long-lasting bear market or investing at a high price just before retirement. Whatever your age, you should intend to have a share of your wealth in equity by having invested small amounts on a regular basis. You can always develop a plan B, like reducing your expenses in case your portfolio fails to deliver the returns anticipated. However, the best approach is to start with conservative expectations in order to be on the safe side and follow the strategy with discipline.

While you cannot set the return you will get, you can at least select an appropriate risk level for your investments, which will drive your asset allocation. Your personal situation will particularly contribute to define your asset allocation, i.e. the components of your wealth (real estate, stocks, bonds and cash) and the share of your future wealth that you wish to invest in stocks. If you are young, you can tilt more towards risky investments and focus on equity. Since cash loses its real value, real estate often already constitutes an important part of your wealth and bonds do not offer a satisfactory return today, even older people shall aim for a reasonable equity allocation as inflation protection. For the sake of diversification, these stocks should represent the global market as best as possible, with different industries and currencies.

Another way of deciding on your asset allocation is to start with the market portfolio allocation and adjust it toward higher or lower expected risk and return mixes, depending on your objectives, time horizon and level of comfort with risk (your risk capacity is your financial strength and your risk tolerance is your psychological acceptance in case of market stresses). Once you have shed light to your financial situation and objectives, you can start to define your investment plan and stick to it!

Investment plan

A plethora of investment plans is available on the internet. For those who wish to invest time or are advanced investors, the CFA Institute offers excellent models. As these are sometimes complicated and more suitable for institutional investors, you will find here a simplified proposal. The “Do It Yourself” investor will need to perform some introspection and answer the basic questions about his or her financial situation before investing. You should document each evaluation with a few sentences and reference figures.

Try now to reflect on your investment, return and risk objectives by answering with sincerity to questions points below:

• What are your overall investment objective? Do you want to supplement your retirement, finance a long-term purchase or achieve financial freedom before you reach old age? Please write it down!
• What is your investment strategy? If you are investing in equities, you shall place it in the context of your total assets and document your existing investments (including your apartment / house).
• What are your return requirements? Avoid too positive expectations of 10%, which reflects an historical performance that is difficult to replicate at current price levels, you can take as a reference a return of 5% nominal and 3% after inflation.
• What is your target asset allocation and risk requirements? An index portfolio allows for adequate risk allocation within an asset class (stocks), but if you move away from a global portfolio, you will have different weights across currencies and regions.
• What is your risk tolerance? Are you willing to lose up to 30% of your portfolio, do you have enough reserves in case of emergency expenses?
• What your financial constraints? Do you have significant expenses that you will need to consider? What are the criteria for asset selection (price, liquidity, domicile)?
• Which other considerations relevant to the investment strategy can you think of? Specify other elements such as your base currency or your maximum number of investments.
• What should be your monitoring parameters? Describe the investable amounts, the timing of your investments and the next review of your plan.

You should do the whole exercise, even you do not fully grasp some questions or if you do not cover some aspects. Take 10 minutes and try to cover as many of the above aspects as possible.

Once you have completed the first review, you can compare your answers with the example below and adjust them if necessary:

Investment plan components	Illustrative answers
Overall investment objective	E.g., Moderate long-term wealth growth.
Investment strategy	E.g., Current assets of EUR 500,000 in real estate and fixed return. Objective to invest EUR 200’000 in 5 (time horizon), i.e. 40’000 per year
Return requirements	E.g., 6% nominal.
Target asset allocation and risk requirements	E.g., 30% EUR, 50% global (USD) and 20% emerging markets.
Risk tolerance	E.g., 1-year loss limit (worst-case scenario) of 15-18%, conservative profile
Relevant constraints	Short-term liquidity needs of EUR 30’000.
Considerations relevant to the investment strategy	Base currency is the EURO and the maximum number of investments shall be 3.
Monitoring parameters	3’000 investments for 12 months, once a month, with a first full review within 12 months.

Once you have developed your plan, you should only modify it if your situation or objectives have changed or if a regular review highlights a real need to adjust it.

An aggressive video on Youtube or the so-called good advice of a beginner should not make you change course! However, do not hesitate to exchange your views with a trusted friend.

How to define your investment risk

No one knows the evolution of market prices. Nevertheless, you can decide in which assets, with different risks, you want to invest. Jonathan Clements puts it this way in his book “You’ve Lost it. Now What?”: “Costs and risks can be controlled. Performance is in the hands of the gods.”

