The second “big” piece of news, for us anyway, is that this time we’ve bought to sell on.
Suffice to say, that means plenty of new things for us, but only good things :D
Until now, we’ve only bought real estate as a rental property.
We look for a good property, we buy it, rent it, and voilà :) The rental income comes in, the property goes up in value, and life is good! In both France and Switzerland, we’re aiming for between 10-20% expected returns on equity with this type of real estate investment.
But this time, my network led me to another opportunity: buy to sell!
To be more specific: buy without a building permit (!), create a development project, obtain a building permit, put it up for sale with a turnkey general contractor contract, and exit the project with added value.
Not being in the real estate profession myself, I went into this project with a partner from the sector. It’s fascinating as I’m in “rookie” mode with everything to learn.
I love it!
Previously, I had thought that if I were to partner with someone to invest in real estate, I would set up a Swiss limited company.
But that is for an investment for a limited period of 12 to 24 months maximum.
So we went for a simple solution: a simple partnership.
Here’s a brief lesson in Swiss law:
A simple partnership in Switzerland is a form of contract between two or more people for the purpose of undertaking a joint economic activity without necessarily having to constitute a distinct legal entity. It is based on a verbal or written agreement between the partners, with no registration formalities on the company register. The partners are jointly responsible for the debts of the partnership.
For example: if you grow vegetables with a friend in a garden that you both own, and you sell these vegetables together on the local market, then you automatically form a simple partnership in the eyes of the law.
It’s the same principle for my partner and me. We decided to choose this format so then you don’t pay anything when you dissolve it.
To ensure that everything was in order between us, we signed what is called a simple partnership contract (also known as an agreement) where we set out everything we planned to do together related to our joint real estate project.
In parallel with the discussions about setting up our simple partnership, my partner had to sign the deal quickly so we didn’t lose out.
As I was unable to go to the notary with him on that day, he opted to put my limited company as a named party in the forward sale agreement.
He could actually have put me on the first page as 50-50%, but as we hadn’t signed the agreement, he didn’t want to take that risk (which I totally understand!)
Instead, he put my limited company as a named party. That means that on the day of the final sale, I will have an irrevocable right to purchase the real estate property with him. Without my limited company being specified in the named parties, we would have to pay additional notary fees to add me to the transaction, as it is already “in progress”.
I’m telling you all this as, even though it’s dedious, it’s still interesting to know how it all happens behind the scenes step by step ;)
I can’t tell you the exact location of the real estate project we decided to invest in, as the final sale will take place during the first half of this year (you can never be too careful!)
Nevertheless, I can tell you that the future buyers will have a view of Lake Geneva! 🤩
Here are the figures:
There is a minimal chance in terms of schedule (see below) that we’ll resell even before having signed the definitive sale agreement. This would mean that we don’t even need to take out a mortgage!
But let’s not get carried away… and so we’ll be conservative.
So we’re assuming that we’ll be taking out a mortgage to fund the purchase of the land:
We’re giving ourselves between 3 months and 1.5 years to have sold all the lots in the project.
To make my life easier when it comes to calculations, I’m going to start from the hypothesis that everything will be sold within 1 year.
With equity of CHF 475,000, I hope to obtain an annualized return of:
To curb the WOW effect, remember that maybe:
But, as a cautious optimist, I firmly believe in my second real estate investment in Switzerland. And I’m grateful to my partner for having me onboard, ready to weather whatever storm may come along, together.
Or the other reaction I can foresee: “Did you sell all your shares on the stock market or what?”
Well no, nothing like that!
So, as I was saying, indeed, you can’t just magic CHF 475,000 out of thin air.
Nope, in fact, I used leverage. This mechanism is as powerful as it can be “dangerous” when it comes to the impact it can have on your total assets.
Effectively, I could have sold all my shares on the stock market and invested in this real estate project with my own cash.
But instead of that, I borrowed part of the 475k through P2P (peer-to-peer) lending so that I hardly had to take out anything from my stock market investments.
This means that I keep the stock market gains (from dividends and share price increases), while benefiting from the added value on the real estate side.
The answer is: it doesn’t need to know. Legally, it does. But it is not false to say that the money you’re giving it from your own funds is yours, and the money you have in the stock market (from your P2P loans) is nothing to do with it.
I am only sharing my experience here, and you are responsible for your own actions, as usual :)
Just like with my Interactive Brokers margin account, I am very cautious with leverage. It can become addictive as it’s such easy money, and you can quickly get your fingers burnt.
It’s the same with real estate and P2P lending.
I therefore calculated all the liquid assets within my total assets, by which I mean those that I can access within a couple of days, such as:
And it’s therefore the amount equivalent to the sum of all these assets that I am OK with taking in P2P loans to use leverage to invest in real estate in Switzerland.
The guiding principle is: PRUDENCE!
This is what we’ll need to do over the next few months, in order:
We’ll follow the necessary steps and undertake surveys in order to submit our plans to the local authority for approval. Ideally, we’ll obtain our building permit just after the contract of sale is completed and signed at the notary’s.
We’ll also need to take out a mortgage, as we’re not going to tie up several million Swiss francs ;)
For this, with our respective experience and extensive networks, I have no concerns about finding one easily and at a decent interest rate.
Then we’ll sign the final contract in order to officially become owners of the real estate property (expected during the first half of this year, 2024).
For info: we agreed with the vendor in the forward sale agreement that we could undertake our surveys in preparation for submitting plans for approval.
It’s important to state this, as my partner has already been prevented from doing this on another project. Basically, this clause wasn’t included, and the vendor stopped him from going onto his land to undertake surveys. My partner was therefore only able to start his preparations for submitting for approval once the final sale had been signed. Because of this, he lost several months “for nothing”.
In any Swiss real estate project where you have several lots, it’s now common to set up a PPE (“ownership by floor”) before selling.
Basically, you don’t want to sell to 6 co-owners by telling them “I’ll leave you to sort out setting up a PPE and struggle to establish the policies for administration, use of the communal areas, exclusive rights of use etc. 🤪”
On the contrary, you want to lay the foundations, that way the future buyers will be purchasing something that is clear and specific for everyone.
and, just in case, I’m bragging with everything I’m telling you above, but I learned it only yesterday myself :D)
We’ll move onto this stage once we’ve got the building permit.
My partner usually uses the common platforms (homegate.ch, immoscout24.ch, immobilier.ch, etc.)
But we’ll see, as with our networks, maybe we’ll be able to sell it all just through word of mouth!
This stage will be done in parallel with the real estate marketing.
We will agree a construction contract with a general contractor. The aim is to finalize and lock in the quotes for the planned building work.
And lastly, we’ll sign the contracts at the notary’s, receive our money and then crack open the champagne :)
Overall, our main aim is to reduce the length of our involvement during each of the stages as much as possible to get back our initial investment quickly, as well as reap the additional profits (in order to reinvest them in another real estate investment in Switzerland!)
As you can imagine, I’m thrilled about investing in real estate in Switzerland, which is going to increase the value of our assets.
I’ll keep you up to date with the progress, either during the process, or once it’s completed with the final figures and returns, to compare them with my initial expectations. Or maybe both, depending on how it’s going ;)
Whatever happens, I can tell you that my strategy of developing a network of contacts in the real estate sector (described in my Swiss real estate program) has worked and continues to work.
It’s certainly not by googling invest real estate Switzerland that you’ll come across such opportunities… It’s clearly by persevering and being patient (and genuine and honest!!), but in the medium to long term, that it pays off.
To finish off, I’ve got three questions for you:
PS: some of you asked me why I don’t invest in real estate investment trusts or other real estate ETFs. The reasoning is simple: for anything ETF, I favor diversification to no lose time picking the right real estate funds. And for real estate assets as such, I favor direct investment as the Return On Investment is really worth the efforts.
PS2: as said above, I was at first solely focusing on rental property (that could include or not commercial real estate). But the more I dig into it, the more I become open to other types of real estate projects, such as this “buy to sell” model :)
]]>Others want to buy their first home in Switzerland.
And all of you are wondering how best to optimize your mortgage by pledging your 3rd pillar invested in the stock market… and above all, is it even possible?
So I’m preparing a dedicated article to answer these questions.
And I could use your help :)
First of all, let’s agree that, historically, SARON mortgages have always been more advantageous than fixed-rate mortgages. (VZ does a very good job of explaining this in detail).
I also quote this other VZ article :
Good to know: banks mainly recommend fixed-rate mortgages, as they earn considerably more than on Saron mortgages. Mortgage intermediaries also have a vested interest in recommending long-term fixed-rate mortgages, as their commission is higher.
That said, I swear by VIAC for my mortgage.
And this, for three reasons:
As far as I know, no other bank allows you to put your VIAC pillar 3a (or finpension) as collateral, when the latter is 100% invested in the stock market.
And since it’s NOT A QUESTION to take out a mixed 3rd pillar linked to life insurance (the biggest legal scam in Switzerland), well, that doesn’t leave us much choice.
I also did a survey to get some MoneyPark feedback some time ago. And how can I put this, the results were rather… mixed.
Hence the question below to help me with the research for my forthcoming article on the best mortgage in Switzerland.
Do you know of a competitive mortgage (in terms of interest rates) that allows you to pledge your pillar 3a invested 100% in VIAC or finpension?
You can reply via the comments section below, or directly by replying to my newsletter email.
Header photo credit: pexels.com
]]>That’s the first word that came to mind when I started to write this article.
I’ll write it again so it sinks in: my blog mustachianpost.com has been in existence for 10 years 🤩
That is… unbelievable!
In contrast to last year when it was you, dear blog, that received a new design for your 9th anniversary, this year we’re turning the tables.
The presents are now for you, dear reader :)
To find out more, you’ll need to be signed up to my newsletter (see below):
Without wanting to spoil the surprise, I do love a promo code ;)
And who knows, maybe participation as one of my associates in a real estate investment in Switzerland… with an amazing return…
Surprise surprise :)
I’ll be in touch with these presents several times during 2024!
As is customary, we’ll kick off with a brief annual review of the last year.
I’ll start off with related projects before focusing on the blog.
By the end of 2022, I had sold 1'976 copies.
And after having counted up all the sales up to 31.12.2023, I can tell you that I’ve now sold 2'276 books 🎉
I can’t wait to have sold 3'000 copies so I can add a “National bestseller” banner on the book’s cover.
Yes, yes, I know, this is purely for my ego ^^
But aside from my ego, I enjoy reading reviews about the impact of my blog on readers’ “real” lives:
I’d like to take this opportunity to thank you all for supporting me with this project.
If you’re new to my blog, this 100% Swiss program for learning how to invest in the stock market is the very first one I created (available in 3 languages).
Although I’ve written many articles about how to invest in the stock market, I was still receiving messages like this:
“Marc, I’ve just finished creating my account with Interactive Brokers *!! But I haven’t bought my first ETF yet because I’m worried about messing up… could you help me?”
So I created a step-by-step program for all Swiss beginners who want to invest in the stock market.
The result: a highly effective program that guides you from A-Z, with no jargon or waffle.
Below, you can see feedback from a participant in the program:
It’s a source of great pride for me that most of the feedback on the blog relates to things that I’ve created for you (like this program) rather than affiliate links. There is more information about this below.
By 2022, we had built up a sufficient amount of funds in order to start looking for our first rental investment property in Switzerland!
After a few knockbacks, we finally made our first buy-to-let investment in Switzerland. The full story is described in detail in this blog post.
Knowing that I would most likely want to make a specific program about it, I took a lot (loads!) of notes about all my queries and concerns as well as other information gleaned from notaries and lenders.
And in view of the discussions it generated with readers of the blog, as well as all the questions I received, it didn’t take long before I set about creating this new guide to investing in real estate in Switzerland.
The result: 10 detailed chapters on how to go from the idea of becoming a real estate investor to actually becoming one - with rent coming in each month 🤩
As is the norm, I talk about what I know and what I have experienced.
I should also warn you: it’s not a journey that everyone should embark on as it requires quite some effort.
But if you have the motivation to acquire this knowledge, it’s worth the effort as it means automatically receiving rental income each month :D
In mid-2023, I decided to redouble my efforts by following a principle advocated by Nathan Barry: “Teach everything you know”.
Having bought two rental properties in France as a Swiss resident, I thought that I should make a program about it for the readers of my blog.
I was hesitant about it as compared to the program for real estate in Switzerland, this new program was a lot more limited in terms of audience. For a start, because you need to be able to speak French (well, it helps ^^), but above all because you need to know someone trustworthy in France in order to create a real estate investment company (SCI) with them.
But at the end of the day, niche subjects often receive the least coverage…
So I went for it… and I have no regrets when I think back to the email I received from a participant only last week in which he told me he was in the process of completing setup of his SCI in France 😃
As always, no waffle or jargon, just the minimum that is necessary and useful for you to be able to get started as soon as possible on buying your first rental property in France.
Spoiler: this also requires quite some effort! Especially compared to Switzerland as I have found it to be more profitable managing tenants directly (except the in-person work at the start/end of tenancies). And I know that’s not for everyone.
But hey, a word to the wise, you won’t achieve a 15-20% return by sitting on your sofa watching Netflix every weekend!
I’m increasingly enjoying sharing live (well, every month) the details of how my funds are growing.
Because sometimes it’s frustrating to not have the time to write a full article to tell you that (SPOILER ALERT) I’ve bought my second investment property in Switzerland.
So I decided to use my exclusive “Club MP” newsletter to meet this need, and which also enables the “supporters” of the blog to receive an exclusive additional bonus.
In it, I talk about all of my investment categories: stock market (ETFs and value investing), real estate in Switzerland, real estate in France, and speculating in cryptocurrencies.
And I share all my figures unfiltered:
I also use it to thank all the current MP supporters! As well as for all the discussions we have behind the scenes :)
Happy anniversary once again, dear blog!
The peaceful childhood is over… now we’re going into adolescence apparently… but what does that mean for a blog, that’s the question. We’ll find that out together over the next few years!
Anyway, let’s have a look at the blog stats (including revenue and profits), as is now the custom at the beginning of every year.
Page views
We’ll begin with something that is good for the ego, but says nothing about the health of a business incidentally, which is the number of page views in 2023:
For the more geeky among us: there were 100,000 fewer page views in 2023 compared to 2022. BUT, I moved onto the notorious Google Analytics 4 at the beginning of 2023, so that may have had an impact on the way in which the data is captured.
But in any case, as it doesn’t matter AND we’re not talking about a factor of x2 or x10 fewer visitors, it doesn’t bug me in the slightest.
Newsletter subscribers: +9% growth
5260 subscribers at the end of 2022, and 5698 subscribers at the end of 2023.
This is a great number.
But it’s the open rate of my newsletters that interests me the most. By which I mean out of 100 people who received my newsletter, how many actually opened it.
In 2021, it was 65%, then in 2022 it was 71%. And in 2023, it was 67%.
Given that I’ve set myself a range of 65-75%, it’s still fine. Phew!
Especially compared to the industry “standard” of around 17-38%.
Traffic
I’m going to put the “decrease” in page views and visitor numbers down to changing to GA4. As with the other statistics, if the change from last year isn’t significant (around -20 or -50%), I’m not really concerned.
Articles
This year, I thought I would also put the number of blog posts I wrote per year into a chart.
This is what it looks like:
So let’s say that we’re around average, although I’m aiming for 35-40 articles per year as being a good goal.
After thinking about it, when looking for an excuse, I spent quite a lot of time putting together my real estate investment in France program. Time that I did not spend writing blog posts.
And as always, if you have any — constructive — feedback on the content and direction of the blog, I’m open to hearing it! (simply reply to any of the newsletters you receive in order to get in touch)
Media
I was going to tell you that there had been no promotion of the blog in the media in 2023… but I went to have a look in the relevant section anyway, and… I’m losing my memory!
The media mentioned my MP blog 5 times 😎
First there was the neon blog, then RSI, 20 minutes, NZZ and Ticinonline.
On writing this, the realization hit me: “Ticino discovered the FIRE movement in 2023!”
Joking aside, I am very grateful to RSI for having agreed to an audio interview with me while respecting my anonymity (and dubbing me in Italian, obviously :D)
For that matter: if you’re a journalist or a member of a community (such as a college newspaper or other type of media), contact me via media[at]mustachianpost.com if you’re interested in an interview on the subject of financial independence in Switzerland (aka FIRE). I’d be happy to chat about it on the phone.
Blog revenue and expenses
And finally, THE section that everyone has been eagerly awaiting, including me: how much did the blog bring in and cost!
First, I’m adding an important point for me:
One of my reader buddies recently asked me:
“But Marc, aren’t you afraid of making people jealous? And that some people will stop visiting your blog after having read this article?!”
I replied: “Are you jealous when you read these figures?”
“Oh, well no, obviously not. On the contrary, it inspires and motivates me to chat to another Swiss entrepreneur who thinks like I do!”
My response was therefore: “Well, there you are! That’s exactly why I’m so transparent: to inspire readers. To bring them some value. And the advantage of this strategy is that those who stay around are the people with whom I want to chat and who inspire me in return (i.e. not the jealous ones)!”
So let’s look at the numbers:
I remain very grateful for the success of this “personal project” journey which has gradually transformed into a long-term entrepreneurial project.
And talking of long term, I always have a little voice in my head that tells me I could already be FIRE if I wanted. I could give up my job and my additional free time would surely enable me to increase the revenue from my blog. And therefore be able to be fully financially independent.
But the other side of my brain (you know, the voice of the repressed and fearful entrepreneur) tells me to do it without taking risks. And to see my current job — which I actually quite like — as the primary investor in my entrepreneurial journey :)
When it comes to costs, they have increased by 58%! This can be explained by different investments:
And as Warren Buffett puts it so well: paying dividends (i.e. paying out profits to me) should only be done when there really is no better option for making the company’s cash work ;)
Business ethos
Since 2020, I have copy-pasted this paragraph so that newcomers are aware of my policy on this subject:
“Profit is related to the subject of ethics. In other words, how not to fall into “making cash at any cost with the blog”, and end up losing readers one by one.
Because let’s be clear, I’m the first to unsubscribe from a blog if I start to see that the opinions are becoming biased because of money.
This is a subject close to my heart and it is illustrated by things like:
Forum
To conclude this review, let’s have a look at how the forum has evolved in 2023:
We seem to have hit our stride these last three years :)
A HUGE THANK YOU once again to our two moderators Julianek and Bojack for their contribution to making the forum a great place.
Just like with my book with the Swiss FIRE movement, I want my programs for investing in the stock market and real estate to be the best in Switzerland.
Rather than creating a new product or service, I’m therefore going to devote 2024 to version 2 of each of my beginner programs (“Investing in the stock market”, “Investing in Swiss real estate”, and “Investing in rental real estate in France as a Swiss resident”).
I’ve actually already started on version 2 of my program for investing in the stock market in Switzerland.
That’s also one of the reasons why I published fewer articles in 2023…
I’ve had discussions with several participants in order to understand what they would like to see improved.
And based on all their feedback, I’ve already spent quite a few Fridays updating all the content, the order, the details, etc.
My aim is to provide you with the best quality so that you can get started in the stock market or real estate, and so that you benefit from all the financial rewards that these types of investment can bring (and from which I personally benefit too).
Although I have set myself the aim of writing 36 articles in 2024, that’s not what matters publicly.
Especially as I recently read that sharing goals in public has the perverse effect of releasing dopamine when you announce them, even though you haven’t actually done anything yet… not a good signal for my brain.
Anyway…
What I want to share with you is that I want to concentrate all my effort on bringing value to you as a reader.
So if you have an issue with something related to money that you’re struggling with, or a financial situation that you don’t know how to tackle, please continue to email me, which some already do. This gives me ideas for articles that are as relevant as possible (because if you have problem X, there’s a strong chance that you’re not the only one in Switzerland!)
Usefulness and relevance, these are my two mottos for this year.
And furthermore, I’m also counting on you to tell me if I stray from this path (in a constructive manner, as usual).
Regulars know that in 2023 I was lucky enough to interview the CEO of Interactive Brokers Thomas Peterffy (!!!), which I then followed up with a very interesting discussion with the Beat Bühlmann, the CEO of finpension.
And for 2024, I have already lined up 4 exclusive interviews for my YouTube channel “Mustachian Post”.
As an aside: I hate writing “MY YouTube channel”, it’s a bit like if I said “MY TikTok account”… either I’ve become a boomer or I just like writing and its enduring nature … or maybe a bit of both… anyway, I digress :D
I find it really interesting (and an incredible opportunity thanks to the blog’s reputation) to be able to chat to the founders of the financial services that I use the most every day!
And I’m going to keep up the momentum in 2024 with the publication of two interviews with CEOs of services that you know well ;)
I must admit that I’ve developed a taste for these in-depth discussions, and it also makes a change from writing. That’s why I had the idea to interview two (okay, three!) other people that I like and respect. I’m not going to tell you any more but you’ll find out during the year.
Whatever happens, I’m making two things a priority:
Obviously, as this is a new area for me, it takes more time than a “simple” article… but it’s really interesting to find myself with a “beginner” mindset! And I’ve met some great freelancers for the editing and subtitles. Excellent!
And talking of “beginner” mindset…
I’m going to share a “funny” story with you, but one which did not make me laugh at the time…
I felt like I’d gone back 20 years and screwed up at work, and then had to admit it to my boss/colleague/client…
Basically, I was interviewing one of the CEOs of the financial products that I love…
Everything was going fine, I was going through my questions, the answers were super interesting, and then, after 20 minutes of chatting…
I realized that I had forgotten to click on “Record”!!!
At that moment, I wavered between:
And:
Well, I explained the situation to the CEO I was interviewing… we both forced a little laugh.
In the end, he was so nice (like his product!) that he agreed to re-record his answers straight afterwards and sent them to me. Phew!
So I then clicked “Record” before finishing the second part of the interview.
I’ve told you all that in order to say: we’re all learning, every day of our lives. And even though I acted like a beginner, once I owned up to my mistake, I can tell you that I swore to myself I would never again forget to click RECORD!!!
It’ll be a private joke with this CEO that we can laugh about the next time we speak ^^
I’m going to conclude this celebration of the blog reaching its 10-year anniversary by thanking you, dear readers who have followed me from the beginning or joined me more recently.
None of this would be worthwhile without you…
Thank you <3
And we’ve embarked on a new year of fun talking about money, FIRE, dreams, entrepreneurship, investments and lots more!
* This symbol indicates where my article contains affiliate links. If you click on any of them, you will see no difference compared to a standard link — but the blog will receive affiliate commission. I would like to thank you for that. As usual, I only write about and review things that I use in my day-to-day life, or in which I have confidence.
Photo credit: pexels.com
]]>Well, today, with the announcement of their new automatic investment feature, I can tell you that they have retained their position as the number one broker in Switzerland ;)
I’ve been waiting for ages for this so I can automate my investments, and it’s finally here!
Interactive Brokers’ recurring investments feature enables you to set up purchase orders for ETFs or stocks which will be executed automatically over a specified time period.
But why would you want to automate your investments, I hear you ask?
For me, there are four main reasons:
In short, automatic investing on a recurring schedule can encourage discipline, reduce the impact of emotions, save time, and above all maximize the effect of compound interest, which is particularly beneficial for long-term investors like us.
If you really want to invest in an automated way, you need to be able to buy “fractions” of a certain ETF (or another share).
You can’t be on full autopilot if you say “Buy me 4 shares of VT ETF every month”.
Why?
Quite simply because you wouldn’t know how much to put in each month in order to make such a transaction.
Why? Because the amount that you need to pay for an ETF share changes every day, according to the value at which the ETF is being traded on the stock market.
That’s where fractional shares trading comes in.
This feature, already well-known by savvy investors, exists with IBKR.
Let’s say that you want to invest 400 CHF per month in our favorite VT ETF.
Now imagine that this same VT ETF costs 95 CHF per share today.
Well, fractional shares trading means you can say: “Buy me 400 CHF worth of VT ETF per month”, and IBKR will then buy you 4.21 shares of VT ETF.
So you need to request the authorization to trade in fractions of shares (and ETFs) in your IBKR account settings in order to be able to invest automatically.
I’ll show you how to do that in the section below.
I’m not going to go into more detail about fractional shares trading, but please note that it doesn’t change anything with regard to your dividends and taxes (you will just have shares in decimal points rather than full shares).
Now let’s move onto the practical side of automating your investments :)
Once you are connected to your IBKR Client Portal, you just need to go to the menu section: “Trade” > “Recurring investments”.
You will then see the list of active recurring investments.
As mentioned earlier, you now need to activate the Interactive Brokers “Trade in Fractions” feature by clicking on the “subscribe” link in the screenshot above.
Then you need to tick “Global (Trade in fractions)” (and the “All Global” box will also then be ticked automatically):
You are now ready to create your first IBKR recurring investment.
Here is how to create an automatic investment on Interactive Brokers in 8 easy steps:
This is what it looks like:
And… that’s it!
You can now see the following columns in the list view:
But we’ve still got one more thing to do.
You now need to ensure that every month (or quarter, or any other frequency you chose), you have enough cash in your Interactive Brokers account for your order to be executed.
So we’re also going to automate this deposit with IBKR.
It’s the same procedure as when you make a one-off deposit with IBKR, except that you need to tick an extra box.
Go into: “Transfer & Pay” > “Transfer Funds” > “Make a Deposit”.
Then choose the bank account you normally use to deposit funds.
Specify the amount and then tick the box “Make this a recurring transaction?”
Then all you need to do is:
Now, as this is just a payment notification, you also need to create an automatic payment in your internet banking (for me via my neon account).
And there you are, you’ve now got yourself a fully automated investment strategy with Interactive Brokers!
I really recommend that you set this up, especially if you lack financial discipline.
The “you” in 10-20 years will thank you when they’re financially independent thanks to a decision that took 20 minutes to set up.
Incidentally, I’m interested to know, how much you invest automatically with your Interactive Brokers account, and how often?
You can choose between the following intervals in order to automate your investments with IBKR:
You can modify a recurring investment on IBKR by going to the list view “Trade” > “Recurring investments”. Then click on the little pencil on the line that you want to modify, and that will take you to the editing view. Make your change and save it.
You can delete your recurring investment on IBKR in two ways:
All you then need to do is specify either the end date of your recurring investment or if you want to cancel it immediately, tick the box “Effective immediately”.
Active IBKR recurring investments are only visible in the Interactive Brokers Client Portal (web application). They are not currently visible on the IBKR mobile app, the IBKR GlobalTrader mobile app, or the TWS desktop platform.
You can see the recurring investments made in the past on IBKR by clicking on the clock symbol on the line of the share that you want to see in detail. You will also see your recurring investments that have been made in the view “Trade” > “Orders & transactions”.
Expired or canceled recurring investments on IBKR can be seen below the list of active ones. You just need to click on the link “Show Expired and Canceled” in order to bring them up.
The price of the recurring purchase order for your ETF will be calculated according to the average price on that day. The actual purchase order will be placed when the stock market opens (the New York Arca in our case for the VT ETF).
]]>UPDATE 08.2023: Booking.com is no longer a Rabattcorner partner. But there’s hotels.com instead, which may be of interest to you :)
I (re)came across a frugal and Mustachian tool recently: Rabattcorner.
Or how to earn even more cashback in Switzerland, in addition to that possible via our preferred American Express cashback credit card!
Like get back CHF 50 (i.e. 3%) on a hotels.com stay of CHF 1'700.
I don’t say no ;)
I knew that Rabattcorner was popular in the German-speaking part of Switzerland, but I admit I hadn’t looked at their site in a while.
Today, they have 90'000 users, and have paid out over 2 million CHF in cashback in Switzerland. Not so bad ;)
Just to be explicit: I have not become a consumerist, eh!
Because clearly, Rabattcorner is partnered with a plethora of brands that I don’t like as a frugalist (e.g. Manor, Aliexpress, Wish, etc.)
But on the other hand, there are still good shops.
I put you below the lists that I wrote down while browsing the Rabattcorner website.
Cashback shops Switzerland MP
Shop | Cashback | Comment |
---|---|---|
Europcar | 4% | |
MediaMarkt | 2% | |
STEG Electronics | 2% | |
melectronics | 1% | |
Do it + Garden Migros | 3% | |
Coop Bau+Hobby | 2% | |
Jumbo | 3% | |
CFF | 2% | SBB gift card to buy train pass (not practical to buy tickets because impossible via the mobile app, you have to go to the ticket office or the vending machine…) |
SportXX | 2% | |
Micasa | 3% |
Cashback shops Switzerland Mrs. MP
Shop | Cashback | Comment |
---|---|---|
Zalando Lounge | 3% | For when she’s checking out private sales for kids |
Fnac | 1-2% | |
Maisons du Monde | 3% | |
Import Parfumerie | 3-6% | |
Marionnaud | 4% | |
Ideecadeau.ch | 3-4% |
Cashback shops Switzerland rarer, but you never know when you might need them
Boutique | Cashback | Commentaire |
---|---|---|
Hotels.com | 2% | |
Lufthansa | 1% | |
QatarAirways | 1% | If we move to the eastern side of the world, it can be interesting |
Swiss | 1% | |
Dosenbach | 4-6% | |
Ochsner Shoes | 3% | |
Ochsner Sport | 2% | |
Avis | 5% | |
Flixbus | 2% | |
CenterParcs | 1% | |
Esprit | 4% | |
Manor | 2-5% | On the rare occasions when there are appliances that we want. |
Lumimart | 3-4% | |
Conforama | 3% |
Travel brands are clearly the most advantageous as a Swiss Mustachian (e.g. hotels.com, hotels.com, ebookers, Europcar, etc.), because the amounts of these bookings are high.
However, if you shop online a lot, it adds up quickly, even for smaller amounts.
We agree, it’s not going to make you a millionaire or financially independent either.
But hey, if it allows me to earn a few hundred francs a year, I don’t mind!
Money doesn’t fall from the sky, and Rabattcorner must earn money somewhere to be able to pay you.
Their operation is basically to be an affiliate marketing intermediary.
Basically, Rabattcorner negotiates an affiliate commission with each partner as soon as they bring a customer to the partner. And then Rabattcorner pays you a part of the Swiss cashback.
So no, Rabattcorner is not a scam. It is rather a Robin Hood who uses the marketing system of the companies, to make everyone benefit from it (and while keeping a margin for them to make their business).
How Rabattcorner works is really simple:
In video it looks like this:
While analyzing their site and thinking about my personal use, I said to myself: “Yeah well that’s cool, but I’m not sure I’ll remember to check their website every time I buy online… “
But they have thought through their concept, because they have identified this problem.
And they have created a browser extension that puts a big green banner at the top of the website if it is a Rabattcorner partner:
Except that, being a little bit anti-advertising and tracking, my brain couldn’t help thinking: “Yeah, well I don’t want Rabattcorner to have all my browsing history… no thanks!”
So I went to see the fine print when I downloaded the extension on my Mac, without much optimism to be honest… but, surprise! They did a good job, because they explain it all black on white:
Privacy is important to us! Our extension does not send or store any personal data and your browsing will not be affected or analyzed in any way for promotional purposes.
So I installed the extension :)
Of course, I stumbled upon this frugal Swiss tool after booking all our summer vacations… for once we decided to spend more than usual…
So, a bit of a bummer about the timing…
I still wanted to experiment their service with booking.com, by booking a hotel, then cancelling it. Again, I was quite impressed. Everything works as described. Even when you don’t complete the sale! — for booking.com, you have to have passed the date of the stay before you get the cashback, it would be too easy otherwise :D
So that’s it for my test.
We need to book a hotel for a weekend with our parents in a few weeks, so I’ll be happy to use Rabattcorner with hotels.com. And that way, I’ll have a dashboard that will look more like the one in the demo video 😄 :
If you want to test Rabattcorner, you can use this Mustachian Post link to register.
It will credit your account with a welcome amount of CHF 5.
Mustachian Post special link for RabattCorner = CHF 5 welcome cashback
I’m thinking of using Rabattcorner on my big purchases like travel with hotels.com, or car rental with Europcar.
Since we are a frugal Swiss family, we will use the other partners less, although MediaMarkt for household appliances can be pretty cool.
In the end, Rabattcorner is a good Mustachian tool to keep under your belt. Especially if you pay with your American Express AND via Rabattcorner, it can quickly give you 5% discount on your big purchases.
I would be very interested to get your feedback on Rabattcorner if you have already used this Swiss cashback service?
