I have talked at length about many stock market indexes on this blog. For instance, I have talked about the S&P 500 index and the Russell 3000 index. However, these are U.S. stock market indexes. Since this is a Swiss blog, I thought it was about time to spend some time on the official indexes of the Swiss Stock Market.
As it turns out, there are many Swiss Stock Market Indexes. This is a small stock market (about 2% of the world capitalization). But it is one that is considered quite stable. Therefore, there is quite more interest in this stock market than the small market capitalization would make us think.
In this post, I am going to go over all the indexes from the Swiss Stock Market. If you prefer visuals over texts, head to the end and discover a nice infographic I made for the different Swiss Stock Market Indexes.
Continue reading “Swiss Stock Market Indexes – SMI, SPI and SLI”
I have recently started using Interactive Brokers (IB). It took a while for me to get used to this system. I discovered that Interactive Brokers has many interfaces from which you can trade. It is really overwhelming at first. I have been contacted a few times by readers that were having a hard time starting with Interactive Brokers. And unfortunately, I did not have any good resource on the subject to help them. Moreover, many people do not know that the Account Management interface can be used for most tasks.
This is why I plan to make a few posts explaining some basic features of Interactive Brokers. The idea is to help everyone that is starting with Interactive Brokers to do the basic tasks in each interface. I will try to cover funding the account, converting currencies and buy and selling shares for each of the posts.
In this post, I am going to go over how to buy the VOO (Vanguard S&P 500) ETF from the Account Management interface. Even though my example will focus on the VOO ETF, it is the same for any ETF. We are going to go over all the steps. The process starts with transferring the money to IB, then converting it to USD and then finally buying the ETF. Of course, if your base currency is USD, you do not need step 2. And if your account is already funded, you do not need the first step either.
For this, I am going to assume that you have an Interactive Brokers account. If you do not have one yet, you can read how to open an Interactive Brokers account.
Continue reading “How to buy an ETF on Interactive Brokers from Account Management”
One of the first things I noticed when I switched to Interactive Brokers is that they have too many different user interfaces. It is overwhelming. Moreover, most of them are not really intuitive to use. Although Interactive Brokers (IB) is a great broker, they are not the most user-friendly one! However, that is a price I am ready to pay to get the cheapest broker available! I just wish that I had more information about the different interfaces before I changed from one broker to another.
In fact, you can trade from the account management interface, the WebTrader interface, the Trading WorkStation (TWS) interface and from the mobile interface. And all of these interfaces are very different from one another. Some are limited in what they can achieve. And some are much more complicated than the others. When you start investing with Interactive Brokers, it is quite difficult to know which interface to use.
In this post, we are going to see all the available interfaces. This is not meant as a guide on how to use them all. It is more meant as an explanation as to which interface exists and which you should use for what purposes. I hope that this will help you feel comfortable using Interactive Brokers. Later on, I plan to write more targeted guides as to how to use these interfaces.
Continue reading “Guide to Interactive Brokers Multiple User Interfaces”
On this blog, you already heard about inflation. And if you follow other personal finance blogs, you have probably heard a lot about it. But do you know exactly what it is? And especially, do you know what causes inflation and what it does to your personal finance?
Inflation is caused by many things, it can come from the economy, from the government or for simple demand and supply effects. It can even be negative, something that is called deflation. And it has several effects, the biggest of which is to make you lose purchasing power over time. You need to protect yourself against inflation.
In this post, we are going to look in details at all these causes and effects of inflation. And we are also going to look at some examples of inflation in the past.
Continue reading “What is Currency Inflation? How to Fight it?”
In 2020, Swiss investors may lose access to U.S. funds. DEGIRO already cut access to these funds. And it is highly likely that Interactive Brokers does the same next year. So, we need to be prepared for that eventuality. The alternative to U.S. Exchange Traded Funds (ETFs) is European ETFs.
You can also use mutual funds, it is almost the same thing. However, it is much more flexible to invest through ETFs in Europe. The main problem is that European ETFs are inferior to U.S. ETFs in many ways as we are going to see in details. Unfortunately, we may not have the choice to use them. The alternative of not investing at all would be much worse!
