The money kept aside for unexpected expenses or a fall in income is called an emergency fund. The amount you need depends on your essential expenses, how stable your income is and what your household has to cover, and it is counted in months of spending.
Goal-based financial planning starts by asking what the money is for, not where to invest it. Each goal has a time horizon, an amount and a priority, and risk becomes the probability of not reaching it.
Buying an ETF or fund quoted in euros does not remove the exposure to other currencies. The currency in which a product is traded and whether it has currency hedging are different characteristics. Confusing them can make the result of an investment very different from what you expected.
Diversifying does not simply mean owning many investments. It means combining assets that do not all react the same way to the same events. But there is another important condition: the portfolio also has to suit your goals and be comfortable enough to hold on to when markets fall.
Looking only at the return of the last 5 or 10 years can hide an important part of the story. The result always depends on when the investment started. Rolling returns show exactly that difference.
An investment fund gives you access to a professionally managed portfolio without having to select each asset yourself. But choosing a fund takes more than looking at past performance. You need to understand where it invests, what it costs and what the management adds in return for that fee.
Choosing an ETF should not start with the name of the fund or its recent performance. The first step is to understand what exposure you want in the portfolio. Only then does it make sense to compare the index, the replication method, the costs and the currency.
An Investment Policy Statement is the written plan behind a portfolio. It defines what the money is for, how much risk it can take, which investments are allowed and when the strategy should be reviewed.
Risk tolerance is one of the foundations of a sound investment plan. A meaningful assessment combines two different questions, how much risk you can afford to take and how much risk you are willing to take, and both should be considered before deciding how a portfolio should be invested.
Few asset classes have shaped wealth creation as profoundly as stocks. For nearly a century, US large-cap stocks have delivered growth that outpaces inflation, government bonds, and cash.
Short-term bond ETFs have established themselves as fundamental instruments for investors seeking stability, liquidity, and reduced risk.
