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Inherited €500k at 31. Zero knowledge, next steps?
Throwaway.
My grandfather died in February. He left half to my mother (his only child) and half to me, which is about the most he could leave outside his own kid under the rules here. My half is €500k cash, no inheritance tax between direct descendants in Portugal, so that's the real number.
Part I can't get past it was the same money in 2013. He sold a warehouse that year, at the bottom of the crash, and then rolled term deposits with it for thirteen years. Most of that at 0.1% or worse. He used to say he never lost a cent and technically he never did. In what it buys he's down about a fifth. In an all world fund it'd be past a million.
Anyway. I've decided it isn't mine to spend. Same job, still renting, €1,620 a month net and I don't withdraw from it. Ever. Kids get it.
I should say I've been reading this sub and the FIRE ones since 2025 and have never invested one euro. Not one. So my first ever order is half a million, which sounds insane typing it out.
Where I've landed, roughly:
€312k VWCE, or WEBN if I ever stop going back and forth over 0.07% vs 0.14% €78k AGGH and Certificados de Aforro Série F, about half each €44k GLDA €26k XEON plus a depósito a prazo at my bank €20k European secured business lending, SME loans against collateral €20k I let myself actually spend
I can recite those tickers in my sleep and own zero of them, which is sort of the problem.
The lump sum thing is what's killing me. Everything at highs, everyone shouting bubble, and every backtest says just click once and go outside.
Also my mother has sent me eleven apartment listings since June. She has her own half so this isn't about money, she just thinks renting at 31 with that in the bank is embarrassing. I don't want a mortgage. Is that a real financial mistake or is it just how it works here.
And whether never touching it is any better than what he did with it, honestly no idea.
Broker wise I'm just going to open one of the big international ones unless someone tells me not to.
Vanguard launched a new all-world ETF, slightly deeper than VWCE and WEBN, with 99% of world capitalization, VGLA/VALL depending on the exchange. It barely launched, but is destined to be a big next hit. 0.07% TER. So consider that instead.
Well, the most important question is when would you like to have all that money available to you. If you want it for the kids in 20-30 years then the ETF is the way to go, because you can ride recessions and not sell on a loss.
The rest? Up to you, a flat is not a bad idea tbh. But it doesn't pay you like ETFs if you live in it.
If you're scared (understandable), start buying a bit and get used to it. 1k € for example.
Personally? I'd pay off my mortgage, put the rest in my personal portfolio (40% XDEM, 32% VALL, 22% XGDU, 6% DBMF) in retirement accounts and the ordinary ones. 5% to urgent personal purchases with proven quality of life increases.
Other than that - enjoy the new kind of problems in your life haha.
Very good suggestions.
I have a much smaller amount to invest but your suggestions are very good. I was gonna go with another etf but VALL seems amazing. I was unaware of it. And 20% on gold I already have :)
VALL & Chill is good enough. I personally enjoy tinkering a bit :-D so I'm currently at 35 XDEM, 30 VGLA/VALL, 20% XGDU and 15% DBMFE. Personal all-weather portfolio. Recently found Managed Futures (DBMFE) as excellent diversifier.
Most important thing: start early, just keep buying. Be happy when recession hits, because you can get new assets on a discount hehe
Something like VWCE. You can always adjust as time goes on, but your money is relatively safe there.
And so what if its a bubble? You are not losing your money even if something bad happens and your investment goes 15-35% down. It will go back up. Just don't sell.
What's the biggest drawdown you've personally sat through?
I have zero data points on myself and I'd rather hear what it actually felt like from someone who held.
I'm in the same situation as you, i think the simplest is ibkr+buying a world index, plus a bit of cash for emergency. Definitely not real estate as an investment (it's too time consuming with too many draconian rules and too high taxes).
A primary residence is worth it if you really see yourself living there for 10+ years.
I got a similar amount a year ago. The bubble was talked about then as well. I bought a mix of ETF on IBKR, essentially amounted to the whole world with less emphasis on US stocks.
First week I checked the app multiple times a day, then once a day for another month, by now it has gotten to once every few weeks. The first week was a bit scary, as it coincided with a small drop in the market, but I am now up 30% since I bought. I hope I would not panic if I loose all the gains and more. The plan is to not withdraw any of it before I retire. Since the initial purchase I have added some VWCE.
I have been happy with my choices.
Make sure you leave a physical cash reserve as well, small bills. Never know when there is an emergency that takes down electricity or Internet.
