2Wk·

Mommy gets a deposit with Finanzen.net Zero 🤓

Mommy gets a deposit for Christmas.

Age: 60

Financial knowledge: zero

Interest in the topic: zero

Tax residency: Germany

Savings rate: 100 € per month

The custody account is to contain starting capital and savings plans and would probably be fed by me with €100 per month.

But how can I sensibly structure a custody account with such a short investment horizon? Because we already know that mommy will have a large pension gap and so far nothing has been done about it...

My original ideas were:

a) 100% $VWRL (-0.52%) alternative an ACWI

b) 50% $VUSA (-0.15%) or MSCI USA

35-40% $WEXU (-1.51%) ( MSCI World ex USA)

10-15% $VFEM (-0.87%) or $EIMI (-0.96%)

But if you now think about the short investment horizon and the pension gap, perhaps something like the following would make more sense:

c) 50% $HMWO (-0.39%) or $WEXU (-1.51%) but this is only available on an accumulating basis

50% $JEPQ (-0.69%)

What do the professionals among you say? Has anyone tackled a similar situation? What are your ideas and suggestions?

11 Comments

ExFinanzminister@DerFinanzminister

2Wk

Team A

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Patrick Schäfer@Hotte1909

2Wk

Phew, difficult with the investment period and no starting capital. You won't close the pension gap with all the ETFs.
I've roughly calculated men REIT aka Realty Income and with a 7-year investment horizon you'd be at around €40 per month based on the current dividend, without reinvestment in the savings phase and without price fluctuations 😀 it's all a bit like playing Russian roulette. You could also go all in on Bitcoin, Solana or something else and hope that it does a x100 in exactly seven years and then switch to a distributor 😉
But seriously. I would be with your variant a whether it's a distributor or theaurizer, it doesn't really matter because it probably won't be exploited either way.

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mein_depot@seppl6431

2Wk

@Hotte1909 I would go along with the idea - or a high dividend ETF (similar effect as reit)
If you have 10k full, you would have an annual distribution of 500€ with a div yield of 5%

With a 1.5% distribution, this is almost negligible
Wouldn't bring sooo much even with a 50k portfolio

Aim for a high distribution at that age
Lg

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Stefan@PatienceBeatsGreed

2Wk

So I would join @Hotte1909. You're not really going to raise a lot of money in this time. That's why I would take a bit of a risk.
50€ in the $VWRL (if the allowance is still open, I would also choose distributing)
50€ in Bitcoin (especially with the new government in the USA, a small savings plan can have a good effect)

In any case, kudos for wanting to take care of your mother here 🙌🏻

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Obs89@Obs89

2Wk

JEPQ

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Eggplant@Eggplant

1Wk

Interesting topic, it probably still has 7 years left and you are probably taking over the custody account management, right?

I would be Team A

But I would tend towards TR or SC, simply because the distributions would then also earn interest. TR would also make it easier to spend the money (credit card).

Furthermore, you should look to fully utilize the saver's allowance. If the dividends are not enough, sell and reinvest immediately.

If retirement is within reach, then I would. Probably invest in an ETF with a higher dividend payout and gradually sell the VWRL, taking the lump sum into account.

Unfortunately, there are currently only 2 brokers who seem to offer withdrawal savings plans, but I haven't looked into their cost structure yet.

Even if it doesn't sound sexy now, she can take a job that is subject to social security contributions after retirement and thus continue to accumulate pension points. Rentenanstalt also provides information on this in a consultation.

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Kevin E.@KevinE

The highest safe withdrawal rate is achieved with a portfolio of 80% equities / 20% bonds.
Apart from more complex structures and/or crypto/leverage.

I recommend the SWR series from early retirement now (but it goes into great (!) detail.

What I would rather do: calculate everything.
How high are the expenses (housing, mobility, food, everything that is difficult to do without)? What is your income (salary / later pension, company pension, Riester, ...)?

Then you will at least know the pension gap.

If you (especially your mom) see that the gap is €500, she will have to do something.

If the starting capital is assumed to be €10k and the savings plan comes on top, that's at best around €25k at retirement. That's about €1,000 in safe withdrawals per year if you want the money to last for a while.
Maybe your mom can somehow contribute another €150 herself - that would still be ~€1,600 per year.

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