Today I want to talk about what I’m buying in 2023. More precisely, my investment strategy for the year, which I’ve already been sticking to in January.
You’ll find out exactly how my wife and I are allocating our after-tax income every month into three different investment buckets.
And while I think we can all agree that 2022 was a very bad year for investors, I believe 2023 will be a lot better. I’m not just saying that because my ETF portfolio is up substantially over the past month.
Don’t get me wrong, it’s not going to be easy. There are still plenty of uncertainties like the still-ongoing war and the monetary policy across the world, with the ECB and the FED increasing interest rates to levels that we haven’t seen in a very long time.
Yet that’s exactly why I think this will be a great period to dollar cost average into different assets – ok in our case euro cost average, but sadly that doesn’t sound that great!
Even though I think we could still be in for a bumpy ride, I am bullish about 2023 as a whole.
Like I’ve done in the past two years, I’m also going to share my predictions for what returns I’m expecting from each asset class.
Please don’t forget that none of this is investment advice, just my personal opinion based on my own experience as an investor.
My 80/10/10 Investment Strategy for 2023
So, here’s how my wife and I are planning to invest our after-tax income this year. We of course still have to subtract our living expenses from this as well, but luckily those are pretty low.
Even including our 3-month old daughter, the three of us usually don’t spend more than 1.300€ on average per month.
And just so you know, in addition to our investments we like to keep enough in cash on our bank accounts for about 6 months worth of living expenses.
That’s simply for emergencies and peace of mind. Also, I’m self employed, so I need to keep more cash reserves for tax and social insurance payments compared to employees.
Having said that, we’re following a simple 80/10/10 investment strategy in 2023:
80 % ETFs
80% is going straight into low-cost, passive ETFs, which enable us to invest into a large, diversified basket of stocks, without needing to make any active decisions on which stocks will perform best, which ones are overvalued, when to sell etc.
We’re planning to hold our ETFs long-term, ideally forever, and to only sell some shares when needed to fund our retirement.
Our ETF investment strategy could not be more simple: We buy a single ETF every single month, no matter what the market is doing: The accumulating Vanguard FTSE All-World (ISIN: IE00BK5BQT80, VWCE), covering 3.740 stocks from the entire world, including emerging markets.
Based on over a hundred years of stock market history, we’re expecting returns of around 7% per year from our ETFs long-term, with a lot of ups and downs in between.
For my wife and I, ETFs are the main pillar of our investment strategy. We’re not planning to touch this part of our portfolio over the next 10-15 years or more.
They’re also part of our retirement fund for when we get old, as the current pension system in most European countries, including Austria where we live, is clearly unsustainable.
Additionally, we consider hard assets like stocks to be a good protection against higher inflation or even periods of hyperinflation, as was the case in Germany between 1920-1924:
If you’re looking for the best low-cost broker in Europe to buy stocks or ETFs, I recommend checking out Interactive Brokers.
ETF Returns in 2023 (My Prediction)
Now, while I obviously don’t have a crystal ball, here are my unqualified return expectations from my ETF investments in 2023:
I think we’ll still see a lot of volatility, maybe even a correction of 10-15% in between, but that we’ll end 2023 with a 9% return for the year.
Still, precisely because of all the uncertainty, some of which is priced in, I think this is going to be a great year to dollar-cost-average into the market. So to buy shares on a monthly basis no matter wether prices are up or down – at least that’s what we’re doing.
10% P2P Lending
The next 10% of my investable cash every month will be going into P2P loans on different platforms and marketplaces. These usually pay interest rates between 10-15% per year.
But with interest rates that high, they’re clearly not risk-free either, even if a loan is offered with a buyback obligation by the lending company.
To reduce this risk as much as possible, I try to focus my investments on loans issued by lending companies with solid financial statements.
P2P lending has been part of my portfolio since 2018 because I appreciate that the sector is relatively uncorrelated to my other investments, providing me with some extra diversification and because of the high monthly cashflow.
The P2P platforms that I’m planning to add money to this year are:
- Esketit – using the diversified auto invest strategy
- Mintos – primarily investing into lending companies with a rating above 7
- Income Marketplace
Last year I had Lendermarket at the top of my list as well, but until Creditstar repays all Mintos investors and stops extending loans on Lendermarket, I’m more likely to withdraw my funds than to increase my account balance.
P2P Returns in 2023 (My Prediction)
As for my return predictions, based on my yearly returns in 2021 and 2022, I’m expecting a 9% return from my investments in P2P lending in 2023.