You can use the comments section below for that, or reply to me directly by email if you’re subscribed to my newsletter.
If it sounds too good to be true, you’re not the only one ;)
When I received the email explaining this service, I thought it was another one of those sponsored article proposals (very attractive financially speaking, but no thanks, not here!), or a dubious scam. I receive a plethora of these emails that know nothing of the FIRE (Financial Independence, Retire Early) world, nor of Team MP. The funniest ones are the ones that tell me they love my blog, and propose me to talk about financial services only available in the US or in Asia…
So I thought that this email entitled “User research studies, exclusively for private investors” that I received last week would end up in spam too…
Except that, for once, the proposal was really interesting and genuine (the person knows my nickname “MP” and has read my book). Especially since I already used it myself without knowing that they had a “private investors” category.
This nice money-making tip comes from a Zürich-based startup called TestingTime. Their job is to connect product developers who want to test their new products and services with potential future users. Basically, imagine the employees who develop the UBS mobile e-banking app, well they can “order people” to test their products in preview.
So, TestingTime contacted me because they have testing opportunities specifically for experienced private investors. And in particular, they’re looking for investors interested in testing brand new digital wealth management tools (before they hit the market), and providing feedback to firms like UBS. They explain well the process on their homepage in case you wanna know more. So far, they’ve already managed to “recruit” 176 private investors into their pool of testers. And they are always looking for more, in order to have the best possible diversity to meet their clients’ needs.
On top of all that, TestingTime told me that testing sessions of this target group are paid at an average of CHF 200/hour! Not so bad to be aware of the new trends in the Swiss fintech field :) Especially since you can participate in the tests from anywhere (everything is done via video-conf), it’s free to register in their database, and you can always say you’re not interested if they offer you something too boring.
In talking with the person at TestingTime, I wanted to be transparent by asking:
“Knowing my investment style, don’t you think that all interviews will go the same way, at least with the big and not very innovative banks — like “too expensive”, “you really think your clients are that stupid, seriously?”, etc.)? :)”
Her response:
“I don’t think it’s a problem, because the studies are diverse. Often, the goal is not only to get feedback on the services in general, but also on the UX and your opinion on the technical features. And at worst, if you end up getting bored with the studies, you can stop signing up for tests at any time.”
Not wrong. Especially since the more Mustachians will be giving the same feedback, the more it could potentially change the Swiss financial products in the right direction :)
Wait, wait… I’ll give you more details of what they’re looking for so you don’t waste your time filling out a form, only to be told at the end that you don’t have the right profile…
TestingTime is looking for profiles of people who are very experienced in wealth management and/or private equity. Basically, this means about CHF 250'000 of net worth (some of their clients even ask for CHF 500'000 minimum).
They have about 10 test slots per month, and the trend is increasing. So the people who register in the form below will have the best chance to be contacted if they meet the criteria explained above.
Another important point: you will have to sign a NDA (aka Non-Disclosure Agreement) at the beginning of the tests, explaining that you will not be able to reveal anything to your entourage about what you learned during the test sessions (neither the name of the company, nor what you did).
There you go, I think I’m not forgetting anything!
So, if you want to earn more money on top of your job, and you meet the profile criteria, you can register via this TestingTime registration link.
PS: as usual, I only recommend the tools I use myself. At CHF 200 an hour to talk about CHF and wealth, of course I signed up! And for the sake of transparency, if you use the link above, the blog will earn some money, without it changing anything for you — thanks in advance!
PS2: if you happen to also work in a cool Swiss company that could (really) interest the Mustachians, don’t hesitate to contact me
]]>Which one is the better online broker?
Which broker should I choose if I am a Mustachian like you (aka on the road to financial independence)?
After sharing my opinion by email and answering the same question over and over again, I decided to share my opinion in a dedicated article :)
REMINDER: I am addressing investors resident in Switzerland in this article. Each country had its own financial regulation and tax rules, so what I write below is certainly not applicable in Germany or France.
If you’re looking for a quick answer, and want to have your online broker based in the US, then choose Interactive Brokers.
Interactive Brokers (aka IBKR) is simply better overall for your investment portfolio — better rates, better selection of available stocks, better tax optimisation for the Swiss and the company is much better secured and stable. Basically, everything you could want from an online broker, Interactive Brokers offers.
But then, why would anybody choose DEGIRO?
The main reason is to have your online broker based in Europe. And also, because some of the ETFs offered by DEGIRO are free of transaction fees on orders.
So if you are just starting to invest in the stock market…
And if you just want to test to see…
And if you really feel comfortable having your online broker based in Europe…
Then DEGIRO could be a good choice.
But as usual, we have to go through the details thoroughly. So let’s go with the more in-depth comparison of Interactive Brokers vs. DEGIRO.
As I know there are new readers coming to this page regularly, I’m just adding three paragraphs for context. If you already know all this, you can just skip to the fourth paragraph below.
Investing in the stock market is the way to make your savings grow. And it allows you to live off the returns when you are FIRE (Financial Independence, Retire Early). Important clarification: investing in the stock market for a Mustachian means “buying and holding”, not trading daily.
In order to invest in the stock market, you have to use an online broker. The broker can be your bank. BCV and ZKB offer these services for example. And there are also online brokers specialising in this area, such as DEGIRO or Interactive Brokers.
As a Swiss investor myself, I spent a multitude of hours comparing the available brokerage solutions. And I discovered that the two most important points when choosing an online broker were: the fees and the products available on the platform.
Obviously, the brokerage platform must also be available to us in Switzerland (this is the case for DEGIRO and Interactive Brokers). And of course, it has to be a secure financial entity that can stand up to the test (again, both Interactive Brokers and DEGIRO are secure).
In short, this comparison of online brokers has led me to a top 3 that has remained the same for a few years:
In this article, I’m going to focus on the top 2, as Cornertrader is really a step behind for clients like us (i.e. long term investors). But I still wanted to include the best Swiss-based online broker in my latest comparisons.
Interactive Brokers is the cheapest for a Swiss Mustachian investor. This is, an investor who buys one ETF per quarter (1x global and 1x Swiss alternating) and holds them over the long term.
As a reminder: brokerage fees are an important element for an investor.
Indeed, these can significantly reduce your returns if you don’t pay attention to them.
For example, some banks charge 1 or even 2% annually on their clients’ assets!!!
Imagine if you have CHF 100'000 invested in the stock market, with an online broker like Interactive Brokers or DEGIRO, you pay zero custody fees. On the other hand, with other “big banks” you will pay between CHF 1'000 and CHF 2'000. Per year!
For me, I recommend choosing an online broker that aims for maximum fee optimisation, and focuses its business model on being the best service provider and making money on the total amount of clients it gets.
Very concretely, I use the following filter criteria to choose my online broker, especially when choosing between Interactive Brokers or DEGIRO:
As always, I use Melanie and Adrian as representative characters for the readers of the blog.
Both of these investors are “buy and hold” investors.
They buy 1x global ETF and 1x Swiss ETF alternately, every quarter.
Their goal with this investment strategy is to have an investment portfolio that takes maximum advantage of the potential of global companies, while keeping a slightly safer portion in their own currency, the Swiss franc.
And the idea of buying one ETF each quater (not both at the same time) is to minimise the transaction costs of your orders as much as possible.
The only two things that differentiate Melanie and Adrian are: the amount of money they can invest each month (Adrian is starting his career on a low salary), and their starting wealth (Melanie is older and therefore has more basic savings).
I’m deliberately letting you with the other top brokers (after Interactive Brokers and DEGIRO) so that you can see how quickly the fees increase. And that’s as soon as you get beyond the top 3.
But first, here are the fees charged by the best online brokers for an investor residing in Switzerland:
Then, here are Adrian and Melanie’s 6 scenarios based on the amount invested each month, and their wealth invested in the stock market to begin with:
So, in the summary table already discussed below, here’s how DEGIRO and Interactive brokers rank:
The result is indisputable: Interactive Brokers is THE cheapest brokerage platform for a Swiss investor.
Interactive Brokers is between 23x and 48x cheaper than the most expensive of the 7 online brokers compared here.
Imagine if I included all the cantonal banks and other banking behemoths with the red logo :)
DEGIRO is also very well ranked, since the next most expensive online broker (Cornèrtrader) is already between 1.5x and 9.5x more expensive than DEGIRO!
Swiss stamp duty is a tax due by any Swiss investor who buys securities (ETFs, shares, etc…) via an online broker based in Switzerland. The amount of this tax is 0.075% of the transaction amount for a Swiss security, and 0.15% for a foreign security.
One of the advantages of choosing a broker such as Interactive Brokers or DEGIRO (both based outside of Switzerland, but doing business in our beautiful country nonetheless) is that you do not need to pay this stamp duty :)
You can learn more by reading my guide to tax optimisation for Swiss investors.
Now that we’ve covered the fees aspect, let’s talk about security.
Until 2022, my view was this:
Interactive Brokers is more secure and reliable than DEGIRO, as IBKR has been around since 1978 compared to DEGIRO which was created in 2013. This difference of 35 years of experience allows Interactive Brokers to have gone through several global stock market crises, still being active to this day.
Then came December 2022.
DEGIRO got caught by the German financial authorities (BaFin, the equivalent of our FINMA in Switzerland).
In DEGIRO’s own words at the end of November 2022: "[BaFin] has identified shortcomings in certain business practices and corporate governance"
The press release goes on to explain its actions following this BaFin audit:
It should be noted that BaFin is very careful with this kind of follow-up, as they have had a case of bankruptcy of a financial operator and do nt want it to happen again.
However, DEGIRO itself has grown enormously in recent years. And the fact that we have to slow down a bit to make sure that everything is 200% under control is a good thing for us small European investors.
It makes me personally feel better, because it proves that BaFin is doing its job.
Furthermore, DEGIRO has been assigned a special representative of BaFin at the end of February 2023. His mandate is to ensure close monitoring of the implementation of the projects to implement the measures recommended by BaFin.
As a small gift to the representative… a fine of 1'050'000€ for recklessness.
In short, as a client of DEGIRO for my children’s investment portfolio, I am not worried by this news. I keep my savings there
In detail: I think it will play out for DEGIRO. These imposed regulatory measures just show that their maturity is still being built. After that, when you compare them with Interactive Brokers founded in 1978, and with its founder still at the head of the ship, there’s no contest in my opinion!
Both brokers offer a long list of ETFs. But there is a key difference between their offer: not all US ETFs are available at DEGIRO
Indeed, there are European regulations (but not yet applicable in Switzerland) that require more effort to make US ETFs available to all European investors.
Except that these regulations for Europe are not applicable in Switzerland.
But DEGIRO has made life easier by putting everyone on the same regime, including the Swiss. As a result, we no longer have access to the world’s best ETF, the VT ETF (whose ISIN number is “US9220427424”), also known as “Vanguard Total World Stock ETF”.
Interactive Brokers, on the other hand, continues to differentiate between each jurisdiction. So as a Swiss investor, we still have access to this famous VT ETF.
Next, DEGIRO still offers the excellent Irish VWRL ETF (ISIN IE00B3RBWM25).
But the VT ETF is better than the VWRL ETF for three reasons:
So, if you are a Swiss investor in “buy and hold for the long term” mode, then Interactive Brokers is better with its more complete selection of US ETFs.
Another important point to consider when choosing between DEGIRO and Interactive brokers is deposit protection.
In this case, it is the country in which your broker is based that will dictate which reglations it follows in the event of bankruptcy.
The parent company Interactive Brokers is based in the United States. The company is a member of the SIPC (“Securities Investor Protection Corporation”). The SIPC is a non-profit corporation that has been protecting investors for over 50 years. Their mission is to return investors’ cash and securities when their brokerage firm fails.
As a result of IBKR’s membership of the SIPC, all investors using Interactive Brokers have their assets protected up to $500'000 USD, with a limit of $250'000 USD in cash.
On the other hand, DEGIRO is part of the German bank flatexDEGIRO Bank AG. Each client therefore benefits from a protection of up to €100'000 of non-invested cash (thanks to the German deposit guarantee scheme).
Now, you have to understand that the securities you buy in your name are very often stored in a securities account in your name, AND especially separate from your broker’s accounts. So if there is a bankruptcy, you don’t risk losing these securities.
IBKR and DEGIRO both practice the separation of assets for their clients.
As far as cash is concerned, the advantage of IBKR is that it protect your liquidity up to 250'000 US dollars, as opposed to “only” 100'000€ for DEGIRO.
The last point that you might not think about is the languages supported by DEGIRO and Interactive Brokers.
Knowing that in Switzerland there are many people who speak English more easily than our four official languages, this is a criterion that can become decisive for many readers.
DEGIRO is available in 4 languages for the Swiss market: German, English, French and Italian.
It’s a pity that DEGIRO doesn’t use its presence in many other countries (and therefore languages) such as Portugal or Finnland. But still, I understand them because each text is actually specific for each market. So it would be a lot of extra work for a few clients in the end.
IB offers its services in 11 languages: English, German, Spanish, French, Italian, Russian, Chinese (2 variants), Japanese, Arabic and Hebrew.
If you speak another language like German, French, or Italian, then Interactive Brokers may be a better fit for you than DEGIRO since it supports more languages.
Apart from the key elements discussed above, there are 3 other points I want to go into detail with you.
As you know, we do not trade stocks everyday.
We buy our ETFs within 30 minutes once a quarter.
And then we lock up our laptop to go back to other much more rewarding occupations :)
So, whether the interface is nice or not, or a bit too complex: we don’t care!
Well then, with the advent of user experience in the digital world, we have seen online brokers increasingly offer user-friendly interfaces that are easy to use even for a newbie.
IB and DEGIRO are no exception.
Whether it’s their mobile app or their web trading platform, these two brokers are on par with their online brokerage user interface.
One of the other important features as a stock market investor is the investment portfolio reports.
First of all, for performance monitoring purposes (to know how your portfolio is performing).
And secondly - and this is certainly where it’s more useful - when you do your taxes, having an efficient reporting tool is key (so you don’t waste hours clicking and exporting PDFs).
From my experience as an investor in US ETFs (like my favourite VT ETF), Interactive Brokers is much more advanced in terms of reporting.
It’s much easier to find, for example, all your foreign dividends and their associated withholding taxes. And that’s because everything is centralised in the same unique and ultra comprehensive report.
Whereas on DEGIRO, you have to do plenty of digging.
Some parts like transactions are available in the web interface with a filter while other information is only available for download (PDF or CSV).
All in all, Interactive Brokers does much better than DEGIRO regarding the portfolio reporting functionality.
Another practical feature is the availability of a mobile app and an online trading web application.
Such tools allow you to make your quarterly purchases from the comfort of your bed, via the IBKR or DEGIRO mobile app.
And when Febrary comes around with the Swiss taxes, you pull out your laptop with the web app to be able to fill in your tax return with ease.
On this specific point, Interactive Brokers and DEGIRO are also on par as they both offer good mobile and web applications.
DEGIRO is a good choice if you are just starting to invest in the stock market AND you want a European based online broker. Its brokerage fees are very low and it’s trading platforms (mobile app and web) are easy to use for a beginner investor.
When you are ready, change to Interactive Brokers if you’re into long-term stock market investing: the lowest trading fees on the market, a company that’s been around for more than 45 years (!) and was a pioneer in online brokerage. It has access to the best possible US ETFs for Mustachians.
And if you absolutely want an online broker based in Switzerland, then I always recommend, Cornèrtrader which is awarded the bronze medal in my top 3 best broker for investing in the sstock market in Switzerland.
How about you, which trading platform did you choose between Interactive Brokers and DEGIRO?
]]>Smile.car is, in my case, the best frugal car insurance in Switzerland. It offers the usual coverages of a car insurance: accident insurance (partial and full coverage) and liability insurance. It is 100% online. And best of all: it’s the cheapest car insurance in Switzerland.
PROS:
CONS:
DISCLAIMER:
If you’ve been reading my blogs for a while, you know how much I dislike 95% of Swiss insurance companies.
Whether it’s your car insurance or your liability insurance, most insurances focus a lot of effort on selling fear and over-insuring the Swiss.
This is because of the insurers’ unfair self-benefiting commission based system.
I’m speaking from experience, because I myself was more than overinsured for my car insurance in 2013, just when I started my FIRE (Financial Independence, Retire Early) adventure in Switzerland!
And don’t even get me started on the mixed 3a pillars linked to a life insurance because otherwise I keep on ranting 🤯
Anyway, when an insurance company like Smile (formerly Smile.direct) pops up and enters the juicy market of unscrupulous insurances, it feels good.
Basically, smile.direct is a Swiss insurtech startup that was created to disturb the quiet and old-fashioned business of insurers since… 1994 already! And this by selling their insurance by phone (every era has its revolution ^^).
Then they took advantage of the digital revolution and went online in 1999.
They digitalised and optimised all their processes in order to reduce their costs to a minimum and offer ultra competitive premiums.
This is the same strategy as the neo-bank neon free and the best online broker Interactive Brokers: they both make money by being the best and relying on the quantity of customers.
Unlike most other insurance companies in Switzerland that rely on dirty marketing…
With the strategy “300% customer satisfaction at all levels”, anything can work in the long term!
Proof: in 2014, Smile became part of the Helvetia group, which was starting to feel threatened that Smile would eventually steal their leading position. Luckily, from what I’ve read, Smile are still as autonomous as before, better for us!
Like every year, I review my recurring expenses to optimise them as much as possible.
The goal?
To save as much as possible, to invest the difference in the stock market or in real estate, and to use the passive income created to be financially independent in Switzerland by 40 :)
So, recurring expenses include my car insurance.
Being frugal by nature, any self-respecting Mustachian will opt for a frugal and reliable car (like my beloved old Toyota!)
This allows me to opt for this car insurance strategy:
That’s it, it’s pretty quick to apply :)
Every year, I use the car insurance comparison website bonus.ch (I don’t like the Comparis.ch one, because it hides the insurers’ name in the list view).
I enter the information about my vehicle and the driver, as well as the selection criteria explained in the previous paragraph. And I run the search engine!
And in the blink of an eye I note down the 3-4 best insurance offers.
Then, to make sure that the comparison website is up to date with the data and the information displayed, I go to the website of all the insurers and do the calculation again on their own website.
Since the beginning of 2020, Smile has always been the cheapest car insurance according to my Mustachian criteria.
I checked again last year during September (because the contracts often stipulate that you can cancel with 3 months notice by the end of the year, otherwise it’s renewed for next year). Smile.car was still the cheapest.
And the same today, as you can see in the screenshot above: Smile.car is the cheapest car insurance in 2024 for Mustachians.
In addition to the price, I always try to get information about companies with a mobile app by looking at its ratings and reviews on both the Apple and Google App stores.
This is due to unhappy customers who usually use this communication channel to share their frustration.
This is what reassures me about Smile.car’s handling of claims by seeing their rating:
Since we’re here to talk about money, here’s what I pay to insure my Toyota Prius with Smile.car:
This reminds me of the time when I was paying CHF 1'680 in 2013 before I became a Mustachian…
And now we’re down to only CHF 321.30 a year.
Over a decade, by investing this difference in the stock market each year, we are talking about savings of CHF 18'993!
I still looked into the issue of claims with Smile, in case I need to use it one day😅
Let’s imagine I had an accident with someone who hit me on one of the hills in Lausanne because of the ice…
We would have parked in a car park in Lausanne to make an official report… on the roof of my Prius, in 3 degrees, with frozen hands…
Then, when I got home, I would go to the Smile website - in the warmth!
And here is the procedure I would follow:
As you can see, it’s really quite simple and straightforward.
For accidents more complex:
I really hope to hear about your experience if you ever had to deal with a claim with Smile.car.
I’m putting down below a short FAQ for the 2-3 questions I receive the most from my readers. Hopefully it will help you too :)
The deadline for cancelling a car insurance policy is usually 3 months. Many insurers also add a contractual clause of annual renewal of the contract. So if you don’t cancel your policy before September 30th, you are bound to the end of the following year.
Partial cover car insurance in Switzerland covers damage to your vehicle caused by events such as theft, fire, hail and collisions with animals. However, it does not cover damage caused by road accidents for which you are responsible.
Full coverage insurance is the car insurance that covers you for all damage to your car, even damage you cause yourself in an accident. It also includes partial coverage for damage caused by events such as theft, fire, hail, etc…
Since 2020, I have been a satisfied customer with my Smile.car insurance. It is cheap and covers all my needs as a Mustachian driver.
If you are also a Smile customer, let me know if you have ever had to deal with a claim, and how satisfied (or not!) you were with their services. I will adapt my conclusion depending on the feedback I receive.
In the meantime, if you want to switch to Smile to save on your car insurance, you can follow this link to get CHF 50 cashback (*):
PS: If you are a neon or VIAC customer, then go through their marketplace instead because their partner offers are even better than mine ;)
(*) This symbol indicates where my article contains affilite links. If you follow one or more of them, you won’t see any difference compared to a standard link - but the blog will receive an affiliate commission. Thank you for this. As usual, I only write about and review things I use in my daily life, or trust.
]]>
You must have had a good laugh at the title of my article today!
MP who cares about life insurance?!?
“He couldn’t resist the indecent commissions of the insurers or what?!” I hear you mumbling behind your smartphone screen.
I reassure you, it’s nothing like that, I don’t intend to reach financial independence in Switzerland with bonuses on the back of the insured ;)
Let’s be clear: I still have no intention to subscribe to any Swiss life insurance.
On the contrary, I am still trying to get out of mine which is currently linked to a pillar 3a… the worst mistake of my Swiss frugal career…
Anyway.
This article is not so much about me, but rather about some readers of the blog. They write to me to tell me their life story.
And that’s when I realized that my Mustachian view of the life insurance world (in short: you don’t need it!) had its limitations.
Let me explain.
Some of you have family and/or personal situations that are much more difficult than the MP family.
The latest example is Stephanie’s.
She told me that yes, life insurance is useless if both spouses are working, and that each one is managing… but that in her case, because of her spouse’s (and her mom’s!) recurrent health problems, she was a pillar for these two important people in her life. And she wanted to be able to sleep soundly and not stress every night about what would happen to her loved ones if she were to be gone from this world overnight…
This made me reconsider my copy: life insurance can be useful in some cases.
In most cases, they are just a way for insurance companies to make money off of you through foolish fears. But in some specific cases, it can be useful.
Hence Stephanie’s question: “If you were in my situation MP, which Swiss life insurance would you choose? a mixed life insurance with a pillar 3a? or a pure life insurance?”
For you who only skim my articles (come on! ;)), read well the following sentence and repeat after me:
I will NEVER take out a mixed life insurance policy linked to a 3a pillar because it is the biggest scam ever seen in Switzerland!
There, I said it!
If you want to know more, this article from Bon à Savoir does a good job of summarizing the issue of mixed life insurance linked to a pillar 3a.
Now let’s take a closer look at what options exist today for pure risk life insurance in Switzerland.
Because yes, the market has drastically evolved over the last 3-5 years, to the benefit of us, the average Swiss. And the insurers who used to make a lot of money on our backs have to worry about the newcomers on the juicy Swiss life insurance market.
While researching this type of product on the internet, which I don’t use myself, I (re)discovered that such a life insurance in Switzerland allows your loved ones and/or yourself to receive cash in two situations:
As we will see, the best life insurances in Switzerland allow you to choose which risk(s) you want to insure (and this is not given by all insurances :D) in order to optimize your premiums according to your real needs.
So I put myself in Stephanie’s shoes, and started searching on the internet for the different pure risk life insurance options in Switzerland.
Here is the list of candidates that I have selected:
For each of these life insurance policies, I will compare the premiums according to a typical profile based on the following criteria:
Here are the results of this comparison of life insurance in Switzerland:
Swiss life insurance comparison for women
Swiss life insurance comparison for men
As you can see, there is no ONE best life insurance in Switzerland. The amount of the life insurance premium depends greatly on the variables you insert.
Nevertheless, some conclusions can be drawn.
Indeed, the most advantageous Swiss life insurance is:
If we were in a situation similar to Stephanie’s, we would choose a pure risk life insurance that does not commit us.
That is to say, depending on the amount we would like to cover, we would go with VIAC or EmmaLife (although depending on SafeSide’s insurer proposal, if SquareLife for example, you can apparently break your contract at no extra cost each year end).
The idea behind this choice is that life can change so much that you don’t want to sign a 20-year contract.
However, in some cases, such as with children and a sick parent, a fixed duration could be more interesting.
It’ll really depend on your situation. In this case, we would opt for SafeSide or VIAC (see the table with the best offer in green according to your personal situation).
Life insurance in case of disability
When I was planning this article, I thought I would do a comparison of Swiss life insurance in case of death, and also in case of disability. Except that, apart from the fact that it takes a lot of time (but that’s my problem :D), the thing is that it brings many other variables and it would give an unreadable table in the end.
What I recommend if you need such a disability life insurance is to calculate your premiums with your real needs by comparing the results of VIAC, EmmaLife, and SolidaVita. According to my tests, these are the three best disability life insurances in Switzerland (knowing that SafeSide only offers life insurance and not disability).
SolidaVita
Also, know that there is a German-speaking-only alternative: SolidaVita. From my comparisons via Moneyland, it is interesting in some cases. But knowing that I am not bilingual in Swiss German, I cannot recommend it to you. But it might be worth a look if you live on the other side of the Röstigraben ;)
SquareLife
SafeSide is actually more of an independent, digital broker that works with different insurance companies, rather than a single life insurance provider as VIAC does through its (unique) partner Helvetia.
And SafeSide is a winner in many cases thanks to its partner SquareLife of Liechtenstein. However, be aware that compared to a VIAC/Helvetia, they have dozens of additional health issues that affect your premium:
VIAC
To be able to take out a life insurance policy with VIAC, you have to be a client of a pillar 3a or a 2nd pillar in vested benefits with them. BUT, the cool thing is that you can very well open an account and leave it empty, and that’s OK with them (I confirmed this with their CEO).
Flexibility, flexibility, flexibility
I’ll say it again here, because it can have quite an impact on your budget in the long run: your life is going to change whether you like it or not, even if you plan everything.
As a result, I would be very careful if I were to buy life insurance, and would most certainly take out one that I can cancel every month or year at most.
Especially because premiums and players in this market are constantly changing, and a good product/provider today could be bad in a few years.
So check all the lines of your potential life insurance contract before you sign it.
As is often the case with fintechs, they offer promo codes. They allow you to have a small welcome bonus that is subtracted from your premium amount.
BE CAREFUL nevertheless, as compared to other products like the best Swiss neo-banks, I do not recommend you to engage in a life insurance contract just for the bonus!
And I repeat one last time: in most cases, a Mustachian generally does not need life insurance because he is self-sufficient and will be able to adapt to life’s challenges. But, unfortunately, we are not all so lucky.
So let’s go for the SafeSide and EmmaLife cashback codes (VIAC doesn’t offer them because they put all their marketing budget in the service of the product, which is a nice strategy too I think!), now that all these WARNINGs are explained:
If you need life insurance, it could help our Swiss Mustachian community if you share the reasoning behind your decision to have different situations and points of view.
You can do that via the comments section below.
PS: and in case you came across my blog by typing in Google the search “life insurance investment in Switzerland”, know that NO, a life insurance is NOT an investment. If you want to make your money grow in Switzerland, I advise you to invest it in the stock market or (in real estate) by following the advice in this dedicated article
Header photo credit: Tim Samuel via pexels.com
]]>Today, it’s the turn of Beat Bühlmann, CEO of finpension.
Thanks again to him for accepting my invitation.
Here’s the interview with finpension’s CEO:
Important note: you can activate German or French subtitles if they don’t appear automatically.
And if you’d rather read than watch the video, then here’s the transcript of my interview with Beat.
Okay, so thank you Mark for having me.
My name is Beat Buhlmann, I’m the founder of finpension.
I’m 40 years old, I’m married, have two kids, two young boys. The older one is six years old, the younger is four and we also have two dogs so I’m quite busy also at home.
If I have free time less your time then I really enjoy running, cycling, so endurance sport is very important to me.
I grew up in Kriens, that’s next to Lucerne. I have two older brothers, they are twins. And I grew up in a neighborhood with a lot of children, so it was for me it was like the perfect setting for playing and learning.
My mother, she stopped working when my older brothers were born. And my father had an optician shop in the city of Lucerne, so he sold and created glasses and contact lenses. But my parents retired in the meantime.
I myself, after the primary and secondary schools, I started a commercial apprenticeship in Lucerne.
Then, I started business administration at the University of Applied Sciences in Lucerne with focus on finance and banking.
And then in 2006 I had the opportunity to join the main group, one of the largest hedge funds to work there. And at that time I then also started the CFA program, the CAIO program, which I finished I think in 2008.
but I lacked a little bit… the opportunity to realize my own ideas.
And then I went back to Lucerne, I got the opportunity to start at a private bank in the area of hedge fund research and portfolio management. So I also there I had a great time, I could learn a lot, so it was very interesting, but I lacked a little bit.
The opportunity to realize my own ideas.
As you can imagine, in an old private bank or in a classical private bank, it’s not a very dynamic environment. So when I made, for example, when I made a proposal to change a process, the feedback I often got was, hey, we did it 20 years like this, so why should we change it? So this is a bit the mindset.
And… I had to make a decision to stay in a, let’s say, let’s call it a golden cage, with a high probability of not being happy over the longer term, or to leave a bit of comfort zone and to work on something I believe 100% and I really enjoy. And this is how finpension started back then in 2015.
You may be also add just one additional point.
You probably wonder, how did I get into finance? I was already, when I was very young, I was interested in financial markets. So I started, I bought my first stocks when I was probably 14 or 15 years old, so very early.
And at that time, there were no online brokers. So you have to imagine, I went to the UBS, I went to a counter, and… the issue was that the transaction costs, they were like 80 francs per transaction.
So this was how it was at that time.
So I still wanted to buy stocks, but the only way to make money, I mean, I had just a small amount to invest. So the only way to make money was to buy penny stocks. But this is how I started with the equity markets.
And a couple of years later, probably or maybe you remember Credit Suisse launched an online broker, U-Trade, so I was very excited about it when this was launched, as the trading costs went down to 40 Swiss francs but it still was high, and then, all the online brokers emerged: Ameritrade, E-Trade, Schwab.
And stock picking now is definitely not part of it.
And this then gave really the opportunity to trade a bit more, to be a bit more active. But I then also learned the whole dot com bubble. So this was my first really meltdown of the markets I remember.
To cut a long story short, or the takeaway for me, it took me a few years also to learn how to invest properly. I paid my learnings, I went through everything. And stock picking now is definitely not part of it.
And I think what really counts over the long term, as you probably all and also your readers know, it’s diversification and it’s the investment horizon. And this is how I invest today.
That’s it. That’s a bit my story.
I would say when it comes to business then Zürich Paradenplatz. I’m a very structured guy and I try to be as efficient as possible always. In leisure time I’m probably more the Geneva water jet :)
Very honestly I’m a bit bad when it comes to reading but one book I really liked was Principles from Ray Dalio.
And this was the book I last gifted to a friend.
What I changed on my side a bit is that I go running really a lot, so usually five to ten hours per week, and I started listening to podcasts, and this is what I do very often and I really like and I often recommend podcasts to my friends.
So for example, there are a lot of good podcasts around but I really like the podcast of Tim Ferriss, then I like the “All In” podcast and also an entrepreneurial one, the “How You Built This” podcast.
This is what I usually recommend to friends and probably at some point in time there will be more time to read books, but at the moment I really listen to a lot of podcasts.
I’m not sure if you can say it in English like this but I will put “Create good habits”.
This is what I try in my everyday life.
Create good habits
One example, we have the office in Lucerne on the fourth floor. In Geneva we have also an office on the fifth or sixth floor. And I never take the lift, so I always go up the stairs and down. And this is one of the habits and I try to integrate it into a routine. And I think it adds up a lot over time.
And integrated into your routine that can be in the area of work, family life, it can be in sports, so it’s everywhere you could do this approach and I think it helps a lot over time.
That’s a very good question.
We have no interest in an exit, because working on the vision we have… together with the team that we have is extremely fulfilling for me.
And it’s really not about money or an exit, it’s all about realizing a vision. And we see still so many opportunities in the banking sector, and we are convinced that we just started the journey with finpension, so there’s a long way to go, and there are very interesting projects ahead.
Good question. I mean, besides business, family would come first, of course.
But for the business, for finpension, I would say that in five years, we have the banking licence.
