In this article, I have analyzed and compared, in my opinion, the top 2 defensive investments in order to understand this investment category. 😊
Recommended products
⚠️ This article is not investment advice. Investing can lead to financial loss. The information shared is based on my personal experience and research. However, further research is recommended to confirm the information in this article.
Introduction
In this article, I present and compare, based on my experience and opinion, two placements that I consider interesting for a defensive strategy: the savings account and the BNDW bond ETF.
The goal is not to seek maximum return, but rather to protect part of one's assets and keep money available for unforeseen events or short-term projects.
However, these two investments do not play exactly the same role.
The savings account prioritizes the security and availability of money.
The BNDW ETF seeks more to generate income through bonds, but its value can fluctuate.
Let's analyze these two investments.
What is a defensive strategy?
A defensive strategy involves placing a portion of one's assets in investments whose primary objective is to limit risk, protect capital and limit volatility, rather than seeking maximum growth.
It can be used, in particular, to:
- build up an emergency fund
- to finance planned short-term expenditures
- to cope with the unexpected
- avoid having to sell risky investments at the wrong time
How much should one invest in defensive investments?
There is no universal percentage.
The proportion depends in particular on age, income, job stability, assets, debts or financial goals.
Personally, here is a very simplified rule I use to know what percentage I should invest each month in a defensive investment.
| Age | Percentage of defensive investment |
|---|---|
| Under 25 years old | 5 % |
| 25–34 years old | 10 % |
| 35–40 years old | 20 % |
| 40–45 years old | 30 % |
| 45–55 years old | 40 % |
| 55–65 years old | 50 % |
| Over 65 years old | 100 % |
For example, a 36-year-old who invests CHF 1,000 per month could, according to this personal rule, spend approximately 200 CHF in defensive investments.
Another example: a 52-year-old person could, according to the same logic, dedicate approximately 400 CHF per month in defensive positioning.
⚠️ This chart is obviously not a universal financial rule. It is simply my personal approach.
Keep at least 3 months' worth of expenses
Another rule for preserving one's assets is to keep at least 3 months of expenses easily accessible to deal with emergencies.
For example, if you have 3,000 CHF in monthly expenses, a minimum reserve 9,000 CHF Having savings in a savings account is necessary to build up precautionary savings.
My top 2 defensive positionings
1. The savings account
A savings account is probably the simplest defensive investment. You simply add money to a savings account.
The money remains in a bank account and can usually be used quickly.
In Switzerland, bank deposits benefit, under certain conditions, from a guarantee of up to 100,000 CHF per client and per bank.
The main advantage is therefore stability: Unlike an ETF, the account value does not fluctuate daily with the financial markets.
However, the interest rate is generally low (approximately 1 %)
2. The BNDW bond ETF
BNDW* is a global bond ETF from Vanguard.
Instead of simply keeping money in a bank account, the investor buys shares of a fund that holds a diversified portfolio of bonds.
In simple terms, a bond is a loan made to a borrower. Therefore, with a bond ETF, the investor is indirectly exposed to numerous bond loans.
BNDW's appeal lies particularly in its international diversification. This allows money to be lent to many countries and thus reduces the risk of non-repayment.
However, unlike a bank account, BNDW's value can rise or fall. Its fluctuations are generally less pronounced than those of an ETF composed solely of stocks, but They are not worthless..
Another interesting advantage concerns distributed income.
Between 2019 and 2025, BNDW generated on average approximately 3 % per year of return from its bond income. These revenues are distributed monthly.
As a result, the BNDW ETF is a passive, defensive and stable investment which, despite risks and some volatility, has historically generated income every month and has a fairly stable value over the long term.
Savings account or BNDW: which to choose?
In my opinion, both can have their place in a defensive strategy.
For example, if you invest 1,000 CHF per month and you want to dedicate 10 % From your budget for defensive investments, you could allocate this sum as follows:
- 50 CHF per month in a savings account
- 50 CHF per month in BNDW
Thus, you dedicate 100 CHF per month to a defensive strategy, with a very stable part and another diversified part, more profitable but also exposed to fluctuations in the bond markets.
What performance level should we really be looking at?
This is where I find it important not to fall into the trap of "best yield".
Let's imagine:
- savings account: 0.5 %; ;
- Bond ETF: approximately 3%
At first glance, the BNDW ETF obviously seems more interesting.
But if you need that money urgently and the ETF has lost 5 % by the time you need to get it back, you will lose money.
That is why I believe that The best defensive investment strategy depends primarily on the objective of making money..
Is it an emergency?
👉 Savings account
If this money is intended as an emergency fund in case you need to withdraw it quickly, then money in a savings account is more advantageous because it is readily available and stable.
