Dear Qiners,
I need to tap into your collective wisdom. My parents recently sold their business and now have about €1 million sitting in their accounts (in addition to the €100,000 each covered by deposit insurance). They know nothing about investing (they’ve been scammed a few times by bank advisors and insurance agents). Now they’re asking me for advice on investment options for the coming decades.
Their very first requirement is: Maximum security! (no capital market fluctuations, no currency risk, no loss due to inflation, no risk of theft, no risk of bank insolvency) Second requirement: Maximum liquidity! (Liquidation and transfer to a checking account possible at any time) Third condition: Minimal costs! (no custody fees, no transaction costs, max. 0.1% TER) Nothing else matters. As you can imagine, this aspect of investing isn’t my specialty. That’s why I’m asking you: How would you invest the money?
My initial idea is to allocate 25% each to the following ETFs, spread across three brokers (IngDiba, Zero Finanzen, SNeo):
1. Amundi Smart Overnight Return UCITS ETF C-EUR (money market ETF; the riskiest due to unfunded swaps, but offers the highest yield, approx. 2.48% per annum) $CSH2 (+0%)
2. Shares € Ultrashort Bond UCITS ETF (Acc) (short-term EU corporate bonds, physically replicated, second-highest yield, approx. 2.23% per annum) $ERNX (+0.01%)
3. Xtrackers II Germany Government Bond 0-1 UCITS ETF (Acc) (short-term German government bonds, physically replicated, likely the gold standard for safety in Germany, 1.96% per annum) $XG01 (+0.01%)
4. Amundi Prime Euro Government Bond 0-1Y UCITS ETF Acc (short-term EU government bonds, physically replicated; in terms of interest rates, these are currently even safer than German short-term bonds, 1.95% per annum) $PRAB (+0.01%)
The total return on this portfolio would be approximately 2.16%. That’s more than enough for my parents—they don’t need the money, but they don’t want to spend it either. It’s simply meant to sit there safely, protected from inflation, until the end of their lives, so they can sleep soundly.
Mind you, we’re in a realm here where a money market ETF is pure gambling. But what else is even safer for the next 10–30 years—that is, protected against currency crises, sovereign crises, bank failures, money market collapses, pandemics, nuclear strikes, and the Four Horsemen of the Apocalypse?
And no: cash won’t work—it loses value to inflation and can be stolen. Gold isn’t the answer either—its value fluctuates too much and it can also be stolen. Real estate isn’t either—its value fluctuates and it can be expropriated. The well-known “3xGTAA” safety net is somehow out of the question too—though I can’t quite recall the reasons right now.
Of course, I could tell them: “Dear parents, the only certainties in life are death and taxes.” ” But they’re not up for that kind of joke. Besides, that saying doesn’t solve their problem.
So: Do you have any ideas for maximum security? Then please share them! I’m feeling a bit incompetent in this area right now.
Yours, Epi
