February 15, 2019

How high should the stock component of my investment be?



40, 60, 80 or 100? What percentage of a financial investment should flow into stock is a question that occupies entire armies of financial experts. The technical term is asset allocation.

In addition to stock, this also includes cash, currencies, bonds, real estate, commodities, and precious metals. If you want to be even more precise, you can differentiate between sectors and regions when it comes to stocks.

Logically, the most amount of money is made with the most profitable asset class. And to answer that question as precisely as possible as to which asset class that is: sometimes this one, sometimes that one.

We simply don't know which asset class will be the best in the future. As they say in America, "End of story". For the investor, this means that he should ideally invest his money evenly.

But don't forget that you probably already have done this. You're most likely already a member of a pension fund, which is usually invested in bonds and Swiss equities. This means that you can already forget about those two. Maybe you are also a homeowner - then you can also tick off real estate.

As a result, it is recommended that most people invest 100 percent in foreign stocks. Most likely European, because they are favorably valued.

Is that a good strategy? That will have to be seen. And at a much later time. At some points, it will look like a very good strategy and at others, it will look like a very bad one. That is inevitable.

Those who invest money invest in the future, and that future is uncertain. If you can't handle that, you have to play it safe. That means several savings accounts, all of which have zero interest rates or negative interest rates.

If you don't want that and instead want to earn money, you have to accept that the world is constantly changing and that today's big hit can be tomorrow's big disaster and vice versa. End of story.



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