To diversify part of one's assets with bonds?
👉 ETF BNDW
BNDW can be an interesting option for diversifying a portion of a defensive portfolio thanks to its exposure to numerous international bonds. However, one must accept that its value may fluctuate.
To generate long-term income?
👉 ETF BNDW
We concluded that the BNDW ETF has historically distributed an average of 3% per year in interest income. This means that this ETF has distributed an average of 0.25% per month.
Note that this return is far from that of a simple S&P500 ETF (approximately 10% per year), but the value is historically much more stable.
This return is historical and does not guarantee a similar return in the future, but we understand that it is historically higher than the interest on a bank account.
To keep your money free of charge?
👉 Savings account
If you want to keep your money free of charge, you need to choose a savings account with no annual fees.
The BNDW ETF currently has TER charges of 0.05%.
My personal opinion
Personally, I am not looking to maximize the defensive portion of my assets.
It is mainly used to secure some of my money, while the rest is invested with a long-term horizon.
As I am quite young, I prefer to invest the majority of my investment budget in more growth-oriented investments, such as an ETF tracking the S&P 500 or an ETF tracking the Nasdaq-100.
For example, my current distribution is approximately:
- 5 %: savings account
- 5 %: Bond ETF
- 20 %: ETF QQQ
- 70 %: VOO S&P 500 ETF
This allocation reflects my personal situation and risk tolerance. It is absolutely not a recommendation for other investors.
Furthermore, it should be noted that over the years, I plan to gradually increase the proportion devoted to mixed and defensive placements.
Summary: Savings Account vs. BNDW ETF
| Category | My choice |
|---|---|
| Security | 🥇 Savings account |
| Simplicity | 🥇 Savings account |
| Urgent need for money | 🥇 Savings account |
| Low volatility | 🥇 Savings account |
| Lower Costs | 🥇 Savings account |
| Diversification | 🥇 BNDW |
| Potential yield | 🥇 BNDW |
| Income distributed each month | 🥇 BNDW |
| International diversification | 🥇 BNDW |
Therefore, it is not necessary to choose between the two. One can very well use the savings account for his emergency fund And BNDW to build another part of its defensive heritage.
Finally, let's not forget an essential element: the goal of these investments is not to make us rich.
The goal is rather to to secure part of one's assets while maintaining a certain level of cash availability.
Is the second pillar also a defensive position?
One element is often overlooked when calculating one's defensive assets: the money accumulated in the second pillar (LPP).
When you work in Switzerland, a portion of your salary is paid into your occupational pension plan each month. This money is then held by the pension fund to finance your retirement.
To simplify, we can therefore consider that the second pillar constitutes a form of long-term wealth with a significant defensive component.
Why is this important?
Let's imagine a 30-year-old person who owns:
- 10,000 CHF in his savings account
- 90,000 CHF invested in an aggressive ETF
- 80,000 CHF accumulated in his second pillar
She might believe her defensive assets are only 10%, because she is not including the second pillar. However, in reality, her defensive assets in this case are 50%.
For his age (30 years old), 50% in defensive percentage is too high, he should theoretically increase his investments in offensive positioning.
In truth, not calculating the second pillar in one's defensive assets can give a false idea regarding which investments to make.
Conclusion: The top 2 defensive positioning
In conclusion, here's what you need to remember about defensive positioning:
- Have at least 3 months' worth of savings compared to your monthly expenses.
- Invest a certain percentage each month in a savings account or the BNDW ETF (depending on age)
The younger you are, the less money you need in a defensive investment. But as you get older, it becomes essential to add more and more.
Otherwise, remember that your second pillar savings are also a defensive investment. Therefore, analyze your future investments while also considering your second pillar savings.
2 Swiss bank accounts to look at
For a defensive strategy using a savings account, I am looking for a savings account that meets four essential criteria:
- No management fees
- No annual commissions
- an attractive interest rate
- Deposit guarantee covering the first CHF 100,000 deposited
Two Swiss banking options are worth considering:
If you'd like to open an account, you can use my promotional codes:
- Zak: 8LU5GX
- Yuh: kqqml6
As the terms and conditions of promotional offers may change, always check the applicable terms and conditions at the time of opening.
FAQ: The top 2 defensive positioning
What is defensive positioning?
A defensive investment is one whose primary objective is to limit the risk and volatility of one's assets. It can be used, in particular, to build up emergency savings, finance short-term projects, or avoid selling riskier investments in the event of unforeseen circumstances.
What is the best defensive positioning?
There is no single best defensive investment. Depending on the objective, a savings account may be more suitable for maintaining readily available reserves, while a bond ETF like BNDW can help diversify a portion of one's portfolio with international bonds.
How much should one have in emergency savings?