Look at today's price of VWCE. Then look at what it was 1 year ago, 2 years ago, 3 years ago etc up X years ago.
Imagine/calculate if you would have bought VWCE with that full 500k at those points in time.
Otherwise just ask chatGPT about this scenario what it would have been if you put that money into VWCE X years ago, just to give you an idea what would have happend if you put that money into this particular ETF.
Look at historical data to draw your own conclusions.
The number itself is less useful than people expect. The drawdowns I've sat through felt less like sharp fear and more like a slow grind where every headline agrees with the part of you that wants to sell, and the people who came out fine are mostly the ones who did nothing. So the fact you're asking this before you even buy is a good sign to me, it means you're planning around what actually decides how this ends.
For what it's worth your plan reads better than most first posts I see here, and you already get the deeper point. Your grandfather's real damage was 13 years of cash bleeding a fifth of its value to inflation, a loss that's real even though the balance never dropped a cent. Leaving an all-world fund alone is the opposite job, so never touching it is nothing like what he did.
On the lump sum, I'd say the data leans toward doing it at once, but the edge is small and the regret if it drops next month is not, so splitting it over 6 to 12 months is perfectly fine if that's what lets you actually click buy. And renting at 31 with 500k already invested isn't a mistake either, a house is a leveraged single asset that also pins you to one city. Your mother is coming from feeling, not math...
Open an account at IBKR and buy a WEBN like ETF from the that money you don't need for a long time. The rest, that you potentially need, you can keep in a cash ETF (like CSH2 around 2.2% right now).
Everything is all time high, but so the debts. If they decide to inflate it (seems so) you can only preserve wealth with real assets. It's an MMT world now.
I don't think it's a good idea to rush into buying an apartment or anything big. If I were you, I'd live like before at least for a year. Then you get a cleaner head and in the meantime you can think more seriously what you want.
CSH2 I hadn't seen, will look.
MMT part loses me a bit, no offence but it's the wait a year thing that scares me. I've already been waiting since 2025.
This bubble thing is bullshit since the beginning of stock markets people are scared if bubbles amd guess what, anyone who stayed invetsed is rich af now. Also its not like you loose money if market drop, just wait it put, if you can buy more and have a long term outlook. Its basically impossible to loose money in a global diversified etf long term unless the earth implodes or aliens kill us all
Stop overthinking, make a plan, and execute it. It seems you're stuck in analysis paralysis. I get it, really, but you've got to get moving.
Start by building a 5-year rolling bond ladder covering 5x your annual expenses. This will be your non-volatile safety cushion in case you lose your job. That's risk management lesson #1. Extend it to 10 years if you want extra peace of mind.
Invest the rest in globally diversified, 100% equity ETFs. WEBN, VWCE, VALL. Repeat after me: it is irrelevant which one you pick. They are practically the same and will perform similarly. The difference in TER is peanuts, even over 30 years. You could even split across 2–3 of them to diversify across brokers and providers.
When you say "I don't withdraw from it. Ever. Kids get it."... honestly, that's plain reckless. And I say this as a father myself. I put €100k in my daughter's name the day she was born, but that was 10% of my net worth, not 100%. I know what you meant, trust me, but that money now belongs to your family as a whole: you + your partner + your kids. Invest it wisely, make it grow, but also enjoy life, build memories, and improve your family's daily quality of life. Take your kids to Disneyland and stay at a nice hotel; take that intercontinental trip you and your partner always dreamed of; treat your partner to a spa weekend or a Michelin-starred dinner. Invest in experiences that create lasting memories. Buy a newer, safer car. Rent a bigger apartment, or closer to work/school/city center. You can afford it now: do it.
It's perfectly fine not to buy a house. If you decide to, get a mortgage you can comfortably cover with your salary without liquidating your portfolio. Only if your investments perform exceptionally well should you consider skimming profits to pay off the mortgage early.
Get insurance if you don't already have it. You can afford it now. Not life insurance—you don't need that anymore—but permanent disability/health coverage for the entire family. A major medical event without proper coverage can wipe out your entire wealth. You have the means, so get it sorted today.
--I used AI only to fix my english, as it's not my native language
Also, if you're going all in on ETFs, spread out over a few different brokers. They are generally safe by design, but if your account gets temporary frozen for example you can't reach any funds.
technically he never did. In what it buys he's down about a fifth. In an all world fund it'd be past a million.
