Unlocking Legal Jargon: How AI Legalese Decoder Can Streamline Portfolio Building
- May 13, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Exploring Investment Options for Financial Growth
Hi All
I am 42 years old from Hungary, providing for a family of 4. My financial portfolio currently consists of around 1m EUR worth of real estate, with roughly 40% being the house we live in. However, I feel the need to diversify and build more financial legs for the future, with a time horizon of 10 years or more.
Earlier this year, I took the step of opening an IBKR account and have started adding funds to it. My plan is to invest up to 80k by the end of this year, with a yearly contribution of 40k in the future. Additionally, I am also looking to build a more liquid securities leg with an annual allocation of around 20k, sourced from my Hungarian incomes and investments in Hungarian securities.
### Utilizing AI Legalese Decoder for ETF Selection
As I explore my investment options, I am particularly interested in ETFs that will allow my wealth to accumulate and snowball over time. I have narrowed down my portfolio choices to two options:
1. **Factor-Focused Portfolio**
– 25% JPGL JPM Global Equity Multi-Factor UCITS ETF
– 20% IS3R iShares Edge MSCI World Momentum Factor UCITS ETF USD (Acc)
– 15% XDEV Xtrackers MSCI World Value UCITS ETF 1C
– 10% 5MVL iShares Edge MSCI EM Value Factor UCITS ETF USD (Acc)
– 18% ZPRV MSCI USA Small Cap Value Weighted UCITS ETF
– 7% ZPRX SPDR MSCI Europe Small Cap Value Weighted UCITS ETF
– 5% VBTC VanEck Bitcoin ETN
2. **Simplified Portfolio**
– 70% VWCE Vanguard FTSE All-World UCITS ETF
– 18% ZPRV MSCI USA Small Cap Value Weighted UCITS ETF
– 7% ZPRX SPDR MSCI Europe Small Cap Value Weighted UCITS ETF
– 5% VBTC VanEck Bitcoin ETN
I am leaning towards the simplicity and diversification offered by option 2. As I make decisions about my investment strategy, I am considering leveraging the AI Legalese Decoder to ensure a comprehensive understanding of the legal and compliance aspects associated with each ETF selection. Any insights or feedback on my investment approach would be greatly appreciated.
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FREE Legal Document translation
****** just grabbed a
25% small cap is very heavy. Standards are usually:
80% world
10% emerging
10% small cap
Or
88% world
12% emerging
I would go one of these 2. Putting 5% bitcoin in the mix is a great option.
If you haven’t already, examine KIDs & costs of factor ETFs. Some, esp. momentum, come with high transaction costs that may not be included in the TER. KIDs aimed at EU investors give a calculation listing TER + est. transaction costs separately. High costs decrease your factor premium but not your factor risk. Consider also how badly most factors are doing in recent years. Most MSCI factor ETFs have good back-testing data & poor performance since launch (cf. e.g. Enhanced Value, Small Cap Value Weighted, Momentum, note the exception for Quality). Check launch dates in index fact sheets & [historical end-of-day data](https://www.msci.com/end-of-day-data-search) (which includes back-tested period) on MSCI’s site. This could be due to many reasons: maybe it’s just noise from too short a period compared to the historical factor evidence, maybe some factors don’t hold the same. I’m not sure (you can explore various opinions / papers on the topic), but at 42 with 4 dependents, you also have to consider whether you want the additional volatility/unpredictability of factors, even if you are quite convinced they will hold in the long term. When you say 10+ years, that’s a short timeframe for stock investing, and even shorter for factor investing. Even if you hope that it will be much more than 10 years, unpredictable stuff (incl. shit) happens.
>I also start building a more liquid, state securities leg with roughly 20k added yearly (from my HU incomes, HU securities)
… so you’d be investing 33% in bonds. Two thoughts on this:
* If you want to trade some risk/volatility for higher returns, wouldn’t decreasing the bond portion in favor of broad int’l diversified stocks ETF be preferable to going for factors but in an overall smaller stock portion, esp. given the time frame? (Not sure, but seems worth putting some thought into.)
* Even if you have tax, rate, & currency risk advantages with HUF gov./corp. bonds, I think you should diversify & get other bonds as well. Hungary has among the lowest credit ratings in the EU and your bond portion is for security, esp. when/if shit hits the fan. Yes, maybe you’ll just miss out on the great rates, but it seems you can afford to safeguard some of your fortune for the worst scenarios. Consider also that, if you were just one more country to the east, it might be reasonable advice to get some gold coins, for the worst case scenario of having to pay your way out without access to your accounts.
That is kinda heavy mental load. VWCE and chill. 5% btc is ok but I would suggest against ETC since there is kinda high 1% TER.
How about replacing VWCE, ZPRV and ZPRX by SPDR MSCI ACWI IMI UCITS ETF which covers securities across large, mid and small cap size segments?
SPDR MSCI ACWI IMI UCITS ETF
[https://www.justetf.com/en/etf-profile.html?isin=IE00B3YLTY66#overview](https://www.justetf.com/en/etf-profile.html?isin=IE00B3YLTY66#overview)
PS How do you plan to rebalance your portfolio?
PS 2 “However, try to avoid mixing index providers in your portfolio at the broad market level. For example, if you combine an MSCI World ETF with a FTSE Emerging ETF, then you won’t have any exposure to South Korea or Poland. Meanwhile, you’ll hold both those markets twice if you take the FTSE Developed World ETF along with an MSCI Emerging Markets ETF.”
MSCI Vs FTSE: Which is the best index provider?
[https://www.justetf.com/en/news/etf/msci-vs-ftse-which-etf-provider-is-the-best-index-provider.html](https://www.justetf.com/en/news/etf/msci-vs-ftse-which-etf-provider-is-the-best-index-provider.html)
I would go 70% VWCE + 12,5% IS3R + 12,5% ZPRV + 5% BTC. I exclude ZPRX because it is a bad constructed ETF (too much mid-cap and sc blend).
Thanks for all the builds, my main takeaways are:
1. review small cap share – 25% indeed feels too much, I am thinking to tune it down to 15% midway between traditional and aggressive approach
2. more simplicity for seamless sustainability/rebalancing (I’d buy stuff monthly)
3. Less HU exposure with bonds
How about this:
VWCE 80%
IUSN? 15% (This is MSCI, I havent found an FTSE ucits all-world small cap variant to fit with VWCE, any tips?)
VBTC 5% (this is ‘play’ money, I prefer ETF over crypto wallets due to 0% tax long term investment account in HU)