3Semana·

Life Savings Sitting in a 1.25% Savings Account for Decades

Hi everyone,

I’m reaching out for some help and guidance, especially since this community is full of people willing to share their experience and knowledge.

About 5 years ago, I got to know that my father had most of his life savings sitting in a regular bank account earning just 1.25% interest per year. It honestly hurt to see all his hard work being slowly eaten up because of it. At the time, I tried to convince him to invest at least a portion in something like an ETF, but with no success. I eventually let it go, after all, it’s his money, and I could understand why he chose to be so conservative with it, even if it's not what I would've done.

Now, five years later, he seems to have changed his mind. We’ve started discussing how to allocate the money more effectively. For context he plans to retire in about 9 years.

The idea is to focus a bit more on growth over the next 9 years, and then gradually shift the allocation toward a more fully dividend-focused portfolio. That way, he can generate passive income and won’t have to rely solely on his pension in retirement.

I’m still learning and would really appreciate some feedback from more experienced investors.

Thanks to everyone in advance!

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Here’s the current allocation we are working on:

🟦 Growth ETFs – 40%

MSCI World ($IWDA (-0,42%) )
iShares MSCI EM ETF ($IEMA (+0,07%) )

🟥 Dividend ETFs – 20%

FTSE All-World High Dividend Yield ($VHYL (-0,35%) )
VanEck Developed Markets Dividend Leaders ($TDIV) (-0,12%)

🟩 Bonds – 15%

Xtrackers II Eurozone Gov Bond 25+ ($DBXG) (+1,62%)
Amundi Euro Inflt Expectations 2-10Y ($INFL) (-0,07%)

🟪 Individual Stocks – 7.5%

🟧 Cash Reserve – 2.5%

Emergency Fund – 15%

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I would really appreciate feedback on the following:

Is this allocation appropriate for someone with 9 years to go?
Any ETFs or stocks you’d swap in or out?
Anything you’d do differently in general and why?

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11 Comentários

KingC@RaphGM

3Semana

Cash reserve and emergency fund, yes.

I would keep it as simple as possible:
I would get rid of the bonds and individual stocks.
Individual stocks because anyway those are in the ETFs you mentioned.
And I don't believe in bonds; I would rather invest in a Minimum volatility ETF if the goal is to reduce the risk.

The "growth" part looks good to me, though the weighting between DM and EM would be different: 90% DM and 10% EM, but then that's also a question of taste.

As for the dividend part, I would just keep $TDIV

Overall, I would then do something like: 62.5% growth, 20% dividend, cash reserve 2.5% and emergency fund 15%.

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stock_whiz_2254@stock_whiz_2254

3Semana

Hm, maybe you can also buy short-term government bonds, which are considered risk-free according to the bwl definition, which is of course not entirely true, but you get 4-5% interest, which is definitely better than overnight money or fixed-term deposits.

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Fl_ow@Fl_ow

3Semana

Then i would do 60% $IWDA 20% $VHYL 20% Individual Stocks

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Solitair@Solitair

3Semana

I would never try to lure friends or relatives in investments they are not convinced of or which they don't understand. If it goes south it's always your fault and this can ruin relationships.

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Alexia@rayoke

3Semana

@Solitair Completely agree, thankfuly in this case it was his own decision. As I said, after mentioning it 5 years ago I didn't try again.

Now, we’re just figuring out what makes the most sense for his situation. My approach wouldn’t apply, and I would never recommend it to him since my portfolio’s about a tenth of the size and I have a 35+ year horizon, which puts me in a very different position from his.

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Fl_ow@Fl_ow

3Semana

Hey Alexia its Important too know what your Goals are? Do your Father wants too get Passiv income when he retires or should it be later for u?

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Alexia@rayoke

3Semana

@Fl_ow Hey, sry forgot to specify. The idea is to focus a bit more on growth over the next 9 years, and then gradually shift the allocation toward a more dividend-focused portfolio. That way, he can generate passive income and won’t have to rely solely on his pension in retirement.

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gorehammer@gorehammer

3Semana

Dear Alexia, how did you made your allocation circle?

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Alexia@rayoke

3Semana

@gorehammer Hey, I coded the allocation circle myself w Python. If you want to make a similar one for your portfolio, just let me know. I can send you the code and help tweak it to fit your portfolio :)

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Tobias@Crovax83

3Semana

Just keep it as simple as posible... MSCI World or an All World Index and thats it... if he is scared to lose money if the market crashes then you may put something into bonds as well which also can be sold at any time to work as cash reserve/emergency fund

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Carlos@market_maverick_2062

1Semana

Hey there Alexia, your etf plan seems responsible, however if you choose to pick some individual companies, I would look into the future (TESLA) and not the past (Allianz). Sure, Tesla has some risk, but huge potential. If you allocate at least a 2.5-5% it could be your “BTC” adding some high-growth even though in a small % of the portfolio.

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