Menu
Skip to content 
If you are younger than 50 years old, you should definitely read this article and internalize. Interest rates are low and will probably remain so for the time being. There are still a few years left until you retire and you should ask yourself, How much risk you can't take. Because yes, you should definitely take some risk in my opinion.
From investment risk to the general attitude towards Return opportunities and risks In life, today we will broadly discuss the topic of risk. Not only for your investment, maybe you even take something for life on the way. If you like the article or maybe you see it quite differently - we look forward to an exchange in the comments!
You have to take risks! No matter in what area of your life, you are unlikely to be able to earn large returns without taking some risk in return. Yes, risk can be calculated and you can limit it. But efficient markets will ensure that the ratio is always kept in a healthy balance.
No matter whether a share is too cheap, or a hotly desired man or a much adored woman becomes single: Cheap shares are bought and attractive partners courted 🙃 little joke on the side. What I want to say is that great opportunities rarely just fall into your lap. Of course it can happen, but if you take targeted risks, you can consciously secure the return. Incidentally, the tension between return and risk is discussed in the magic triangle perfectly described.
What has always fascinated me about the stock market was the Coupling of return and risk. What is exciting about it? Well, let's introduce the great concept of volatility. In the stock markets, volatility stands for risk, which is nothing more than fluctuation. In other words, the value or the stock price fluctuates over time. Even an excellent company fluctuates in the stock market price, but in the long run the price will rise due to efficient markets. You are still with me?
Good. Then you probably understand now why the relationship of return - risk or return - fluctuation fascinates me so much. If you have time, because you only invest the money you don't need for the next few years, you can take this calculated risk. Then it doesn't matter if stock prices rise in April 10%, fall in August 20% and rise 40% in December. Rather interested in whether the company will be successful in the market in the long term and in 5-10 years or even longer, a substantial return is achieved.
The fact that returns without risk (or fluctuation) are not normally available on the stock market is also shown in the following chart:
So if I have a long time, can I take any risk? Ideally, you should rather look for a perfect mix of risk and return. If the fluctuation or risk becomes too high, the ratio is not appropriate and is no longer sustainable. There is also the risk of a total loss, which also speaks for a healthy ratio.
So invest broadly and in the long term? That's how I do it and I would also recommend it to you, even if this is not supposed to be financial advice and is not even possible without further knowledge of your situation. But if you follow this blog a little bit, you know that we are supporters of passive investments and always recommend a long-term investment horizon. For example, who is in ETFs and only uses money which he does not need for the next few years, he will be able to profit in the long term. Remember: long-term = short-term fluctuations are not relevant = higher risk possible = higher expected return.
And why doesn't everybody do that? This is a central question! Especially large institutions such as funds, banks and similar have shareholders, quarterly reports and other "disturbing" factors in the background. As a result, they have to show "good" figures on a regular basis, otherwise prospective investors often quickly become impatient. As a result, (!!) such institutions often have to deliberately look for less lucrative investments, or sell shares, for example, when they should actually be bought!
Please be aware that this is a key issue, which is why investing through large active funds etc. is often not so profitable. Private individuals like us don't have to satisfy shareholders and are allowed to have bad figures in their portfolio for 3 months in a row, because we know that we are long-term oriented. Our risk/return ratio can therefore look quite different - to our advantage.
"Life is so dangerous, we don't even survive it." Risks are normal, part of it and make up life. You can calculate them, reduce them, and foresee them. You don't have to take risks to the extreme unnecessarily, but there's a great line somewhere in the middle. At that level, you can earn handsome returns and not even have to take risks that make you lose sleep.
The risk tolerance is different for each person, and in the investment field, among other things, your age and other financial situation should be taken into account. We will gladly take you by the hand if you want to do this yourself. Selma Finance or other providers also fulfill you this activity also very gladly and guarantee also still comfortably the yield-risk relationship for you.
At least as far as old-age provision is concerned, we actually advise everyone to make use of their pillar 3a, save taxes and, given the current interest rate situation, also save them with securities. Frankly, Viac or Selma are only 3 possible addresses, which we can recommend to you. If you have 20, 30 or even 40 years until your 3a withdrawal in your pension (and do not want to withdraw the money earlier), then please give us a good reason in the comments that speaks against it! 🙃
Do you have any more questions or suggestions on this topic?
Leave us a comment there!
"Intelligent people learn from the mistakes of others".
We have compiled our top selection for you from all our tests and experience reports:
2 Responses
Hi Eric
Always find your blog posts exciting to read! I have also taken your saving tips to heart and have been investing regularly for the last 3 months.
Do you also invest with SELMA? Or via the SwissQuote? In general, I think the idea behind SELMA is great - little effort, broadly diversified. The fees increase there just with increasing amount always new. But maybe this is also the "price", for this that you have little effort.
Frankly / VIAC
I currently use Frankly and VIAC for my 3a. For about 4 years I have been indirectly paying off a condominium via ZKB, now via Frankly. I'm still using the "Moderate 45" strategy. I opened a new VIAC 3a this month, as I have not exhausted the entire 3a via Frankly. VIAC with Global 100, so at 97% in equities. What strategies are you running? I am also considering Frankly to invest all the capital with the highest possible equity allocation.
Greetings Christoph
Hi Christoph
thank you for sharing your experiences and for your positive feedback! 🙂
Personally, I invest on different platforms, also because I have to gain a lot of experience to be able to share it with you. Selma is very comfortable (just like you say) and you pay a small fee for it. I think she is very fair, for the great range of services you get.
I also invest at Swissquote, but it must be clearly stated that this is not suitable for everyone. I regularly receive news and give support because Swissquote is not self-explanatory and definitely requires knowledge. But if you are willing to acquire this knowledge and invest larger sums of money, you can save some fees in the long run.
At Viac I have a portfolio with Global100 like you, but I also have an account with a defensive strategy and precious metals/gold. I may need to shift this if there is another major correction in the stock market. Generally I don't recommend this - firstly because I don't give any investment recommendations and secondly because everyone should think for themselves and the 3rd pillar is a long-term investment. In the pension section of the blog I write more and more about this.
What do you like better so far? Frankly or Viac? Or what would you improve on each?
Thanks for your feedback and see you soon!