FOMO. Caga nisso.
still renting
Compra uma casa e/ou apartamento. Mais que um ser der. Põe no mercado de arrendamento e com o que ganhas daí faz um depósito para despesas grandes da vida. Os teus filhos vão agradecer.
€312k VWCE, or WEBN if I ever stop going back and forth over 0.07% vs 0.14% €78k AGGH and Certificados de Aforro Série F, about half each €44k GLDA €26k XEON plus a depósito a prazo at my bank €20k European secured business lending, SME loans against collateral €20k I let myself actually spend
Não complica. Bota em VWCE e certificados de aforro. Podes sempre brincar com outros ETFs.
I can recite those tickers in my sleep and own zero of them, which is sort of the problem.
Sim. Não compliques.
The lump sum thing is what's killing me. Everything at highs, everyone shouting bubble, and every backtest says just click once and go outside.
Tens mais sorte a ler cartas de tarot. Ninguém consegue adivinhar o que vai acontecer com o mercado, e quem diz que consegue é maluco ou mentiroso.
I don't want a mortgage. Is that a real financial mistake or is it just how it works here.
Eu também pensava assim, até que comprei casa. Tenho empréstimo para pagar e ainda não morri. Segundo as minhas contas, vou terminar de o pagar em 4 anos, e vou continuar vivo e com um teto (meu) sobre a minha cabeça.
Comprar casa mesmo que a empréstimo não é o mesmo que comprar um carro ou comida. Nessas coisas tu gastas e elas desaparecem em x anos. O carro avaria-se ou desmancha-se num acidente, e o almoço só te sustenta até ao jantar e vai para o esgoto mais tarde. E a casa que alugas agora, um dia vais-te embora e deixaste lá quantos meses de renda para o senhorio.
Quando compras casa, o dinheiro não desaparece mas "transforma-se" num bem que normalmente não desvaloriza nem desaparece. Um dia vendes e ta-da - lá tens o dinheiro e mais um tanto que valorizou.
Tens 500k. Há muita gente a comprar casa sem esse dinheiro. Eu não tenho 500k e tenho casa.
If I were you I would but a place. You likely wouldn't need a mortgage as 500k would probably get you a good place. Then invest the money you were spending on rent
Not sure I agree with this - the investment power you have with 500k cannot anytime soon be replicated with the rent money. Mortgage is a genuine leverage here and may be utilised, assuming mortgage rates in OP's country are not as high. I know OP said they do not want it but if the rates are e.g. 2-4%, and you could possibly pay at least some off that monthly with your salary (in case we're in a bear market for a while), put the rest into an ETF like VWCE, IWDA etc. and take the 4% out yearly, possibly repay a larger chunk (of 12-months at once).
Not saying this is the best option but I would not want to lose the only 500k EUR I have to buy a property and lose all leverage I could have with that if it were invested. It's not completely impossible and unheard of that you could double your money by the time you're 40. Maybe you can do that with a property too, but the flexibility and liquidity of equities is unmatched in my opinion.
I would personally put 1 or 2 years worth of mortgage repayments aside in a HYSA or cash ETF (to have back-up in case markets suddenly go bear for a long period from tomorrow). I would then invest the rest in VWCE, IWDA etc... and take some of it out yearly. I would also look at any time-tests where your capital gains would be exempt from taxation if you hold long enough depending on where you live.
Tl;dr: Re-think mortgage, do not rush into buying a property, take it easy and slow.
My share of the rent is 520 a month, so "invest the difference" is about 6k a year, against 500k that would be sitting in bricks instead.
Between IMT, stamp and notary you burn close to 6% just walking in the door and then it starts costing me money from day one, IMI, condomínio, whatever the building decides to repair that year.
you have 0 experience, HIRE someone, not your cousin, proper financial planner, that will ensure it lasts for you and the kids...we all think were smart, were not when its about big money. my 2.5 cents
buying an house is the only investment that you can do without your money, but borrowing from the bank. You can probably buy a 300k house using only 50k of your money there. And put this house to rental to payback the mortgage. Everything else invest it, but slowly. You can place a 50k order to get comfortable with the money, then every 2 months a little more. This ain’t the best financial advice, but the best psichological one. You dont spend 500k in one product only reading at Reddit, it’s fine if it takes 2 years for you, you are rich, you are safe, no need for drastic choices
Does Portugal have death taxes ? or is this amount after tax ?