A common rule of thumb is to keep at least three months' worth of expenses in easily accessible savings. For example, with CHF 3,000 in monthly expenses, a reserve of CHF 9,000 could be a good starting point.
Is a savings account a defensive investment?
Yes. A savings account is one of the simplest defensive investments. It allows you to keep money readily available with low volatility. In Switzerland, bank deposits are guaranteed up to CHF 100,000 per customer and per bank, subject to certain conditions.
Is the BNDW ETF a defensive investment?
The BNDW ETF can be considered a defensive investment relative to equity investments, as it invests primarily in diversified bonds. However, BNDW is not without risk: its value can fluctuate, and investors may incur losses.
What is the difference between a savings account and the BNDW ETF?
The savings account prioritizes stability and the availability of funds. BNDW allows for the diversification of a portion of one's assets into international bonds and can generate distributed income, but its value fluctuates with the bond markets.
Does the BNDW ETF pay dividends every month?
BNDW makes regular distributions, usually monthly. However, it is more accurate to refer to them as bond income or distributions rather than stock dividends, as this income primarily comes from the interest generated by the bonds held by the fund.
What return can be expected from BNDW?
BNDW's return is not guaranteed. Between 2019 and 2025, the ETF generated an average of approximately 3 % per year in bond income. This figure represents distributed income and does not necessarily reflect the total return on investment.
Can BNDW lose money?
Yes. Unlike a savings account, BNDW does not offer a guaranteed value. The ETF's price can rise or fall, particularly depending on changes in interest rates, bond markets, and currencies.
What investment should I choose for an emergency fund?
For an emergency fund, a savings account may be more suitable than a bond ETF. The main objective of emergency savings is to maintain readily available and stable capital when needed.
What investment should I choose to diversify my assets?
A global bond ETF like BNDW can be used to diversify part of a portfolio thanks to its exposure to numerous international bonds. However, one must accept the fluctuations and risks associated with this investment.
Should the second pillar be taken into account in one's assets?
Yes. The second pillar (LPP) constitutes a significant part of pension assets in Switzerland. When analyzing one's overall risk exposure, it can be relevant to consider second pillar assets and their structure, rather than solely focusing on savings accounts and stock portfolios.
As we get older, should we increase our defensive positioning?
This can be a relevant approach, as investment horizons generally shorten with age, and the ability to withstand a sharp market downturn can also change. However, the ideal percentage depends on each individual's circumstances, including income, assets, expenses, and retirement goals.
Is it possible to combine a savings account and the BNDW ETF?
Yes. The two investments can serve different purposes. For example, a savings account can be used as an emergency fund, while BNDW can be used to diversify another part of one's assets with international bonds.
Can defensive investments make you rich?
The primary objective of a defensive investment is generally not to maximize wealth growth. Rather, it serves to reduce overall risk, maintain a readily available reserve, and protect a portion of one's assets. To pursue greater long-term growth, some investors accept a larger exposure to growth stocks or real estate.
Top 2 Defensive Placements
Subscribe for the latest news
You have a frugalist or minimalist project and you want a training? Click ”here”.
My pages
- About me
- Saving / Frugalism
- Blog
- Shop
- Contact
- Training and E-book
- Invest
- Minimalism
- My account
- Newsletter
- Basket
- Order confirmation
Lastest Post
- After 10 years of investing in ETFs: which ETF would I choose?
- Financial freedom: why the first 100,000 are the hardest
- The best advice in the world to save
- The Neon bank, the summary
- How does digitalization influence minimalist?
How does this blog live?
Overall, this blog lives on sharing a frugal and minimalist lifestyle.
For a question of transparency towards the readers. All recommended products are in order to make life cheaper, simpler and to promote the essentials.
Basically, my only income with this blog comes:
- Trainings that I realize
- Promo codes for the products I use
- Donations that readers make in exchange for neutral information.
About me
I decided to create this blog to develop and help readers who are looking for a simpler and more economical life.
Compared to before, I was a person who consumed a lot until the day I realized that my consumption made me sadder and poorer 😑
Now I prefer the minimum of my needs to be happy and achieve my financial freedom.
Without realizingI started to focus on saving and investing to depend on a boss for as little time as possible and to speed up my personal projects.
As a result, I am getting richer in a way that I never imagined since I have an average salary in Switzerland.
It is for this purpose that I decided to create this blog. In order to share and learn with other people who seek freedom and simplicity 😉
Are you rather minimalist or frugal Jonny?
I am as minimalist as I am frugalist. However, there are situations where I lean more towards an art of life.
To conclude, I think the most important thing is to feel comfortable in your lifestyle 😊
Top 2 Defensive Placements
Top 2 Defensive Placements
Leave a Reply