There are different individual attitudes to risk: Gamestop buyers in February 2021 or those trying to play the market, see the stock market more as a short-term speculative game. At the other end of the spectrum, you’ll find people who still regret not having invested earlier, who find the level of the stock market too high and are sitting on untapped savings forever. The fear of taking any risk and seeing their savings change in value paralyze them. I understand the playfulness and need for thrills, as well as the fear of investing for some, but you will find a more solid and serious long-term approach here.

To build a diversified portfolio across different asset types, you must first understand your risk capacity and risk tolerance. Your risk capacity defines the level of risky assets you can hold (between having a small buffer required for regular expenses and holding large untapped reserves) and your tolerance depends on your ability to accept losses (if your stock portfolio fell by 20% or more, would you be calm, find yourself in some state of agitation or lose sleep?). In your lifetime, it is possible that such a crash will cut your portfolio in half. This can be very stressful and you should not panic if it happens. If this thought scares you, your loss tolerance may be low and you should only enter the market gradually and with small amounts.

In pre-2008 market environments, the key portfolio decision was to determine the percentage of stocks and bonds that fit your risk profile and stage of life. Some experts suggested investing roughly your age in bonds; for example, if you are 65 years old, you could have invested 65% (or between 50% and 80%) of your wealth in a diversified bond portfolio.

In today’s ultra-low interest rate environment, a new investor should mostly avoid bonds for the time being, until rates rise again. Most importantly, you need to define your risk capacity and tolerance for stocks. So far, with a few exceptions, the global economy and equity markets have always performed well over the long term. In the short term, due to liquidity squeezes, conflicts or other crises, stocks can lose a lot of their value. So with good returns on average comes significant risk, especially for individual companies. Diversification helps mitigate this risk without reducing potential returns, but very sharp corrections and long-term declining markets are possible. Because of the efficiency of the markets (i.e., prices incorporating publicly available information) and the difficulty of beating the market, a diversified portfolio is best suited for most investors to limit investment risks.

In practice: To offset potential losses in stocks and avoid bonds, it is best to consider a mix of volatile investments such as stocks and stable assets. If you have a company or government pension, you can add it to your stable assets. If your risk capacity allows and you are looking for more “entertainment” with speculative bets or crypto-currencies, this guide suggests to be very cautious, to consider them as a casino account and to keep them at a reasonable level (no more than 10% of your total wealth and considered over your entire life) as you may well lose it all!

Investment principles

How to achieve asset diversification

New investors should divide their portfolio into risky money and safe money. Risky money should provide you with (erratic) growth and safe money will limit the overall short-term changes of your wealth. You should first set some money aside as a safety buffer and you can then begin investing in diversified risky long-term securities such as stocks. You should then focus on building progressively a solid equity portfolio as a key constituent of diversified wealth. By adding risky (but not fully correlated) assets to a portfolio, you can decrease risks without sacrificing returns.

Beside your safety buffer and your core equity portfolio, you should also consider real estate: Despite the concentration risk of a property and the time commitment required, owning at lease a part your home before retirement will reduce your financial burden. Moreover, Real Estate is one of the few asset classes that usually had a low correlation with the traditional asset classes (stock and bonds). 

Other alternative options are subject to debate, but as Rick Ferry pointed out in “All About Asset Allocation”, “A good rule of thumb for all alternative investments is, when in doubt, stay out.” Here are some examples.

Despite having existed for ages, gold does not generate cash and its price is based on different assumptions and speculation, not on economical use, since the annual industrial requirement of gold are much lower than the volume available.

Most commodities or cryptocurrencies are very volatile for speculative purpose but produce no cash flow and are difficult to value.

With regard to Hedge Funds and despite some success stories such as Renaissance, usually not available for retail investors, investors should generally avoid those speculative vehicles because of asymmetrical risks, high fees, limited exit options and low transparency.

Diversification across many companies allows limiting losses in case of a sharp decline in performance or failure of a particular company. In practice, there are opportunities for diversified investments that cover the whole world and you should consider a global portfolio as a starting point. The overweight of the United States in global market capitalization can be limited by supplementing the portfolio with exposure to more specific markets and currencies. If you wish to make a medium-term investment involving a payment in another currency, if your currency is under-represented in existing investments or if your retirement expenses require a particular currency, you can also put your money in an investment exposed to a specific currency (e.g. EUR, GBP or CHF passive funds). This basic guidance should help you construct your portfolio based on the types/ classes of investments, particularly equity and real estate. You can then choose the specific vehicles for the former, ideally low-cost ETFs and funds.