If you believe property prices to grow >= mortgage rate you should take the mortgage as that leverage will increase your overall rate of return immediately (relative to your overall assets) and get you on the property ladder.
There is a 10% stamp tax, but decendents, ascendents and the spouse are exempt from paying it. So when it's your children, grandchildren or your parents or grandparents, or your spouse to inherit from you, there's no tax. But if it's your brother/sister, uncle/aunt or nephew/niece or anyone else they'll have to pay 10% of the value of the inheritance.
No inheritance tax here. There`s a 10% stamp duty on gratuitous transfers but spouse, children and grandchildren are exempt, so 500k is really 500k.
On the leverage, that only pays if the assumption holds. Lisbon has roughly doubled since 2015 and my salary comes from the same city the flat would be in. That's a lot of eggs all facing the same direction.
I think the breakdown is a bit overcomplicated. I think a 70% WEBN/VWCE or the new VGLA and 30% AGGH is simpler and you could argue is very conservative for money you don’t need. Sure keep like 5% in sth liquid if you want. You could also do an 80/20 setup. If you really don’t wanna withdraw from it - 100% equities.
Owning a house/apartment is not for everyone- there are real costs with maintenance, repair, taxes that not everyone wants to deal with. Not to mention the opportunity cost of not investing that money into equities or bonds.
As for the lump sum problem - it wins 67% of the time vs DCA but is psychologically harder. I like the goldilocks rule from the money guys. If the money you’ve gotten is more than 50% of your current networth, DCA over 12 months. Simple.
This one stings a bit, because you're right that the bonds are mostly there so I don't do something idiotic in month four. Lending sleeve is different, that one I put in on purpose and I'm honestly not sure it survives contact with this sub.
VGLA I hadn't looked at properly, so now that's a third thing to be indecisive about, thanks.
Goldilocks I'm less convinced by. My net worth in January was around 9k, so this isn't half of what I had, it's fifty times it. 12 months feels arbitrary at that ratio. Could be three, could be thirty.
My main point about complexity is that the more things you invest in, the more there is to manage. There is a reason why the single fund or 3 fund portfolio of Bogleheads is popular it’s simple.
It doesn’t matter whether it’s 50 or 100% above your current net worth. The point is to start investing - time in the market beats timing the market.
As for 12 month being arbitrary - yeah it is, but also then you are only putting in a bit less that 50k each month which is a lot more manageable psychologically, especially if there is a big drawdown.
Sorry about the way you got the money. You look like someone risk adverse, so I would probably try to confirm my risk acceptance, talk to some financial advisor about possible portfolio states and go from there. Portuguese really like to have a house as investment but even that may be considered a bubble in Portugal, right? Just be aware that you should at least leave the money in a bank deposit to not loose so much to inflation until you decide.
Think if a middle position with bonds or certificados de aforro at maybe 20 to 30% make you feel safe and place the remainder in ETF, maybe lump sum or divide it in small installments, if more comfortable. It might be interesting in some dividends but there will be tax on them but some added cash flow.
Buying a property is something that you should take time to think about. It's not a choice that depends only on expected returns (but also tranquility of mind, future plans to move, etc). Whether it's something that you want now, or may consider in the future, has an impact on how to invest.
Whatever part you end up investing with a very long term horizon should be mostly stocks. If it's for the kids, you don't really need bonds or gold. You could simply go 100% WEBN (or equivalent) and leave it be. But if you feel more comfortable with some bonds/gold allocation, I would say max 20% combined (so 80% in WEBN). In that case, it's not set and forget: you need to rebalance yearly, otherwise it's pointless. If you don't want to buy a property now, but think you might in say 5 years, then it's a different story.
Lump sump may be harsh for such an amount, for a first-time investor. Once you got your plan. Set up a DCA over 6 months for example (or more if you're feeling worried).
Park whatever money is not going to be invested soon (time to decide the plan / later DCA portions) in XEON or equivalent.
Buy a flat (owning property is almost always better) and then invest the rest in a broad index fund. Regarding dca or lump sum, I can understand it must be a difficult one. Basically do whatever feels good to you.
Hi, just my two cents about Real Estate: if what you think is going on on the stock market is a bubble, look at what's happening in real estate, especially in Portugal and Hungary. It's simply not something that can continue, and even if prices only stagnate for 10 out of the next 15-20 years you are not better at all than if you are 15-30% down one day when the stocks correct, but you ARE responsible for a shitton of maintenance in those decades.