With a banking license we then also could offer saving accounts or cash accounts for the pillar 3a solution.
Then I would say we have over 10 billion under management. We grow by over 2 billion a year.
And I would also say, the core banking needs we see, there are like four or five core banking needs we identified.
What are all those core banking needs and what do we see as core banking need?
First one is retirement solutions, this is what we already have.
Then, the second one is probably investment solution.
And, third, there is maybe something ahead like savings. So cash accounts is also what you need.
Then, fourth is financing. Mortgages and stuff like this.
And the last one is payments.
So those five areas, they are probably at some point in time on the roadmap.
And I would say in five years we should be able to speak a bit more in detail about those five areas.
Not really. I see in individual areas, I see a bit of risk, especially through regulatory interventions.
However, we are already diversified with different offerings that we have, so I don’t see a big disruption for the next couple of years for our business.
It’s a very good question, but I have to say no, probably not.
It’s very good that we have the competition so that we both also push each other for better solutions. This is, in my opinion, extremely important.
And we have to see, as VIAC is partly owned by the WIR bank. And we see there’s a big advantage to be completely independent from banks and insurance companies.
And…
We know VIAC very well. So we also have exchange from time to time with them.
A few months ago, my co-founder, Ivo and I, we went for dinner with co-founders, with Danny and Christian from VIAC. And by the way, you probably don’t know that. We all know each other really very well and we work together at the same private bank before.
We know VIAC very well. So we also have exchange from time to time with them.
So, Ivo and Christian, my co-founder and one of the founders of VIAC, they are best buddies. So the connections are really very close on a personal level, at least.
However, Ivo and Christian also, they agree that when they meet they don’t talk about business.
We try to completely separate it, but we know each other very well and I think it’s very good that we push each other for a good solution.
Also going forward with new offerings, this is good to have the competition.
Very short answer: we just have no influence on that.
Two things: when I spend time with the family and when I do sports. This is very important to me.
I can clear my head during endurance sports or having a family time. This is what I need and gives me the balance I look for.
The first couple of years were extremely intense. I was regularly with over 100 hours of work per week, so it was really tough. And I had two, I would say I had two major challenges.
The first one was my first son was born in 2017.
So, and I was in the middle of building up the company, so I had to somehow balance the family life there with work. And this was not that easy. Yet, it worked out, but it was tough.
And the second one was… This is something also probably a lot of entrepreneurs experience, and this is also maybe a reason why often entrepreneurs fail. You need to have a lot of endurance. Let’s say after two or three years you probably still don’t see an income but you put in a lot of effort into your business, and then you need to put even more effort to achieve a tipping point.
And this is really tough and I think a lot of entrepreneurs quit on that way, but you just have to go through it. And this was in our case also a bit the case.
I myself started in 2015 and at the end of 2017, so after two and a half or three years, we had an income of about 30'000 Swiss francs. And I had to pay also for the co-founder a bit of salary, so this was a tough time. But, we then saw, hey, the business, it works, and we just need to keep on running and pushing even harder. But this is tough at the beginning, especially, so you need to push and push and push.
Compared to today, it changed a lot to be honest.
Now, the work is on a lot of different shoulders. When I started, if there was a problem with the website or so, I had to go up during the night and try to fix it, so I had to take care of everything.
But now, I have all the experts around me and work-life balance is completely different so it’s now that we have a very good setup, with around 25 people now in the company.
So it’s very well established and well organized now.
And work-life balance is also for me, it’s very, very good. I still like, of course, I still like working a lot, but not 100 hours anymore per week. So it’s maybe down to 60 or so, 60, 70.
So I’m familiar with the FIRE concept, I know it, but to be very honest it’s not for me.
Although I’m an extremely rational person, really, I would probably have trouble with the withdrawal phase, to be honest. My ambition also with what I do with finpension is to build up a sustainable cash flow that always sustain my running costs that I have.
It’s a bit of a different concept, but I probably have a bit of an issue, a mental issue with the withdrawal phase otherwise.
It’s also a kind of FIRE concept that I try to achieve but it’s slightly different.
So, what I try not to do is no emotional decisions.
So, if I have really something important on my desk, then I go to sport or at least sleep on it, so that I can decide the next day.
And, what I always think is very important and what I try to do is I try to listen to the other person, I try to understand the view of the other person, and for finpension or in the case of important decision, I really allow myself the necessary time to make a decision.
And this has paid off several times.
And when it really comes to finpension, for example, when recently, I had a different opinion about a new product than the other team members, than the management team.
Then, I try to understand their view, I don’t try to push something through, because I’m 100% convinced that together we are much stronger. I have a lot of very smart and strong people around me, and so I accept if they disagree with my opinion, I accept it.
If I have really something important on my desk, then I go to sport or at least sleep on it, so that I can decide the next day.
And then we move forward.
And I think this is the way we need to do business. I don’t put myself in a position that I have to decide. So we are a team, and we are much stronger and smarter as a team.
And I’m really very lucky that I have such a smart team around me.
No, I had no direct mentor. Nevertheless, there were always people I looked up to, especially at my previous jobs I had.
There was one guy, he had very good leadership skills. There was another guy, he had very deep research knowledge and I looked up to him.
So, what I tried and I try always is to absorb and learn as much as I can from the different people I admire.
That’s the question I wanted to have. I would say give me a few more weeks and then we can set up the perfect solution for your daughter at finpension :)
Sure, I’m always up for a fondue and a good conversation, of course. Happy to invite you!
I like to try out always a bit new things, so also very small restaurants and they make very often make very good experience, but there is one I probably can recommend it’s called FED, so F-E-D.
There is a very creative team behind it, and they offer, it’s like a food sharing concept. So you order a menu, and then it’s put in the center of the table and you can share the food, you can try out, you can taste. So I really like that one and it’s in the city center of Lucerne.
If you also like entrepreneurship, I highly recommend the “Acquired.fm” podcast. The two protagonists tell the story of some of the world’s biggest companies, including Berkshire Hathaway and Amazon.
I really enjoy listening to them on long walks. Each episode lasts between 2 and 4 hours, and you never get bored for a second! On the contrary, I ask for more ;)
Or how to combine personal development and health.
If you needed further proof that diversification is THE way to long-term wealth, here it is with Beat’s example:
To cut a long story short, or the takeaway for me, it took me a few years also to learn how to invest properly. I paid my learnings, I went through everything. And stock picking now is definitely not part of it.
As he explains, he went through stock picking, lost a lot, and ended up with a boring AND successful portfolio!
If you’re new to the blog, consider yourself lucky, as you’ll be able to save several years on your investment journey. Provided you choose the right investment strategy.
While chatting with Beat, I thought I’d make a little bet with nothing at stake.
I bet you that finpension, VIAC and neon will be the leading banks in Switzerland in 10 years’ time.
In 2033, UBS will be dying a slow but sure death, still trying to scrape together a few fees in private banking mode.
There will still be BCV, which will be subsidized by the canton.
But all the other banks will have disappeared, or will be doing something quite different from what we know of their services by 2023 (or at any rate, quite differently).
Talk to you in a decade :D
If you’re new to the blog, you’ll find my pillar 3a comparison on this page.
You can use the finpension promo code “MUSTBC” to get a fee credit of 25 Swiss francs (provided you transfer or deposit at least CHF 1'000 in the first 12 months after creating your finpension account).
I’m a finpension customer myself, and only recommend products that I use in real life.
What do you take away from this discussion with the CEO of finpension?
]]>Over a year ago in September 2022, I learned that BaFin (Germany’s financial regulator) was issuing additional capital requirements to the group owning DEGIRO (flatexDEGIRO Bank AG and flatexDEGIRO AG).
Then, in March 2023, BaFin announced the following in a publication:
On February 17th, 2023, the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht — BaFin) ordered flatexDEGIRO Bank AG to take measures to ensure that the institution has an appropriate business organization in the areas of risk management and money laundering prevention, and to limit the risks.
To ensure the proper organization of activities in the area of risk management, BaFin ordered flatexDEGIRO Bank AG to remedy several serious shortcomings, particularly in its internal controls, its supervisory reporting system, and in the area of money laundering prevention.
To monitor the implementation of the risk management system, BaFin ordered a special commissioner according to section 45c (1) in conjunction with paragraph (2) of the KWG.
Due to this context, on February 7, 2023, BaFin issued a final and binding administrative order imposing a fine of 1'050'000 euros for flatexDEGIRO Bank AG.
The fine is based on a breach of obligations under section 130 (1) of the breaches of administrative regulations (Ordnungswidrigkeitengesetz — OWiG) in conjunction with offenses punishable by a fine under the KWG and the European Capital Requirements Regulation (CRR).
When I did my research, I found that this was not alarming.
On the contrary, it proves that the financial system has learned (a little ^^) from its past mistakes.
But nevertheless…
Having my children’s entire ETF portfolio with DEGIRO myself, I was following the news closely (as I announced to you in my newsletter).
In December 2022, the signals sent by DEGIRO were good with an extension of its management via senior profiles, as well as organizational changes at the head of the internal control, risk management and regulatory reporting departments.
Last September, BaFin’s special commissioner reassessed DEGIRO’s situation (as required by law).
As a result. BaFin “approved the reapplication of credit risk mitigation techniques for DEGIRO’s margin loans with immediate effect.”
A bit of gibberish for me…
But reading DEGIRO’s press release, the header reads:
- Increase in CET1 ratio to over 27 % following BaFin approval of the reapplication of credit risk mitigation techniques for the DEGIRO margin.
- Decrease in the Group’s risk-weighted assets by around 450 million euros
- Solid capital structure opens up new opportunities as part of the ongoing financial planning process
The most important thing in this text for me is the CET1 ratio, which is over 27%.
I didn’t know its meaning until today ^^
As defined by Investopedia:
Common Equity Tier 1 (CET1) is a component of Tier 1 capital that consists primarily of common shares held by a bank or other financial institution. CET1 is a capital measure that was introduced in 2014 as a precautionary measure to protect the economy from a financial crisis, largely in the context of the European banking system. All eurozone banks are expected to meet the minimum requirements of the CET1 ratio for their risk-weighted assets (RWAs), as defined by financial regulators.
In the event of a crisis, capital is first drawn from Tier 1.
CET1 is nothing more than an acronym for “solvency ratio” for banks.
The DEGIRO press release continues:
On this basis, the flatexDEGIRO group’s Common Equity Tier 1 (CET1) ratio should increase to over 27% compared with a regulatory CET1 ratio of around 15,4%, resulting in a regulatory capital surplus of around 100 million euros.
These figures are verified by what I found as another source of statistics online:
DEGIRO has grown very fast over the years 2018-2022.
They have prioritized the focus on a simple, clear, and effective product for their customer. And, in my opinion, they’ve left a bit out with the administrative paperwork control.
This BaFin intervention proves that the German system of financial auditing of investment institutions works.
DEGIRO took it seriously, resolving the major problems in less than 12 months. Both in terms of staffing and cash reserves.
As discussed with BaFin, they still have 12 months to deal with the final points for improvement named by the Commissioner. This is in line with the original timetable and the agreement reached with BaFin.
So I’ll continue to keep an eye on them doing their homework ;)
In the meantime, I’m staying with DEGIRO for my kids’ investment portfolio.
Yes, DEGIRO is safe thanks to asset segregation. Any ETFs you buy are stored by DEGIRO in a separate legal entity, so that they are not accessible to DEGIRO’s creditors, even if DEGIRO were declared bankrupt. This serves to protect clients’ investments.
Yes, the Custody account still exists for customers who selected it at the time. Nowadays, DEGIRO no longer offers the Custody option to new customers to optimize their fees as much as possible. This means that your assets (ETFs or other equities) can be loaned out.
Don’t worry about it, because DEGIRO covers these share loans in the event of borrower default. The only risk is therefore if DEGIRO and the defaulter go bankrupt at the same time. I consider this risk to be minimal.
As proof, I myself use this stock lending system by Interactive Brokers (cf. my review after one year via this link). And I use it knowingly, as IBKR offers the option of having a “custody” account (i.e. without securities lending by default).
Nevertheless, I think it’s a shame that DEGIRO has stopped offering a custody account. Even if I understand their strategy of wanting to optimize their fees as much as possible, knowing that they (compared to other banks) pass on most of these savings to their end customers in the form of a very competitive offer.
BaFin is Germany’s federal financial supervisory authority. It is an independent institution that regulates German finance. It reports directly to the German Federal Ministry of Finance. BaFin is the equivalent of FINMA in Switzerland.
FINMA is the Swiss Federal Financial Market Supervisory Authority. FINMA is the Swiss equivalent of BaFin in Germany.
]]>730 days to be precise.
Like many of us who have a personal project alongside our main job, I’m always looking for best practices and other guiding principles to maximize my chances of success with the blog.
About two years ago, I remember coming across a very short article that explained that you could apply this or that technique to succeed in your side business, but that in fact, there was a very useful piece of advice to follow that nobody followed because it was much simpler BUT, above all, much harder to follow over time…
The advice?
Devote at least 2 years to pursuing your business idea.
Basically: “You must work on an important task for your business every day, for 2 years in a row, no matter what.”
Very simple, but a lot less sexy — and a lot harder! — than this or that social networking strategy (🤢) which promises you overnight success…
Because it takes time. And energy. And perseverance!
It made me wonder.
Reflecting on my own blogging journey, I realized that if I had stopped after even 2-3 years, I would NEVER have seen the fruits of my labor… which are characterized by several tens of thousands of CHF these days (which my “side business” brings in).
There are several types of metrics you can set up to measure your progress with persistence.
For example:
You get the idea.
The point is to have something measurable that, you know, has a direct impact on your expertise (and therefore your success) if you reproduce it for two years, or 730 days (for simplicity’s sake) in a row.
For me, I hesitated between a word count (for my blog articles and other books) or between time spent working on the blog.
Knowing that I don’t just write…
I also reply to as many comments as I can, fine-tune the engine behind the blog, create new programs, update the forum, etc.
Rather than procrastinate for months on end, I decided to set out with the following:
Spend 1 hour a day working on the blog, for 730 (working) days in a row
That’s why I’m writing this article today because I just passed the milestone last week! 🎉
By the way, I just noticed on my time tracking tool (Toggl Track) that I only worked 54 minutes yesterday, therefore I didn’t add a +1 in the mobile app, because there is no point in cheating yourself.
Same for the Fridays I mainly devote to blogging: last week, I spent 5 hours and 1 minute preparing v2 of my stock market investment program. Instead of adding +5 to my counter, I just added +1 :)
At the time I came across this famous article, I remember that I lacked consistency.
I also wasn’t working 80% back then, so I was looking for entrepreneurial shortcuts.
Except that, unfortunately, shortcuts to overnight success don’t exist…
And after 730 days…
Actually, while I was looking in my “Counter” app, I wondered over how many years, in reality, I’ve done those 730x 1h of focus per day…
Ouch!!!
My mobile app counter tells me I clicked +1 the first time on… Friday the 19th of December 2019!
I thought I started in 2021, maybe 2020 at the earliest…
But in fact, it’s been around 4 years since I started this routine, which I haven’t kept up many times, but which I’ve clung to each time to get back on the saddle…
So as I was saying, after 730 days of working with focus on the blog, well I can tell you that I can see quite a difference from before.
Both in terms of production, because I have published the following in the meantime (in addition to all my blog posts):
… and in terms of numbers:
Newsletter subscribers | Gross income (in CHF) | |
---|---|---|
2019 | 1'974 | 18'374.37 |
2020 | 3'706 | 98'619.36 |
2021 | 4'694 | 106'983.09 |
2022 | 5'260 | 128'782.44 |
So, I’ll continue with my tracking app, which follows my habit of focusing on the blog for 1 hour a day, every day that goes by.
If you too are serious about any side-business idea, I can only recommend this 730-day strategy.
Especially as it’s helped me stay on track, and even with proven results.
Obviously, you need to choose an activity that makes sense for your business! And not something superficial like “creating a business card or brainstorming for a business name”. It has to be something that, on the one hand, allows you to improve, and on the other hand, adds value to those for whom you’re producing it.
And you, what’s YOUR strategy or tactic for making a success of your personal project or other side business?
PS: It’s impossible to find that article again… I just remember that it didn’t look like much, not a sales page or anything, just raw reality that felt good… if you see what article I’m talking about (it was very short, like 4-6 paragraphs at most), I’d appreciate it if you were to send it to me :)
Banner photo credit: pexels.com
]]>Because we have to solve the “mobile phone” topic for our eldest child…
To be honest I’ve thought about it… for several years now, both of our two children (!) have been the last or second last in their class to not own a mobile phone.
Although mentalities are starting to change among parents, it drives me crazy that more than half of the under 10-year-olds all already own a mobile phone… and don’t even get me started on inactive parent control, where parents leave their kids alone to watch Squid Game (!!!) and other dope like TikTok alone in their room at night…
But anyway, I beg to differ :D
This is the question that interests us in this article.
And above all, how much does such a mobile phone subscription even cost?! You know me ;)
What Mrs. MP and I want the mobile plan for most of all:
Oh yes, to clarify: he’s not allowed to use his cell phone at school. Only at home or when he’s out having fun with friends all afternoon, or other extracurricular activities.
I looked at Swiss mobile subscriptions especially for “youths”, as well as cheap prepaid subscriptions.
And I also used Comparis with their “special plans for kids” comparator".
Here’s a quick overview of my search results:
CHF 4.90 150 MB / 4 weeks.
We thought he could use this to call us on WhatsApp.
But knowing kids, he’d probably use all of that watching YouTube videos in an afternoon out… and as we don’t want him using the internet outside the house, that wasn’t helping either…
CHF 9.95 All unlimited (calls, SMS, and internet).
Uh, no, because it’s too expensive and there’s way too much in this youth mobile subscription :D
Pay what you use. Unlimited calls to Salt & Das Abo networks. Paid calls to other networks. SMS for a fee. 100 MB / month.
We’re currently using Sunrise with the QoQa offer, so this doesn’t work for us.
And we don’t want him to suddenly have no credit to call us on the day there is an emergency…
CHF 0.15 to all networks in Switzerland. 4.90 CHF / 500 MB (valid for 30 days)
Same here, not good for us as a youth mobile package, as there’s a risk of running out of credit on the very day he wants to call us…
CHF 4 / 30d 40 min call time + 40 MB surfing limit.
Same problem as below with the Prepaid.
The further we got, the more we thought we’d have the same problem with every prepaid subscription…
Just like the M-Budget, all are limited in Prepaid mode. Cool for an adult who can top-up his mobile plan on his own, but not cool as a youth mobile subscription.
Finally, we came across the Swisscom Prepaid youth mobile subscription that didn’t look interesting at first…
CHF 5/month With unlimited internet access BUT with a bandwidth limited to 128kbit/sec. And also with unlimited SMS.
At first, I thought “Forget it, we don’t want unlimited internet…”
Then, after thinking more about it, I remembered the last time I’d gone over the limit on a mobile internet package, and how incredibly SLOWWW it was with a 128kbit/sec connection!
So I searched: “Is it possible to call per WhatsApp with 128kbit/sec bandwidth”?
The answer: yes!
So we chose this mobile subscription for our child, which was perfect for us.
No worries about prepaid, and our teenager ending up with no credit in the middle of the month.
No risk of going over the limit.
And no risk of him spending his afternoon outside watching YouTube, because of the 128kbit/sec bandwidth… 😅 well, we’re not fooled, he’s watching it on his buddies’ cell phones now, but it doesn’t matter.
I’d started out with the idea that we’d just get him a Prepaid. On the one hand, so that he’d be really limited, and on the other so that it would only cost us a few 1-2 CHF per month.
But when we talked it over with Mrs. MP, we quickly realized that it was likely to cause us even more problems than solutions, as it could eat up all the credit (even inadvertently with an app running in the background).
So we opted for this Swisscom kids mobile subscription (called Prepaid, isn’t that hilarious!). For CHF 5/month, it entails:
And you, what kind of mobile subscription for children and young people did you get (what was the price and conditions)?
PS: I’d like to avoid the “should my child have a mobile phone”, and “at which age” debate in this article. Because that’s not the main purpose of this blog post
Header image credit: pexels.com
]]>In short, here’s what the program contains:
You’ll find more information in my original article.
Over the past year, I’ve had the following in my portfolio:
And here you can see my activity report from September 2022 to September 2023:
So in total, for one year, I earned… CHF 4.86 in interest… Impressive :D
After closer inspection, my VT ETF was loaned out 95% of the time.
So if I were to have 1 million Swiss francs in my portfolio, I would have earned CHF 20 in interest. Ugh.
After all, it’s not surprising since stock traders have more fun trading Tesla or Nvidia rather than the VT ETF.
Well, legally, I can’t say it’s risk-free because you’re lending your securities in exchange for collateral.
Nevertheless, after a year of experimentation, I’ve never used the Interactive Brokers’ collateral. As a result, I haven’t lost any shares or other ETFs.
This is where you have to be careful…
As I explained in my article last year:
When the day comes to pay dividends, it’s the one who owns the stock on the day who will receive those dividends. But don’t worry, because if this happens to you, IBKR will pay you this amount via a “dividend compensation” which simply means that it makes you a credit note. So you don’t lose the dividend. BUT, via a “dividend compensation”, IBKR doesn’t handle any claims to recover the withholding tax… that money is lost forever.
So I looked into the details and indeed, I did have compensation instead of dividends (visible in the “Dividends” section of my IBKR activity report):
Then I looked in the “Withholding Taxes” section, and IBKR also withholds withholding taxed on these dividend compensations:
The next question would be: will the Swiss tax authorities accept these dividend compensations as “real” dividends?
To date, I’ve still had to justify quite a few documents for 2022 to the tax authorities (how lucky, a tax audit ^^). And they haven’t told me anything about this, and have taken all dividends into account, including dividend compensations.
Obviously, when it turns out that it’s a tax problem, I’ll stop this program immediately, as I have more to lose in terms of US withholding tax refunds than in terms of gaining the few Swiss francs in interest.
UPDATE 24.11.2023: thanks to Paolo for shedding some light on the subject! Indeed, in Switzerland, securities lending is treated in the same way as direct ownership of financial assets. See circular letter nr. 13 from the FTA:
Even if the interest is ridiculous, this Interactive Brokers program has the advantage of not requiring any additional effort on my part in terms of budgeting or portfolio management.
Furthermore, I’m confident in Interactive Brokers and its founder with regard to the guarantees they offer as collateral for these stock loans.
Nonetheless, I have my doubts about the Swiss tax authorities, who might nitpick and decide not to give me a tax credit to reimburse the withholding tax on these dividend compensations.
But since it’s been quiet all year long, I’ve decided to keep the yield enhancement program active.
I don’t think I’ll see much change in the next few years in terms of the interest we receive. But you never know :)
And as usual, I like to “get my hands dirty” so I can talk about these things concretely with real numbers (and not just theory) — especially regarding taxes.
The Interactive Brokers Stock Yield Enhancement Program is interesting for making your money work even harder, without taking undue risk. Nevertheless, this program is mainly aimed at investors with a portfolio of specific stocks (like Tesla) rather than global ETFs (comprised of 8'000+ companies).
Even though the program has only earned me CHF 4.86 in one year, I’m going to keep it active while keeping an eye on it to make sure it doesn’t hurt my US withholding tax refund.
I don’t think I will get rich with it, but you never know what will happen tomorrow… all it would take is for the VT ETF to become a one-week hype ^^
I’m keeping it mainly out of curiosity so that I can talk about it concretely on the blog.
If you want to test it out yourself, you can follow this link to find out how to activate Interactive Brokers’ Stock Yield Enhancement Program.
How about you, how much interest have you earned through the Interactive Brokers Stock Yield Enhancement Program? And above all, which stocks did you loan? And what about your DA-1 tax credit refund?
]]>I was tired of spending hours (OK, it was just tens of minutes) reconciling my YNAB budget with my Swiss credit cards from Swisscard and Certo One.
Just a reminder for the newbies of the blog, I’m frugal and only use credit cards for the cashback.
Unfortunately, Swiss banks haven’t decided to open their interfaces (i.e. APIs) to tools such as my YNAB budget app to automate reconciliation. This means I have to keep reconciling transactions manually.
As frugal as I usually am when it comes to my Swiss Francs (even if it takes effort), the time it was taking me over the weekends wasn’t worth it compared to the 200-300 Swiss francs in cashback I was receiving back every year.
Afterward, I started thinking that if I did that, I’d soon be getting a cleaning lady to optimize my effort/return ratio… and I had a bit of a guilty conscience. While reflecting, I realized that there’s value in what we teach our kids (at least at their ages) about taking care of your home vs. manually entering credit card transactions.
Once my brain was convinced by my reasoning (it’s quite chaotic up there ^^), we decided to implement it.
So I decided to suggest to Mrs MP that we block all our credit cards, and only use our neon debit card.
Luckily, neon allows us to export all our transactions in CSV format with one click in their mobile app.
Then I adapt two columns in the file and import it into my YNAB application.
So clearly, we’re a long way from the automation that exists everywhere in other European countries (including the US), but it’s already better than the old Swisscard and Certo One PDFs!
And I can already see the benefits in terms of speed and accuracy of our balance in our YNAB budget app.
And since frugality is ingrained in our lifestyle, we’ve only been entering our expenses into YNAB twice a month for some time now (rather than daily as in the beginning).
So as to not have to worry about any more credit card transactions (especially recurring ones, such as our monthly cloud backup subscription), I’ve rediscovered a feature that’s so much more practical than before.
Credit card blocking directly from my mobile app.
When you think about how it was in the past, you had to block your card and order a new one…
And now, all you have to do is log into your Swisscard (or Certo One!) credit card app, and press “Block card”.
And within 3 seconds, your credit card is blocked.
Digitalization is improving, I tell myself :)
I also have to admit that even if it doesn’t change the way we spend money, the fact of having less than 1'000 Swiss francs in our neon account does reduce our spending…
And if it really is an essential expense, I managed to hold off payment until after our salaries are paid on the 25th of the month.
And, if we really need to pay right away, then in that case I unlock our credit card, pay with it, and schedule a transfer from my neon account to my credit card once our salary arrives.
Oh yes, because the MP strategy is simple:
It’s been 1.5 months now since we adopted this new payment card system with Mrs MP.
And I must say, it’s great not having to waste time reconciling credit cards and budgets.
BUT, I must confess that, two weeks ago, when I had to pay for a purchase of over CHF 1'500, I couldn’t help but reactivate my Swisscard Cashback credit card in order to get the 1% cashback… and to avoid having a credit card bill at the end of the month, I made a transfer from my neon account right away…
I couldn’t pass on that chance :D
All in all, I’ve just set myself a reminder in 12 months’ time to debrief you and tell you whether to keep or change the system.
How about you, do you prefer credit cards to maximize your cashback, or prefer simplification to optimize the time you spend budgeting?
]]>As usual, I used the best health insurance comparison tool in Switzerland on the official website of the Swiss Confederation “Priminfo” (and not Comparis or anything else that puts sponsored items in between results that you can quickly get screwed over).
Readers who have been following the blog for a long time know that we have been with Assura for several years now.
Then, in 2022, we switched to KPT, which had become the cheapest insurance for 2023.
This was the most frugal option we could find with our search criteria, namely:
Since the beginning of 2023, we paid the following monthly health insurance premiums with KPT:
So I went to enter my info and that of Mrs. MP and the kids on the official federal “Priminfo” website to compare health insurance premiums:
The result of the comparison was less obvious than the previous year:
Visana (Sana24) becomes the most frugal insurance for Mrs MP and myself in 2024.
And, first time for us, the children’s health insurance for 2024 will be different from ours, as they change their health insurance for CSS in 2024!
That’s what we’re talking about in numbers, monthly:
That’s quite a slap in the face compared with last year… we’re talking about a 25% increase 💸
But if we’d stayed with KPT, we’d have paid CHF 1'005 for the whole MP family, or CHF 112 more a month!
So, by switching health insurance in 2024, we’re talking about annual savings of CHF 1'344 (= 112 x 12).
And over 10 years, by investing this amount in the stock market via my favorite broker Interactive Brokers, that will make us CHF 19'877 more in our pocket!!!
All this for the small effort of sending a registered letter to cancel my KPT health insurance, and filling in a small form to take out our health insurance with Visana and CSS for 2024!
All that for about 1h15 of work, so we got a good return in the end!
If you also decide to take out your KVG/LAMal health insurance with Visana, I’ve made a few screenshots of their registration process (pretty well done):
And the last step:
If you also want to cancel your KVG/LAMal health insurance (no matter if KPT, Assura or other), here is a standard insurance letter that you just have to fill in, sign and send by registered mail to your health insurance before 30.11.2023:
Download sample cancellation letter for health insurance (in French) >
Download sample cancellation letter for health insurance (in German) >
I must insist that you send this letter on time, otherwise your request to cancel your basic insurance will not be considered…
It feels weird to go through all these health insurance changes again… I’m borderline happy because I feel like I’m back in 2013 when I was optimizing all my contracts to become the Mustachian that I am today :)
And a little note about KPT and Assura: even though I’ve cancelled with them, I can confirm that it’s only because of the health insurance premium, because it’s always gone well and I’ve always been very satisfied.
And you, are you cancelling your KVG/LAMal health insurance this year? If so, with whom? With the family doctor insurance model or another? And also, do you have any opinion on Visana and CSS?
]]>And especially its founder, Thomas Peterffy.
A true textbook case of a “bootstrapped company” as they say.
No external investors such as funds or VCs (Venture Capital). Nada!
Above all, since Interactive Brokers was founded in 1978, Thomas Peterffy never sold it.
Over the past few decades, I’m sure many US brokers would have liked to acquire IBKR…
But no!
I’d always wanted to talk to this Thomas Peterffy, to see who was behind the official photo on the IBKR website.
So imagine how happy I am as I write this…!
Because yes, I was lucky enough to be able to interview the founder of Interactive Brokers :D
I was like a kid at Christmas (except that it was the end of July).
Here is the interview with the founder and president of Interactive Brokers:
And if you’d rather read than watch the video, then here’s the transcript of my interview with Mr. Peterffy.
I was born and raised in Europe, in Budapest, and at age 21 I left to visit relatives who had a chalet in Luzern.
So that’s where I went, and I spent months there with them, experiencing for the first time life without socialism and without fear.
That was great.
And from there I went to München, where I spent four months waiting for my permit to enter America, and then I left from there to go to America.
In America it took me a long time to feel at home, especially since at the beginning I didn’t have any money and I lived in even worse circumstances than I lived back in Hungary.
Nowadays, when I go to Europe, I always have to admit to myself that I feel at home in America more than I feel in Europe.
I am more Paradenplatz.
I prefer to stand on solid ground… solid dry land.
Growing up in socialist Hungary there was censorship, but I was very lucky because my grandmother had a good library with all the classics that were written well before the Second World War and she acquired them before the Second World War.
So I learned about free enterprise from Dickens and Thackeray and Gut and Balzak and Turugo and Stendal and Zola and many Hungarians who you don’t know. In retrospect, they all flow together in my mind now.
They flow together into a composite picture of the human condition and a picture that I found true in life.
The constant need for food and sex and social position, how people relate to work and money and business, ambition, drive, faith and morality they are all described and very well explained in those books.
And those books help me to navigate through life.
I would say do what you can today, don’t wait for tomorrow.
Do what you can do today and don’t wait for tomorrow!
So building IBKR has been a fantastic lifelong adventure for me.
I enjoy almost every minute.
It is a great pleasure for me to be able to set goals, identify and solve problems, and to see the company grow and prosper.
As a result, I cannot imagine anything else I would rather do or find more interesting or satisfying than to continue this as long as I can.
Now, when you have money… money changes its character in the eyes of an entrepreneur as the business grows.
At the start, the enterprise takes personal money, so it focuses keen attention on revenues and expenses.
They dominate the mission.
As the business matures, revenues and expenses become part of the mission.
And entrepreneurs do not think much about money in a personal sense. It’s all about the mission.
We’ll certainly try to give our customers what they want.
I think the regulation you are talking about applies only to some specific US ETFs.
Regulators often look at products and practices with different glasses.
We’ll certainly try to give our customers what they want.
They often want to protect the uninformed impulsive investors at the expense of the well-informed.
They are willing to spend $10 or even $100 to eliminate $1 of harm.
Unfortunately, by doing that they throw sand in the gears of the economy.
They can’t help it.