Active and passive management

After the broad diversification and asset allocation decisions, you can define specific investment alternatives. However, before choosing your vehicles and investing, you must make a fundamental choice between active and passive management.

Stock picking implies choosing a limited number of stocks and market timing means that you buy or sell at specific times in the hope of making a profit: this selection of investment and timing is called active management; finance gurus and many stock picking newsletters promise advices to beat the market. A thriving industry follows this principle, from Wall Street to Paradeplatz and La Défense. However, the costly advisers and mutual funds advocating active management have shown limited success when they compare to the market return over the long-term. Beside very limited successful exceptions, mostly based on cutting-edge IT infrastructure and secretive trading strategies of hedge funds and proprietary trading companies, it is almost impossible, to succeed at market timing over the long run. Consequently, the significant fees gathered by the active managers and financial intermediaries are the portion of the returns that is removed from investors’ pockets.

Numerous studies have revealed that on average, the investor will lose his bets with the market. Regular investors are unable to obtain results above the market on a consistent basis. In contrast, with passive investing, you invest in a collection of stocks representing the market. These collections of stocks for a particular market correspond to indices. As pointed out by Rick Ferri in “All About Index Funds”, “in the 1950s academic researchers began to search for “efficient” portfolios of stocks and found that the most efficient portfolio was the market itself.”

Passive investing is appropriate for most investors, especially for beginner investors, and offers the following advantages:

1. Better average performance than active management over the long term;
2. Fees on index funds are generally lower and more transparent than on active funds;
3. Superior diversification since the passive investing cover the whole index;
4. Transparency and simplicity: As John Bogle of Vanguard wrote, “there is no point in looking for a needle in a haystack, you are better off buying the whole haystack”.

In practice, the renouncement to active management as an investment approach is one of the most important decision that an investor will make concerning a portfolio in order to improve diversification, reduce costs and avoid non-market risks resulting from active management failures, such as wrong stock picking, manager incompetence, and a higher risks of failures and fraud. Choosing a reputable indexed offering such as Vanguard or iShares enable to reduce those risks. Even if the markets are not perfectly efficient, the recommended investment strategy is to consider them as sufficiently efficient and follow a passive strategy. This is currently the best available cost-effective approach for retail investors.

Controlling investment costs and taxes

The returns for your investments in the next decade are uncertain (and you should avoid investing in bulk at a high level of asset prices for this reason): Will it be 3%, 5%? How does it compare with inflation? You have no influence on those macro-variables such as interest rates, inflation and the currency exchanges, but you can control a limited number of elements such as your diversification or your investment approach.

The markets being uncertain, you should focus on the factors that are key to improve your overall performance. The good performance of an investment is impacted by external factors and by some actors without any possibility for you to limit their intrusions, such as internal company costs or company management failure. Other decisions, such as the choice of investments and platform allow you to limit the costs and taxes of investment. As stated by John Bogle in “The Battle for the Soul of Capitalism”, “The only things that can be predicted are fees and taxes. Fees and taxes can be very, very large; they can be predicted; and they can be reduced enormously by anyone who merely tries.”

The financial industry has rarely been a trusted partner for the individual investor. This illustrated by the following anecdote from the classic book “Where are the Customers’ Yachts?” (1940), by Fred Schwed Jr. “An out-of-town visitor was being shown the wonders of the New York financial district. (…), ‘Look, those are the banker’s and brokers’ yachts. Where are the customers’ yachts?’ asked the naive visitor.” Today, financial intermediaries are usually getting richer than their clients by charging a very high price on their services. In his book “Stay The Course” J. Bogle shares this view because he “realized that a mutual company would never provide me with the personal fortune that so many denizens of Wall Street would earn”.

New instruments and enhanced transparency make it possible today to everyone to access cost-effective instruments under a passive approach, such as ETFs and a cost-effective broker. As such, the less you expend management and banking fees, the more money stays in your pocket.

In order to facilitate your first steps and reduce the fees paid to the banks, this guide includes three key ETFS, which can serve you as a comparative basis for your decisions. Since investing involves risks of loss and is an important decision, you should take your time and look for alternatives. Criteria are the volume, domicile, replication method, reputation of the service provider and the total expense ratio (which shall be below 0.2%). If you are satisfied with your current providers, please always compare the cost and consider if the service is worth the extra costs.