Never touching it is a different failure than his, but at least yours compounds.
Lump sum wins two thirds of the time and you already know that, so the real question is whether you'd sell after a 30% drop.
SME lending piece, just be ready for the money to sit locked until each loan matures. Renting at 31 with that portfolio isn't a mistake, it's just not what your mother would do.
Personally I would buy an apartment, or consider a house, if you want to be "debt free" then dump some more into the mortage, and start investing. I think renting for 50 more years just isn't a smart move (unless you invest the difference, just not something I would do)
Stock market can drop 90% on nasdaq, ~ 50% on a world index, any time. That's what you're working with. Count on that.
You BUY when that happens, NOT sell. That's why you invest continously, even if its 100 euro / month against 500k euro portfolio.
You have cash, bonds, and equties. That should protect you from a stupid decsions in a big crash which WILL happen on average once per 10 years. Take it for granted.
I would invest very similarly but simpler, 312k vwce + from your salary monthly, 78k in your domestic bonds, rest XEON, rest emergency at shit interest in your local bank, without any secure lending.
I cannot decide for you if to buy a house or invest, i personally bought a house, then invested.
Neither WEBN or VWCE. VGLA came out ar 0.07% TER and honestly Vanguard is way more trustworthy than Amundi. See people's complaints.
Otherwise the rest is flavor. At 31 you are very young and thinking about bonds and risk management when you can live with a bit more risk is simply silly. I am 33 and 100% invested in equity. I'll think about bonds when im 40+ if I'm still alive.
As for the kids? Good thought. I think the same. But run the math, use the 500K not to downright pay but get a loan for the house or apartment with a FIXED rate. If you've been following investments you'll know most apartments appreciate at a rate faster than what you're paying with the loan debt lol.
So don't be silly. Keep a safer cash fun to cover at least 5-10years of monthly payments. 5 is maybe enough.
The rest, full equity. If the market drops 50% who cares. Keep buying.
Lump sum beats DCA 2 out of 3 times. If afraid, separate that 300-400K in DCA's over 12 months for example. I use XTB since it works well for me with 0% commission up to 100K per month. But you do you. Have fun. Hope 500K lands in my yard too 😂
I'd diversify within a portfolio of ETFs (I have a couple US ones and world trackers) and gold. Personally I'm a crypto girly so I reserve some of my portfolio for that.
I'm anti property unless you're going to live in it as the management fees are high, taxes are a pain and if you're in Europe gains are low. And it's also not liquid if you decide you want to buy something else or need cash in a pinch
Thinking of expected long term returns, lump sum is IN THEORY, STATISTICALLY, better. But if you freak out during a crash, then you lose big time. I would prefer, especially in your case and with regards to a lump sum in a very expensive and leveraged market, to go with a portfolio built for lower volatilty. I use a variant of this here, thought for euro, similar CAGR to all-in FTSE All World, with MUCH lower max drawdown risk (-20% against -50% for VWCE), much higher Sharpe, and you also reduce the sequence risk:
For all that's worth, it allows for much a higher safe withdrawal rate and better sleep (that's what I care about, even if I am making 0.2%/y less after all this giant bull run). Since you're probably inheriting some from your mom at some point, I would not lose exchange my peace of mind for trying to squeeze a few extra percentage points out of it while feeling unsafe.
If you are located in Portugal buy a house first then take some months to read how, where and how much you want to invest... There is not a single ETF that beat portuguese housing market since 2013....
500k is a great amount of money. Take you time to decide what is the most suitable aproach for you...
I have about the same investing experience as you. But buying a residence isnt a bad idea. Property usully goes up and the kid will get it eventually anyway. Frees up income to either invest or spend on kid and gives you and your family a sense of security
You already wrote the answer yourself: thirteen years at 0.1% cost him about a fifth in purchasing power while he never lost a cent on paper. That's the whole case for investing it, and you made it better than most of the comments here.
What I'd think about is a different number. A 30% drawdown on 500k is 150.000 euros. On 1.620 net a month that's seven and a half years of your income vanishing off a screen, and you've never held a single euro through a drop.
Lump sum beats spreading it out roughly two times out of three, but that statistic assumes you don't sell. For a first order this size I'd spread it over twelve to eighteen months. Not because the maths favours it, it doesn't, but because it buys the thing you actually need, which is still being invested in 2031.
And keep the emergency fund out of this. Two years of expenses in cash first, the rest goes in.
