Mid-term investing before property purchase

[prayerspirit]

Dear all,

Long time follower of the sub, I would like your opinion on the following situation. My partner (32F) and I (29M) live in Switzerland and are putting money aside. We looked at investment options (banks, robo-advisors, etc...) and came across the Boglehead approach and decided to take matters into our own hands.

Our financial situation is as follows:

• We have about 250k CHF on the side after working full time for a few years.
• My partner earns about 120k/year after taxes, and I earn about 80k/year.
• Our combined living expenses in Switzerland are about 70-80k/y.

Our investment plan would be to start by investing 100k in VT and then add a fixed amount each month or quarter for the rest of our lives. We would like to keep at least 50k for emergencies.

Our financial goals are as follows:

• We would like to be able to buy a property in 7-10 years, which we estimate would cost about 500k as a deposit (Switzerland is very expensive).
• We would like to reach financial independence before retirement (not necessarily by stopping working, but by being able to make life decisions independent of income). This would mean having about 2.5mio invested to maintain current livestyle with a 4% withdrawal rule.

So the question is as follows: if we invest 100k/y in VT for the next 7 years, we would have about 800k invested without taking into account gains or losses. Our goal would be twofold: to invest as much as we can, while protecting our goal of being able to buy a house. So if the market crashes in 6 years time, we would like to be able to find a solution in the following years that does not involve selling the money invested at a bad time.

We have been advised to also look into bonds as the timing seems to be favourable. Would it make sense for us to invest 20% in BNDW to secure the deposit for the future house? As we are quite young and have good job security, our initial stance would be to go for 100% equities.

I would like your opinion on this situation, both from an investment and personal point of view. How would you behave in the next 10 years to optimize investment with this project? Should we invest in bonds? Should we start withdrawing money in 5y to make sure we have the deposit ready when we need it?

Thanks a lot for your help!!

 

[ayosyrene]

@prayerspirit VOO/VT/QQQM biweekly purchase on recurring for 60-75% of your yearly invest. Use the rest to pick bigger dips to buy extra. Pick two etfs max depending on what you believe in more, VT being the most diversified. If you are into stock picking, use 15-20% to pick 4 you really really really understand and are behind.

Never bond ETFS, regardless of currency. Not until you really understand what drives them up/down and how bonds never mature in an ETF.

Always max 3a every year.

Don’t diversify too much, ETFs already give you that. Stay the course with recurring. If your salaries increase and you have gap in your 2nd pillar and the pension fund is overfunded, consider investing your yearly dividends into it to offset extra income tax.

 

[baothy2201]

@prayerspirit What kind of house do you want to buy in the Zurich area with 500K down payment? And do you realize what a 80% mortgage on a 3M CHF (realistic scenario) house will do to your finances? The Zurich area is not for home ownership unless you are really above the curve financially. By the way, did you account for 300K+ per child that you might want to have? And the extra taxes you have to pay if you get marries?

 

[bethelight]

@baothy2201 300k per child? Over what period of time?

Sorry, I was just casually reading around here and saw this number, scaring me as we're expecting