How should I invest my money? Here’s one take from a businesswoman
Read or listen on Medium: https://medium.com/p/75176af0374b
What’s in it for me?
Are you putting your money to work? Are you investing in a way that serves your goals for today and the future? Would you like to but don’t know where to start and frankly no one talks about it openly? Plus any books you might have read are too US-centric? Then you’re in the right place.
I’m not a finance expert, but I am a conscientious businesswoman who has researched, studied, and tested in the field of personal finance. I want to open the gates to my portfolio philosophy because I would have loved to read someone else’s 10 years ago when I started earning money! I hope it gives you a place to start or to re-think for yourself how you’re already investing. We don’t talk about personal finance enough in school, in social circles, and especially among women. Proper society says it’s distasteful to talk about money, well I think it’s badass. Join me.
While this is by no means financial advice, the body of this article is:
Manage your money as you would a business
Design your investments to finance your desired life and interests
Start now, because compounding interest
My portfolio choice and performance
About the author
I’m an Entrepreneur, Investor, and Tech Lead for a SaaS company. I grew up with exactly two bullets of guidance about personal finance from my parents (which I cherish and reference later in the article) so I really had to figure it out for myself– is this your experience too? At some point, I knew I was sleeping on my money when cash was just sitting in the bank with no interest. So in March 2020, when I suddenly had a lot of time on my hands, I went deep into managing my money in a way that enabled the life I wanted to lead. You can read more about my story and career on my personal website.
Investment philosophy & guiding principles
These are my guiding principles for you to use as a reference point. I share some resources below to figure out your own.
Positive Impact: it’s of utmost importance that I invest my time or money in ways that align with my values. For example, I didn’t accept a project in Sydney (how cool would Sydney be!) because I didn’t want to spend my time advancing a sector I think is overall bad for the world. I chose Selma (not a sponsored post btw!) as a Robo advisor over its competitors because I looked at the diversity of the company’s team– plus, more diverse teams perform better. My friend invested with a non-diverse competitor and my returns are better! So sticking to my values paid off.
Lifestyle: I prioritize freedom in how I spend my time– that means I want to have time to do things that aren’t money-makers and even when they are, I want to truly enjoy them. I enjoy innovative projects where I get to work with a team I can learn from. In practice, this means I’d rather make investments that don’t require my time (or much of it) and if it does, it should be something I’m really motivated to work on because I’ll be doing it outside of my main career. I don’t care much for status symbols like titles and logos or instant gratification– no get-rich-quick here! Especially when you learn about the diminishing returns of happiness to money.
Automation: humans suck at budgeting– we’re too emotional. I automate as much as possible to save time and avoid this human pitfall. My savings, investments, tax, and any bills are set up to be deducted automatically the day after I get my salary. What’s great is that whatever’s left, I know I can spend! I learned this and more great advice I reference later from an excellent book with an awful title called “The Automatic Millionaire” by David Bach, which is sadly quite US focused on its practical advice.
Figuring out your own philosophy
Career Anchors: figure out what you prioritize by taking examples of opportunities you’ve said ‘yes’ or ‘no’ to and why. I’ve listed the anchors below and you can find assessment tools online.
Criteria Matrix: I discovered this thanks to my business coach that I met through The Ascend because I had ~20 business ideas, some I had started actioning but lost motivation on, some I’d seen through and some were still ideas. The matrix allowed me to say ‘no’ to business ideas and be clear on why– for example, because I don’t get to work with a team– and say ‘absolutely fucking YES’ to others and know exactly why. The matrix is a combination of what matters to you, how much time you have to dedicate to a venture and whether it’s a skills match.
Here’s my selection criteria matrix as an example:
Composition of Portfolio
The numbers in brackets are the % of my overall portfolio:
(61%) Equity Compensation: one of the pieces of advice my dad gave me was “the only way to build significant wealth is by owning a business”. I took this advice to heart and sought opportunities where equity was part of compensation. Buying Medallia shares with all my savings was my first investment decision. I bought 3’000GBP of shares, and 5 years later got 38’000USD when the company was bought by a Private Equity firm. Not bad! I now work for Palantir which includes equity in their compensation too (we’re recruiting, message me for a referral). You can find other such companies by looking at companies Venture Capitalists invest in like Index Ventures or Sequoia Capital. When you do receive equity, be sure to read and remind yourself of the fine print: vesting terms and tax implications are key ones I learned the hard way about. Also, pick a sell/hold strategy in advance. OK, so what if you don’t work for a company that pays in equity? What are additional options? Angel Investing.