They are regulated…
I don’t think anything will as long as we are diligent and constantly think about how to take advantage of future technologies and developments to broaden our services and to become better and more cost-effective in providing them.
That’s what it’s all about.
So I start every day with my reports from the previous day.
Seeing more customers coming to the platform, seeing greater usage of tools and accommodations we provide rising customer profits, all fill me with excitement.
Trying to discern what new products or tools or facilities would benefit their experience or customers’ experience on the platform, trying to create them gives me a thrill.
I would still like to have more thrills :)
And I would still like to get more things done faster and better.
The fact is that I could never figure out how to do more things at the same time by just hiring more people and still remain excellent.
So that is the challenge: It is difficult to expand a successful business and not drive it into mediocrity.
Writing clears the mind.
So I list all the possible choices and outcomes on a piece of paper.
Then I assign associated probabilities that I try to evaluate and the relative value of each outcome.
And then I multiply it through and the biggest number wins.
It’s all about evaluating probabilities.
Just like in business, trading, or investing.
Writing things down clarifies the mind.
I didn’t have a mentor.
I was always sure of what I wanted to do, even when in retrospect I shouldn’t have been.
Luckily I entered into a business that sorely needed automation and I just happened to have the necessary skills and ambition to do it.
I did have some wonderful people helping me along the way.
All of them still work with me today.
It is true that I’m eleven years older than my oldest associate.
But at IBKR we have fun working.
Nobody retires.
We look at what we are building and we are all proud.
I would do everything I could to try to convince her how fascinating the investment world is and why it is worthwhile to learn about it.
I would try to explain to her and illustrate with examples that in a free market economy, just like kids in school, we all compete with each other about who is cool.
We often organize into groups to produce goods and services and that is good because it provides for our needs, right?
We produce things like iPhones, computer screens and electrical bikes and movies.
I would show her how all these things compete for her attention and choice as a user.
So the companies and the groups of people with the best products and best prices grow and the others go out of business.
It’s a race, it is a competition, it is fun, it is cool and profitable to be able to pick the winners.
And it’s good because as consumers we get better.
So I would find similar products she uses or picks from the store and show her choices. Via her choices, she participates in the economy as a judge in the competition with her purchases, she selects the winners.
As an investor, she tries to handicap the winners by buying the risk, pushing up the price of the stock, and giving the company her investment as a vote of approval that the company can use to expand and produce more and better products.
The companies with the best products will win and she is among the people who make that happen.
That is really cool.
In the end, I would tell her how cool it would be if she learned about investing, but until she does she should just buy the Vanguard VT ETF..
BUT, until she gets interested in how the investment world works, she should simply buy the Vanguard VT ETF.
So if you think about research, in research we basically need to bring enormous data sets together analyze them, and distill them.
The human mind is not really capable of doing that.
Computers can do it.
So that’s what AI basically does brings a lot of data points together and figures out where they point.
So what I think is going to happen is that there’ll be more and more companies will enter into the business of using AI to predict the financial outcome of various companies and they will make that available to certain investment advisors who will then run their clients’ portfolios.
Based on that and what we are doing at Interactive Brokers we are readying ourselves to be able to offer that service to financial advisors and individual customers too.
And as a matter of fact, already at the moment we have one of these things that is called toggle, that is available to our customers. It continuously evaluates individual securities and tells you what in their view their AI, what it says about what the chances of any stock is to reach certain prices, etc…
So basically, I keep all my money in the company, almost all my money.
So it’s important for me that the company does well not only from that point of view but also it’s my legacy.
So I want to make sure that we have plenty of people in line starting with people in their twenties all the way up to Milan, Milan Galik, current CEO of Interactive Brokers, who is in his mid-fifties and there is a deep bench of people to take over in the coming decades.
Here’s what we’re going to do: if I go to Switzerland soon, because I haven’t been there for a long time, but when I do, I’m going to our Zurich office, so I’ll take you out for a Kirchwaser fondue. :)
The proverb is well-known and may seem simplistic.
My mother told me often enough: don’t procrastinate, and do it now rather than say you’ll do it later!
But this time it resonated with me, as I’m currently reading the excellent book called “War of Art” by Steven Pressfield. In it, the author talks about that “Resistance” that anyone who creates anything (author, painter, musician, sportsman, etc.) must face… every morning. And the solution is first to be aware that this “Resistance” exists and then to simply start doing what you “must” do, without questioning or thinking about it.
And once started, as if by magic, the “Resistance” disappears.
This is what I regularly experience when faced with the task of starting a brand-new article…
And then, every time I get down to it, 5 minutes later I wonder why it seemed so hard…
As usual these days when I want to understand a concept in its entirety (and avoid my “blind spots”), I asked my ChatGPT coach to list the negative consequences of procrastination:
In short, I agree with Thomas Peterffy: stop procrastinating and ask yourself if/what/how you should do that task your subconscious knows is important, and DO IT NOW!
I found the part about net worth and your company’s mission very interesting.
For me, before I passed the one million Swiss francs net worth cap, I put a lot of focus on increasing our net worth.
But since a few months (or even a year or two) when the blog has gotten some traction and visibility, I’m beginning to understand what Mr. Peterffy means…
My mission to help each and every reader is taking over more and more because I know deep down that my FIRE “flywheel effect” has started and that I’m going to reach it.
As a result, my considerations increasingly revolve around my mission, and my why.
I took away two pieces of good news from this part of the interview:
As long as this mindset is the cornerstone of IBKR, I can tell you I’ll be staying with them indefinitely :D
“It’s difficult to develop a successful business without leading it to mediocrity.”
Having seen it for myself in my own company and with some of my customers, I can only agree with Mr. Peterffy in his point of view.
If only more CEOs would follow this motto of maintaining excellence regardless of the level and size of their company, everyone would benefit, both employees and final customers.
I laughed out loud when the president of Interactive Brokers took a detour to explain investment trading to my daughter!
But what I didn’t expect was the conclusion:
*Until she gets interested in how the investment world works, she should simply buy the Vanguard VT ETF.
Even if someone who is so involved in finance thinks that this VT ETF is the perfect way to get the best of both worlds of yield and simplicity, then what I’m talking about isn’t bad at all :D
We talked about the FIRE movement off-camera.
His response was blunt: “Sorry, I’m not familiar with this [FIRE movement]… and knowing that I’m never going to retire, I think you’re talking to the wrong person ^^”
On the one hand, I find it reassuring and cool that Thomas Pterffy has this mentality (as well as his employees including IBKR’s CEO), as it’s definitely going to benefit me/us as Interactive Brokers customers. Indeed, such a mindset won’t make them resell to a larger group who would then only seek to make their investment profitable in the short term to the detriment of end customers.
On the other hand, his statement “I will never retire” reminded me of the quote from Jean-Claude Biver (former CEO of the Hublot watch brand) when he announced the launch of a new brand at the age of 73:
You can’t retire your passion!
All this just confirms that what I want in the FIRE movement is just the first two letters: Financial Independence! Retirement as most people imagine it (beaches and cocktails 24/7), isn’t for me either!
If you are new to the blog, I’ve created a complete guide to Interactive Brokers.
It explains, among other things how to open an Interactive Brokers account, and how to buy your ETFs via the IBKR brokerage platform.
And you, what do you take away from this interview with the founder of Interactive Brokers?
Disclaimer: there are affiliate links present in this article. You can also find the same information by doing a simple Google Amazon search. As a reminder, I only recommend products I use myself in everyday life
]]>If you are reading this blog, chances are your situation is similar to his:
Except that, this type of profile carries a risk… linked to the impact of currency fluctuations.
But don’t worry, we’re not here to scare you. On the contrary, in this article, we’ll look at the concept of currency hedging, its purpose, and its advantages and disadvantages.
And, as usual, at the end of the article, I’ll explain what I do for my own ETF portfolio as a Swiss investor.
Currency fluctuation risk refers to the danger that the value of a currency may change over time, positively or negatively affecting the value of your investments or international transactions.
Let’s take an example.
Let’s assume that you invest in the VT ETF in US dollars (USD) and that your base currency is the Swiss Franc (CHF).
Simply put, you buy your VT ETF at USD 95. At the moment of purchase, 1 CHF equals 0.88 USD (fictitious example, not representative of the current exchange rate). So, to buy a VT ETF, you’ll pay CHF 107.95.
6 months later, you decide to sell your ETF, because it’s now worth 120 USD instead of 95 USD when you bought it 🎉
If the exchange rate were still the same (1 CHF = 0.88 USD), then you would have made CHF 136.36 (120 USD / 0.88 USD/CHF).
Not bad at all, you earned CHF 28.41 (= 136.36 — 107.95).
BUT, let’s imagine that over the past 6 months, the exchange rate is no longer 1 CHF = 0.88 USD, but 1 CHF = 1.45 USD.
Suddenly, after 6 months, if you sold your VT ETF (bought at USD 95 and now worth USD 120), you’d only get CHF 82.76 for it (= 120 USD / 1.45 USD/CHF).
Ouch!
In this new scenario, where the USD/CHF exchange rate has fluctuated, we see that you’re left with CHF 82.76 instead of your initial CHF 107.95 invested. And this is despite the fact that the value of the VT ETF itself has risen…
Basically, the exchange rate fluctuation ate up your profits…
What’s worse, you lost money!
So this is when you ask yourself: How do you hedge the exchange rate risk? :D
Currency hedging is a way of protecting yourself against fluctuations in exchange rates between different currencies.
In simple terms: you can buy a kind of insurance that guarantees the exchange rate (CHF/USD in our case) at a date in the future.
In our example above, if you had used a currency hedge, you would have received the entire profit, i.e. CHF 28.41 (purchase price = 107.95, and sold price = 136.36).
Technically, there are three ways to ensure a fixed exchange rate between two dates:
Let’s take a short detour and let me explain what these are since this is all gibberish - even for me!
“Hmmmm, that’s a cool solution MP!” I hear you saying to yourself.
But wait a moment! Nothing is free in life… what do you expect :)
Let’s first continue with the other definitions:
And finally, the last definition of the day (aw man, are we back in high school? ^^):
Now that we’ve finished the finance lesson, let’s get back on track :D
Let me first remind you of one of our goals here on the blog: to invest in the stock market in no more than 30 minutes per quarter.
We don’t want to spend our precious time on trading platforms (life’s better than that!) buying forward contracts!
And we’re (also) a bit lazy ^^
So clearly, we’re not going to play around with hedging the exchange rate risk of our ETFs!
And it seems we’re not the only ones, since the financial world has already anticipated the need for hedged ETFs.
So when you see “hedged” in the name of an ETF, it means that it incorporates a currency hedge.
Concretely:
A “hedged” ETF automatically manages the risk of exchange-rate fluctuations for you via (in most cases) forward contracts.
So now, the million-dollar question: Is it worth taking a hedged ETF vs. a non-hedged ETF?
When you read my explanations above, you think that you clearly need to hedge against currency risk.
Because you don’t want to see all your stock market profits reduced to zero when you convert your USD back into CHF…
At least, that’s what I told myself in 2013 when I started investing in the stock market…
Except that I was wrong :D
Because, like all good insurance, they’re never free!
We’re talking about an additional 3% (in 2023) in insurance costs… so on a portfolio of CHF 500'000, that equals an extra CHF 15'000 per year!
So, yes, it’s not cheap. But if it gives you a 6% return, for example, it’s still worth it.
Then I looked up what the economic research papers had to say.
To keep things short: for a Swiss investor (CHF as a base currency) who invests over the long term in a global ETF (ETF VT for example), there is no evidence that a currency hedging strategy would improve returns or reduce risk. STILL, there is also no evidence that it would have a negative impact 1 2 3
On the contrary, one thing is certain, by not hedging your investments against currency risk, you benefit from additional currency diversification (as each company in your global ETF is active in its own currency).
So, in the specific case of a long-term investment in global ETFs, I prefer ETFs that are not hedged against currency risk (aka ETFs that don’t have the keyword “hedged” in their name)
Hmmm… MP… you got my attention! Why in this particular case? Are there any other cases?
Of course, there are! Remember, we all want to be FIRE on this blog. This means that part of our investments are placed in a long-term global ETF, for returns.
Then, when you become FIRE, you’ll have another part of your investments placed in bonds or other investment vehicles with stable returns (but lower than global equities).
Why?
Well, quite simply so that you can benefit from passive income in CHF to finance your early retirement :)
When I’m FIRE, I’ll be consuming my wealth - rather than accumulating it as I am now in the pre-FIRE period.
That will be the time to adapt my hedging strategy.
Let’s imagine two scenarios.
Scenario 1:
Scenario 2:
And anyway, in terms of portfolio allocation, I’ll be following my Bogleheads strategy according to my age as detailed in this article
And as always, I’ll stick to my currency hedging strategy without changing one bit throughout my FIRE retirement, regardless of the financial news.
Because it’s precisely by becoming an “active management” investor (aka when the human brain full of behavioral biases gets involved!) that I’ll be taking far too much risk in relation to potential returns.
Throughout this article, we’ve assumed that you’re a long-term investor (minimum 8-10 years). And that you primarily invest in a USD-denominated global ETF (such as my favorite VT ETF). The final assumption, is that your base currency is the Swiss Franc (i.e. the currency in which you earn, spend, and invest your money).
Also, one of your goals is to become FIRE. And once you’ve achieved that goal, you’ll be living your early retirement using CHF (and not USD).
To the question " Is it worth taking out a currency hedge", we’ve seen that **no economic paper gives a clear YES or a firm NO.
And that’s understandable when you think about it, because just as our MP Forum Julianek says: “It would be next to impossible to hedge it correctly (with companies weight in the index changing regularly, and business performance in each region of the world changing every day)…”
My strategy will therefore depend on each of the two phases of my FIRE life.
During my wealth accumulation age (i.e. before becoming FIRE):
And during my wealth consumption phase (i.e. once I become FIRE), I’ll have two possible scenarios:
How about you, would you hedge or non-hedge the currency risk?
PS: all that being said, a bigger risk that is often overlooked as an investor is taxes on the profits of your US ETFs, as you have more to lose if you don’t do the right thing declaring your tax situation correctly in order to recover your anticipated taxes. I recommend reading my complete tax guide for Swiss investors.
Currency hedging is only partially included in the TER. There are certainly more management fees, which make these hedged ETFs more expensive. But the actual costs of the assets (futures or options) used to hedge currency risk is not included in the TER.
In concrete terms, interest rate variations on these futures or options are not included in the TER. This can be very confusing when you only compare the TER between a non-hedged and a hedged ETF. So be wary to not only take this TER info into consideration.
Hedged ETFs are protected against the ETF base currency fluctuations, and not against each underlying ETF assets’ currency fluctuations. So if you buy an hedged ETF in USD, the ETF provider will take a forward contract for the total value of all assets included in the ETF at once.
As of 2023, hedging costs of an ETF are about 2-3%. It means 2-3% additional costs compared to the same non hedged ETF. As said above, all costs of hedging an ETF are not reflected entirely in its TER. (source: ZKB article).
When you’re investing for the long term (8+ years), diversification is your best ally for increasing expected returns, while reducing the volatility of your investments. Scientific papers in applied financial economics all come to this same conclusion.
In particular, the paper International Diversification Works (Eventually) explains that:
International diversification is beneficial in the long term, because the sawtooth curve observed on the markets, which is a short-term phenomenon, does not tend to collapse over the long term, and each country’s long-term economic performance is the main determinant of long-term returns.
The trading currency doesn’t really matter. The currency that matters the most is the one in which your ETF companies do business - and even more importantly, the currency of their revenues.
Let’s take an example (thanks again, Julianek, for the images you provided in the forum) with the company Nestlé:
As a beginner investor, you might think you’re putting all your eggs in Nestlé because you want shares in CHF to not be exposed to the risk of exchange rate fluctuations.
Except that, if you take a closer look, you’ll only see that Nestlé only does 1-2% (!) of its business in Switzerland… while a third of its business takes place… in USD in North America! Thanks for the focus on CHF :)
To drive the point home, if you look at the list of revenues by country, you’ll also notice that by buying a Nestlé share, you’ll be more exposed to the Indian rupee than to the Swiss franc ;)
And the same goes for Novartis or Roche.
The listing currency of a global equity ETF is of little importance, compared with the currencies in which the ETF companies do business. On the other hand, the listing currency for a bond (or bond ETF) is essential, as this type of asset guarantees predetermined and expected cash flows.
That’s why, in conclusion to this article, I recommend currency hedging the non-Swiss bonds first (if this risk of exchange rate fluctuation keeps you awake at night, of course).
A strong US dollar (USD) means that the value of the USD is rising against other currencies, including the CHF. It means you need less USD to buy one unit of another currency like CHF.
For example: let’s say you have an exchange rate of 1 USD = 0.85 CHF as a starting point. If the US dollar strengthens, the exchange rate could rise to 1 USD = 0.95 CHF, for example. This signifies that each US dollar is now worth more in terms of CHF, and it takes fewer US dollars to buy one Swiss Franc.
And on the contrary, if we say that the USD is weakening against the CHF, it means that with the same number of US dollars, you’ll get less CHF. For example, we say that the USD has weakened when one day we’re at 1 USD = 0.85 CHF, and the next day we’re at 1 USD = 0.70 CHF.
“However, this did not translate into superior absolute or risk-adjusted performance, and Hedged ETFs underperformed all other asset categories (with the exception of Commodities index ETF DBC). The absolute and risk-adjusted performance of Hedged Mutual Funds was similar to that of Hedged ETFs. Based on these findings investors would have been better off with index fund ETFs."
Source: Kanuri, S. (2016). Hedged ETFs - Do They Add Value? Financial Services Review, 25, 181. ↩︎
“We find that the mean returns and standard deviations of global portfolios with hedged currencies during the 15-year period 1988-2002 were approximately equal to those of portfolios with unhedged currencies."
Source: Statman, Meir & Fisher, Kenneth. (2003). Hedging Currencies with Hindsight and Regret. SSRN Electronic Journal. 10.2139/ssrn.428741 ↩︎
“The literature on the convenience of currency hedging of international portfolio investments has not reached a final verdict. There are arguments for (Perold and Schulman [Perold, A.F. and Schulman, E.C. (1988). The free lunch in currency hedging: implications for investment policy and performance standards, Financial Analysts Journal, May/June Vol. 44, No. 3: 45–52]) and against (Froot [Froot, K. (1993). Currency hedging over long horizons. NBER Working Paper 4355.] and Campbell et al. [Campbell, J.Y., Viceira, L.M., and White, J.S. (2003). Foreign currency for long-term investors. The Economic Journal, Volume 113, Number 486, (March), pp. C1–C25(1)])."
Source: Walker, E. (2008). Strategic currency hedging and global portfolio investments upside down. Journal of Business Research, 61, 657-668. https://doi.org/10.1016/J.JBUSRES.2007.06.041 ↩︎
“We find developed markets (DM) fixed-income instruments should generally be fully FX hedged. […] When it comes to multi-asset investing, hedge ratio optimality also becomes a function of cross-asset correlations, which leads to interesting trade-offs."
Source: Iborra, R., & Chabane, I. (2020). Strategic Currency Hedging in Multi-Asset Portfolios. , 29, 31 - 57. https://doi.org/10.3905/joi.2020.1.141 ↩︎ ↩︎
(⬆️ the header picture is the evening view from our apartment in Zürich — yeah, we know, we are lucky and grateful for it!)
Hey there :) I’m Flo, a 35-year-old French woman living in Switzerland for the past 6+ years (Oct. 2017).
I’m working for Google in Zürich.
And I plan to retire at 40!
Before arriving in Switzerland, I didn’t know anything about FIRE.
And at that time, I actually didn’t know exactly how much money I had in total. I only had a rough number in mind.
And because I always had a frugal lifestyle, and saved a lot of my income (between 60 and 70% usually), I never really paid attention to my expenses in general, because they were always low.
When I arrived in Zurich, having moved from Dublin, I changed my career ladder at work to a higher-paying role.
I got a substantial salary increase from my employer, and that’s when I realized I really needed to keep track of how much money I had and where I was financially speaking.
At that point, I was not investing any money on my own.
Since I was raised in a frugal “safe money” family, most of my net worth was sitting in savings accounts with various return rates (from 1.5 to 2.5%).
And until then, I had been pretty happy with that.
I should also mention I never had any debts (my parents paid for my studies) and I quickly got a job after graduating.
I also realized that my employer was matching my contributions to our company retirement plan, and was shocked when I discovered that after 4 years at Google, I had been contributing only the smallest amount (4.5%) instead of a full 8.5% — which my employer is matching.
I also had never logged into that account and had no idea how much money I had there at that point.
Finally, I knew that I was receiving company stocks, yet I had never logged into that account either and had no idea how much money that was worth.
At that point, I decided I needed to get a better overview of my personal finances.
First, I created a spreadsheet where I listed:
While listing all my accounts, I did a couple of things:
Now, I also want to mention that while I manage to have a high savings rate (between 60 and 70%), I don’t live an extreme frugal lifestyle that some FIRE people may preach.
I live in a very nice and comfortable apartment.
I eat out whenever I want, and I treat myself when I feel like it.
I luckily just happen to have inexpensive tastes in general.
I hate shopping.
I am actually quite the minimalist, too.
And most of the activities I enjoy are usually mostly free — like hiking for example.
At that stage though, I still wasn’t aware of FIRE, nor was I investing.
But within 3 months of having moved to Switzerland, I met my partner Jan.
He happens to be 17 years older than I am.
And as we started talking about our future together, I realized that, if I wanted to enjoy the best of our lives together, I would have to retire much earlier.
I noticed: if I retire at the regular retirement age, Jan would be close to 80 years old.
What kind of activities would we do then?
And that’s really when I jumped and fell into the FIRE (Financial Independence, Retire Early) rabbit hole, and discovered the various ways to retire early.
I started to expand my spreadsheet with multiple formulas to calculate my FIRE target and then visualized the growth of my net worth and its forecast at different ages for potential retirement.
That’s when it really hit me…
Savings accounts would never get me there.
Jan, fortunately, had experience investing on the stock market with Interactive Brokers (and IB kept being recommended here and there), I started small and invested my first CHF 20'000.
From the very beginning, I only invest in ETFs.
I had learned from all the FIRE blogs that they were the go-to instruments for the ideal FIRE investment portfolio.
And as I am quite a risk-averse person, the diversification the ETFs provide really attracted me.
Also, I am quite a lazy person, so the full notion of passive investing in a set portfolio of ETFs really seemed the best option for me.
6 months passed by and I felt more comfortable with the market’s ups and downs. So I decided to invest a bit more.
Last year was actually a great year to start investing!
And now, approximately 70% of my net worth is invested (including my company’s shares).
It took me quite a while to build my portfolio, and I actually changed its composition last year to something that now fits my needs, values, and understanding of fees, taxes, etc.
I know the blog totally loves it when people share information like this! So, just scroll down a bit, and you’ll find all the juicy details about my portfolio and how it’s divided up:
ETF name | Ticker | Portfolio allocation |
---|---|---|
iShares Global Government Bond UCITS ETF USD (Dist) | SWX:IGLO | 15% |
Vanguard FTSE All-World UCITS ETF Distributing | SWX:VWRL | 40% |
Vanguard S&P 500 UCITS ETF | SWX:VUSA | 30% |
iShares MSCI EM UCITS ETF EUR | IQQE | 6% |
iShares Developed Markets Property Yield UCITS ETF | IQQ6 | 6% |
Vanguard Mega Cap Growth Index Fund ETF USD | MGK | 3% |
Alphabet Inc Class C (my Google stocks) | NASDAQ:GOOG | n/a |
As you can see, at first I was super focused, and then I expanded my selection a bit 🙄 and I know that I got quite some overlap now with VWRL and VUSA…
I think it’s very important to share these numbers in general!
I see it as inspiring, even if it feels a bit like voyeurism :)
I’m sharing the gross annual salary here because taxes vary from country to country. This sum includes, before taxes:
Year | Gross annual salary |
---|---|
2012 | 30k € |
2013 | 33k € |
2014 | 37k € |
2015 | 66k € |
2016 | 86k € |
2017 | 123k CHF |
2018 | 161k CHF |
2019 | 192k CHF |
2020 | 210k CHF |
2021 | 240k CHF |
2022 | 264k CHF |
2023 | 297k CHF |
And below, I added some info on promotions, location, and job changes to contextualize the salary evolution.
And I added an approximation of rents for each stage, as this is always a big expense bucket, and can give context in regards to cost of living and lifestyle inflation.
Jan 2012 - Jun 2013
Oct 2013 - May 2014
May 2014 - Nov 2015
Nov 2015 - Oct 2017
Oct 2017 - Oct 2018
Oct 2018 - April 2021
April 2021 - April 2023
April 2023 - today
2017 was when I moved to Switzerland.
And it is the 1st year I tracked down all my numbers and calculated my net worth, hence I don’t have figures to share for previous years…
Year | Net worth CHF | Investments CHF | Comments |
---|---|---|---|
2017 | 167'557 | 42'193 | Mostly Google stocks from work |
2018 | 272'288 | 78'580 | Started investing a bit outside of my Google stocks |
2019 | 414'031 | 153'913 | Started feeling more comfortable with investing |
2020 | 571'671 | 254'059 | |
2021 | 874'505 | 525'052 | |
2022 | 863'936 | 559'881 | |
2023 | 1'061'961 | 731'197 | Made it to 1 Mio by 35 years old! It was my goal since I arrived in Switzerland :D |
The one thing that FIRE planning also brought to the table was many life conversations.
I feel it’s really the gold behind FIRE: it really pushes you to think about what you want to do with your life.
And as a woman, it hasn’t always been the easiest to share externally.
It’s interesting to see how talking about life planning can disturb so many people!
Part of the life choices we made with my partner, that directly impact my FIRE planning – are luckily things that we aligned on right away.
We don’t plan on getting married, as there don’t seem to be that many advantages to being married for 2 working partners in Switzerland.
Also, my father insisted on raising my sister and me as “strong independent women”, who wouldn’t need to rely on a man for financial (or emotional) support.
And this has served me well so far and is still a path I want to follow even as I am in a relationship (you never know how long anything lasts, and need to be prepared either way).
That is also why my full FIRE plan is based on my own numbers (inflated with my expected future expenses in case our relationship doesn’t last). This is actually a key part of my forecasting and strategy.
Also, we don’t have a joint account or anything like that.
We split the bills and “couple related expenses” proportionally to our income.
When we die, our money would go to our respective families and not to each other, which is something that was very important to me.
We don’t plan on buying a house, either for ourselves or as an investment.
While property owning is preached in many FIRE conversations, we both don’t care for the work it would involve (did I mention I’m a lazy person?!) nor do we care for having a fixed main residence.
We enjoy being able to pick up and go as we please without physical attachments.
We also don’t plan on having kids, for various personal reasons.
And this — for sure, helps with the FIRE planning even more: much reduced expenses and no inheritance (generational wealth) to plan for!
We can spend all our money in our lifetime as we want, without the need to leave some behind us!
And that is always one of the trickiest conversations I have with people (mostly extended family).
As a woman, this has been one of the most challenging aspects whenever I talk about my FIRE journey or future in general.
It’s quite surprising how “having kids” is such a strong societal expectation. And some folks have sometimes accused me of being “selfish and greedy” because I want to favor my own time and money for myself instead of having children.
But that’s a whole other conversation in itself that would take me too many pages!
Below is how we plan to live our early (well, earlier for me than my partner’s!) retirement.
At first, we want to visit our families for longer periods of time. Both our them are abroad (France for me, the US and Brazil for my partner), and every time we visit, it’s short trips that don’t give us much time to deeply connect. We want to be able to stay maybe a couple of months at a time in each country to spend more quality time with family and friends there.
Then, we want to do longer travels across the world.
Afterward, our most wished activity is hiking across Europe. We enjoyed the Via Alpina through Switzerland these past years and wish to travel all across Europe via similar hikes.
And there are also nourishing activities such as:
While these activities are things we mostly plan together – and while my FIRE journey was originally planned around when my partner would also retire, I now find it hard to imagine a life where I would not retire at 40 (in 5 years!) and do all these, even if I were to be single at that time.
And this is why I keep planning my FIRE journey with my own numbers (and money!)
FIRE is more of a way of life than a goal in itself for me now.
For me, this event occurred in 2013.
That’s when we decided to act upon our wishful thinking of becoming homeowners.
We realized all of a sudden that something would need to be done to transform CHF 48'000 of savings into the needed CHF 160'000 to buy our own home.
This realization made us start a budget with Mrs. MP.
And it led us to discover the FIRE movement.
The same happened to Flo.
When she met her partner Jan, she realized that her savings account would never enable her to retire early together with her older partner.
It’s needless to say: it only needs a single triggering event to really get you started and ultra-motivated to reach FIRE.
I would be curious to know about your story in the comments section below: what was your triggering event to pursue FIRE?
Flo is no different than you.
She realized she needed to invest in the stock market in order to retire early.
She knew that her “savings accounts alone would never get her to FIRE!”
So she dived into the topic, read blogs, and started to invest.
She invested a small amount for the first six months. Just to get her feet wet.
Then, when she felt more confident, she increased her investment amount.
And as of today, she has 70% of her net worth making CHF babies automatically every single second of her life.
So I wanted to point out two things here:
You just need to get started. Then it becomes an easy habit. So much that you will wonder why you didn’t get started earlier!
Thanks so much to you Flo for openly sharing both your story and your numbers.
First, it’s interesting how far you go to remain independent, even up until your couple’s finance. And I’m glad you felt at home here on the blog. Moreover, that’s exactly why we call personal finance, well, personal! (same goes for kids)
The same goes for your money numbers! I know by experience that we are all a bit money-voyeurs and that we love to see real numbers of salaries and net worth :D
More than the voyeur side itself, I think it helps a lot to get inspiration to challenge one’s own status quo! Something like this could go on in your brain:
Wow, this woman rocks it! Actually, I could also imagine such a career change that she undertook. That would be great, to 1.5x or even 2x my salary… Let me write my next steps to actually make this happen!
In all my media interviews with newspapers, I explain that everyone starts into the FIRE movement via numbers.
And that’s the easy part.
You start by optimizing your budget optimizations and cutting your expenses.
And very soon, you end up discussing life and philosophical questions…
But, actually, what will I do when I’m retired by 40 in Switzerland? What do I really want to do if I had all the free time in the world?
I can’t emphasize Flo enough: FIRE is more than numbers!
It’s a damn powerful way to treat the most important question in one’s lifetime!
This seems to be a common thing.
This is one of my goals too. As well as plenty of other readers I interviewed, as well as other bloggers.
I’m curious to know if it’s just a fad (like the digital nomad, which seems to erode), or if it’s actually a thing that will last.
That’s my hypothesis.
And I will wait to be FIRE to experiment and experience it myself, and talk more about it here on the blog :)
There is one activity that every FIRE seeker (myself included) wants to do more once retired: volunteering/community work.
Every single time I interview someone from the FIRE movement, it keeps coming back.
This made me think about the Universal Basic Income (UBI) topic 1.
One of UBI’s aims is to allow for self-determination.
If Universal Basic Income is a thing you would like to see our governments implement (which will take decades, if at all), you may find what you look for within the FIRE movement.
Indeed, as for Flo and myself, we chose to implement our own version of the UBI by taking the money where it lies (aka the stock market). And we will reap its rewards (in the form of stock valuation and dividends) by enjoying free time to invest in our local communities and volunteering. And this, independently of any government decisions or change of wind.
What inspiration do you draw from Flo’s story?
I won’t get into discussing politics here, please don’t either in the comments. ↩︎
I recurringly get questions about the three following FIRE (Financial Independence, Retire Early) topics:
Thankfully (for us!), Steve’s story ticks all the boxes.
I hope you enjoy it as much as I did, and that it answers some of your own FIRE challenges!
Over to you, Steve :)
Thanks for having me on your blog, Marc, it’s a real pleasure!
As you originally contacted me just before I officially retired (late 2021/early 2022), and I provided you with information that included my expectations and plans for retirement and some details on our financial situation at that time.
Since I think it might be of interest, I’ve contrasted the situation at the time of retirement vs. how things have actually panned out almost a year and a half into retirement.
Also, note that I agreed to do this interview to satisfy a desire I have to have an impact on people’s lives during retirement by helping them consider their own financial situation and retirement plans.
Particularly if they intend to retire abroad.