10% Speculative Investments
The last 10% of my investable cash on a monthly basis is what I’m willing to speculate and take the most amount of risk with.
However, I don’t like to speculate with single stocks the way many others do, as it’s way too time-consuming and it’s almost impossible to outperform a broad, passive ETF like the one we buy over the long run.
That being said, I’ve had a lot of success with my crypto investments since 2017.
Even with all the painful crashes since then, I’ve been able to take out my initial investment several times over, which I then moved into my core ETF holdings.
And while 2022 was a massive disappointment for the sector, making me rethink wether or not I should ever talk about crypto again on the channel, I still want to be open about what I’m doing, so here we are.
So, you probably guessed it. This means, the remaining 10% of my investments every month will be going into the two largest, best-known cryptocurrencies, Bitcoin and Ethereum.
I’m aiming for a 50:50 split between the two – among them, I think Ethereum has the higher upside potential this year, but also carries more risk.
Bitpanda – The Importance of Regulation & Asset Protection
I’m using a single exchange to buy these every month. Bitpanda, which is based and regulated in my home country, Austria.
With crypto, it’s extremely important to choose an exchange you can trust, especially after what happened last year with FTX.
All assets on Bitpanda are 100% backed, which is further validated by the auditing firm KPMG on a regular basis.
In addition, crypto assets are segregated from Bitpanda as a company according to Austrian law, meaning that even if they were to ever go bankrupt, they still belong to you.
This is not necessarily the case on other exchanges even if they’re based in the US, so it’s important to keep this in mind.
Another reason why I’m using Bitpanda is that there are no fees for euro deposits or withdrawals and that you can even set up automated savings plans to buy whichever amount of crypto you want on a regular basis, with the minimum being 25€:
Just be aware that when you buy on Bitpanda directly, you pay a premium of 1,49% on top of the current market price. I think for savings plans that’s worth the convenience.
How To Pay Zero Fees on Bitpanda
That being said, if you want to buy something directly, here’s a pro tip to pay zero fees:
1. After depositing euros to Bitpanda, go back to the login screen and select Bitpanda Pro:
2. You can then click on deposit, to transfer your euros from your main Bitpanda account.
3. On Bitpanda Pro, you can now buy or sell up to 1.000€ worth of crypto every 30 days, without paying any fees at the current market price. Even once you go above that amount, you only pay 0,15% or 0,25% in fees respectively. That’s quite a bit lower than the standard 1,49% premium using the simplified, main Bitpanda interface.
4. Once you’re done on Bitpanda Pro, you can move any funds (cash or crypto) back to the main Bitpanda interface if you want. You never pay fees for any of the internal transfers.
So yeah, that’s where 10% of my investable cash will be going on a monthly basis in 2023: a 50:50 split between Bitcoin and Ethereum using the Bitpanda exchange.
I’m fully aware that this is by far the most speculative portion of my portfolio, but I’m willing to risk 10% of my monthly investments on it.
If you’re considering allocating a small percentage to bitcoin and ethereum as well, please make sure you don’t invest money that you can’t afford to lose.
Speculative Investment Returns in 2023 (My Prediction)
Ok, let’s finish things off with my return expectations for my two speculative investments. Just remember, last year I was completely off.
While both of them have performed exceptionally well so far in January, I think Bitcoin might finish 2023 at a price of around 35.000€, which would be a 120% return for the full year (but still far off its high of 63.000€ in 2021).
And I expect Ethereum could double from here to around 3.000€, for a yearly return of around 170% from start to finish of 2023, still finishing quite a bit below its all-time high of 4.500€ from November 2021 as well.
I don’t think we’ll be seeing new all-time highs in the stock market or in crypto yet this year, but I think we could still see a nice recovery.
Let’s check back in a year and see if I got anywhere close with my three predictions or if I was completely off. In the latter case, hopefully because the markets performed better, not worse!
There you have it, now you know exactly how I’m allocating my money this year.
Just to reiterate, please don’t treat anything that I wrote today as investment advice, I’m simply sharing what I’m doing with my own money.
What investment strategy are you following in 2023?
- My Investment Tools
A list containing all my investments in P2P Lending, the brokerage accounts I use to buy ETFs, my speculative investments in Bitcoin and my free bank accounts. It even includes the tools I use for blogging and YouTube.
- P2P Bonus Offers
A collection of all the best, currently available bonus and cashback offers in the P2P lending space. Regularly updated.
Disclaimer: Investing involves risks of losses. You should always do your own research before investing into anything. Also, some of the links are affiliate links, which help support me, the website & YouTube channel. I only link to services I use myself, none of them are sponsored.