I am 27 and have a retirement portfolio with three funds that are all rather long-term investments:
This portfolio is managed by an insurance company and the legal envelope is such that I pay less taxes on the interests but the company takes some money out. This system is supposed to pay off in the long run, also because one can switch funds for free and there is an automatic rebalancing built in. Currently I invest 31 EUR/month but plan to go to around 100 to 150 EUR/month once I start by PhD position.
Then I have a “normal” portfolio which is rather conservative with those four funds:
These funds are expected to give returns in the 2% to 3% range. I have invested 2000 EUR there and currently do not put any money into there regularly but aim to put in 100 to 150 EUR/month into there as well starting in October 2017.
Right now I do not have any portfolio fees, so this gives me 40 to 60 EUR/year. However, in half a year I will no longer be an university student and have to pay 36 EUR/year just to have that portfolio. Then I will effectively make 4 to 24 EUR/year. This is the point where I question that whole endeavor, the difference to having that money in my savings account for 0.001% interest is 24 EUR/year in the best case.
The options that I see are
- putting more money into the conservative funds such that the absolute returns are significantly higher than the portfolio fee;
- and choosing more aggressive funds such that the returns are also higher. Looking at the return rates in the “retirement funds”, it all seems very nice and way more lucrative than the conservative funds recommended to me at the time where I said that I wanted a low risk.
- Put all the money into the retirement portfolio and take part of it out earlier. The advantages of that legal envelope will be gone then and a simple portfolio would have been a bit cheaper.
Switching to the more aggressive funds will incur a 5% buying fee such that switching back and forth will only lose money. For the four funds in the portfolio now I have paid around 3% buying fee, which I do not have back after only four months, as expected.
How aggressive should I make this non-retirement portfolio which I would probably use a down payment for a house in 3 to 15 years?