I think my situation serves as a useful case study of what can happen when the market crashes just after you retire (in our case in February 2022 with the invasion of Ukraine). Showing that this kind of negative situation need not be devastating, might give people more confidence in their own planning.
In addition, the article might generate discussion and questions from readers.
This in turn might be a benefit to our family in the years ahead.
If needed, we might consider a follow-up article.
I’ve of course provided my financial numbers 💰 (since this is probably of most interest to readers of the Mustachian Post :D)
You will see that there are challenges to having assets in multiple countries and/or when you wish to retire to a different country.
However, the non-financial aspects of retirement also require a lot of preplanning to try and ensure a fulfilled meaningful and happy retirement.
I hope my experience will get people thinking about their own lives and start to implement some ideas even before retirement.
So, my name is Steve, aged 56.
I’m currently living in a rented apartment in Riehen (Basel Stadt, Switzerland) since 2004 with my wife (55 years old) and 20 year old son.
I’ve been a statistician working in the pharmaceutical industry at various levels since I started in 1988 after completing my Masters’s degree in the UK (our home country).
After working in the UK, we then moved to Canada in 2000 for 4 years before moving in 2004 to Basel in Switzerland, where I worked for a large pharmaceutical company (being located in Basel, you can guess that it is one of two companies…)
In January 2022, I officially retired from work.
At 55, I guess this can just about be called “early” retirement or FIRE :)
My wife is continuing to work part-time in child care, but she also intends to stop paid work once we move back to the UK.
My son is in his second year as an apprentice Informatika and plans to remain in Switzerland when we move.
We plan to remain in Switzerland in the short term to ensure our son is in a stable position while he completes his apprenticeship, but our aim is to move back to our home country (UK) in the spring of 2024.
Our son is in the process of completing his Swiss citizenship application since his intention is to remain in Switzerland for the long term.
In fact, a few months ago, he passed his local community citizenship interview, so he is just waiting for the rubber stamping at the cantonal and federal levels.
We have a C Permit which expires in Summer 2024, which my wife and I will not be renewing.
Soon after moving back to the UK, we aim to buy a house in Cornwall for somewhere between 350k to 450k CHF.
Our current thoughts are that we might temporarily stay in my wife’s Mum’s house in North Wales to start our life in the UK before moving to Cornwall.
We are also not averse to renting first, so we can take the time to buy the right house in the right location for a reasonable cost since this is a big decision to make.
We’ve been to Cornwall a number of times recently so know that it can give us the type of lifestyle we want in retirement.
It has wonderful scenery, interesting culture, and warm people and it is a straightforward location to do most of the activities we have planned (see later section).
Furthermore, it is not too expensive to live there, if you avoid the most popular tourist areas and are not fixated on a property with a coastal view.
The house we eventually buy should not be too far from a local airport (e.g. Newquay airport), since travel is important to us.
Of course, it will also be good for us to move back to our home English speaking culture in the UK.
Switzerland has been good to us and we’ve enjoyed our time here, but we both feel it is now time to return “home”.
In the UK, I intend to step up and extend my activities.
This should be easier for me in my home country since I’ve always struggled with the language while in Switzerland (languages were my worst subjects at school…)
I believe that having sufficient money in retirement can largely satisfy basic safety and physiological needs such as shelter, safety, sufficient food, water, etc. that can avoid unhappiness.
Then, there are also the obvious pleasures and experiences that give shorter-term dopamine hits (new gadgets, visiting new places, nice gourmet food, etc.).
Beyond this, I think true happiness in retirement (and indeed in life in general) depends on meeting needs in additional specific areas such as:
(note: this kind of thinking is similar to Maslow’s hierarchy of needs)
As I’ve moved into retirement, I’ve come to realize that my activities in retirement need to target these areas, and in particular I need to work on social interactions, connect more with friends and family, and start making new connections.
Last year, we had to deal with the traumatic death of a close relative which put everything into perspective…
Having an impact or purpose in life is also important to me.
As a statistician working in the pharmaceutical industry, I worked in teams helping to develop and provide life-saving and life-improving drugs to people.
And this helped me cope with the often stressful fast-paced working environment.
In retirement, I still think you need a purpose in life and therefore, my future activities will be chosen with this in mind.
Activities that cover multiple areas at a lower cost are ideal.
Currently, my plans for the next few years are as follows:
We are keen on visiting new and interesting places (New Zealand, Iceland, East Canada) and returning to places we already like (e.g. Western Canada).
However, if we can align this with meeting up with friends and family, this can increase the value of such trips.
In addition, during our travels activities like hiking and skiing, these places will maintain our physical well-being and fitness.
One thing I’m increasingly conscious of is the impact of travel on the environment and climate change, so I think there is a need to factor this into our future travel plans.
This will involve choosing means of transport that have a lower climate impact and perhaps choosing “slow” travel options (i.e. staying in the same destination for longer rather than short stays in multiple destinations requiring more transport).
I’m already considering buying an EV for our next car once we are back in the UK.
Since retiring, I have substantially increased my travels but, apart from the occasional family holiday, the main priority for me has been to meet up with friends and family. I guess travel for just leisure purposes will increase once my wife is no longer working.
I’ve stepped up my running schedule in preparation for my first ever marathon in October later this year.
This will take place in Victoria (British Columbia, Canada) where we used to live between 2000 and 2004, so it will be great to meet up with old friends who are still living there.
I actually completed a half-marathon at the same event in 2002, so it will be good to go a step further this time.
Victoria (and Canada) still holds a dear place in our hearts so we intend to keep on visiting the place in the future.
At present, I’m also doing a lot of hiking, mainly in the local area, including daily walks with our 10 year flat-coated retriever, Molly.
In winter, I enjoy typical seasonal activities such as downhill and cross-country skiing.
Beyond this, I hope to join a gym when back in the UK and increase hiking, etc, perhaps joining clubs to incorporate a social interaction element.
I regularly attended a subsided company gym in Basel but canceled my membership when COVID hit.
I was meaning to join a gym again post-retirement, but was put off by the high cost of many gyms and the fact that we are leaving Switzerland soon anyway.
I’ve been thinking about how I can make use of my financial knowledge accrued over the last few years to make an impact in other people’s lives.
Educating my son about personal finance One straightforward way is to try to teach money matters to my son who is transitioning to the world of work and is having to deal with money he has earned himself for the first time.
Part of my approach to teaching him is through example, showing him what I’ve been doing my numbers, and what difference being able to handle money in the correct manner has made to our lives.
Hopefully, he can absorb and apply the principles himself without needing to directly tell him what to do.
Although it is possible to give him books to read and relevant podcasts and blogs (your book will help with this!), like many young people, he probably lacks the motivation to take time to use these resources effectively given the other competing priorities in his life.
I also think my son’s specific learning style is such that self-motivated book reading is probably not the best approach to use.
Educating or helping others with personal finance At the start of retirement, since I thought I had lots of time available, my intention was also to put together some financial material e.g. PowerPoint slides or video recording modules on specific topics, or even develop a podcast or even develop something on Youtube, with my son helping on the technical side.
I thought I could then use these materials to teach my son or for him to use as needed but perhaps also roll them out to a wider audience, perhaps adapting so that the material is different from the usual stuff already available.
Most blogs, podcasts, and co focus on money only or with happiness almost as a side effect, but I think I could have linked the financial aspects with how happiness itself could be optimized — this kind of approach would give a better framework for long-term planning and spending decisions in general.
I did initially start to make notes on this project and make some initial slides, but I soon came to realize that this was too ambitious for me.
In retirement without specific deadlines and other competing non-stressful activities, without knowing that the material would eventually be good enough, it was difficult to find motivation.
Therefore this project has been put on the back burner.
Instead, I’ve been trying to help individual friends and family with personal financial issues and this has been good for my self-esteem since I think I have made a good impact. Examples of this include the following:
Off the top of my head, it could be useful to do a follow-up article addressing questions or feedback areas or even an article giving my wife’s viewpoint on the retirement process if she’s up for it.
At present, my wife is helping out quite a bit with support for Ukranian refugees and I also help out to a small extent.
We hope to increase my community and charity work when we return to the UK, when we both have more time and where it will be easier to communicate in English.
Personally, I’m also interested in getting involved in local politics.
Now I have more time, I am keen to support initiatives to improve the environment and fight climate change. At present, I am doing some research on the topic and will hopefully step up to some practical activities once I’m back in the UK.
Apart from the above, I’m aiming to target additional activities that increase social interaction and other areas of learning and development, self-esteem, etc.
These include the following:
Now let’s get to what we all love to talk about on your blog: money numbers!
For interest, I have included the numbers from around the time I retired in January 2022 and provided more recent updates (in parenthesis “update 06.2023:”) so people can see the impact of the recent market downtown, and currency changes as we have drawdown our assets for spending purposes.
All valuations have been converted to CHF where necessary.
In a nutshell:
And below are the details by country.
I added how I found the numbers for each of them.
Some of the pension accounts have online access where you can log in to your accounts to check the current status and others provide yearly updates.
There is still some missing info that I request periodically by contacting support departments by email and/or phone.
I like to keep on top of the current numbers, so I have a good idea of our current net worth and likely pension payments so I can check whether I am still fine financially.
Steve Company Pension
I have a frozen company pension in the UK.
This is a hybrid pension scheme in two parts; (1) a retirement account is meant to provide a guaranteed income based on your final salary at the time of leaving the company. The annual pension is meant to go up by approx inflation each year although there are some complicated rules. You can convert this to a single capital value if you want to transfer out or take in one go but the conversion is complicated and depends on current interest rates etc. (2) There is also an investment account with money invested in mixed asset funds of your choice with very low fees.
In terms of checking current value and options I have an online account, where I can check the current value of the investment account whenever I want and this changes on a daily basis.
It is more difficult to get online info on the retirement account and the numerous options for converting to a capital amount or taking annual pensions (which can take both accounts into consideration). For this, I usually contact the pension administrators by email and they usually take a number of weeks (or months) to make the calculations and produce a report giving the valuations and possible retirement options.
The company also allows me to have two separate and free meetings with a specific financial advice company to talk through my options prior to when I need to access money or transfer to another provider.
The estimated transfer amount is about 230k CHF. (update 06.2023: 206k CHF. Increases in inflation since retirement countered by a fall in the market, fall in transfer value due to increases in interest rates, and fall in the value of GBP vs. CHF ^^)
Wife’s UK personal pensions with same company
My wife also has 3 personal pensions, two will give annual pensions of 4.3k CHF and 1.4k CHF (non-inflation adjusted) (update 06.2023: unchanged in sterling value but reduced in CHF — also less valuable because of high UK inflation), and the remaining fund will be available as a lump sum valued at 25k CHF (update 06.2023: probably reduced, due to market fall and sterling depreciation, but no recent valuation). The total transfer value in the 3 funds is about 66k CHF. (update 06.2023: probably less than 60k).
The pension company sends regular statements (annually) and we can request a more detailed single report as needed which is sent by email (with a security password).
UK Endowment Plan
We also have an endowment fund left over from a house we bought and then sold in the UK. We have been making small monthly payments to this fund for over 24 years with the last payment done in August 2022. Its current value is about 45k CHF (update 06.2023: worth approx 41k CHF). It’s a multi-asset fund with about 60% equities in it.
Again, I have an online account that I can access with a username and password where I can check current valuation which changes on a daily basis.
UK State Pension
In addition, since leaving the UK in 2000, we have both been making monthly voluntary National Insurance contributions. So we should both be able to receive a full UK state pension at the state retirement age. From April 2030, the total value for both pensions combined will be 23.8k CHF p.a. based on January 2022 money. (update 06.2023: similar value today — increase due to inflation is countered by a reduction in sterling value)
Bank account
Finally, we still have a current UK bank account containing approx 17k CHF. (update 06.2023: around 9k CHF)
I have an RRSP (Canadian retirement account) at Manulife with an estimated value of 39k CHF. (update 06.2023: value reduced to approx 34k CHF).
It is invested in funds of about 70% equities.
Note that there are restrictions on taking out this money during retirement with possible tax penalties if you take too much in any one year.
I have an online access account which I can access via username and password.
We will also eventually receive a small CPP (Canadian Pension Plan) pension worth approx 1.3k CHF p.a. (update 06.2023: value is rather uncertain since I haven’t obtained an estimate from the Canadian government)
2nd pillars
I’m in the process of transferring my large company pension fund (aka LPP/2nd pillar money) to 3 separate vested benefits accounts (update 06.2023: money was transferred easily and quickly with no problems):
The total value of those 3 funds will amount to about 1.25Mio CHF. (update 06.2023: worth approx 1.175M CHF)
The SZKB money will be used to help fund the buying of a house when we move to the UK.
The finpension funds will be high-risk strategies with 80% equities. (update 06.2023: I still have a similar higher-risk strategy but I’m starting to consider bonds more as interest rates increase)
I did research on the possible vested benefit investment accounts.
I chose finpension since it’s better for people moving abroad. Indeed, finpension is registered in the Canton of Schwyz, so withholding tax for withdrawal of 2nd and 3rd pillar accounts is generally lower than in any other canton.
This is important since when you withdraw the capital when you have already left Switzerland, it is the tax rates of the canton the company is based in that are relevant and Schwyz has among the lowest rates, irrespective of capital value.
You find here a link to a calculator that I have used to calculate the tax savings for various capital values in our “moving abroad” situation.
Below is a snapshot example for an account with CHF 500'000 showing the total withholding tax:
In your comparison of 3rd pillar companies, you should include this aspect since a number of people may have left Switzerland when accessing their 2nd and 3rd pillar accounts.
Note that you can always transfer funds later to a company with a good cantonal tax location, but there are sometimes penalties if you withdraw the money soon after the transfer. I think this is to stop people gaming the system by transferring to a low-cost canton just before withdrawal in order to take advantage of low withholding tax rates.
My vested benefit cash account with SKB is also based in Schwyz, containing money for a house when we move to the UK, so we will get a similar low withholding tax rate on withdrawal.
As for access, finpension is well known on your blog with its easy online access.
And SZKB sends annual statements via post of valuation and interest accrued.
3rd pillars
At the time of my retirement, we both had third pillar 3a accounts (valued at approximately 13k CHF, 25k CHF, and 111k CHF with equity components of 75%, 50%, and 80% respectively). (update 06.2023: worth approx 11k, 22.5k and 96k CHF respectively but now with finpension — see below)
The first two were with UBS, and the larger one with finpension (which will have lower withholding tax (update 06.2023: over the last year, we have transferred both of our UBS 3rd pillar accounts to finpension. All the withholding tax savings may be negligible on these lower value accounts, but finpension has a better choice of funds which are also much lower cost. Having all 3rd pillar accounts and vested benefit accounts with one company also simplifies our finances.)
Stock Exchange account (Non-retirement)
Outside of retirement accounts, we have combined investments in Swissquote worth 565k CHF. (update 06.2023: current valuation = approx 460k CHF after market downturn and withdrawal of 28.5k CHF)
These are composed of ~30 funds and ETFs, and are distributed like this:
I will need to sell these before leaving Switzerland to avoid capital gains tax when I’m back in the UK. (update 06.2023: although the recent market downturn has reduced gains and given me losses on a number of investments)
In addition, it will be better to switch to a UK-based brokerage firm since active funds are generally much cheaper as they are not allowed to include trial commissions (on average around 0.5%) in their ongoing fees, unlike a lot of other countries such as Switzerland.
1st pillar (aka AHV)
At the time of leaving Switzerland in early 2024, we expect to have accrued 20 years worth of (full) state pension (AHV) years equivalent to give a combined Swiss state pension of approx 20k CHF p.a. In today’s money
Note that my wife is currently working part-time but contributing the minimum AHV amount for us as a couple so this means I don’t have any additional contributions to make myself. If my wife (and employer) did not contribute at least twice the minimum AHV contribution then I would also have to make payments, with wealth also taken into account.
Swiss income
My wife is currently earning 21k CHF p.a. As a part-time child-minder and this has been extremely helpful in the initial drawdown period.
My son also has a small apprenticeship salary increasing every year. During his apprenticeship, we will also receive an education allowance for him (325 CHF per month) while living in Switzerland.
As for myself, at retirement, my salary was approx 150k CHF p.a. plus around a 15% performance-related bonus. The last salary payment was received in Jan 2022 and I have received no other earned income so far.
Cash
We also have approx 110k CHF in a bank account which we will use for the next year’s living expenses including a tax bill for 2021. (update 06.2023: this has been whittled down to around 13k CHF, even after topping up with the sale of investments)
We also have some small amounts elsewhere on Revolut and Wise cards.
Inheritance
My wife will eventually inherit some assets from her mother including a house, but this has not been included in our calculations.
However, this does reduce the risk that we will run out of money in retirement and can perhaps let us plan for leaving a legacy of our own.
Note that I have only seriously been involved in personal finance and investing with the aim of retiring for about 10 years or so.
Indeed, a decade ago, at Novartis, I went to an information event on my pension for the first time and that got me thinking about my finances in general.
At the time, I was rather stressed at work and I started to think when would be the earliest I could finish work altogether.
Searches on the internet eventually led me to the FI and FIRE communities.
I also had meetings with various representatives from different finance companies, a lot of which contacted me at work by phone.
I was very unsatisfied with many of these meetings since they seemed to be primarily salespeople with no deep understanding of finance and/or had false friendliness.
In 2013 I went with Grether Macgeorge in Basel to handle my investments outside retirement funds as they seemed to be a small well-run company with transparent (although very high) fees.
Around this time I also started doing a lot of research into personal finance in general and investing in particular to try to better monitor how Grether MacGeorge was handling my assets. The interactions I had with GM also helped to improve my understanding of investing.
Through this research, I also realized ways of minimizing tax in Switzerland.
For example by making a lot of additional contributions to my company pension fund and paying the maximum amounts into pillar 3 accounts (including my wife’s pillar 3 account). I also tried to invest more into equities within pillars 2 and 3 although this was only possible to a small extent in my company pension.
After 3 years I realized that I wasn’t getting good value from GM, based on the high fees I was paying and my level of knowledge was such that I thought I could handle the investments myself and get rid of the high fees.
And so I did.
Initially, I probably did make some mistakes e.g. chopping and changing my investments too much, possibly diversifying too much into niche areas, and not being fully aware of the high currency conversion fees in the Swissquote platform. However, overall I think I have done an okay job and my net worth is probably higher now than it would have been had I delegated totally to a financial advisor with high fees.
The result: around a decade or so ago, my net worth was probably only around 650k CHF.
And by January 2022, it had increased to nearly 2.5 Mio CHF.
I use my statistical knowledge and experience to inform my investment decisions.
For instance, I ensure proper diversification (assets with low correlations) and diversify across regions.
I also invest in large and small companies with a slight value tilt.
The majority of my investments are index funds or ETFs, but I do see some benefit to lower-cost active funds in certain areas. And indeed, some of my best funds are active. (Either giving good performance after adjusting for risk or giving me assets in areas not adequately covered by index funds to ensure better diversification.
I know MP readers like to know each other’s investment portfolios, so here are more details about my active funds that have done well for me in periods in the past:
At the start of my retirement (January 2022), we targeted approx 100k CHF of expenses in retirement, and so far this has largely proved a good estimate.
On top of this, we needed to keep extra money aside for a large tax bill from my last year of employment (2021) — roughly 26k CHF.
By contrast, we’ve just made a tentative tax payment for 2022 of 1'400 CHF which is primarily wealth tax since our combined income is very low in retirement.
At the start of retirement, my plan was to have at least 12 months’ worth of cash in our current account.
And then use this for our spending needs — refreshing it when needed by selling our Swissquote investments, hopefully when market valuations were still high.
Eventually, when I retired, the markets started to go down quite a bit, triggered by the Russian invasion of Ukraine.
As a result, my net worth has taken quite a hit.
Due to increased interest rates, the bonds part of my portfolio did not provide any ballast against falling equities, nor did the REIT funds (aka real estate) which we also hold.
The 12-month cash reserve that I built up ran out a few months ago and I’ve had to start selling investments which have only partially recovered since the low of last year.
In retrospect, I wish I had built up more of a currency reserve, perhaps two years’ worth to see us through to our move to the UK.
It was a strange feeling to see our net worth reduce by hundreds of thousands of CHF (market reduction + spending) with only my wife’s part-time income partially offsetting the reduction… My assessment of the numbers calmed my nerves somewhat.
I also think the fact that we have only a short time left in Switzerland where there is a very high cost of living helped us psychologically.
The fact that the money we have kept aside for buying a house is protected in our SZKB account with a bonus of a strengthening CHF against GBP has also helped take the downturn in our stride.
Based on my calculations, we are still not in any danger of running out of money in retirement, but the market uncertainty is making me think twice about any big splurges in spending in the near future. Even assuming a constant 0% real return over the long term, I’ve calculated that we won’t run out of money.
(Note: I had a quick meeting with my old financial advising firm at Grether MacGeorge in the autumn of 2020, and at that time they quickly confirmed that I should have enough for my needs at that point. Despite the recent market downturn our net worth has since increased since that meeting.)
Hopefully, the markets will be better than that, especially after the recent downturn!
However, it is possible that growth will be tepid in the future as we enter a period of energy transition and need to pay a cost to deal with environmental issues.
There is a scenario where the availability of plentiful and low-cost renewable energy and the integration of AI into the economy accelerates growth, but I have my doubts.
Regardless, I think that our spending plans are conservative and even allow for some charitable giving.
In addition, I think we can still have a great life even with much-reduced spending if we target our spending on the things in life that really matter.
The spending level required once we return to the UK is more difficult to ascertain and made more difficult by high inflation levels.
The fluctuating currency levels of GBP also make decisions on withdrawing Swiss and Canadian assets for UK income more difficult.
We have an idea of annual spending needs from recent UK vacations and visits to family, but without truly living in the country it is difficult to accurately estimate our needs.
Nevertheless, we have targeted around 60-65k CHF assuming a paid-for house, and this estimate has not changed much since I retired.
We predict that we will require more spending in the first few years of retirement and this will gradually reduce in later years.
My plan at the time of retirement was to continue the process of moving some more of our wealth to lower-risk assets to cover us for the period beyond this and avoid having to sell many equities in a down market.
However, the fall in the market has interrupted this process so, at the moment I’m reluctant to sell a lot of equities until the market has recovered a bit more. To pay for ongoing expenditure I’m selling a mixture of bonds and equities as required on a bimonthly basis.
We still intend to buy a house in the UK eventually and the SZKB vested benefits account should be available for this purpose. I think it was wise to protect this money from the swings in the market.
We may look for a smaller energy efficient house in a good location, at least walking or biking distance from the coast.
In general, our spending is aligned with activities or things that we value and lead to greater happiness (see the section on activities in retirement) and we don’t tend to waste money.
We intend to maintain this approach into retirement.
I like the ideas of Ramit Sethi who believes in spending money on things that you value whilst reducing spending on things you don’t:
Spend extravagantly on the things you love, as long as you cut costs mercilessly on the things you don’t.
(ed. this is actually matching my definition of frugalism)
I don’t agree with everything Ramit says, but I agree that we shouldn’t necessarily miss out on happiness today for some greater financial security in the future.
There is a balance to be struck which will vary between people.
I don’t think my wife and I would spend too extravagantly on anything (e.g. 5-star hotels, or first-class air travel) since we both think that there are a lot of deserving causes in the world.
And therefore, our money might have more impact if it was directed elsewhere.
In fact, directing more money to charitable causes might increase our level of fulfillment in life, so it is kind of a selfish action in an indirect way.
Obviously, in my particular complex situation, using the “4% rule” to calculate whether I have enough just doesn’t cut it, especially as we expect various annual pensions relatively soon compared to very early retirees.
To determine whether I have sufficient money built up to retire, and to have confidence that I can “pull the trigger” safely, I’ve used various online tools such firecalc.com and cfiresim.com.
However, I know that even the most sophisticated tools can have flaws e.g. they may just use historical US data, have flawed Monte-Carlo simulation modeling, etc.
Virtually all have the problem that they do not account for current market conditions and valuation when calculating prediction probabilities of running out of money and/or when estimating withdrawal rate to give an x% chance of running out of money.
For instance after a very strong bull market is it wise to assume a predicted rate that does not adjust for current market conditions?
I like the analogy of a trip to the airport where you want to know what is the risk of making it there within one hour.
Ignoring the time of day it could be said that only 4% of all trips would lead to the arrival not being on time.
However, if you know that you would be setting off at rush hour (5 pm) then the risk of not making it within an hour would be much greater.
Therefore I take the results from all such calculators with a pinch of salt and try to interpret the results conservatively when the markets seem high.
Nevertheless, the tools do provide a certain degree of comfort.
Like firecalc which suggested a spending level giving 95% chance of “success” which was well above our desired annual spending level.
Although I think DIY investing has worked so far, I think it is coming to a point soon where I will need a second pair of expert eyes to look over our finances to ensure there are no gaps and help plan a successful retirement.
The UK is quite complex with respect to the financial products available and taxation rules which are constantly changing.
The country has different progressive tax rates for income, dividends, and capital gains tax with different personal allowances for each and there are ways to mitigate or avoid certain taxes by locating money in tax wrappers such as pensions and ISAs.
Unlike Switzerland, taxes are always levied on a personal level (so cannot file as a couple).
So, the allocation of assets between a husband and wife can be important.
Compared with some other countries, the UK can be quite a good place to avoid tax on wealth, and in particular, locating money in ISAs is particularly advantageous for early retirees (which I’ll describe later).
Also, pension rules are complex.
People can avoid tax on income as they are accumulating wealth by putting money into pensions and this grows tax-free until withdrawal.
There are various choices for withdrawal but basically, money can be taken out in lump sum form (with 25% tax-free), or as a regular pension and this will be counted as taxable income.
Pensions can be especially good if your marginal tax rate at the time of putting money into a pension is likely to be less than that at the time of withdrawal (e.g. if income is below the personal allowance threshold).
Money in pensions is not liable to Inheritance tax, which can be great for legacy planning.
However, the one big disadvantage to pensions is that you can access any money from them until 55 (and this age is going up in the future), so this is not good for anyone wishing to retire very early.
Furthermore, a lot of old pensions have their own restrictive rules which can be problematic.
For instance: the UK pension I hold has penalties if you access the money before age 60.
Although ISAs don’t give any tax benefits on the way in have some key advantages over pensions and we hope to take advantage of this when we get back to the UK.
Based on my own research with careful management, I think it should be possible to avoid all UK income tax up to the point where state pensions are taken.
This is by keeping income below our separate personal threshold levels.
We should also be able to minimize or avoid a lot of dividend and capital gains tax by utilizing the various personal threshold levels for paying tax and by using pensions and ISAs wisely.
Once we start receiving the different state pensions, I think the overall level of tax should still be fairly low.
With respect to eventually moving money from our 2nd pillar and 3a pillar accounts in Switzerland, I also had to do some research to confirm how these accounts would be taxed in UK and/or Switzerland.
This involved looking at the double taxation agreement between the two countries (and ensuring it had not substantially changed because of Brexit).
If you move away from Switzerland, any 2nd pillar and pillar 3a money can be withdrawn early in lump sum form.
These are subject to withholding tax in Switzerland based on the registration canton of the fund company, but the money is then not liable for tax in the UK.
In contrast, pension income taken as a regular payment (e.g. Swiss state pension) would be taxed in the UK as normal income but is not liable for tax in Switzerland.
For information to readers: if you are moving to an EU country, then the mandatory part of the 2nd pillar must remain in the retirement account in Switzerland until 5 years before statutory retirement age.
I also had to do research on how to take income from my Canadian retirement fund (RRSP) which also has complex rules and depends on the country residence of the person taking out the money.
The RRSP requires a regular minimum payment to be taken out each year, but below a maximum threshold amount I would not be subject to Canadian withholding tax but this money would be taxable in the UK.
Above this maximum threshold amount, a withdrawal would be subject to Canadian withholding tax.
Because of all this complexity, the possible strategy for asset location and sequence of withdrawal between individuals in a couple is not straightforward.
Therefore, once we return to the UK we will seek out a fee-based financial planner to help optimize our financial plan in retirement.
One concern I have is that a UK-based financial planner will not be familiar with the rules in different countries, or indeed may be legally restricted in giving advice on them.
This means it is important that I personally understand the rules and keep abreast of all changes in case I cannot find an advisor or need to help the advisor navigate the rules.
If we do eventually employ a financial advisor, we will mention that we want to maintain a large degree of flexibility so we can adapt spending, etc. as needed.
A final note: in recent years we did try to find a financial advising firm in Switzerland to indecently look over our finances to see if everything was on track. However, this search proved very difficult so we abandoned these efforts. For example, we did get a quote of around 4000 CHF for a financial planning report from VZ.
But since they were not legally allowed to cover our UK finances nor our detailed strategy once back in the UK, this would have been largely useless to us.
The following are what I think are the key take-home messages focusing on topics relevant to a retiree (especially of the FIRE variety) who is considering retiring outside of Switzerland, and who may also have assets and/or pensions in other countries:
As usual, I’m adding my comments below on all the very interesting points mentioned by Steve.
First of all, my warmest thanks to Steve because it’s not so easy to find Mustachians who succeeded in becoming FIRE, and who still take the time to answer questions for a blog.
Just like he says, once you’ve achieved that goal, your priorities change.
So thank you, Steve!
I agree with Steve’s idea of having all his retirement assumptions assessed. And of wanting to do another assessment once you’ve arrived in the UK.
The most important thing is to do this with an independent company, not a bank that will obviously want to sell you its products…
Personally, I see it as an investment because the ROI can be monstrous if you don’t make any easily avoidable rookie mistakes. It can save you several thousand CHF in taxes and other costs.
I myself did a similar “reality check” at the Financial Advisory Center in Lausanne, which I still recommend to this day.
However, no matter what financial advisor you choose, it will always be up to you to get all the information you need to have an overall view of your assets.
You could mandate your independent financial adviser to fetch all of this information, but I think that would be a mistake…
Because you want to have control over these data sources.
Besides budget management, that’s also why I love YNAB!
As you can see below, this tool gives me a global view of all my assets.
If you were to take it away from me, I would be completely lost as it’s such a central aspect to my financial life.
I recommend you to have such a system in place, either via YNAB or a simple Excel file, to keep control of your personal finances.
In addition to being a UK-based financial advisor, I would recommend that Steve starts researching FIRE blogs as well as FURE forums in the UK.
The goal? Find the same Swiss FIRE community in the UK so he can discuss his issues with people who have context.
If you’ve got any good plans for Steve in this regard, add them directly in the comments section below!
I definitely agree with Steve mentioning everyone’s focus on money and investment in the FIRE world (with the exception of a few bloggers).
I was just talking about this in my last article with my upcoming book dedicated to the psychology of the FIRE movement.
As a result, I’m very pleased that other people are starting to write content on the web to cover this important subject!
I might come back to you in the future Steve, to interview you as part of my research for my new book :)
How about you:
But I had never thought about whether it was possible to see the future dividends of my investments…
Until Alberto, a loyal reader of the blog, wrote to me:
Hi Marc,
I just discovered this tab in Interactive Brokers where you can see the projection of dividend income, as well as interest on margin loans in the incoming months.
Have you heard of it? If not, then it might be worth mentioning on your blog.
Thank you, Alberto
So first of all, I would like to thank you, Alberto.
Because I have never heard of this feature on Interactive Brokers!
You learn something new every day :)
You need to go to PortfolioAnalyst to find this section.
Then, you have to scroll to the bottom of the page.
That’s where you’ll find the “Income Projection(s)” widget by default.
I say “by default” because you can reorganise the widgets in this PortfolioAnalyst view however you like.
In screenshots, here’s what it looks like:
In the last screenshot, you can see the revenue and the expense projection over the next 12 months, point by point:
So, after discovering this feature thanks to Alberto, I quickly calculated the total dividend projection for our stock market investments.
Because, after all, I have a personal IBKR brokerage account (screenshots above) as well as a corporate Interactive Brokers account.
So that’s how much we’ll get in dividends over the next 12 months:
If we add up all of these future dividends over 12 months, the sum would be:
This was a bit of a surprise for me, as I hadn’t realised that we were receiving such a large sum in annual dividends with Mrs. MP!
I’d like to make it clear that I don’t favour stocks or ETFs that pay a lot of dividends.
And I’m in no way recommending that you follow such a strategy with this article.
Because, as you know, when a company pays cash dividends to its shareholders, its equity is reduced by the total value of all the dividends paid out.
