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#3 How to build a portfolio with ETF?

Felix Niederer

Welcome back to another exciting edition of our Coffee Break. In the last episode, we learned what ETFs are and how to choose the best ETFs. Today, it's all about the crucial question: How do you put together an optimal portfolio from these ETFs?

The art of constructing the right portfolio

A question that often comes up: Why isn't it enough to invest everything in the one, best ETF? It's a fair question, because ETFs are already very well diversified by nature. But there are multiple asset classes beyond equities. Think real estate, commodities, and bonds. If we look more closely at bonds, we see that there are big differences even within this class. Short-term and long-term bonds have different interest rate risks. Government bonds behave differently in crises than corporate bonds. The same is true for emerging market bonds – they may offer higher interest rates, but they also carry more risk.

The role of the asset mix

This means different asset classes are needed, as well as different ETFs. You need a clear strategy. But do you need an opinion on which asset class will perform better or worse in the coming years? No, you don't need to. Trying to catch the perfect time to enter and exit is called market timing. This is extraordinarily difficult and almost impossible. What really matters is having an investment strategy that suits you. A strategy that lets you hang in there when the markets fall – and unfortunately, they do from time to time.

The science behind the investment mix

But how do you design this investment mix? Fortunately, there is a scientific basis for this, modern portfolio theory. We also need to determine your individual risk tolerance. This can easily be done online. Simply open a test account and try it out. You will then see how many asset classes and ETFs make up the optimal mix for you.

Conclusion: The path to a successful portfolio

In a world of opportunity, it's important to find the right investment mix. This mix reflects your financial goals and risk tolerance. With the right strategy, you can defy the uncertainties of the markets and set your investments up for long-term success.

Do you have any questions or comments? Feel free to email Felix Niederer. See you soon!

Disclaimer: We have taken great care with the content of this article. Nevertheless, we cannot exclude the possibility of errors. The validity of the content is limited to the time of publication.

About the author

Felix Niederer

Founder and CEO of True Wealth. After graduating from the Swiss Federal Institute of Technology (ETH) as a physicist, Felix first spent several years in Swiss industry and then four years with a major reinsurance company in portfolio management and risk modeling.


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