Putting the principles and the plan into practice

Asset allocation through a very limited portfolio of ETFs

Good index funds, not all of them, 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 funds are traded on exchanges, the largest and most recommended issuers being BlackRock (iShares) and Vanguard.

Index Funds: Core Options

As a core index fund, Vanguard Total World (VT) is an excellent ETF, for example. If VT is not available, the iShares MSCI World ETF is a good alternative. For emerging markets, the Vanguard FTSE Emerging Markets ETF (VWO) is my first choice.
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. You will have to invest in an ETF in order to gain 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.

Platform: Main options

For a Swiss or international investor, the following three platforms can be considered, each with their own advantages and disadvantages (Disclaimer: I personally use all three for platform diversification):

  • Interactive Brokers: This American broker also has offices in the UK, Holland and Switzerland. They have very low prices and a very efficient platform. The minimum investment without penalty is USD 100,000 and their system is professional, so it can be intimidating for a beginner. However, it is the first choice for an experienced investor.
  • DEGIRO: This is a European broker from the Netherlands that also offers a good range of low cost investments. Although it does not offer as much as Interactive Brokers, it is easier to get started and it may be advisable to invest your first 10,000 – 80’000 francs or two years with DEGIRO before venturing out with Interactive Brokers.
  • Swissquote: If a Swiss bank for CHF investments is desired, this option may be considered. The much higher custody and transaction fees than Interactive Brokers and exorbitant forex costs should give pause, but if a Swiss account is desired with good magazine subscription this bank may be an acceptable option for investment in Swiss francs.

Then follow those three steps:

Decide on the amount

If this is your first contact with the stock market, I recommend starting 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.

Determine the timing of investments

On the basis of your plan, it is then recommended to invest regularly, for example every quarter, month, or even week. After 9 or 12 months, reflect on your actions.


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.

Be clever: Get informed, get educated and stay the course

As mentioned in the practical tips, it is better to start small and learn slowly along the way. I recommend publications from professionals like Bridgewater and my weekly updates. Ideally, it would be wise to read 2-3 reference books (see the library under construction) 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. If you do not want to invest much time, are still recommend to invest some time. You will then be able to spend a few minutes to invest every quarter after having completed those initial homework.
Above all, do not panic and do not try to sell or buy all your assets at once. 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 statement at the beginning of the year after the previous year’s closing and in preparation for the tax forms. You should then invest regularly by following the amounts and ETFs determined, even if they are small amounts, and they will accumulate over time.