An excellent way to invest in a tax-efficient manner is to use the tax-free investment schemes of your jurisdiction. Depending on your domicile, some schemes may benefits from certain tax advantages. Income and capital gains realized on this account are, under certain conditions, such as being held for a sufficiently long period, taxed at a low level or tax deductible up to a limited annual amount. A level exceeding the legal limits does not usually make sense, since these plans are generally more expensive than their counterparts on the open market and their choice is more limited. As such, you should place your investment plan within the framework of your overall estate planning and consider your individual tax situation.

Investment practice

Passive Asset allocation through indexes

Good index funds (and not all of them are good) fulfill the above criteria of passive management (market or index performance, low fees, diversification and transparency). An index fund is a fund that represents all the stocks in the index. Instead of buying stocks, you buy units of the index and in doing so, you are buying the equivalent of all the stocks in the index. Your performance will be virtually identical to the market. If the market does well, your shares will do well. If the markets fall, you will follow suit.

Index funds come in two versions:

1. Mutual funds. These are funds managed directly by a financial institution.
2. Exchange-traded funds (ETFs). These are exchange-traded funds, the largest and most recommended issuers being BlackRock (iShares) and Vanguard.

Select a limited portfolio of ETFs as index

In his “Little Book of Common Sense Investing” John Bogle proposes to use only one fund such as “a Total Stock Market Index Fund” to cover equity exposure. Taylor Larimore also recommends simplicity because a straightforward portfolio has lower costs and reduces administrative work.

Depending on your domicile, you should look for low-cost US or Irish ETFs. If you face several variants for the same ETF, you should buy large ETFs at the stock exchange with the lowest bid-ask spread and physical replication, since swap-based ETF (synthetic replication) do not own the underlying equity but an unrelated basket of assets combined with derivatives to gain access to the expected market. This would be acceptable for short-term speculative trading but I avoid them because of my long-term horizon.

To invest in a mutual fund, you will not need access to the stock market. You can invest in mutual funds through a financial institution such as Vanguard. Unfortunately, this is rarely the best option outside of the United States, which has the largest offering in the world. In the European Union or in Switzerland, you will have to invest in an ETF in order to gain a broad access to the stock market, for which you will use a broker as intermediary. Thanks to its platform, you will be able to buy the shares of an ETF as if it were an individual company share.

Decide on the amount

If this is your first contact with the stock market, you should start with small amounts. This will allow you to see how you react in case of losses and to test the resistance of your psychological profile.

Except if you have huge cash reserves, you should avoid investing a high percentage of your money in stocks during a year or two. A stock market decline right after a bulk investment can be a traumatic experience for any investor.

There is no fix rule to determine the amount but you will find here some numerical examples:

• If you plan to save 1’000 EUR per month over twenty years, this would lead to a total investment of EUR 240’000 by investing 3’000 EUR every quarter.
• If you can compare it to your total wealth at retirement of 1’000’000, this would amount to around a quarter of your worth (without taking into account dividends and value variation). Using a rule of 3%, you could withdraw EUR 7’200 per year to compensate for state pension shortfalls, for extra expense, vacation, house renovation, take an expensive course, while mostly preserving your capital.

By designing some scenarios as above and playing those numbers (saving and targeted wealth), you can define your investment rate and the amount that you want to commit. Beware that some people may be too optimistic by looking at past returns and invest too much in a bulk. So give some thoughts to your numbers and stick to it.

Timing of investments

This year, as the level of equity prices is high and in order to avoid investing before a decreasing market, investing incrementally is the only viable solution.

Based on your plan, you should invest regularly, for example every quarter, month, or even week at the beginning. In order to balance time, cost and market variations, I would suggest that you invest on a monthly basis for the first year. If your broker proposes low cost of investments (a few Euros per trade), these limited costs of EUR 30 – 50 for the first year will overcompensate the risk taken by investing in bulk at an inappropriate timing.

Investing Steps

You have now determined the parameters and made the necessary decisions. You can open an account with a low-cost intermediary, transfer the money to this brokerage account and make your first investment in the stock market by reviewing the tutorial of your broker and following the generic steps below:

• Insert the ISIN of the ETF;
• Decide the number of ETF shares;
• Insert a limit order with a price close to the bid-ask; the higher your order, the higher the probability that your order will be placed;
• Click on place order: You are now the owner of the chosen ETF !