It’s simple math.
And most importantly, such a dividend-focused strategy costs you tax on the dividends received (as mentioned in detail in my Swiss tax guide for investors).
For my part, my ETF investment strategy is designed to support my standard of living when I’m FIRE.
In other words, once I’m financially independent, I’ll be relying on two types of income from the stock market:
There you have it: yes, it’s cool to see so many dividends being paid out every year (+13k CHF!!!), but it’s not a strategy in itself.
How about you, do you know of any other useful features like this on the Interactive Brokers trading platform?
Header photo credit: pexels.com
]]>Especially since I’ve been feeling the need for several months now.
Make yourself a cup of coffee or tea and let’s get straight to the point FIRE (“Financial Independence Retire Early” :)
In the last chapter of my “FIRE journal”, I wrote:
Will I really quit my job overnight when I reach my ‘Fuck-You Amount’? What about the blog where I only have virtual interactions most of the time (voluntary, of course, for anonymity reasons)? Will it really fill the void of social interaction left by my old job? In short, a lot of unanswered questions, and a few answers for now. In any case, I’m preparing myself for it because I know that the psychological aspect is just as important as the monetary aspect of the FIRE movement.
Until the end of last year, I still had only a few answers.
And this feeling of uncertainty was weighing on me more and more.
Uncertainty about my future transition (even if it’s not tomorrow).
Uncertainty is also about the change in identity that such a transition to a FIRE lifestyle implies.
I felt like I was looking for a path in the middle of a megalopolis I didn’t know, without GPS or any other map…
So I decided to take action.
And I got a coach.
An ICF (International Coaching Federation) certified coach, with a holistic focus. This means that he will take the professional, and the personal while passing by the family and the analysis of oneself into account.
In our first session, I gave her a rundown of my life and answered questions about my FIRE journey, my job, the blog and my transition (a word I’m starting to embrace!)
And I concluded by telling her: “One of my goals with this coaching with you, is to find the ‘right path’. And to make sure I’m directing my energy to that ‘right path’, because right now I feel like I have a lot of paths available and I’m taking them all (speaking of all my opportunities in general in life — career, rental real estate, side business with the blog, etc.) without taking the time to prioritise them, and as a result, it’s a bit of a blur.”
I’m on my 4th coaching session (of only one hour each), and I’m already seeing a LOT more clearly!
It’s so interesting, and also motivating, to have this monthly hour dedicated just for me, and for my personal journey.
I have discovered fears and other glass ceilings that have been identified, and that I’m already starting to work on.
You will discover some of them below this article. And other topics will come with dedicated blog posts (I’m keeping a bit of suspense anyway!)
Whatever happens, I confirm what Liz from Frugalwoods said to me 3 years ago: we all need the “mirror effect” that a coach or other psychologist can bring.
And it doesn’t matter if you are in the FIRE movement or not.
It’s a question of the mental health of our societies.
And in my opinion, it is even more necessary when you want to become financially independent.
Because a transition to a FIRE life is anything but common.
And it raises many questions…
Identity firstly, because at 40, you are suddenly no longer “Carol, HR Manager in XYZ company”.
And secondly: the social aspect.
Because yes, it’s cool to not have to work for money anymore, but it has to be planned.
Because it also means no more work colleagues, no more coffee breaks, no more human interaction brought together by teamwork, etc.
So my first wish for you after reading this article: invest in yourself, and find a (certified) coach or psychologist with whom you get along well.
And live your FIRE adventure with the peace of mind!
And yes, you could do it for free with a friend or a relative, but the problem is that their view is biased and subjective.
And humans also have the annoying tendency to project their own fears and limitations onto others.
That’s why I recommend paying (investing!) for it.
I’ve been hesitant to announce it because the timeline is still fuzzy…
But in the end, a blog is also a way to share this kind of information with you, dear faithful reader.
So, great news: I have a new book in the making.
The name sounds better in English: “Psychology of FIRE”. But that’s just a detail!
Just as the title suggests, the book will talk about the psychological challenges of the FIRE movement (before, during, and after).
And it will give some tips and solutions drawn from concrete experiences of people who are already FIRE, or who, like me, are in transition more or less.
And I insist on the word “transition” which is becoming more and more important in my reflections about the FIRE movement. In the sense of transition vs. overnight tipping point between life with a job / FIRE life.
Also, this topic has no boundaries per se.
So, compared to my first FIRE book “Free by 40 in Switzerland”, this new book will not only be for the Swiss population.
If you are interested in this topic of FIRE psychology, and you want to be kept informed of the progress of my book, you can register below to get the info in the preview:
And I’ll tell you this again (because I don’t want to pressure myself): I haven’t yet decided on the release date.
Indeed, I’m using 2023 as a stabilization year as best I can in order to refocus all my Friday energy on writing for the blog, as well as polish the aspects neglected so far (fixing old links, improving the site’s speed, etc.)
All this to be able to build on a solid foundation before starting a big project like writing a book, without having an overflowing todo list :)
I’ve been asking myself this question a lot lately:
Isn’t the whole FIRE adventure that I write about on this blog skewed by the fact that I’m an entrepreneur (part-time) alongside my life as an employee?
Like, is everything I’m telling you really only possible because of the side income from my entrepreneurship (on top of my Swiss salary as an employee)?
Then, after consideration, I don’t see that as a bias actually.
So yes, let’s not beat around the bush: if you increase your income, you’ll be FIRE faster.
It’s simple maths.
But personally, I see it more as an inspiration for you, dear reader, to show you that it’s possible.
It’s possible to earn more income than you’re earning today.
And you can do it at your own pace, starting quietly in your free time (whether it’s starting an online shop, a blog, or even looking for your first rental investment to generate additional passive income).
Then, once it starts working (financially speaking), you can reduce your work time to spend more time on it.
After all, I also don’t think entrepreneurship is a must to become FIRE.
See Mr. Money Moustache and other bloggers as proof.
For me, I chose this balance (80% part-time job, and 20% entrepreneurship) because it meets my intrinsic need for entrepreneurship and freedom. But I could very well have preferred to climb the corporate ladder in XYZ company, with the big salaries that come with it.
Thanks to my coach, I was able to identify and realize a fear about our FIRE goal: I wasn’t 100% sure we were aligned on what we meant when we mentioned “a life together in FIRE mode”!
Because once the kids grow up, it’s just the two of us. And we’ll have to decide what we’ll actually do with our days, without obligation to use our family time.
Like, how many “slow travel” trips per year? How much time will we spend in this or that country, far away from our (grown-up) children? And what will we do in Switzerland when we don’t travel??!
Or even:
MP: “I, while discovering this or that Nordic region with its cosy and welcoming little town, still plan to write daily for my blog about our adventures… but in the meantime, what will you do? Won’t you get bored?”
Mrs. MP: “Uh, but wait, if we go to the other side of the world, are we not going to visit and discover other cultures together?!? I’m not going to spend my days waiting for you, am I?”
MP: “Of course not, I’ll only spend 1-2h in the morning every day, no more than that!”
Mrs MP: “Ah OK! That’s fine. I could read or pursue my hobbies even when I’m travelling.”
MP: “Ah phew! It’s great that we can talk about it peacefully because it’s these kinds of details that stress me out I just realised… because we’ve never talked about our FIRE life in detail.”
One of the main points of one of my coaching sessions was to create some alone time with Mrs. MP, without the kids, to talk about these topics peacefully without being interrupted.
So I invited her for lunch at a restaurant on Friday, as a date :)
We talked a lot about our respective priorities as to what we wanted to do with our lives once we were FIRE.
And since that meal, I feel a 100x stronger connection, because we talked about everything.
We used to talk about it, but we were (well, I was) in “it’s a long time away mode, let’s focus on increasing our income and saving as much as we can for now.
Except that while talking with my coach, I realised that I was more concerned about it than I thought.
My coaching sessions also made me realise that I was going to have to face a second round of budget"reality check”!
Anyway, as I told you in 2021, I’ve been focused on increasing our income in the last few years rather than tracking our frugal budget as closely as I did at the beginning of our FIRE adventure.
And my second to last coaching session made me realize on the one hand that time was moving forward… and on the other, that I had a lingering stress of jumping on every income-generating opportunity, without really knowing if it was necessary (and to what level).
Just to be clear: I still track our net worth progress monthly. And I know if we are diverging or converging towards our goal of CHF 2'156'000 in net worth to retire early at 40.
However, what is much less clear is how we will concretely do until then because we do not only rely on the stock market but also on our real estate investments.
What I mean with real estate investments is rental income on the one hand, but also an increase in the value of the rental properties. Except that if you earn CHF 100'000 in cash or in real estate value, well it’s not the same because one allows you to live off of, and the other is only a virtual amount until you actually sell your rental investment.
So, instead of discussing our monthly expenses (which I haven’t been tracking much lately) with Mrs. MP, I’ve been burying my head in the sand and working countless hours to think and find the next real estate or side-business opportunity…
Thanks, but no thanks!
I didn’t quit one hamster wheel to start another!
Summarised, I’m currently evaluating two options to calibrate our efforts over the next few years so that we can peacefully when the time comes:
Both options have their advantages and disadvantages.
As I write this, option 2 seems to be easier, but also the most limiting because it doesn’t take the profits of any real estate into account.
But I like the first option too because if we were to choose it, Mrs. MP will support my decision since we would be completely aligned with our goal to become fire at 40 years old! This was not at all the case when I first visited the wealth management office in 2015 (when Mrs. MP still thought I was a sweet utopian dreamer!)
Anyway, we’ll let these two options mature over the next few weeks.
If you have any opinion on the matter, send me an email or write me in the comments section at the bottom of this article.
Anyway, the good thing now is that I have a coach to call me out if I try to quietly push the action plan back ;)
One of the other topics related to the previous point is our FIRE date.
Will we be retired at 40? Or 41? Or 43.5?
As I explained to you before, everything starts to become more concrete with the passing of time.
It was easy for the last ten years, because the ultimate goal seemed far away, and we knew what we had to do.
But now that it’s getting closer, self-doubt comes into play…
Will we actually be ready?
It’s going to be weird not having to work “for real” anymore!
And what about the kids, what are we going to do if they are going away to study at the university? Maybe we’ll prefer to stay in Switzerland all the time and continue to stay by their side? Or what else?
We are left with so many open questions as there are different scenarios.
The goal we are trying to focus on is currently that we’ll go into 100% FIRE mode between our 40s and 45s.
Is this a range to give ourselves more time, and put off a major life change?
This definitely gives us more time, that’s for sure!
Will my holistic coaching help me find the right path, and maybe leave my job before and go into full entrepreneurial mode until we reach our goal of CHF 2'156'000?
Why not! I’m still open! And so is Mrs. MP.
In the meantime, I’m enjoying the adventure and our learning experiences, because as the saying goes:
The important thing is the path, not the destination.
I talked to my coach about my personal project, my blog.
Between my passion for writing and the fact that I could turn it into a small business, this project is still running through my veins even after 9 years!
He wanted to dig a little to understand what made me so passionate about it. And by doing so, we got to the root of it: freedom!
Freedom of choice about what I write. Freedom in my strategic decisions for the future of the blog. Freedom in the form of monetisation (in particular to send those who want to pay to ‘just’ paste a link to a crappy site that has nothing to do with it").
Along with independence, freedom is one of the values I cherish the most.
That’s why I’ve decided to do everything I can to refocus my Friday solely on writing… this creative process is unlimited in terms of possibilities!
Mentioning real estate, we finally closed the deal on the acquisition of our first rental property in Switzerland!!
And we also bought our second rental property in France.
But things will change soon.
Because both my coach and reading a book (about prioritising putting my energy into what I prefer) have helped me refind the place I want rental properties to take in my life.
I definitely love investing in real estate.
It’s calculations, valuations, and house openings. It mixes the analytical side with the social. Although a little too social for my taste, since I am an introvert at heart.
But I really like this area.
Always with the idea of seeing what parts of this field I like so much, I did a lot of introspection.
And finally, it’s more about acquiring and expanding my real estate holdings that I like. As much for the passive income as for the side of living as an entrepreneur.
So, as my time is limited, and rather than aiming in all directions in terms of personal projects, I decided to delegate the search for our next rental properties in Switzerland to someone else.
The ideal setup I’m aiming for is as follows:
I’m already conducting tests with different people.
I’ll definitely write an article about it once I’ve managed to set it up, and after I’ve made my first real estate acquisition in Switzerland through this process.
As far as companies are concerned, our situation makes me chuckle.
As I was telling a friend the other day, after going to the notary for the hundredth time the day before:
it feels like going to the notary’s office is just like going to the bakery! 😅
When we bought our main residence in Switzerland, it was stressful and overwhelming as it was the very first time for us.
Then we had to go through it again when we bought our first rental property. And again when we created our first company to manage our side business income.
It’s just like buying your first ETF on the stock market or your first rental investment, the rule of thumb applies:
Do it once, then twice, then it becomes the new norm!
And concerning the mention of our “family holding” in the title, it is referring to the SA that we created for the MP family.
The purpose of our holding company is to hold interests in other companies if we buy a rental property together, as well as direct real estate (so it’s not a “real” holding company for that matter).
Due to the information I learned from the notary’s office, the name “holding” does not mean anything legally. It is not a commercial entity in itself.
It’s just a nomenclature used in the field to describe a company that doesn’t do any business itself and only holds interests in other daughter companies.
If my new normal makes you “dream”, then I recommend my technique to get there too: surround yourself with 5 people you want to become.
Because as the saying goes: you are the average of the 5 people you spend the most time with.
I am living proof of that!
This is good news for you reading this blog, because now you only have 4 other people to find ;)
My focus hasn’t shifted much since my last journal entry.
I’m still in the same phase of creating income and wealth (which I see as “Divergent” on the diagram below), rather than optimising expenses (“Convergent”).
Regarding our YNAB budget, we stayed on a monthly budget tracking, in order to always control and keep an eye on our expenses.
Concretely, this means that I enter all of our expenses and income into YNAB once a month, not after every expense like I did when I joined the FIRE movement.
So we’re still living frugally by default, and all of our energy is deployed to increase the cash coming in (via rental real estate, new business ideas, etc…)
If you are new to the blog, I’ll just remind you of these two facts:
And so, to the question “So, how does it feel?!?”, well, I’m almost ashamed to sound cynical while writing this…
…but nothing much has changed…
Of course it was cool, and I also had a small drink with Mrs. MP to celebrate.
But honestly, the next morning when we woke up, we went back to our usual frugal and creative routine.
To sound even more cynical: we didn’t even celebrate the 1.1M CHF milestone…
Ditto for crossing the 50% mark of our FIRE goal. After that, I think it became too blurry and intangible because of our old wealth management report which only included stock market investments.
Whereas now, we’re starting to have a certain amount of net worth locked up in concrete.
Anyway, regaining clarity and tangibility in our FIRE objective is going to be one of the next areas we’re going to focus on with Mrs. MP.
And finally, I’ll conclude this chapter by confirming that all the cash in the world doesn’t change who you are inside. Yes, it increases your self-confidence and self-esteem (which is already quite a lot, I must admit), because you know that you have been able to achieve this. But in terms of desires and values, it doesn’t change anything.
This news, on the other hand, makes me excited!
That’s gigantic!
To be precise, to date, we have CHF 433'383 invested in the stock market!!
I still remember my very first ETF buy order at less than 100 CHF…
By the way, at the time, I didn’t know much about it and I had chosen a Swiss trading platform that was way too expensive (the orange one that supports soccer thanks to its too-high fees ;)).
So don’t make the same mistake as me, and choose the best ETF trading platform which is Interactive Brokers (*)!
I really wasn’t a fan of it initially.
I always thought it would get our kids used to believe that money grows on trees.
Except that after many discussions with Mrs. MP (who had been entitled to it during her childhood, unlike me), and after having informed myself on the subject of financial education, we decided to start giving our children pocket money in 2021 (⬅️ you will also find on this link the amounts of how much we give them according to their age).
And what a great decision that was!
Just last week, we were planning a trip to a place that one of the MP kids has been dreaming of seeing for a long time.
Obviously, it’s a place he knows he’ll want to take a souvenir from.
So far, so good.
As we discuss what we’re going to visit there, I see our kid thinking and starting to calculate out loud how much pocket money he has left.
Suddenly, his face tightens, and he says to us: “Aw but then, if I buy a souvenir, I won’t have the money I’m saving for the PS5 I’m dreaming of?!”
“Welcome to the adult world!” I told him.
Obviously, this discussion would never have happened if your kids weren’t used to thinking about managing their pocket change.
As for our second kid, pocket money is teaching him the art of… negotiation!!
He too wants to save money to buy something bigger than just candy.
So, every opportunity is great to try and negotiate a little extra CHF 1 and a little CHF 1 there!
Like “OK no problem, I’ll vacuum the trunk of your car, but give me CHF 2, OK?” with a big smile on his face.
My response: “Well, that is a household chore like any other, you will have to do it anyway, so no thanks!”
Same here, this kind of discussion would not have taken place if not for the pocket change which is the engine of their financial education.
So basically, no regrets!
I can only recommend that you start with pocket money with around 6-8 year-olds.
Several of my recent posts contradict the fundamental principle of my frugal financial education, and how I use my money.
I’m talking about boring administrative tasks (invoices, taxes, accounting of my Swiss companies), as well as more complex tasks such as managing software updates of the forum of our community “FIRE Switzerland”.
The principle proposed by these authors is to focus all my energy on what nourishes me the most and produces the most value.
And to delegate everything else.
Because if I don’t do this, again according to these authors, I am selfish, because I don’t allow other people to benefit from a complementary income, and also selfish towards myself because I keep tasks that I don’t like…
Before I would have closed the book saying to myself that it was not for me…
But here, due to the way it was mentioned, it spoke to me.
So I’m elevating the option of an administrative assistant for some blog-related tasks already.
And the same for Swiss taxes and VAT declaration for my companies. I’m testing the option of delegating some of these to my trustee.
I see it as an experiment. And If I don’t like it, worst case scenario, I’ll go back to the way it was before.
On the other hand, concerning the chores like cleaning, I want to keep them to keep a culture of effort for the children and not let them believe that everything can be delegated in a snap of the fingers. And there is also the materialism side (cf. the citation below) that I want to instill in them; that is, to take care of what we have because we consider the materiality of our home.
We are too materialistic in the everyday sense of the word, and we are not materialistic enough in the true sense of the word. We need to be true materialists, that is to say, to really care about the materiality of goods. — Juliet Schor
Here is a change I didn’t see coming.
Let’s talk about it again in a few months.
Finally, I’m currently reading the book “The Millionaire Fastlane” which was recommended to me by one of you.
Just like the other books I’m reading at the moment, I chose to start this book because it goes against some of my beliefs (especially frugality).
That’s how you broaden your horizons and adjust your worldview.
And actually, in terms of a different point of view, I am served.
But I am not entirely closed to his approach, quite the contrary.
I’m particularly interested in the subject of entrepreneurship.
I’m only a little more than halfway through the book, and I must admit that some of my glass ceilings (job = security, entrepreneurship = risk) are starting to crack…
And there are also a few highlights about the power of the choices you make every minute of your life.
Anyway, I’ll tell you if I recommend this book when I finished it. But anyways, I’m glad I didn’t stop at the title or at the pitch about Lamborghini and show-off :)
All in all, thanks to you dear reader who told me about this book (sorry, I couldn’t find your name in my emails…)
I am really happy with the current situation.
Why you ask?
Simply because I am active and make conscious choices about our future (vs. being passive and suffering from what life chooses for us).
On the one hand, I am refocusing my FIRE adventure with coaching (the convergence side of the double diamond process), in order to put all my energy in the right place to unfold and optimise my path to financial independence at 40.
The alignment with Mrs. MP was also a great source of pleasure, satisfaction, and peace for the future.
And on the other hand, I am exploring (divergent side of the double diamond process) new entrepreneurial horizons with my readings - and especially putting them into action via experiments that are not irreversible.
As for the money aspect, one of the core subjects of my blog, well, I must say that everything is on the right track. As much on the real estate investment level, whose share has increased in our investment portfolio, as on the stock market level with the next milestone of CHF 500'000 invested in ETFs via our favourite trading platform (*).
And you, what’s new on your path to financial independence in Switzerland?
(*) This symbol indicates where my article contains affilite links. If you follow one or more of them, you won’t see any difference compared to a standard link - but the blog will receive an affiliate commission. Thank you for this. As usual, I only write about and review things I use in my daily life, or trust.
]]>Whether it’s at the train station in Zurich, Lucerne ,or Yverdon, I always ask myself:
Would you really prefer 10 minutes of adrenaline per month, or would you rather have an extra CHF 87'268 in your bank account in 8 years?
What drives me crazy is that most of the time, it’s a young adult who is still in an apprenticeship or someone who just got his first job and is burning through thousands of hard-earned Swiss francs…
Then I remember how lucky I was to have a financial education…
Unfortunately, this is not the case for everyone…
That’s why I wrote this article.
Let’s fix this general lack of financial education in Switzerland now!!
Let’s say you want to purchase an Audi S3 (or an expensive car that costs a fortune such as the BMW M4 or Mercedes CLA 45 S AMG).
An almost brand new Audi S3 (about 3'000 km on the odometer) costs CHF 77'890.
When leasing, the monthly payments for an Audi S3 is around CHF 490.
And that’s without any services or the mandatory car casco insurance.
In total, that’s CHF 687 per month!
We can’t forget to add the initial minimum deposit of 10% (from the value of the car). And suddenly you have to transfer a small sum of CHF 7'789.
Let’s imagine that you keep your Audi S3 for 4 years. And then you decide to continue your leasing for another 4 years with the latest version of the Audi S3.
Over 8 years, you will have spent:
In annual terms (by dividing the total by 8 years), this gives us CHF 10'191/year to lease an Audi.
Now, let’s compare that sum with that of a Mustachian chosen car:
Looking quickly on Autoscout24.ch, I found a TOYOTA Auris 1.8 16V HSD Linea Sol (Limousine) for CHF 11'900, with 119'000kms on the odometer (it is still being run in for a Toyota!!):
Don’t forget to include: the (partial casco car insurance at Smile direct from CHF 305/year) and the service at Toyota (CHF 450 to be broad per year).
Let’s calculate the sum over 8 years:
You’re probably thinking: “Oh yeah, CHF 63'590 (= 81'530 - 17'940) is a lot of money over 8 years!”
Stop right there, we’re not just saving CHF 63'590.
Because a real Mustachian would invest in the stock market every year so that he can stop working at the age of 40!
So if you divide CHF 63'590 by 8 years, that gives us an extra CHF 7'948.75 to invest in the stock market every year.
And with the magic of compound interest (you can find an example spreadsheet), the fool you thought was ridiculous in his average Toyota Auris, well he ends up with CHF 87'268 in savings in 8 years. In cash!
Whereas you end up with CHF 0 in savings in your pocket!!
And I was even being nice with my calculations.
Imagine the difference if we had leased an Audi RS3 (I swear, I regularly see young people under the age of 25 driving these cars worth 100kCHF!)
And my calculations are really conservative because I didn’t include expenses such as car tax (super expensive depending on the model) and the difference in tyre price which are doubled!
Leasing is a scam because it only fills the pockets of one person: your dealer - I should say, the financial company that manages the leasing behind it!
It’s a hidden expense, like consumer credit to change your TV.
And as far as I’m concerned, there is no good relationship between happiness and debt!
According to my own experience and empirical observations in my circle of friends, I found two reasons why someone would like to lease a car beyond his or her budget in Switzerland.
The pleasure of driving is what pushed me to buy a big car over ten years ago.
I took out a car loan for it… the same sh** as a car lease.
Not even after 2 years, I realised that I had made the biggest financial mistake of my life.
You always learn from your mistakes!
I had done my calculations. I realised that the so-called driving pleasure was in fact only 10 minutes per month. And that I was paying about CHF 210 for it.
Every month!
That was a lot of money per minute of fun.
Too expensive for me!
I’d prefer the superpower of “delayed gratification”, so that I can be financially free at 40 by not having to work for money anymore.
Free in the sense of being able to decide every morning how I want to spend my day.
Like going to the Moléson on a mountain bike early in the morning, and riding downhill for CHF 0 per minute! Or even making money because it keeps you healthy vs. increasing your cardiovascular risk by sitting on your butt in the soft leather Alcantara seat of your RS3!
The other positive aspect IN THE SHORT TERM of leasing a nice car is the increase in self-esteem.
And increased self-esteem means less cortisol in the blood, because of reduced stress, therefore less physical and mental worries resulting from that stress.
Except for that, bad news for you, leasing only makes up for this lack of self-esteem when you prance around your car outside the station for hours on end, or when you park in your uncle’s yard and he compliments you about your car… for only 15 seconds because you came to have dinner at his place and not talk outside when it’s 5 degrees.
As soon as you’re away from your car, you’re on your own again.
And then, your self-esteem falls back to its natural level, Et là, l’estime de soi retombe à son niveau naturel, sans frills.
On the other hand, the leasing continues to suck money out of your bank account every second of every month!!
How can you have more self-esteem without blowing CHF 87'268 every 8 years?
That’s what I tried to find out about ten years ago.
Healthy activities (both physically and financially) to build self-esteem often revolve around this:
For me, an introvert, creative activities (writing this blog), and learning new things (reading, investing in real estate, etc.) have increased my self-esteem in positive aspects.
These activities go much further than leasing because I don’t need to have a car next to me to feel confident.
It is also much more “practical” because it’s not easy to include that you have an RS3 in every conversation you take part in… :D
And since this is a FIRE (Financial Independence, Retire Early) blog website that talks about money: it’s monstrously rewarding from a financial perspective.
A huge sum of CHF 87'268 you can save every 8 years ;)
Now that you’ve realised that you made a poor decision, you have to accept the consequences (I’ve been there, don’t worry!).
But most importantly, you have to take action!!
In only 6 steps, I’m going to get you out of this financial mess aka a car lease:
Don’t forget to come back and give us a short report on your experience in the comments section below or in our MP forum.
Just to be absolutely clear: If you need to get to the train station, you can buy a bike, walk or even take the bus!
If so, then I guarantee that you will exceed CHF 100'000 every 8 years and that in 10-15 years you will have reached financial independence.
You have the choice between burning cash every month or reaching wealth in a few years by getting your life under control
You just have to make the right decision.
And it starts right now.
Oh, and in case you really need a car and you are living with your significant other, don’t forget the rule I stated in my book: only ONE car per household! — Unfortunately, I’ve been there too because Mrs MP and I both had a car at the time. Now, we only have one car and we don’t regret it at all!!
The only way (on this blog anyway!) to buy a car is to save up and buy a car you can afford.
The financing of a car purchase must be done by the person who buys the vehicle. Not through a bank or other financial institutions which only increases your debt.
I think you’ve come to the wrong blog my dear friend. Car and loan are antonyms here. The only load allowed is the one you take out of your own savings. And the good news is that the current (and future) interest rate is 0%!
My god, you are still using antonyms! A salary should never be used to pay a lease. A salary is used to save and build your wealth, not deplete it…
Are you serious? Do you still dare to ask that question after reading this article? :D No, it is never profitable to lease!!
And no, leasing doesn’t give you any peace of mind or security, but only an additional monthly debt to pay over several years…
Short answer: no! Long answer: No, it will make you poorer in the long run in return for short-lived gains in self-esteem.
Just for the record: Leasing can be an option to evaluate IF AND ONLY IF you are very wealthy, AND you are already FIRE(“Financial Independence, Retire Early”), AND you are looking to optimise your Swiss tax situation by paying your car expenses through a company. But, this article is not written for you.
Because you would be throwing CHF 87'268 out of the window over 8 years, and your self-esteem drops the day you no longer have a nice car. It’s better for your wealth and self-esteem to save your money, and buy what you can afford only.
The first option is to walk. The second is to take a bike. The third is to take public transport. And if you really want a car, then you can save up and buy a car you can afford.
Leasing, car credit, and car loans are NOT acceptable solutions.
Leasing and car loans are two types of financing to buy a car. By financing, I mean two types of DEBT! So these are two things you want to avoid!!
A car lease is a long-term lease contract where the customer pays a monthly fee to use the vehicle for a certain period of time. At the end of the contract, the customer can either return the vehicle or buy it at a predetermined price. Throughout the period, the vehicle remains the property of the finance company.
On the other hand, a car loan is a loan that allows the customer to buy the vehicle immediately in exchange for a fixed monthly repayment (i.e. a BAD debt!) over a fixed period. The customer becomes the immediate owner of the vehicle and is responsible for all maintenance costs.
In conclusion, leasing is a long-term lease contract with an option to buy at the end, whereas a car loan is a loan that allows the customer to purchase the vehicle immediately with full responsibility for maintenance.
You go to a car dealer.
Every car has a price you can’t afford.
You imagine your self-esteem rising as you drive around Lausanne train station.
You sign a financial contract you don’t understand.
You get scammed.
It’s that simple, right?!
Three years later: you come across this article (way too late!). You terminate your leasing contract by paying the unreasonable early termination fee. You cry for a few days. Then you start to take control of your life and build your way up to financial independence. And above all: you NEVER EVER lease again in your entire life!!!
How about you, have you ever made the mistake of leasing a car? How did you get rid of it - since you don’t have it anymore, we are all proud of you!
Photo credits: Pexels.com
]]>Here’s to the new passive income stream in CHF :D
What an adventure packed with surprises… I have to admit!
My goal last year was to acquire a rental property in Switzerland.
We couldn’t afford it until a few years ago, so we looked at other alternatives. Especially on the other side of the Jura border.
As you already know, we bought a French rental property in 2019. And we did exactly the same when presented with the possibility of purchasing a second (investment property with an IRR of 21% !)
But as I explained to you in a previous article, France is great with its 100% or even 110% mortgage possibilities.
On the other hand, there are also disadvantages such as taxes which tend to increase after every presidential election. The same goes for the taxation in Switzerland, with some ugly clouds approaching in the canton of Vaud…
Generally, French tenants are much less respectful (from our personal experience anyway), and the system is rather disadvantageous for homeowners by default.
In short, I’ve always figured:
As soon as we can financially buy real estate in Switzerland, we will refocus on our country, as France is too unstable fiscally and has a political system that is too disadvantageous for homeowners
So, 2022 was chosen to be the year we were going to buy our first rental property in Switzerland.
We had the funds (thanks in particular to our mortgage switch, which you can read here).
We had also done our research and acquired the necessary knowledge of rental properties..
And above all, we had started to create our network of owners and investors in French-speaking Switzerland (a critical step in the real estate investment process, as I describe in my program).
So we started to visit a lot of different properties.
It was a bit of an emotional rollercoaster.
Because even though I have a process with very clear metrics for decision making, the excitement of buying my first Swiss rental property meant that my decision making was sometimes clouded by my emotions.
As soon as the first property met the performance requirements of my Excel file, I thought it was THE one! ^^
Fortunately, I decided to work with a business partner for this first property purchase.
So, when I was too focused on a property because it was so well located, my partner reminded me of our approach.
The same goes for me when he saw the potential for improvement (via work that he likes to do), I reminded him of our 4.5% minimum gross yield rule!
We visited 4-5 properties in total before finding THE right rental investment project.
In order to be able to quickly calculate the rental potential every time, we focused on the regions we knew.
In other words, the regions of the distric of Morges, Gros-de-Vaud and the Jura Nord Vaudois.
A great opportunity even made us leave our comfort zone and go to… Fribourg.
The profitability was great on paper. But in the end the investment opportunity was unclear and shady when we started asking questions about the history of the construction, rents, etc… The deal was dodgy!
Next!!
Having engaged my French-speaking real estate network like crazy during spring, a first opportunity popped up in June 2022.
There was some work to be done (clearly not a turnkey deal where you buy and receive the rent directly), but we were interested.
My partner and I agreed to hand in an offer on afternoon in July. Then… the seller had a problem with the building permit for the works… we tried to find solutions, but nothing helped (and I am not talking about the added value on the construction part…)
Back to square one.
Connections, connections, connections. There is no other way, it is a key element of success in rental investment from what I saw in my recent experience as a real estate investor.
Because it was via connections that we got back on the saddle quickly in August with a new potential rental property.
At first, we validated that the rental property had a sufficient return according to our strict selection process. It was close, but it passed: Check!
Then we went to visit the property. No bad surprises there either.
This was followed by several follow-up visits to discuss technical points.