(4%) Angel Investing: reserved for the super wealthy right? Wrong. I met a lot of seasoned angel investors in my research and the key advice I took away was “Because of the odds, you must plan for your first 10 angel investments, not only your first.” Makes sense, but if each angel investment is $5000 to $150’000 and the cheaper end tends to be higher risk ones too. So I thought it was impossible until I discovered Moonshot. Moonshot vets pre-IPO companies, invests a big share, and splits up the investment among smaller investors. Moonshot allows investors to pay from 500CHF per month, or from 10’000CHF in one go. Thanks to this vehicle, you can actually plan for a target of 10 angel investments with companies that have been vetted by a team of investors. I’ve already seen a 36% increase in the value of my first investment in 2021. If you contact Moonshot.ch, say you came from me. I found out recently that Swisspreneur offers a similar product via their syndicate but I haven’t looked closely into this myself. Note, angel investing is super risky. My husband and I angel invest based on our values and with full knowledge that there’s a risk we don’t see our money back, just like there’s a chance we’ll see great returns.
(13%) Market Investing: buy shares or commodities in public markets. Three categories in my portfolio:
A. (1%) Day Trading: I did my research here and day-trading aka buying/selling in public markets yourself has a 1–5% success rate (making a profit) plus, it’s time-consuming. The S&P 500 has a performance of ~12% over 10 years. So, any day trading I do is into companies I believe in and using my disposable income. This is super time-consuming and not great for non-professional investors like me.
B. (12%) ETFs: Instead of day-trading I opted for Exchange Traded Funds called ETFs which is an index with a basket of shares and/or commodities that perform at an average of 10% annualized return over ten years. I chose to go with a Robo advisor that invests and rebalances the risk on my ETF placements for me. I love my Selma Robo advisor– high-performing return, great user experience, and a great (diverse!) team. It’s pretty liquid too: you can withdraw in a couple of days, although when you place money here you should aim for a 5–10 year timeline. I have an auto transfer each month for my long-term investments. Zero time spent after set up and around 10% returns over the long run (I’ve seen highs of 25%, lowest around 4%). You’ll see they walk you through how much is advisable that you invest in Selma based on your personal circumstances. I invest 20% of my Net salary. This link gives you Selma fees free for a year.
C. (0.2%) Cryptocurrency: look, crypto is too risky– like day-trading shares when you’re not a professional. It’s either you make it your full-time job or find something less risky and less time-consuming to invest in. That said, I did great with crypto because I had a strategy (double and get out). Now I have some placements but they came out of my disposable income and I’m prepared to lose it if that’s the way it goes. I’d much rather invest in a basket of Web3 companies via vehicles like Moonshot’s (not sponsored) new Web3 offering because yes, Web3 is going to cause a similar transformation to the Internet but there are going to be a lot of cadavers before we find the winners too– so I hedge my bets and bet on the rails/infrastructure over the currency. A Web 2.0 analogy to my approach is to bet on companies that provide the rails for e-commerce businesses, like Shopify, PayPal, and AWS/Amazon, rather than one or even a basket of e-commerce companies.
(3%) Art: art as an investment has advantages and disadvantages. These may apply to other private assets such as wine and jewels. The advantages of art include intrinsic value: you love the art in your living space. Physical art has a low correlation to stocks and bonds, so when the market dips, art tends to hold its value. It’s also proven that fine art pieces maintain or grow their value over time. The downside is that physical art is not liquid– you can find a buyer for your stock much easier. An addressable downside is the risk: what tells me that this artist’s work is worth investing in? Well, here I made another discovery to hedge my art bets. MT Art solves the problem that artists cannot be an artist as well as their own publicist and marketeer. MT Art solves this by applying the Hollywood actor model: artists focus only on their art, and MT Art acts as their agent on PR, partnerships, and sales to collectors. This is brilliant because MT Art curates artists and builds up their profile such that the valuation of their art grows over time. I’ve invested in 3 pieces so far– I love them in and of themselves, I love the team (B Corp certified hello!), and a win-win, innovative business model. The latest valuation of my artworks gives me a “return” of over 100%– put differently, the value of my artworks has more than doubled since I bought them in 2019 and 2020. Check them out and get started– you can say you came from me.
(16%) Real estate: so there are two levels of real estate investing I think of: the place you live in and places you would rent out. For the place you live in, my logic is that if it costs more to rent, then buy it. If it costs less, stay renting and invest your money. Homeownership is work and mortgage interest rates really matter for the maths. Do your maths and compare it to renting. Investing in real estate that you don’t live in: the returns are estimated at 4–8% long-term. So two things with that: (1) as mentioned, ETFs are at 10% annualized with no effort from you, and (2) being a landlord is work, it can come with surprise costs and can be very time-consuming. Now if you love the idea of being an Airbnb host and you’ve done the research, great. I’m not particularly interested in the field, it’s too time-consuming and the margins are too tight. So we own the house we live in which costs us a conservative estimate of 30% less than if we were renting thanks to 2019’s low mortgage interest rates. We Airbnb our spare room when we can and that’s that. Note, the % of my portfolio for real estate is only calculated with what I’ve paid back on my mortgage so far– not the full value of the real estate since the remaining value technically belongs to the bank.
