do you see a sweet spot between these two scenarios? I mean between keeping cash for DCA in case of drawdown and reduce portfolio volatility investing in domestic and corporate bonds?

Yes – there *is* a pretty natural sweet spot between: - “**Fully invested with lots of bonds**” and - “**Huge cash pile + 100% equity bucket**”. Think of it as: **a small, intentional DCA cash sleeve (10–15%) plus a core bonds allocation**. --- ## 1. A concrete “sweet spot” mix Using the same type of assumptions as before (equities ~6–6.5% p.a., bonds ~1.5–2% p.a., cash ~0.5% p.a.), a balanced middle ground could look like this for your *total* invested wealth: > **Sweet-spot target:** > **45% equities / 40% bonds / 15% cash** - **Equities (45%)** - 55% Swiss total market ≈ 25% of portfolio - 45% global equity (CHF-hedged) ≈ 20% of portfolio - **Bonds (40%)** - Mix of Swiss gov + Swiss corporate, as you liked originally - **Cash (15%)** - Explicitly labelled as **“DCA / buy-the-dip cash”**, not forgotten money For your **30k CHF/year** saving: - **13.5k** → equity ETFs - **12k** → bond ETFs - **4.5k** → stays in high‑quality CHF cash for DCA (Those contributions roughly maintain 45/40/15 if markets don’t move too wildly.) --- ## 2. How this compares to your two extremes Using the same rough planning numbers as earlier (not guarantees, just reasonable estimates): | Plan | Equities | Bonds | Cash | Rough expected return p.a. | Approx. max drawdown* | |------|----------|-------|------|----------------------------|------------------------| | **A – Original** (all invested) | 45% | 55% | 0% | ~**3.8%** | ~**–19%** | | **B – Cash heavy** (DCA extreme) | 50% | 0% | 50% | ~**3.4%** | ~**–21%** | | **C – Sweet spot** (proposed) | 45% | 40% | 15% | ~**3.6%** | ~**–19%** | \*Drawdowns are ballpark “bad bear market” scenarios, not precise forecasts. Interpretation: - **Return** - Plan C’s expected return (~3.6%) lands **between** A (higher) and B (lower). - You pay *a little* expected return vs the fully invested A, but avoid Plan B’s bigger drag from parking 50% in cash. - **Risk / volatility** - Plan C keeps **equity exposure at 45%**, like Plan A → **similar overall drawdown** (~–19%). - You avoid Plan B’s higher risk in the *invested* bucket (100% equity) while still having dry powder. - **DCA flexibility** - Plan C gives you **meaningful but not excessive cash (15%)** to deploy in drawdowns. - You still have a **proper bond sleeve** working for you, instead of everything that’s “not in stocks” just sitting in cash. --- ## 3. How to actually use the cash sleeve To make that 15% cash work (instead of just dragging returns), you’d want **simple rules**, for example: 1. **Always auto-invest the 45% equity / 40% bond part of each contribution.** Don’t time that portion – it’s your core. 2. **Grow the 15% cash sleeve until a real drawdown happens**, then: - If global equities are **–20% from their last high** → deploy **⅓ of your cash** into equities. - If they reach **–30%** → deploy another **⅓**. - If they reach **–40%** → deploy the last **⅓**. 3. **Refill the cash sleeve** over the next 1–2 years of contributions after deploying it. This way: - In “normal” markets, your portfolio behaves much like a classic 45/40 portfolio, with modest volatility. - In **big crashes**, you: - Have **ammunition** to buy cheap, and - Don’t need to sell bonds or panic‑sell stocks to find cash. --- ## 4. When this sweet spot makes sense for you This 45 / 40 / 15 structure is a good fit if: - You **like** the idea of **bonds reducing volatility**, - But you also want **some freedom and psychological comfort** from a dedicated DCA cash pile, - And you don’t want half your savings doing nothing in cash (Plan B). If you had to choose, where do you *feel* more comfortable for that cash sleeve: closer to **10%** (more efficient, less dry powder) or **20%** (more ammo, a bit more drag)?