In this post, we are going to go through the multiple steps of designing a new portfolio. First, you need to decide the allocation of the different parts of the portfolio. Then, you need to choose between different stock market indices. Finally, you need to choose the best ETF for each index. I believe it is an excellent exercise. However, it is not trivial and should not be taken lightly.
Continue reading “ETF Portfolio with European ETFs”
Compound interest is a subject that you can read about on most personal finance blogs. In fact, I have already talked a little bit about it. But I never delved into it. It is now time to cover compound interest in details.
Many people will tell you that compound interest is like magic! However, I do not consider it magic, it is only math. But how can we calculate compound interest? Even if it is not magic, its effects are really more powerful than it seems at first sight. The effects of compounding are what makes investing in the stock market so interesting. But does the stock market really compounds? Let’s try to answer these questions in this article.
I really think that compound interest is not correctly understood by many people. I hope that this article will help you understand exactly what is compound interest and why it is great.
Continue reading “What is Compound Interest? Is it Magic?”
If you have been following personal finance blogs or the news these recent weeks, you have probably heard a lot about yield curve inversion. But do you know what it really is? Should we panic and sell all our shares? Is a recession starting?
Before we answer these questions, it is important to know what is the yield curve. For this, we will need to review what we know about bonds. Then, we need to understand what does the inversion of this yield curve really means. We can also see what causes such an event to happen. As we are going to see, all of this is actually quite simple. So what is all the fuss about? In the past, the yield curve inversion has accurately predicted the coming of recessions.
And what will happen after such an event? Is the recession already upon us? Should we sell anything and get out of the market? The most important thing is to see what we should do, now that the yield curve in the U.S. is inverted.
Continue reading “Yield Curve Inversion: Should we Panic?”
Deciding on an entire portfolio index portfolio from scratch is no easy task. And, it is a very important thing. If you decide to choose your own index portfolio, you will need to be very careful about what you are going to invest in. Once you have chosen it, you will need to stick with your portfolio. If you plan to invest for the long-term, you may have to invest in your new portfolio for more than ten years. Therefore, it is crucial to do this carefully. You will have to decide on your asset allocation and your international exposure. From there, you will have to find the indexes you want to invest in. And finally, for each index, you will have to find an Exchange Traded Fund (ETF) to invest in it.
Nevertheless, choosing your own index portfolio from scratch may not be necessary. And it may not even be a good idea! In most cases, you should invest a simple, broad portfolio. Doing too many choices in your portfolio is market timing and is unlikely to pay off in the long-term. But I still believe it is an interesting exercise. And you can design a simple three-fund portfolio from scratch and have something quite sound.
So, in this post, we are going to cover in details all the different steps involved in choosing your own index ETF portfolio.
Continue reading “How to Choose an Index ETF Portfolio?”
You have probably heard of the Standard & Poor’s 500 (S&P 500) index. But do you know exactly what it is? Many people actually believe it is a fund. But it is only a stock market index. And there are many funds available that track the performance of this index. There are many interesting facts about this index. If you have chosen to invest in this stock market index, you may want to learn more about it.
For instance, did you know that it does not really track the 500 largest companies in the United States? It tracks 500 large companies from the U.S. stock market, not necessarily the largest. This is due to the fact that the index is not managed by a single formula and a computer. In fact, a committee of humans is taking the decisions of including or removing a company from the index.
In this post, we are going to see exactly what is inside the S&P 500 index. We are also going to see how the committee manages the index and updates it over the years. Finally, I am also going to describe how to invest in this index.
Continue reading “S&P 500 Index – Invest in 500 Companies At Once!”
If you have decided to invest in a precise stock market index, you first have to choose the stock market index. And once you have chosen an index to invest in, you will have to decide through which index fund you are going to invest in this index. For this, you can choose either a mutual fund or an Exchange Traded Fund (ETF). For popular indexes, there will be a large choice of index funds replicating the performance of this index.
Even if you only choose popular funds for a precise index, it will still be difficult to choose. As you will see in this article, there are many things you can take into account when you compare two index funds. The most important remains the price as most people know. But there are other points you can use to compare two index funds. And some of these points are definitely not obvious.
In this post, we are going to see all the things you can look at when you need to choose an index fund, whether it is a mutual fund or an Exchange Traded Fund (ETF).
Continue reading “How to Choose an ETF or an Index Fund”