And then we entered the negotiation phase.
Even though it was my first rental investment, the price was rather high and I didn’t want to rush and lose an opportunity for a higher return.
The key was that the owners had very few viewings as they told us in informal discussions.
Long story short: the real negotiation actually started after the summer holidays once everyone had returned from their holidays.
We came up with a much better performance figure around November.
Then we started with the paperwork: bank meetings to prepare the mortgage project, creation of a Swiss SA, meetings with the notary, etc.
You should know that the end-of-year period was very busy due to my other acquisition of my rental property in France!
The deal was therefore concluded in 2022 and the notary signing took place at the very beginning of 2023.
We are now officially owners of a rental property in Switzerland!!!
I know you guys well, since I’m the same way: “We want numbers, numbers, MP!!”
1.6 million CHF.
CHF 108'000 per year.
Note that I am working with a partner on this project, so the earnings and expenses are divided by two. But since we also split the funds in half, the return calculations are also split in two.
9% net cash flow return on equity!! This means that I don’t count the rent that is used to pay back the mortgage (in other words, this money stays in my assets, but in stone, not in cash).
And if we calculate the gain including the amortization of the mortgage, we result in a 12.7% return on equity. NET!
Can you please give us all the recurring charges you will have to pay in total?
With pleasure:
I would also like to point out that you should not forget the one-off charges such as:
Luckily for us, the previous owner had a 10-year fixed rate mortgage a few years ago. So we benefit from an interest rate of 1.35% for the foreseeable future :)
This helps with the profitability of this investment regarding the mortgage rates which have been rising over the past few months.
Yes, and this has always been the case for several decades.
This is one of my real estate investment criteria: I wanted proof (rental leases and bank account transaction history) that each and every flat was rented out for the last 6-8 years. At minimum.
Rental investment is likely to become a second pillar of our FIRE (Financial Independence, Retire Early) strategy. Thanks to the leverage effect of mortgages, investing in a building allows you to increase your return on equity in exchange for a little more work than the stock market. (it’s obvious that rental investment needs more time than investing in the stock market!)
The stock market will nevertheless remain the major cash allocation for MP for at least the next few years.
Potentially, in the medium to long term, the share of real estate will increase among our investments on our way to financial independance in Switzerland.
I say “likely” and “potentially”, since this is the first real estate investment I made in Switzerland.
And we will have to see if this investment is actually “passive” since we are imagining a system where the property manager will take care of everything from top to bottom.
But I thinks it’s unlikely that it wouldn’t work, knowing that in France we only have someone to deal with the incoming and outgoing payments, and that it’s us who manages the rent payments, the reminders and the services of craftsmen (electrician, plumber, etc…) if necessary. And it’s working out quite well, even if it takes up too much of our time for my taste.
Anyway, I raise a toast to the beauty of passive income. Cheers!
I will of course keep you posted on the progress of this first project (especially the rents that drop ;)).
Now that we have put our clear and defined process into practice, we are looking for a second rental property.
So if you find anything in the canton of Vaud that exceeds the 5% ROE (gross), you know where to find me :)
How about you, have you invested in rental properties? Did you succeed? In which canton?
Would you like to join the world of real estate investors?
But you lack a clear and concise procedure on how to get there?
Then my Swiss rental investment program will be a perfect match for you.
It’s in “simplified” mode.
No blah, blah, blah.
No “I’m selling you an unattainable dream” or marketing crap.
Only the essentials.
Only sharing experiences.
My goal is simple: to offer you a path to knowledge rather than you having to go through all the dead ends and running in circles just like I did before reaching a process that works for any first Swiss real estate purchase.
Because once you buy one, you’ve basically done the hard part.
And you can repeat the same exact process as many times you want to become financially free (FIRE) in Switzerland.
After all, the way to financial independence isn’t only just the stock market. There are countless ways to increase your passive income. More effort will transform into more returns. It’s up to you to select the path that works best for you.
You can find all the information on my Swiss real estate program dedicated page.
]]>And given the general interest I have in personal development, I thought “Atomic Habits” would be the right book to review.
In the past, I have reviewed my readings and extracted my takeaways from them.
This time I decided to do something completely different.
I love reading the comments and notes people take while reading books.
It’s unfiltered/unedited.
And it often captures the essence of how the book affects another person’s life, which inspires me to explore other ways of thinking.
So I’m sharing my private notes with you below.
It’s been extremely tough not to rework or edit them…
The only two things I’ve adapted are:
Every time I’ve felt like writing something down in my book, I always thought to myself, “this part of the book resonates with me because…”
Please let me kow what you think about this new type of review. Do you think its more interesting/useful than my usual bullet points?
In terms of my blog and my professional job, Cal Newport is one of the people I look up to the most.
The book “Atomic Habits” recommends that in situations of doubt or otherwise, you should ask yourself the question: “What would one of the people I respect the most do?”
So for me it’s: “What would Cal do?”
Blog
Person
Job
[…] went to bed early every night […] I tried to keep my room clean and tidy. These improvements were minor, but they gave me a sense of control over my life. I started to feel more positive
This speaks to me about how good and zen I feel when such small things are under control too :)
Changes that seem small and unimportant at first will turn into remarkable results if you’re willing to keep at it for years.
This resonates with me for two things:
Thinking long term means that it will compound exponentially.
And regarding the stock market, “buy and hold”, just like Warren Buffet did, wealth will exponentially too!
So: always think long term in whatever you do. In the short term there is little that is a successful strategy.
The reverse never works.
To write a great book, you must first become the book.
The publishers claimed that my book was not enough like this or not enough like that.
But I knew in my heart that the Mark of 2013 would have spent a lot of money on a FIRE shortcut book including all steps in detail.
That’s why I wrote my book anyways and published it on my own. This is one of the reasons why it is such a success (on its way to becoming a bestseller in Switzerland).
The same goes for my “Swiss Investor Program”. I have gone through every step and doubt I mention in the program. And it works. Several hundred people have decided to start investing and overcome their fear of the stock market thanks to it.
Real estate investment program in Switzerland: I waited until I had taken the step of buying before publishing the programme because I wanted to “do it myself first”. I had all the theory and knowledge that could guarantee my content if I had published it earlier, but I wanted to feel the thrill of signing up for a mortgage of more than 1 million CHF myself, with all the doubts that entails.
“Skin in the game!” as Nicholas Taleb so eloquently put it.
A strategy he called “aggreating marginal gains”, the philosophy of looking for a tiny margin of improvement in everything you do. Brailsford said, “The basic principle was born out of the idea that if you break down all the things you think about that go into riding a bike, and improve them by 1%, you will get a significant increase when you put them all together
This speaks to me about budget and saving on the way to FIRE.
It’s easy to say for yourself “Yea, but it’s only CHF 10 over the next 6 months, it’s not worth spending time to change that…”
Of course it’s not the most urgent thing if you haven’t tackled the biggest items, but nevertheless it adds up very quickly. And if you save it all up instead, you’ll be a millionaire and then FIRE faster than you think!
If you can get 1% better every day for a year, you’ll be thirty-seven times better when you’re done!
This resonates with me with the idea of going for a 30 minute walk every day for a year and see what it does :)
Habits are the compound interest of self-improvement.
I couldn’t have said it better myself!
Success is the product of daily habits - not one-time transformations in a lifetime.
My blog in 2023 is the result of 9 years of writing every day.
If you’re a millionaire but spend more than you earn each month, then you are on the wrong track.
However, that work was not wasted. It has simply been stored. It is only much later that the full value of previous efforts is revealed.
This resonates with me in relation to all those blogs I started but never finished, but which taught me how to start a blog.
Same with all the posts at the beginning of this blog… I thought it wouldn’t work but I kept going.
Then I almost gave up in 2015 and 2016.
This was evident in my regularity at the time.
Then it started to pay off with an affiliate proposal for a product I was already recommending. I had just reached the plateau of unrealized potential.
Same with my job and all those things (including raises) that magically come without effort! Actually, it’s not magic, it’s that you’ve just passed a plateau of unrealized potential.
Goals are about the results you want to achieve. Systems are the processes that lead to those outcomes.
Dreaming of writing a book vs. writing one hour every day first thing in the morning no matter what.
Result: “Free by 40 in Switzerland” written in 6-8 months, and published 3 months later!
Stop dreaming, take action, every day!
Focus on what you do at the beginning, and what comes out will automatically follow
Deliver high quality articles, and the money will flow from that.
Not the other way around!
Goals limit your happiness. A systems mindset provides the antidote. When you love the process rather than the product, you don’t have to wait to give yourself permission to be happy. You can be happy as soon as your system works.
This inspired me a lot. Yes, being FIRE will be cool, but today with all the cash we’re saving and the self confidence it generates, I already feel free.
And I’m going to keep working on this system in place and cherish it. Reaching the other end of FIRE will be just a step! Because in the meantime I’m already only working 80%, then maybe 60%, and gradually my freedom will get bigger and bigger 🎉
Genuine long-term thinking is purposeless thinking. […] It is the cycle of endless improvement and continuous improvement.
This resonates with me in my job where I focus on always optimising what I do, doing it better, with more impact, and I’m getting rid of salary and raises more and more.
It also fits with the book “So good they can’t ignore you”, which makes you almost free now rather than at a certain amount of CHF.
If your identity is that of a person who consumes rather than a person who creates, then you will continue to be attracted to spending rather than earning.
This resonates with me in relation to frugality and FIRE.
We often talk about spending vs saving.
In fact, and this is also what I experience with my blog and its passive income, if you start creating (content, wooden objects, a tiny house, etc…), it’s incredibly satisfying and on top of that it allows you to earn money.
And all that time you spend creating is time you don’t waste spending.
And that’s pretty powerful, because the word “Create” is much more positive and motivating than “Save”!
So get creative!
Changing your identity is a simple two-step process:
1/ Decide what type of person you want to become.
2/ Prove it to youself with small victories.
Idea: write this down after finishing the book=> get up and write 1'000 words every morning. Be careful: don’t make it too binding. I’m looking forward to the next chapters where there will be details on how to do it right.
The goal should always be to become that kind of person, not to achieve a particular result
A healthy, lean person, rather than losing 4 kgs.
Together, these four steps form a neurological feedback loop - signal, craving, response, reward - that ultimately allows you to create automatic habits.
The importance of each step is critical.
Without a signal, there will be no habit.
A weak signal does not trigger a strong enough urge = not enough.
Response difficult to perform = not able to do it.
Reward not high enough = no reason to make it a habit.
This resonates with me for several reasons and areas.
The blog for one, where writing an article is always a difficult task to tackle, but one that I’ve learned to master.
And then publishing is synonymous with accomplishment, and also rewarding through the exchanges and the value I bring to the readers.
And in the long term I know it supports the passive income of the blog indirectly.
One thing I wonder is when, for example, on a quiet Sunday afternoon at home and I start a good book, and I’m looking forward to a nap: how do I keep the motivation to not sleep and succumb to the Sunday phelgm?
I imagine the book will tell me how to set up mini-rewards, like posting a message to my readers of my current reading to see what emulation it generates.
Or to create a draft article that I update with my notes, which gets better and better and keeps me motivated to read? We’ll see! I look forward to learning more about this mechanism and how to use it rather than it using me ;)
The four laws of habit change are a set of simple rules that can be used to create better habits. They (1) make it obvious, (2) make it attractive, (3) make it easy, and (4) make it satisfying
The human brain is a prediction machine. It constantly observes your environment and analyses the information it encounters. […] With enough practice, you can spot clues that predict certain outcomes without consciously thinking about them. Automatically, your brain encodes the lessons learned through experience.
This passage resonates with me in relation to my job where my long experience makes me more intuitive than some of the more junior so-called experts.
It reminds me that I should not hesitate to trust myself, and that experience counts for a lot, not just expertise per se.
The ‘point-and-name’ method is used on Japanese trains to reduce accidents by raising awareness: “If you want to cut down on your junk food habits but notice you are having a second biscuit, say out loud: ‘I am about to eat this biscuit, but I don’t need it. If I eat it, I will gain weight and it will damage my health.’”
A strategy that appeals to me for my sugar addiction.
It’s funny because Mrs MP takes on this role by calling me out when she sees me going for my Lindt milk chocolate bar when it’s not snack time ;)
But when she’s not there, I have no one to tell me anything!
Try it out for real!
The process of changing habits always starts with awareness. You have to be aware of your habits before you can change them
Typically, rewriting the list of my habits and writing them down made me aware of some of the things I had automatically fallen into.
For example, only getting up at 7am instead of 5:35 am on Monday mornings due to lack of preparation for a cool, quick reward with less effort related to the blog, vs. the feeling of “Oh I’m too lazy to get up and work on this new article topic this morning, I’ll work on it tomorrow
Whereas if I plan to work on, say, a mini design improvement for my blog that’s quick and easy to implement, it’ll give me a boost to avoid the “Snooze” button!!
The two most common signals are time and place […] the format for creating an implementation intention is as follows: “When situation X occurs, I will execute response Y.”
I made this note on a Sunday evening when I was redesigning my website which launched in January 2023: “When the Monday morning situation beween 5:35 and 6:40 comes up, I will contact and pass on my website to my future freelance developer
This was an exciting and motivating task for me. And once I got the flow going, I then set about writing a new article.
People who make a specific plan for when and where they will practice a new habit are more likely to stick with it.
Tested and approved by MP for a whole week. It works! Especially in the morning at 5.35am when I have a little acute phlegmatitis, the little phrase from the day before made me get up anyway! We’ll see how it holds up in the long run!
*Once an implementation intention has been defined, you don’t have to wait for the inspiration to come. *Should I write a chapter today? Do I have to meditate this morning or at lunch? When the time of action comes, you don’t have to make a decision. Just follow your predertermined plan. The easiest way to apply this strategy to your habits is to fill in this sentence: I am going to [TASK] at [TIME] in [PLACE].
I used to do this naturally, but every few years I would fall back into indecision.
And since I started again 3-4 weeks ago, I see my efficiency increase drastically every Friday when I am focussed on writing my Swiss real estate investment program, and the other times reserved for writing blogposts.
BJ Fogg’s formula for habit linking is: “After I have [CURRENT HABIT], I will [NEW HABIT].”
One of the most practical ways to eliminate a bad habit is to reduce exposure to the signal that causes it
The little square of milk chocolate in the evening because I’m doing the dishes while watching the news - try to remove the catalyst? The dishes ^^? Or brush my teeth before washing the dishes and do it afterwards! Try it tomorrow!
Use the tempation structure: “Doing what you have to do allows you to do what you want to do”.
It resonates with me because it could allow me to find time to read while doing sports:
Something to try out: Audiobooks (ugh I’m rather visual) while cycling or running? Maybe start testing in French so there is less concentration needed than with my English books?
A family from Poland with 3 daughters becoming chess champions, and the author concluding: " Habits that are normal in your culture are some of the most attractive habits you will find.”
This resonates with me because my parents have always made it a priority to only spend on things that are thoughtul and not impulsive. And also with the idea that effort in life is a good thing and not something to be avoided.
Habits are attractive when they help us fit in. […] One of the most effective things you can do to develop better habits is to join a culture where the habit you want is normal […] Surround yourself with people who have the habits you want to have yourself. You will grow together.
This resonates with the saying I already know: “You are the average of the five people you spend the most time with.”
It’s true. I’m proof of that. That’s how I acquired my first rental property in France. And likewise (spoiler alert!!!), that’s how I bought my first rental property in Switzerland.
It makes me want to consciously surround myself around with Swiss real estate investors and entrepreneurs.
Solve the causes of your bad habits by creating a motivational routine of doing something you enjoy immediately before a difficult habit
If I come up with twenty ideas for articles I want to write, that’s a dynamic. If I actually sit down and write an article, that’s action. […] That’s the first lesson of the 3rd law: you just have to take action
This speaks to me as a blogger, as it would be my style to plan everthing out well before starting a new habit. “Just do it!”
The duration [21 days, 30 days, 3 months] you’ve been doing a habit isn’t as important as the number of times you’ve done it.
Example of agriculture that spreads twice as fast in Europe and the US as in Africa because of the ease of changing habits due to the same climate from East to West vs. North to South => “Make your habits so easy that you will do them even when you don’t feel like it”.
This speaks to me relating to the mini muscle strengthening exercises I used to do for 10-15 minutes every morning, then gave up.
Then I resumed, thanks to a 6 x 30 second workout only while my tea is heating up in the morning :)
Prepare your environment for future use.
This resonates with me because it reflects the way I end each day on my laptop: all windows closed, I have no files left on my Desktop and all apps are closed.
That way, the next day I start with a blank page, with my todolist sorted the day before with the 2 most important tasks of the day.
And I don’t get tricked by opening my laptop in the morning to start working, only to find the YouTube video or unfinished web page from the day before… and only start working 45 minutes after turning on my computer…
When you start a new habit, it should take you less than two minutes.
Instead of “read before bed every night” => “read a page every night.”
Clearly, it’s easier when you put it that way :)
And indeed, as James Clear says, when you’re in the flow it’s easy. But the hardest part is getting started. And this technique is like the starter on old cars to give the engine a boost :)
When you have trouble sticking to a habit, you can use the two minute rule. It’s a simple way to make your habits easy.
This speaks to me for the next time I have a drop in motivation that makes me stop my lower back strengthening at home, to get back on track quickly without pressure…!
Making the habit satisfying increases the likelihood that a habit will be repeated the next time. […] We seek immediate gratifaction as humans.
This typically speaks to me with writing a book, a blogpost, or a message to blog supporters.
Writing a book is hard because the satisfaction of publication is distant.
With a blogpost, you go from months to days between writing and publication.
And with a direct message, you get instant gratification.
In order to finish writing a book, I used this instant gratification technique by asking 10 readers who absolutely wanted to read my book first to pay now and receive each chapter as soon as it was finished writing (in draft mode). Suddenly, my motivation was boosted!
8 months later, you were holding my finished book in your hands :)
“A habit has to be enjoyable to last.”
I always though that this sentence was for those who have no motivation…
And that I manage to create habits without immediate reward because I was brought up like that from a young age.
But in fact, this is a major key that I’m going to explore for some new habits (especially sports) that I never worked on.
The cardinal rule of habit change: What is immediately rewarded is repeated. what is immediately punished is avoided.
The “all or nothing” cycle of habit change is just one of the traps that can derail your habits.
This resonates with me because whenever I broke the chain once, I get demotivated and it doesn’t encourage me to do it again the next day because the chain is broken.
But yes, the first time is OK, but it’s the second time you get back on the horse that you should pat yourself on the back!
You broke the chain? That’s life! Nothing is perfect.
So you should move on and start again at the beginning of the next chain.
Like Michael Phelps in the pool or Hicham El Guerrouj on the track, you want to play a game where the odds are in your favor.
This speaks to me with the fact that I don’t do video coaching but instead prefer coaching by writing where I feel like I’m in my natural habitat.
Genes do not determine your destiny. They determine your areas of opportunity.
I love this formulation. No victimization, just positivism!
The more we understand our nature, the more effective our strategy can be.
This resonates with me because for many years I have been reading about psychology and personality traits, and it has helped me to know myself better and also to identify how others are.
This allows me to improve my relationships, especially at work and as a side effect to increase my salary regularly :)
In summary, one of the best ways to ensure that your habits remain rewarding in the long run is to choose habits that fit your personality and skills. Work hard on the things that seem easy to you. Genes don’t eliminate the need to work hard. They clarify it. They tell us what to work hard on.
One of the most consistant findings is that the way to maintain motivation and achieve peak levels of desire is to work on tasks of “just manageable difficulty”.
Interesting, but how do you know where you are on the scale between too easy and hard?
When you start a new habit, it’s important to make the habit as simple as possible so that you can stick with it even when conditions aren’t perfect.
This resonates with me because when I start a habit, I always tend to imagine the ideal scenario.
Like if you want to start getting up at 5am everyday, it’s easy to imagine that every day is the same.
Except that you soon realise that you sometimes are going to come home from work later, or when you catch a cold, etc.
Without variety, you get bored. And boredom is perhaps the greatest villian in the quest for self improvement.
True in the business aspect, but also in married life :D
Standing up and not giving up when it’s boring, painful or exhausting to do so is what makes the difference between a professional and an amateur.
This speaks to me because with my previous blogs this is what happened. I gave up when I was working on a less interesting blog. And with my Mustachian Post blog it suddenly changed, because I am actually motivated.
The downside of habits is that you get used to doing things a certain way and stop paying attention to the little mistakes.
This speaks to me about our family budget. Now that everything has been in place and optimised for years, we live with a kind of status quo (although I have my annual automatic reminders to double-check the most expensive recurring expenses).
Focus point for the my future self!
Maintain a small identity […]. If you’re a vegan and you develop a health problem that requires you to change your diet, you’ll be living with an identity crisis on your hands.
This resonates with me because FIRE is a very important part of my identity. What happens when I turn 40 but I still want to continue working?
After that, I’m reassured because the blog is a really good vector to share my evolution, and not a status quo.
Everything is impermanent. Life is constantly changing, so you must periodically check to see if your old habits and beliefs are still serving you.
For some years now, I’ve been mentally tired of always having to do annual reviews, simply because I told myself at some point in my life that this was a good thing.
Rereading the why behind this idea makes me see it again as a positive vs. something that tires me out. Something to think about!
And you? Have you read the book “Atomic Habits” by James Clear? What was the most life-changing takeaway from it?
]]>Over the last 6 months, this was the third time in a row that my mate Mathew had said this to me over a nice raclette with friends.
He had created his Interactive Brokers Switzerland (*) account last year, but still hadn’t transferred a dime or bought any ETFs there.
The interface of the Interactive Brokers mobile app called “IBKR Mobile” scared him off.
Upon hearing again that nothing has changed, I said to him: But haven’t you tried the Interactive Brokers GlobalTrader app?"
I was kidding, but I actually had only discovered it a few days before when I was looking for some other info on the Interactve Brokers website 😅
I carried on:
Basically, it contains the same features one needs as a Swiss Mustachian investor, but it is much easier to use!
The IBKR GlobalTrader mobile app has been designed for beginner and intermediate clients of Interactive Brokers. Unlike the IBKR Mobile app and its many advanced features, IBKR GlobalTrader focuses on buying and selling global stocks and ETFs. Currency conversion is also much easier!
Just like I did with my friend Mathew, I’m going to show you the features of IBKR GlobalTrader that every Mustachian needs to invest in the Swiss stock market.
You can check how much money you have in your trading account in real time (i.e. the value of all your shares + your cash) directly when you open your IBKR GlobalTrader mobile app.
Below you can see the value in CHF and the change in value of your portfolio in the last 7 days in percent.
One of the many things that “shocked” me was how easy it was to change currencies on IBKR GlobalTrader, when you compare it to what you had to do before…
Before (in 2017)
This is what it looked like (if you want to laugh at the 147 steps in total, check out this article):
Today (in 2023)
And this is how it’s done today on the Interactive Brokers IBKR GlobalTrader app:
And that’s it! It’s so much more user friendly!!
Same thing when you want to buy our favourite VT ETF, just press the “Trade” button and follow the steps below:
Depositing money into your IB trading account is just as easy and straightforward as anything else on this platform.
The feature is accessible from the home screen:
Then as per usual, you then click on “Get Transfer Instructions” to get the Swiss Interactive Brokers IBAN to send your money to.
Below are the other features of IBKR GlobalTrader that I find useful from time to time:
Nr. 1 - Trade history (orders, trades, transfers)
Nr. 2 - Portfolio view
Nr. 3 - Account Summary
Nr. 4 - News related to the stocks in your possession
For a long time I’ve been wondering where to follow world economic news quickly and efficiently.
I wanted something fairly simple, with a macro view where I could just see if there was any big news, like a stock market crash.
I certainly didn’t want to spend 30 minutes a day on that.
IBKR GlobalTrader has this news function in the mobile app where you only see news related to your stock portfolio (including my favourite ETF VT).
So obviously it’s noisy, but the advantage is that you’ll quickly see what’s most critical highlighted in the top banner:
While chatting with Mathew, we wondered why Interactive Brokers was offering two apps rather than one.
So I asked my Interactive Brokers representative and here is his answer:
IBKR GlobalTrader is designed to be simple and easy to use. The app dispenses many of the features of IBKR Mobile which makes it more enjoyable for users. The primary focus is also on international stock trading
GlobalTrader’s target audience is different from that of IBKR Mobile. GlobalTrader is simpler, so it’s aimed more at beginner or intermediate users who want to get into stock market investing and trading.
I suggest you refer to these tables for a comparison of experience level and features per platform:
Below I have highlighted the Interactive Brokers features that are not present in the IBKR GlobalTrader mobile app in red for you whereas they are in the IBKR Mobile app:
In short: there is nothing important missing from the IBKR GlobalTrader Interactive Brokers mobile app for an investor with a passive ETF investment strategy.
My buddy Mathew was telling me that it was a shame that bonds were not supported on GlobalTrader. But as I explained to him, you can buy bond ETFs and they are considered as stocks. As with stocks, we don’t want to go through the hassle of choosing one bond at a time for our Bogleheads portfolio.
The only feature that is not in the IBKR GlobalTrader app is “SmartRouting”. SmartRouting is an algorithm “made by Interactive Brokers” to ultra-precisely optimize the purchase of stocks in order to pay the lowest possible fees. In my opinion, this feature is cool, but not very useful for ETF investors like us. It can be useful for value investors where the fluctuations on a single stock can vary rapidly and you want your order to be processed as quickly as possible.
Interactive Brokers’ new GlobalTrader mobile app is superb. It’s so simple to use. I especially like the shortcuts available on the homescreen. The same goes for the news related to my portfolio.
But, I’ve gotten pretty used to IBKR Mobile by now.
So I decided to keep both Interactive Brokers apps on my phone. Because I still buy and sell value stocks using the Daubasses process.
Ultimately I find myself using both apps. But most of the time I use each one for specific reasons:
IBKR GlobalTrader
IBKR Mobile
A quick reminder for newcomers of the blog: Interactive Brokers is the best 2023 online broker for any self-respecting Swiss Mustachian investor.
It’s the cheapest Swiss online broker based on a company that has been around since 1978.
And the founder is still the CEO of the company.
You can read my Interactive Brokers Switzerland comprehensive guide in detail.
What about you? Do you use IBKR GlobalTrader to manage your investments placed on Interactive Brokers Switzerland?
(*) This symbol indicates whereever my article contains affiliate links. If you click on one or more of them, you won’t see any difference compared to the standard link - but the blog will receive an affiliate commission. Thank you for supporting the blog. As usual, I only write about and review products that I use in my daily life, or that I trust
]]>It’s been two years since I published the first performance report of my investment portfolio!
I think it’s time to do something about it, and finally talk about money and profit on this blog! :D
As I was telling you at the time, investing is one of the pillars of any FIRE (Financial Independence, Retire Early) strategy.
In fact, you will be able to live without having to work for money thanks to the returns your portfolio makes which will provide you with the necessary passive income.
Investing is one thing, but being profitable from investing is something else.
So let’s see what all my Swiss and foreign investments have brought in so far.
As a refresher for the newbies — it’s starting to get too much to handle, even for me — here’s the complete list of my investments as of the end of 2022:
Investment Instrument | Amount CHF | Total Percentage |
---|---|---|
— | — | — |
Stocks | 534'583.95 | 97% |
ETF VT | 320'674.03 | 58% |
ETF VWRL | 55'393.83 | 10% |
“Value investing” stocks | 35'573.36 | 6% |
Swiss stocks | 31'386.60 | 6% |
Mrs MP’s 3rd pillar | 55'608.34 | 10% |
Mr Mp’s 3rd pillar | 19'919.40 | 4% |
ETF VWRL (MP’s children) | 16'028.39 | 3% |
— | — | — |
Real estate | 11'617.41 | 2% |
French rental property #1 | 33'584.97 | 6% |
French rental property #2 | -21'967.56 | -4% |
— | — | — |
Casino | 5'643.34 | 1% |
Cryptocurrencies | 5'643.34 | 1% |
— | — | — |
TOTAL | 551'844.70 | 100% |
Our value investing stocks, our 3rd pillars, and the children’s ETFs all contain both global and Swiss stocks.
I suggest you to take a look at my stock market assets only to see the distribution between Swiss and global stocks.
It’s quite straightforward because when I look at the information sheet of the ETF VT and the VWRL, I see that:
My Daubasses sub-portfolio contains only one Swiss stock of CHF 500, so I won’t take it into account.
And finally, our two 3rd pillar 3a VIAC with the Global 100 strategy contain 38% of Swiss stocks.
Here is a summary of my stock market assets at the end of 2022, classified by geographical location (global stocks or Swiss stocks):
Stock market assets | Amount CHF | Percentage of total stocks |
---|---|---|
Global | 429'442 | 80% |
Swiss | 105'142 | 20% |
Stock Total | 534'584 | 100% |
The World/Switzerland ratio is a bit too conservative for my 8-9/10 risk profile, being the Mustachian shareholder I am…
I would prefer having around 90-95% global stocks!
Nevertheless, I am on the right track since I almost don’t buy any Swiss shares with my company anymore and my ETF VT is growing faster than our VIAC 3rd pillars including Mrs MP’s :)
Well, now let’s go to the most interesting part: the performance of all my investments at the end of 2022!
As a reminder, I use the “Money-Cost Weighted Return” when the info is available.
Just like I explained in my Interactive Brokers guide:
Since October 2016, I have been investing all my assets via a securities account on the online broker Interactive Brokers (*) as a Swiss investor.
I started and still mainly buy my favourite ETF VT.
Then I started value investing via Daubasses with a small part of my portfolio in the stock market.
+23.14% return since I created my Interactive Brokers account, not too shabby!!
So that’s for the “private” part of my investments.
As I also invest in the stock market via my Swiss company since November 2020 and also via the online broker Interactive Brokers (*).
I only own the ETF VT on the stock portfolio with my Swiss company.
Here is its performance:
And if you wonder: “Yes, I still sleep soundly with a return of -8.66% 😱 thank you very much. This is thanks to me being in this game, which is the stock market, for the long term! Or how could you invest in the stock market successfully without worrying about fluctuations!”
I have bought less shares with my Swiss company than in the past.
Nevertheless, it still represents a non-negligible part of my stock portfolio.
As per usual, I used the Moneyland.ch return calculator.
I get an annualized return of +5.72% on my Swiss company’s shares.
As a reminder, Mrs MP switched her Pillar 3a to VIAC in June 2018.
And we can say that the perfomance of her portfolio is more than respectable with a nice +30.87% return since its creation :)
FYI, VIAC only offers the return calculation in the “time-weighted return” form (not the one I prefer: “money-cost weighted return”).
It feels great to share my experience on this VIAC 3rd pillar, after being able to terminate my combined 3rd pillar linked to life insurance 💪
And even though this change is recent, we celebrated a performance of +7.43% with my VIAC Global 100 portfolio. Absolutely stunning!
We invest our children’s savings via a securities account with DEGIRO to keep it well separated from our personal assets, and simultaneously test the European broker DEGIRO.
I don’t regret leaving BCV with their 0.60% interest rate at all! (that is only up to CHF 25'000, because beyond that it’s only a mere 0.05%…)
This building is on its right path with rents that are coming in, expenses that are being paid, and a real estate loan that is gradually being repaid. A beautiful and successful investment so far!
We’re still expecting a internal rate of return of 14-15% after resale at 10 years via the tool Horiz.io (formerly rendementlocatif.com) *:
We acquired a second rental investment in late 2022. All details are in this article.
The projections are even better than our first building.
In fact, this building has been fully occupied for over 15 years. And its location is even better than our first rental building.
We are aiming for a return of +21.18% after resale in 10 years.
We couldn’t finish our performance report without talking about our little “casino” investments :)
My portfolio consists of Bitcoin, Ethereum and Litecoin.
I bought these at the worst time ever(i.e. crypto peak)… twice in a row! :D
Which gives us a astonishing return of -7.5%.
You can find more info on how I created my portfolio (at the time, it’s changed a lot since then!) via this link.
As I like to say, I keep this cryptocurrency portfolio for the long term for two reasons:
Instrument | Creation date | Annualized return |
---|---|---|
ETF VT, ETF VWRL, and value stocks (private account) | 2016 | +23.14% |
ETF VT (corporate account) | 2020 | -8.66% |
My Swiss shares | 2014 | +5.72% |
3a VIAC Mrs. MP | 2018 | +30.87% |
3a VIAC Mr. MP | 2022 | +7.43% |
ETF VWRL children of MP | 2016 | +5.14% |
French rental property 1 | 2019 | +14.96% |
French rental property 2 | 2022 | +21.18% |
Cryptocurrencies | 2017 | -7.5% |
Below I share with you the thoughts I had about my investment portfolio while writing this article.
