Asset allocation: seeking volatility

Caution Sign - Volatility Ahead

Mr. German and I are almost at that point when we can start investing.

We have our brokerage accounts set up and money sitting in our girokontos earning close to 0% interest.

Now we just gotta take the plunge and do it.

I’m very excited!

What we need to discuss though, is asset allocation.

ETFs

I’m quite comfortable with 100% equities.*

Specifically, passively managed ETFs that follow the index.

What I’m less clear about is which ETF(s), and which country or region to focus on. I’m working on it though.

Taxes?

We have 50% of our net worth in EUR in Germany, and the other 50% in CAD in Canada. So it makes sense to me to focus the euros in the European market, and the CADs in the North American market. This may also be the most tax efficient scenario.

Investment goals

Our investment goals are long term (10+ years), where we ride out the ups and downs while generating dividend income. I’m not at all interested in timing the market with short term growth stocks, as I don’t have the time or desire to actively manage our portfolio.

Simplicity

I also want to keep things really simple, with a maximum of 3 equities in each account. So 3 European ETFs in our German trading account, and 3 Canadian and American ETFs in our trading account.

Make it volatile!

In terms of volatility, I want volatility and think I can handle it. Whether Mr. German can handle it is another story, and we need to figure out whether it’s fair for me to expose him to more ‘risk’ than he may be accustomed to, by virtue of being married to me and me managing our investments!

Is it actually risky?

Risk is very subjective. To me, volatility does not necessarily equate risk. Volatility can also be opportunity, while non-volatility can be very risky indeed (e.g. cash losing to inflation – which we’re doing now!).

Still, will I be able to handle seeing our portfolio at times cut in half? Will Mr. German? For me, I think I can take it, and probably may not even notice since I don’t plan on actively watching the market anyway.

* Side note: we are planning to keep some money liquid in case we want to buy property. So my 100% in equities means 100% of investments that are NOT real estate, which will probably be 60% of our net worth at first.

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3 thoughts on “Asset allocation: seeking volatility

  1. Pingback: Getting into the German stock market | Ms. Canadian Expat

  2. Pingback: We are so liquid we can evaporate! | Ms. Canadian Expat

  3. Pingback: Where to live and whether it matches our FIRE goals | Ms. Canadian Expat

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