Investment instruments

Investment Platform

ETFs offer real-time pricing and superior tax efficiency, but suffer from the need to deal with a broker to make purchases and sales. Nevertheless, this is usually the best choice available for European investors. You can consider many platforms but it is key that they hold a proper license, are of good reputation and charge low commission. For beginner investors, you can look at DEGIRO (an European broker from the Netherlands that also offers a good range of low cost investments) or Interactive Brokers which offers wider options in terms of derivatives. Most transactions will cost you around 1 USD at Interactive Brokers and DEGIRO even proposes a selection of 200 commission-free ETFs. DEGIRO and Interactive Brokers charge no custody/administrative fees. In our opinion, DEGIRO is one of the best stock brokers in Europe (Link to DEGIRO) and Interactive Brokers (Link to Interactive Brokers) is an excellent choice if your domicile is in the European Union, United Kingdom and Switzerland and please do not hesitate to compare different options of international brokers servicing your jurisdiction with those two examples as reference. Please remember that investing carries a risk of loss, double-check any information for your individual situation and ensure that the companies are solid and have offered their services for some years already.

Index Funds: Core Options

You should consider the tax-optimized plans in your jurisdiction along your other investments. You can select your domicile on the website www.justetf.com and add the necessary keyword in order to filter eligible ETFs. The provider Lyxor and Amundi provide options starting with 0.15% Total Expense Ratio. The only concerns are the usually low volume of those funds leading to higher market impact and a swap-based replication, meaning that the ETF does not own the equity directly but gains an equity market exposure through a derivative.

Swiss, French and Belgian investors can use the three following building blocks from iShares and Vanguard, all having a high volume, low costs and a physical replication. They are also domiciled in Ireland, which offers some degree of security for European investors compared to Singaporean and US ETFs that exhibit other risk-benefit-profiles. They cover the developed world (with a high weighting of the United States), the developing world and the Eurozone.

• As a core index fund, the Vanguard FTSE Developed World index is an excellent choice, despite its very high weight in US stocks. It tracks the largest stocks in developed markets across the world. It is a large ETF with 1’074m CHF assets under management, is physically replicated, is older than 5 years and its domicile is Ireland.
• For an exposure to China (over 37% of the ETF asset in 2021) and emerging markets, The ETF iShares MSCI EM is a good choice. It invests in stocks with focus on Emerging Markets and allows a broad investment with low fees in appr. 1’424 stocks. The total expense ratio amounts to 0.18% p.a. and is a very large ETF with 3’871m CHF assets under management.
• For an exposure to the EUROZONE, you can consider the ETF iShares Core EURO STOXX 50. The total expense ratio amounts to 0.10% p.a. The fund replicates the performance of the underlying index by buying all the index constituents (full replication).This is a very large ETF with 4,913m CHF assets under management.

Region	Name	Fees	ISIN
Developed World	Vanguard FTSE Developed World UCITS ETF (Dist)	0.12%	IE00BKX55T58
Developing World	iShares MSCI EM UCITS ETF (Dist)	0.18%	IE00B0M63177,
Eurozone	iShares Core EURO STOXX 50 UCITS ETF EUR (Dist)	0.10%	IE0008471009

If you wish an exposure to the Swiss Franc, you can add the iShares Core SPI ETF (CH) with a TER of 0.1% (CH0237935652) with a strong weighting on three companies: Nestlé, Novartis and Roche. You can also add country-specific ETFs under www.justetf.com, but as a start, you can invest on the three ETFs mentioned above.

Final thoughts

In the second half of this guide, you received actionable steps using the ETFs in order simplify your start, but please compare those options with your current and further services providers. The most important implication for you is to understand what you are investing in and you shall ideally complement this information with other sources because investing involves risk of loss.

As mentioned in the practical tips, it is better to start small and learn along the way. I recommend publications from professionals like Bridgewater or the Journal of Portfolio Management. You should base your decisions on the evidence of solid source of information from peer-reviewed academic journals or good source that popularize such content. Ideally, it would be wise to read 2-3 reference books on personal finance, markets and portfolio management. Not everyone is interested in the subject and I understand if you stick to the minimum and do not want to spend too much time.

Above all, do not panic and do not try to sell or buy all your assets at once, especially at the current high level of price. Finding good entry points is more a matter of patience and luck than skill. Invest small amounts according to your plan and review it once a year. I recommend that you do a complete review at the beginning of the year after the previous year’s closing and in preparation for the tax forms. You should then continue to invest regularly by following the amounts and ETFs determined, even if they are small amounts, and let accumulate over time.

The core of this guide are the principles of diversification and cost effectiveness, that you can apply to other offering, while the examples given (Vanguard, iShares, Interactive Brokers and DEGIRO) can serve as reference points. Please do not hesitate to review further information and leave a message at www.guidefinances in order to improve this content.

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