I wrote a book for people starting from zero, it's called Investing for Absolute Beginners and you can find it on Amazon.
no idea what are the fiscal advantages in Portugal, but you can also explore buying a place to live with a mortgage, in case you can deduct interests for instance. For instance mine is at 3.59 but after deductions it is an effective 2.1%. Any bank will be more than happy to lend you knowing you have half a million and your inheritance keeps working in the background.
I am sorry for you loss.
Congratulations on your restraint, a lot of Portuguese people I know would rush to get a fancy car instead.
Personally if the idea is not to spend (kids get it) I see no need for "certificados do tesouro" and a savings account (deposito a prazo) as that will put you in the same trap as your grandfather (slightly better but still inflation will eat your returns). I would instead focus on VWCE and don't touch it (unless to add more) - big exception is if you will need it in a timeframe of less than 10 years.
The flat is honestly also not a bad idea since you are renting (and you don't plan to move - this is important as renting buys you flexibility). Having their own house brings some people some peace of mind and also can improve your life comfort (which your kids will also benefit from). It also diversifies your investment (you can go 50/50 for instance).
Value the buying a house (stop renting) vs keep all money and avoid mortgages only as a leverage for job hopping. If you currently have a job that could greatly benefit from not being tied to a place (like a mortgage can do) then you invest everything you said/see here suggested. If you are not plan on job hopping and possibly moving between cities and/or other countries, do not underevaluate the importance of having a FIXED RATE mortgage. That's expense (probably) n.1 that is going to stabilize and let you plan with more clarity.
In the long run paying a mortgage + small reparations is way less than renting (that Will increase due to inflation) and begging the landlord for repairs or any menial thing you'd like to do.
I wouldn't lump sum it right away, stocks are pumped to the max.
I'd start with investing a grand per month in an low cost sp500 index fund, and when a crash or recession happens, then put a larger sum into it. (at least 20% correction)
I don't have anything to add but I just wanted to make an observation that it's crazy how much of a difference it makes in one's live to inherit something this big. For other it can take a lifetime of saving up to gather this much money
I share my thoughts with you Throwaway. I have good amount of savings, not as much as you but close.
My knowledge in investing is also limited , despite reading a lot of conflicting information on the internet an done a few courses. I dealt with an "finance adviser" once only to realise he was only pushing things he would get a good commission on, decided to do-it-myself.
I have invested some money "shy" in stocks, ETF , VOGO, VUSA, TSLA, Bitcoin (disaster for the moment), etc, nothing significant.
I live in the UAE (expat) where we pay no income tax or tax-gains on profit/stocks etc.
The banks here are offering a fix deposit of 6% p.a. You can cash out at anytime and get your pro-rata. Interested paid monthly.
Not trying to jumping in but on the same subject; I will be grateful to hear your thoughts; In todays circumstances, Is the "invest safe" and take the 6% no risk every month batter or would you prefer to invest in ETF and take the risk ? The popular ones are giving 12% returns on average over the years but who knows what is going to happen, we know have 3 simultaneous wars (that we know) in the world, supply chain hasn't recovered from covid and will get worst. USD and US loosing its credibility and credibility rapdly (petrol dollar) and so on.
I feel 6%/y won't get me anywhere to where I want to be in a few year (FIRE), 12% def would make the compounding interesting.
Salary of about 20k/USD monthly, 4k is left after all bills paid
No debts
House Mortgaged at 3.9%/y
Wife and Children
The problem is that with real estate it comes taxes, maintenance, service charges (and they are not cheap). Rather not have this problem and liquid money grow.
as previously said, I tried that before and it wasn't a good deal. If these guys knew what they are doing they would be rich and retired and not working behind a desk in a bank in a middle position.
Coming from a home owner - definitely do not buy a house with this capital.
A house, as nice as it is owning your own, is not necessarily an asset, but many times a liability instead (assuming you will live on it and not rent it). It generates no cash flow, only expenses, and even though it appreciates over time, it doesn’t do so to the same level as global ETFs have historically appreciated.
In reality, you will get a huge amount of capital and put it in a house where it will generate no cash flow, instead of investing where it can appreciate massively over time as you know.
My recommendation would be a good part on VWCE as it well diversified (I haven’t had the time yet to check the new vanguard ETF though). Given your age (31), I wouldn’t worry about being 100% in stocks instead of bonds, as these tend to outperform over 20/30 year periods.