My husband’s stepdad would say “I’ll be happy the day I pay a million in taxes!”. I hope you’re in a country where you’re also happy to pay taxes– in Switzerland I see it being put to great use.
That said, there are some tax tips I wish I knew sooner, these apply to Switzerland but again, I’m not a financial advisor, you should check with an accountant or financial advisor.
Know your tax rate: if you anticipate a big change like you earn more, you get married or your company IPOs, ask your financial advisor ASAP what that implies for your tax rate. I’ll spare you the full details, but I made this mistake when Palantir IPO’d and I really suffered from it.
Pay in installments: there is an option to pay in 3 installments over the year. Just take it, don’t get caught by surprise or pay late fees. You’ll get your money back if you overpay.
3rd Pillar: 3rd pillar is a pension account and you can deduct up to 6’800CHF a year per person. So instead of paying that amount in taxes, give it to yourself at retirement. Selma offers 3rd pillar accounts, that’s what I use. I have friends who have a 3rd pillar that helps with mortgage payments, called an “indirect amortissement”, but I don’t know much about this one– ask your banker.
Training: up to 12’000CHF of continuous learning costs could be deductible annually. So talk to your accountant and see if you can get that career coach or MasterClass subscription tax-deducted.
Food & Travel: if you travel for work, there’s a capped cost you can deduce daily for food and transport (I think without providing receipts, it’s just a fixed daily amount although I’m told that’s changing with the surge of work-from-home). You can deduct train passes also, for example. Check with an accountant.
Donations: I used to donate an automatic amount to the same charities each year. That’s until I read Automatic Millionaire where Bach points out that it’ll bring you more joy to be able to spontaneously place as much of your disposable income into whatever causes you feel like. And I love that approach, now I make donations instead of physical gifts sometimes. I’ll donate to pressing causes or causes my friends are close to. And those donations can be tax deductible.
Life Partner: if you’ve read Sheryl Sandberg’s Lean In or listened to Scott Galloway’s advice, your life partner is the single most important economic and well-being decision you will make. Talk to your prospective partner about investing philosophy and role expectations. If you’re planning to work or you would like a partner who contributes financially, talk about it. You also need to know your partner’s financial situation. Don’t end up responsible for your partner’s debt by accident.
Relationships: You invest in relationships and experiences too! Experiences like learning a new skill or traveling are proven to bring more and longer-lasting happiness than things (even big things like a house!). And there’s nothing in life if not deep, meaningful relationships with friends, family, and mentors who support and inspire you. Relationships are the root of happiness according to many studies.
Multiple income streams: I read that half of the millionaires have 3 income streams: employment plus two. That research suggested it’s a good safety net in case one doesn’t work out. For inspiration, my income streams are: employment, our spare room on Airbnb, and my website development business and I hope to add more soon.
Retirement: I have no intention of retiring early but you absolutely can and should plan for it if you’d like to. Invest Like Aysha has a spreadsheet where you can simulate your retirement age and required savings for Switzerland if that’s of interest to you.
Buying second hand: anything you can buy second hand, do it. Clothes, kitchen utensils, and cars all lose so much value as soon as it’s bought and they’re depreciating assets over time (maybe except a Birkin or luxury watch but even then, you can’t wear it or you might damage it so what’s the point?). I love gem.app for searching all second-hand luxury goods. Facebook Marketplace and Ricardo are great for kitchen appliances and anything you can think of really! It’s worth selling your stuff too of course.
Timing: the best time to invest was when you earned your first dollar. The second best time to invest? NOW. For two reasons (1) everything’s on sale because of the financial dip and (2) compounding interest.
Bias Towards Action
The time is now to take action by looking at these key investment resources referenced in the article (not a sponsored blog, to be clear!):
Selma — ETF and 3rd pillar
Moonshot — Angel Investing
MT Art — Art investing (not ready yet? follow their fabulous founder on IG)
Palantir — for a role in tech with a positive impact and equity compensation (also, Index Ventures, Sequoia Capital, and Frontline Ventures to look for companies they’ve invested in).
Which parts of this article were most helpful? Is there anything else you’d like to know more about? Comment or connect via my LinkedIn
Edgar Schein’s Career Anchors
How to Invest in Art
A Guide To Depreciation
Why Happiness is Becoming More Expensive And Out Of Reach
Average ETF Return
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