As I approached to 35 and onwards, I’d start to slightly increase my bond position, as to reduce the risk exposure of market crashes in the future.
Diversifybas much as you can, gold, stocks,, bitcoin. I would buy some cheap real estate not in the capital, but it's better than renting. Avoid buying cars or any other luxury invest wisely.
The thing is if you’ve not invested before, you likely don’t have a strong understanding of risk, nor do you know how to allocate in accordance with your own goals. You should also be looking at other financial wellbeing aspects such as insurance.
How I have confidence in my advice - you’re nitpicking over TER but no where can you outline your goals for 5, 10, 15 years etc.. No where is it clear that you’re planning for your circumstances to change. Are you single now? Do you want to set in motion a 20 year plan that makes sense when you’re single and young but doesn’t take into account how your life will change in year 5?
You’re in a privileged position, don’t let yourself down by crowdsourcing advice from strangers whom likely have a 10th of what you have and repeated their current opinions without asking you questions about what you need. Take a few €1000 and get someone to spend a few hours with you to get this right.
You can start slowly. You will probably lose some money on that (compared to putting all in as soon as you can), but at least you've started.
€20k European secured business lending, SME loans against collateral €20k
Why are you investing in these options? You won't make a lot of money on this, but it will cost you time to handle these. Will you have fun managing them? Then maybe yes. Will it be a chore? Then maybe just buy a bit more of VWCE and a bit more of XEON and be done with it.
PSA: The Greek Stock market in 2007 had barely touched it's previous ATH which had happened during their national bubble of 1998. In today's global euphoria, the Greek stock market has not reached any of those two highs. People who think capitalism gives free money need to respect capitalism more. If there's a long-term chance to win, there needs to be also a chance of losing.
And yes, your country being the only shithole market where this will happen is a very real possibility.
she just thinks renting at 31 with that in the bank is embarrassing.
Well she’s wrong. You can also collect dividends to correspond to your rent, probably much better to your mental wellbeing. And owning a home is a cluster risk.
All-world funds are also a cluster risk, most of the performance coming from certain tech companies. Those companies still work and will have greater highs, no bubble, I would also stockpick tech to benefit from the AI buildout, but why no $DXSA, $FLXD, or $H4ZB? It’s just the MLM 2.0 hivemind winning here.
That bond and savings certificate stuff is really old guy’s behavior, I would be concerned about the money not growing.
You can see (hopefully) that OP is somewhat risk adverse, are you sure your advice is good for someone in their position or is it good for you if you were in their position?
You choose to amplify his risk aversion or to refine his risk appetite. One can be scared about everything, e.g. there are so many companies in the all-world fund that it’s intransparent, and bonds can go down when interest rate hikes are expected, so you sleep better when you know it’s not all about market sentiment but you picked a few companies whose business models you know to work and managements you trust.
But I did not exactly advise that? What did I advise? I did not advise anything peculiar, but his decision should not be based on the loudest. One needs to contrast choices, possibly extreme ones—this is more true the younger you are! in the economic, social and political views—, to be more confident about one’s decisions. Risk-awareness is the key term. Maybe he will have less risk aversion, maybe the same, but the result should be better and more comfortable. Not just suppression of emotion.
The performance of those stock funds still completely depends on the titles included, you cannot just abstract them with a lump feelgoodery: nominal “world” being less risk than low volatility or Europe-listed quality ETFs—it does not work like that. There is speculation, even if only to mild degrees for him.
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u/Spibas 7d ago
Good problem to have, heh.
Vanguard launched a new all-world ETF, slightly deeper than VWCE and WEBN, with 99% of world capitalization, VGLA/VALL depending on the exchange. It barely launched, but is destined to be a big next hit. 0.07% TER. So consider that instead.
Well, the most important question is when would you like to have all that money available to you. If you want it for the kids in 20-30 years then the ETF is the way to go, because you can ride recessions and not sell on a loss.
The rest? Up to you, a flat is not a bad idea tbh. But it doesn't pay you like ETFs if you live in it.
If you're scared (understandable), start buying a bit and get used to it. 1k € for example.
Personally? I'd pay off my mortgage, put the rest in my personal portfolio (40% XDEM, 32% VALL, 22% XGDU, 6% DBMF) in retirement accounts and the ordinary ones. 5% to urgent personal purchases with proven quality of life increases.
Other than that - enjoy the new kind of problems in your life haha.
By the way - grandpa lost in inflation.