I’ll gladly take your feedback in the comments at the bottom of the article.
In my last investment report, I was able to find the performance by stock type in my IBKR account (this was the case since I created my securities account in 2016).
In other words, I could see the separate performance of my ETFs on one side, and my value stocks on the other.
It seems that this comparison does not exist anymore (I asked Interactive Brokers support and I am waiting on their return).
It’s quite a shame because I find it very interesting to be able to see the performance of each type of stocks.
As I mentioned above, my risk profile is around 8-9 out of 10.
This means that whenever my stock portfolio loses 20-30% of its value as it did last year. Don’t worry, I still sleep well since I am in on this adventure for the long term. And such fluctuations are part of the game.
Therefore, I will continue to concentrate my future investment in my ETF VT in order to increase my share of global stocks in my portfolio.
The performance of the US stock market is fairly well reflected in the VT ETF, which is composed of 62.10% US stocks.
Nevertheless, given the historical performance, I am tempted to increase my exposure to the US (via an S&P500 ETF).
For now, it’s just a thought.
You’ll be the first to know when I adjust my portfolio.
I have to say I also like the simplicity of investing only in my ETF VT… ;)
The second rental property purchase in France was not on the agenda..
The opportunity was just too good to be true.
However, unless there is a similiar opportunity, we will not be actively looking for a new French property for the following reasons:
After our first acquisition of a rental property in Switzerland (SPOILER: we signed recently, an article is coming soon), we see a huge opportunity to increase our wealth in large steps.
When I say large steps, I mean a few hundred thousand CHF at a time.
And notably via the following techniques:
My switch to 80% part-time is not a factor either.
This time freed from any professional constraint allows me to have more energy to manage this type of rental real estate project in Switzerland.
Again, this is the plan for the near future and we’ll see how we can adapt it according to my feedback.
To be continued!
I’m going to repeat myself but you can’t imagine how happy I am to have finally gotten rid of my old mixed 3rd pillar which was linked to life insurance!
What a pleasure to have all this money in one of the best 3a products on the market!
You know very well that I always test what I recommend.
The only exception so far is the 3rd pillar Finpension.
In fact, apart from a demo account, that’s all I’ve tested with them. But I still recommend it as being equal with VIAC in my ranking of the best 3rd pillar in Switzerland for us Mustachians.
So it’s decided, this year I’m going to put in at least CHF 100 to be able to observe how the platform works in the real world (for the upside as well as the downside), and share my experience with you in a dedicated article.
If you didn’t start investing in the stock market because of some irrational fear, remember one thing:
Yesterday was the best time to start investing. The second best time is today!
So don’t drool over the success of my investments and take action!!
A quick reminder: I have created two programs in order to guide you and to answer all of your frequent questions:
The first program guides you to start investing in the Swiss stock market. If you don’t know anything and are terrified of the stock market, then you are just clicks away!
My second program is designed to guide you from A-Z in rental investment in Switzerland.
What’s new on your end in terms of stock market and real estate portfolio performance?
(*) This symbol indicates where my article contains affiliate links. If you click on one or more of them, you will see no differnce compared to the standard link - but the blog will receive an affiliate commision and I sincerely thank you for this. As usual, I only write about and review things that I use in my daily life, or that I trust
]]>We therefore asked ourselves the question with Mrs MP to hold this property directly through our own names, or via a Swiss company (LLC or Ltd).
Knowing that we wish to acquire more than one, and that we think on the long term (i.e. until the inheritance to our children), we said to ourselves that the simplest would be to create a company which holds all our buildings in Switzerland.
That way, the day we are no longer around, we will only have to divide the shares of a company between our children, rather than having to divide the properties.
So we decided to go for a Swiss company formation.
As usual, I documented all the steps of the company formation process, with the idea to make a guide for the blog ;)
N.B. my experience of company formation is based on the canton of Vaud, even if the steps and main principles are the same for all Switzerland.
The type of company is called the legal form. The 4 most common types of Swiss legal entities are: the sole proprietorship, the general partnership, the limited liability company (LLC), and the corporation (Ltd). The main differentiating factor is whether you are liable for unlimited or limited liability.
To put it simply, with the sole proprietorship and the general partnership, the partners are jointly and unlimitedly liable for any problem with the said structure, especially at the financial level.
Whereas with the limited liability company and the corporation, the liability of the partners is limited to the amount of the share capital (respectively a minimum share capital of CHF 20'000 for the LLC and a minimum share capital of CHF 100'000 for the Ltd).
For Mrs MP and me, future entrepreneurs in the making, it was clear that we wanted to create one of those two limited liability companies’ structure.
We then had to choose between the two Swiss legal entities that are the LLC and the Ltd (aka joint stock company).
The 3 main differentiating elements for us were:
Limited Liability Company | Corporation | |
---|---|---|
Minimum share capital | CHF 20'000 | CHF 100'000 |
Commercial Register | All partners appear | Only the administrator appears |
Legitimacy (perceived) | + | +++ |
In the end, we chose to found a joint stock company (aka Ltd).
We were going to need more than CHF 100'000 of equity for our first building anyway.
And, even if it’s only a matter of perception, it’s reassuring to banks and entrepreneurs when you come with a Ltd, as you had to put CHF 100'000 on the table when you founded it.
Once you have chosen your legal form, you have to take action.
For our first company (LLC for the activities of the blog), we had gone through a notary for the company formation.
Apart from a lot of papers to sign, there wasn’t much to do. Well, OK, we still had to know what to put in the statutes, and also how to send all that to the trade register.
But then, we had already been through it, and we felt less newbie than the first time.
So I started looking into doing it online to save time.
And, to my good (big!) surprise, there are services to create your company in Switzerland entirely online (all automated or with advice from a lawyer if needed).
The two most serious sites for me were: startups.ch and entreprendre.ch.
Then, you know me, as a frugalist, I started to make a small comparison of the costs of creating a company for each of the solutions (including comparison with several notaries around).
I specify that to be fair, each line includes the foundation part (definition of the statutes) and the notarial authentication of signature. The costs of the commercial register are separate (not included in the table below), with a direct invoice in your name (in the canton of Vaud, for a Ltd., you should account for between CHF 500 and CHF 600).
Here is the result:
Create a Ltd. company via: | Costs |
---|---|
Entreprendre.ch | CHF 490 |
Startups.ch | CHF 549 |
Notary Montreux | CHF 2'550 |
Notary Yverdon | CHF 3'200 |
Notary Echallens | CHF 3'500 |
So we were very motivated to go with entreprendre.ch.
I called them and explained that we wanted to create our company in Switzerland, to do real estate. The last part of my sentence cut short our conversation: entreprendre.ch does not create companies for holding real estate…
I could already see myself having to go through a notary and pay double the registration fee… but I thought I would call startups.ch anyway to see if they had the same limitations.
And no! They agreed AND were used to startups active in the real estate field.
On the other hand, we had to choose their “Business Pack” in order to have a phone conversation with a lawyer to define our legal entity statutes correctly, and to make sure that everything would be in order at the time of the company registration in the commercial register.
Here is my updated comparison of the costs to create a business in Switzerland in the real estate field:
Create a Ltd. business via: | Costs |
---|---|
Entreprendre.ch | n/a |
Startups.ch | CHF 928 (CHF 899 of bussiness pack + CHF 29 signature authentication) |
Notary Montreux | CHF 2'550 |
Notary Yverdon | CHF 3'200 |
Notary Echallens | CHF 3'500 |
So we decided to found our Swiss company with startups.ch, saving over CHF 2'500 compared to the most expensive notary!
We chose to open a Ltd. in Switzerland via Startups.ch, but it’s almost the same process to open a LLC (except that the limited liability company requires you to bring “only” CHF 20'000 of minimum share capital).
All the steps are very well explained on startups.ch with help bubbles wherever needed.
Also, startups.ch is available in French, German, English, and Italian.
The process of the startups.ch website starts with the calculation of your offer for your new legal entity.
A picture is worth a thousand words, so here are the screens in a few slides:
Then the interesting part begins :)
This is where you have to choose your legal name (aka the name of your business). You also have to define in your legal entity’s statutes what kind of activity your company will practice (also called “goal”).
As everything is well explained on startups.ch, I’ll quickly list the other elements you need to consider:
And the slides that go with it so that you can see the whole process:
Congratulations when you get to the end of this part, because it’s the one that takes the longest!
Within 24-48 hours, you will be contacted by a startups.ch lawyer.
Her goal is to verify and provide you with advice on the statutes for your Swiss business. And you can see that they are experts directly, because they ask you very pertinent questions about
They also ask you if you intend to have employees in order to foresee questions related to social insurance system, unemployment insurance, as well as disability insurance. Fortunately, we don’t plan to have employees, and we will distribute any profits to ourselves via dividends or other means. Well, first, we’ll reinvest as much as we can, and when we’re FIREd (Financial Independence, Retire Early), then we’ll get dividends!
In the same week following the call with the lawyer, we received the documents via mail.
Small aside about the mail by the way.
Startups.ch even wrote the sentence in CAPITAL LETTERS because many clients were experiencing a considerable delay: you must write the name of your future business on the mailbox located at the head office address. Otherwise, the mail from startups.ch will not reach you!
We just had to print everything, sign, add our initials, and send all the documents back via registered mail to Geneva to startups.ch.
The instructions were very clear, and on top of that you get an email notification at each step to tell you that your file has progressed. I was blown away by the quality of the service!
At this stage of your project, you will have to open a Swiss corporate bank account.
And this, at the cheapest Swiss bank for companies, of course!
To date (and as in 2020 when I founded my first LLC), Migros bank is still the most frugal bank for a corporate account in Switzerland.
You can verify this on moneyland.ch.
Pro tip: you have to take into account the one-time fee for the capital deposit account AND the long-term recurring account maintenance fee. Because UBS and Credit Suisse are smart, and lower the one-time fee as much as possible, but charge you in the long run with recurring fees.
While Migros Bank does charge you one-time fees of 0.5% of the paid-in capital (min. CHF 300, max. CHF 2000), i.e. CHF 500 for CHF 100'000 of capital, but after that, it’s CHF 3/month in account management fees.
A capital deposit account in Switzerland is a bank account created when a Swiss company is registered in the commercial register. It allows the deposit of the share capital on a blocked account, so that the notary (from startups.ch) can proceed with the company registration in the commercial register.
The whole process of creating a bank account for a Swiss business goes like this:
And so, as I was saying: the best Swiss corporate bank is Migros Bank.
Once you have sent your capital deposit account certificate to startups.ch, the process continues with the next phase.
That’s when I thought to myself: “We are in a nice country after all!
For 29 Swiss francs (paid directly to startups.ch), you can get a notarization of your signature. Online!
It literally took me 1 minute and 49 seconds of Zoom call! (you can also choose via WhatsApp if you prefer)
The notary of startups.ch (based in St. Gallen) calls you.
He tells you that the call is being recorded for legal record purposes.
Then he asks you a few questions to verify that it is you and the right business.
After that, he asks you to put your passport next to your head to verify your identity. Next, he shows you the documents you signed to confirm that it’s really you.
And then… that’s it!
He congratulates you because you have just finalized your company, and everything will now go to the Commercial Registry. And he wishes you a good day!
All this, in 1 minute and 49 seconds!
This is finally the longest step, thanks to the Swiss public institutions…
The company registration in the Swiss commercial register takes on average 2-3 weeks.
You don’t have to do anything but wait. You can find the expected date of company registration in the dashboard of startups.ch (just so you don’t do like me and check on zefix.ch every 5 minutes if there was any movement!)
Never forget the dance of joy!
Because you just entered the inner circle of business founders!
After all these steps, you will have to think about the choice of your fiduciary to do your annual account closing. And potentially to do your accounting and your tax return if you wish to delegate these tasks.
To give you an order of magnitude, because the estimation depends on your turnover, it costs me between 1'000 and 2'000 Swiss francs per year for the accounting, the annual closing of accounts, and the tax declaration (via registering with the Federal Tax Administration).
To create my company in Switzerland (a Ltd.) with startups.ch, I paid a total of:
I am looking forward to starting this new business venture with Mrs. MP! We have quite a few projects together as a couple, but this one will have a special flavor because it’s for our own business.
I hope this guide will inspire you to start one or more businesses of your own!
Next step: I’ll keep you posted on the progress of our Swiss rental property investment soon :)
Startups.ch is one of those modern online companies, so they offer a referral program. As usual, I wouldn’t talk about it if I hadn’t used their service myself to create my business.
And since I’m very satisfied with it, I share my referral code with you if you want to launch your own business:
8TUSXVQQ
It allows you to get a discount of CHF 50 when ordering a limited liability Swiss company formation (LLC or Ltd) via startups.ch.
Enjoy!
Small lexicon of companies in Switzerlan:
You give me great pleasure when I feed you with content and maintain your features and other servers.
And that’s without mentioning the value of the information you make available to the Swiss!
It was well worth a birthday gift worthy of your loyal service: a new design for your 9th birthday! 🎉
For you reading this, the previous design was fine with me. Except when the idea of launching a limited edition of a certain credit card with a “by MP” design, I needed some visual identity elements.
One discussion led to another with my designer… and here we are in the second half of 2022 with drafts of a new design for my blog.
I hesitate… a new project that doesn’t take only 1-2 weeks, especially considering all the content to migrate… in 3 languages…
But hey… the potential new design was too gorgeous. And I liked the idea of having a real identity in terms of logo and everything.
So I took the plunge!
And as I didn’t want it to reduce my writing time too much, I also decided to delegate the code part of the new site. Not easy for a geek ;)
But here we are, after several months of work, the new design is online!
Don’t hesitate to tell me if you see any mistake on mobile or computer.
And once again a happy 9th birthday to you my dear blog! <3
Let’s move on to the more usual sections of my annual review.
Like last year, I start with the projects around the blog before concluding with this latter.
I just looked at the sales figures.
And what a great news: we’re approaching 2'000 copies!
1'976 to be exact :)
Another 1'000 copies in circulation to spread the good word about FIRE (Financial Independence, Retire Early), and I will finally be able to add the “Bestseller in Switzerland” label to gratify my ego ^^
Much better than my ego, it makes me feel good to see that a project launched in 2020 still has so much impact on the lives of readers 3 years later:
So a big thank you to all of you who have and are supporting me with this project.
“Good news Marc: I just finished creating my account at Interactive Brokers *!! On the other hand, I haven’t made any transaction yet for fear of making a big mistake…”
I was receiving this kind of message regularly until the end of 2021.
The readers of my book and of the blog went as far as creating their brokerage account, and found themselves psychologically blocked when buying their first global ETF on the stock market…
This is what motivated me to launch my “Swiss Investor” program early 2022 in French.
Due to the demand from English and German speaking readers, I spent several months getting it translated into English and German.
It has now been open for registration for several months, and the feedback is enthusiastic.
Especially the screenshots - which I ask for in the last chapter - that the participants send me at the end of the program with a certain level of emotion and pride!
Investing in real estate in Switzerland has always been on my list after real estate in France (interesting, but not great fiscally and not next door).
Then, in the second quarter of 2022, I finally managed to find a solution to get rid of my pillar 3a linked to a life insurance.
The consequence: we were also able to change our mortgage partner for our main residence.
With the side effect that we were able to release cash (with the condition to dedicate it to a real estate project) following the revaluation of our real estate and also thanks to the taking into account of our VIAC 3rd pillars invested in the stock exchange (no other bank than VIAC/WIR bank usually accepts that!)
Therefore, we could not let all these tens of thousands of Swiss francs sleep on an account…
So Mrs MP and I decided to invest in real estate in Switzerland.
And from then on, everything went very fast with a project of rental property signed in September, but with some surprises, thus postponed of a few months (one passes at the notary suddenly!)
I took a maximum of notes during the whole process.
And all this became the “Swiss Real Estate Program”, launched at the end of September 2022 in 3 languages!
I knew that many of you were interested in rental real estate in Switzerland, but not to this extent!
The launch was a great success.
Thanks again to all the participants so far for your trust.
I had created a Patreon account a few years ago so that readers wishing to support my blog could do so via a monthly fee, in exchange for regular exclusive content.
But as time goes by, I’m trying to reduce the number of platforms I use in order to have as much time as possible for what I like most: writing articles.
So I changed the system, and also redesigned the exclusive content to simplify it.
I let you discover all this by clicking on this link if you are interested.
The only flaw of the new system is that it’s a minimum of CHF 5 (USD in fact, but soon in CHF base currency) per month, while I would have liked a little lower. But then, I bypassed the system with this proposal:
Let’s move on to the star of the day: the blog!
Happy ninth birthday again by the way 🎂
“We want numbers MP, we want numbers!!!” I hear the geeks and voyeurs that we all are a little bit screaming.
Here are the blog stats (including revenue and profits!)
Page views
As we are in the voyeurism that serves no purpose in a side-business, except to satisfy the ego, here we go for the number of page views on 2022:
Newsletter: +13% growth
4'694 subscribers at the end of 2021, and 5'260 subscribers at the end of 2022.
But above all, it’s the opening rate of my newsletters that interests me the most, because it shows me the interest (or not!) of the readers of the blog. And 2022 was really a great year, because the opening rate went from 65% to 71%! Thanks to you for your trust.
Traffic
The 2% growth in page views is pretty normal. If time allows, I should be able to publish a few more articles in 2023, and thus increase this metric.
On the other hand, it’s interesting to see the 174% gain in visitors. By investigating a bit, this peak happened mostly in December, when the Blick published an article on the FIRE movement.
Blogposts
The pace was quite good with 37 blogposts written in 2022, compared to 32 in 2021.
Nevertheless, I did some shorter ones to quickly answer recurring questions from readers. This format is nice and a nice change from the rhythm of in-depth articles.
But, I must say: I still prefer the in-depth articles :)
Ditto, I thank the readers who alerted me when I started to talk too much about tools to earn a few dozen francs like Rabattcorner, vs. talking about longer term topics.
I’ll take good note.
As well as the desire of some to get a good dose of motivation from my “Net Worth and Savings Rate Update” articles which seemed less interesting to me, but which seemed quite useful in the end for some on the way to financial independence in Switzerland.
In conclusion: I welcome any feedback on the content and direction of the blog — as long as it is constructive!
Media
In 2022, the blog was featured 3 times in the following media: Bilan, Raiffeisen Magazine, and Blick.
The interesting point is that this is the second year in a row that an established Swiss bank has talked about financial independence (last year it was UBS with its youth blog). Proof that the subject is becoming more and more mainstream among the new generation? We’ll see in a few decades :)
If you are a journalist or a member of a community (such as a university newspaper or any other media), contact me via media[at]mustachianpost.com if you are interested in an interview on the topic of financial independence in Switzerland (aka FIRE). And we’ll gladly talk on the phone.
Blog income and expenses
Ah, here we are, we’re getting to the crunchiest part for us monetary peeps :D
As last year, I give you this note that I find important:
One of my reader buddies recently asked me:
“But Marc, aren’t you afraid of making people jealous? And that some people won’t come to your blog anymore after reading this article?!”
I replied: You, are you jealous when you read these figures?"
“Well, no, clearly not. On the contrary, it inspires and motivates me to talk to another Swiss entrepreneur who thinks the same way I do!”
So my answer was: “That’s it! That’s exactly why I’m so transparent: to inspire readers. To bring them value. And the benefit of this strategy is that the ones who stay are the people I want to talk to and who in turn inspire me (i.e. not the jealous ones)!”
Enough blabla, let’s get to the numbers!
2018 | 2019 | 2020 | 2021 | 2022 | |
---|---|---|---|---|---|
Revenues | 4'671.05 | 18'374.37 | 98'619.36 | 106'983.09 | 128'782.44 |
Expenses | 415.38 | 8'413.92 | 27'274.58 | 21'098.14 | 21'560.35 |
Profits | 4'255.67 | 9'960.45 | 71'344.78 | 85'884.95 | 107'222.09 |
Two comments this year:
Business Ethics
Since 2020, I am re-inserting this paragraph so that newcomers are aware of my policy on this subject:
“Profit is tied to the topic of ethics. In other words, how not to fall into the “make cash at any cost with the blog”, and end up losing readers one by one.
Because let’s be clear, I’m the first one to unsubscribe from a blog if I start to see that the opinions become biased by money.*
So this topic is very close to my heart and that translates into things like:*
Clearly telling one of the banks I recommend that no, they won’t have exclusivity on my blog, because it’s all based on my honest comparisons (which they understood very well)
Keep recommending Interactive Brokers * as the best online broker for a Swiss investor. And this even though I get much less affiliate commission than with other online brokers in the market
Don’t accept any sponsored article (I get several requests every month!) because first, it’s never adapted to Switzerland, and second, it would denaturew the blog
To mention you in a transparent way the affiliation links so that everything is clear between us (if it happens that I forget, don’t hesitate to point it out to me — there I can get better in 2023 because I missed it too many times in 2022, sorry!)
To not judge or religiously push my choices, like when a reader tells me that he/she will stay at the Raiffeisen because it’s profitable with all the museums he/she can visit for free every year with his/her family. And on the contrary, these exchanges inspire me with food for thoughts
Never sell the email addresses of the readers registered to the newsletter
And, finally, even if it seems so obvious to me, only recommend tools and services that I use and have tested myself on a daily basis”
Forum
And we won’t forget our dear Swiss FIRE community who meets on the forum.
Here are the updated statistics of this latter:
2018 | 2019 | 2020 | 2021 | 2022 | Total 2016-2022 | |
---|---|---|---|---|---|---|
Users | 210 | 344 | 951 | 843 | 2'066 | n/a |
Created posts | 5.2k | 6.9k | 17.7k | 22.4k | 15.3k | 68.7k |
Unique visits | 15.6k | 30.1k | 50.9k | 70.4k | 71.3k | 245k |
Pageviews | 691k | 1.1M | 2.3M | 3.5M | 3.4M | 11.4M |
I would like to take this opportunity to thank again our two moderators Julianek and Bojack for their involvement which makes the forum a quality place. Even more so with the heated discussions that took place in 2022. THANK YOU!
I already told you how my first Fridays at 80% were a blast.
Well, I can confirm that it’s still a fantastic time!
2022 was in the name of “balance” in order to reach a certain serenity between family, job, personal projects.
2023 will be in the name of fulfillment by taking full advantage of this 80%, spending my Fridays writing blog posts, analyzing real estate opportunities, or having fun with the optimization of my blog’s performance.
I’m thankful for this situation. But as they say: “We have the life we create for ourselves!”
The redesign of the site also involves a change of engine behind the scenes.
My goal with this is to move away from my geeky setup to a content editing tool that is more understandable to the average person.
Especially my German translator, who also does the proofreading!
All this should allow me to automate a lot of things in terms of publishing, and thus to free up as much time as possible for my primary passion: writing :D
I also plan to launch my rental property program for the acquisition of property in France.
I know this market well after having acquired a first rental property in 2019, and a second building in late 2022.
But I’m not putting any pressure on myself, and plan to release it in the second half of the year. But it should be OK, because I already have a good base of slides structure with the Swiss version.
Finally, I end this ninth anniversary celebration with you, dear reader, without whom this would be meaningless and non-existent. THANK YOU, sincerely!
Here we go for another year!
* This symbol indicates where my post contains affiliate links. If you follow one or more of them, you won’t see any difference compared to a standard link — but the blog will receive an affiliate commission. Thank you for this. As usual, I only write about and review things that I use in my daily life, or that I trust.
(header image credit: pexels.com)
]]>That was me a few months ago.
And then a real estate opportunity came out of nowhere — well, not that much actually, because it came via our real estate network built in 2019.
An acquaintance emailed us to say that he had decided to sell one of his properties.
And that he remembered that at the time we told him we might be interested.
In addition to being unplanned, this property was located abroad (in France) whereas our focus from now on is on the Swiss market.
But since they were acquaintances, and their property was renovated and in good condition, I still took the time to analyze it all.
As usual, I used the calculator of Horiz.io (formerly rendementlocatif.com) to get the return on equity.
Usually, I’m looking at a range of 10-15% return on equity. In this case, since we were really not inclined to re-invest in this country, we were going to be even stricter and aim for 15-20%.
To achieve this, we first had to negotiate the sale price down by 15'000€.
Two e-mails later, the sellers were OK, because they knew us and knew that they would not have any bad surprises with the banks or at the notary’s office.
To be as close as possible to the 20% return on equity, we then had to tackle the financing.
As it was not planned at all that we buy a second rental property in France, we really went for it without fear of losing the deal.
We wrote to our banker from the previous deal, explaining that we had a property in mind, but that he had to follow us at 110% for it to be really worth it.
And that if it wasn’t possible for him, we would understand, but we wouldn’t follow through.
A short break for the readers with awe in their eyes: But why would you borrow 110% of the rental property value?
A 110% mortgage is used to finance the property at 100%, and to use the remaining 10% to pay notary fees and other bank charges. This allows the buyer to not have to disburse any equity when purchasing a property in France.
So basically when you buy a rental property in France with a 110% financing, it means that you literally take 0€ out of your pocket.
Nice leverage effect!
Our bank manager in France has changed since 2019.
He is much more motivated and go-getter than the previous one.
He told us that the 110% financing was rather an exception than the rule, but that he would try to get it through the internal commission.
We agreed together that we would not be too greedy on the rate (which increased from about 1.6% to more than 2.2% in 6 months in 2022…)
Ditto, he could keep the usual (and unique!) application fees without a discount where he makes his margin.
One week later, we received an agreement in principle.
And we sent our formal offer to purchase to our acquaintance who accepted it.
In real estate, as in other businesses, the hardest part is the first time. You face the unknowns of the domain, not to mention the banking and tax jargon. You find solutions as you go along. And when the second time comes around, everything seems so easy and known in advance.
That’s exactly what happened in our case.
Within a week and a half, we had signed a binding offer to purchase at 250'000€ with little emotion or fear. Even for Mrs. MP it was as if we had bought a new wardrobe at IKEA: “Been there, done that… how boring!”
Even when we signed the forward sale contract as well as the final sale contract at the notary’s office, we still opened a bottle of champagne… but more by principle to make the purchase conscious than to celebrate it 😅
I say this not to brag, but to show you how easy everything becomes once you break your glass ceilings about this or that subject.
It becomes a skill that you master.
And I might as well tell you that as for any investment matter (stock market or real estate), it is the repetition and the reflex to make your money work that generates the machine that is compound interest.
As real estate investment requires more effort than investing in the stock market in an ETF, it is normal that it is better rewarded. I expect a 6-8% return on the stock market over the long term (>10 years), and I aim for a minimum of 10-15% for real estate in France.
And drum roll, for this unexpected building, we will reach an internal rate of return on equity (after a resale in 10 years) of… 21.18%.
That is to say an net enrichment of about 72'000€ in a decade, without taking a single CHF out of our pocket :)
As we have other real estate investment projects in our sights (see section below), this new building abroad was supposed to be without renovation work.
On paper anyway ^^
Basically, out of all the apartments, only one needs to be refreshed (a good paint job and a change of heating and it will be done!)
All the others have already been fixed.
And the other important point for us: all the apartments are rented, AND have been rented without interruption for the last 15 years!
The opportunity was just too good to pass up.
And yet, we tried to find every excuse not to take it because we wanted to focus on Switzerland so badly.
Which brings me to the next key point if you are looking to buy in France yourself.
France has introduced a new Energy Performance Diagnostic (DPE in French, aka Diagnostic de Performance Énergétique) in 2021. This legal document implies that any housing classified G+ (consumption > 450 kWh per m² and per year) can no longer be rented from 01.01.2023. Ditto for housing classified G in 2025 and for the F in 2028, and the E in 2034.
While we were in full evaluation of this potential new rental building, we learned about this French DPE legal change.
We thus asked for up to date DPEs (because the old ones were blank, which is not authorized any more today).
And there, idem, no “passoires énergétiques” as they call it… all the apartments were above E…
All the lights were really green. We couldn’t not buy :D
Those who have followed the launch of my Swiss real estate program are aware of this: we want to acquire a first investment property in Switzerland with Mrs. MP.
It was planned for last September, but the business rules of construction/real estate decided otherwise.
In short, after a few twists and turns, we are getting closer.
SPOILER ALERT: the signature at the notary’s office is planned for the first quarter of 2023 — that is, if no new changes occur between now and then!
The first point that comes to mind is to never say “never” 🤣
Secondly, what I like about real estate is that there is this leverage via mortgages which are very well framed legally (i.e. the finance laws prevent you from making big mistakes by going into debt or taking reckless risks).
And that’s without mentioning the returns that are much higher than the stock market, especially when you take into account the potential revaluation of the property after a few years, which can allow you to free up cash via a mortgage increase to invest in new properties!
So yes it’s more work, but with my 80% part time job, I like to spend a few hours on it on Fridays because I don’t see it as work :)
And it allows us to diversify our investments.
So at the moment, our strategy is to continue to invest our cash regularly in the stock market via this good old global ETF, and to start building our real estate portfolio in Switzerland to increase our yields and more stable income than the stock market (and unless we get a big new opportunity, we should stay with two properties in France — but hey… I don’t swear by anything anymore!)
What’s new for you in 2023? Are you starting to invest in real estate in Switzerland or abroad? Or in the stock market? Or both?
PS: I have well received all the requests to release my real estate investment program for France as well. If all goes well, it should be available during 2023. If you want to be informed of its progress before everyone else, you can register via the form below:
]]>The numbers, the budgets, the investments, the return calculations, etc. That’s the easy part, because it’s rational.
But the psychology, the feeling of leaving the work family, wondering how those around you will react, what “the others” will think, etc. That’s the most complicated part, because it’s purely emotional.
So when I meet someone who dared to take the step of becoming a FIRE, and moreover in Switzerland, you can imagine how interested I am in his story ;)
Dror Allouche had a career in sales for 23 years. He always knew he would stop working at 40. With 6 years of “delay”, he took the plunge and became FIRE in Switzerland. For the past year, he has been juggling between the pleasure of this financial freedom and the doubts it brings.
I met Dror via the blog (another good reason for you to start one!)
We hit it off because we have a few things in common, especially our professional field and the age range of our children.
When he proposed me a year ago to share his experience on the blog, I told him that I was interested, but after 6 months or even a year. My goal was to have something concrete, something out of real experience.
So here we are at the end of 2022, exactly one year after the beginning of his early retirement.
And he shares with us today his FIRE experience in 6 points.
I’ll pass you the keyboard Dror :)
This is it. One year into my new lifestyle and embracing financial independence.
In November 2021, I left my corporate career with the idea of living off my investments in Switzerland, following the classic FIRE method. My annual expenses multiplied by 25, invested mostly in a global fund (ETF) that replicates the market index.
Below is what I learnt in 6 points.
Passively investing in the markets is an exercise of calmness. You have to be able to continue, or even increase your investments when everything goes wrong. I learned to do this for 20 years and it was one of my keys to success.
But living off your investments is a different, more complex skill. Usually, we like to be in control. In the first part, I used to increase my investments when the markets went down.
In my new life, I don’t even have that tool anymore😀. And when the markets go down (much of this past year) and your spending continues, it’s another level of calm you have to achieve.
So if you’re dreaming of this life, make sure you work on this skill.
There is a link between creativity and quality time. If your schedule is very full, you stifle your creativity.
If you have enough quality time (appointments with yourself), it will naturally develop.
Don’t ask yourself if you are creative, create the conditions to let it express itself.
In the FIRE movement, there are two main parts (Financial Independence/Retire Early), I’ve been thinking hard about the second part, and I think…(caution: affront to the movement 😀)
It has become obvious.
I’ve left a “corporate” career and I’m embracing a new one as a “solopreneur”.
I’ve always been attracted to financial independence for what it offers “the freedom to do what I want without financial pressure”, but I’m not/no longer attracted to the pure retirement part.
There are no quick fixes for everyone. The choices are individual and situational. It’s not either/or. It can also be a whole, at different times in one’s life.
I loved my executive career until the last day. I met some amazing people, learned a lot, and grew… But I couldn’t see myself continuing for another 20 years.
And this is where financial independence comes in.
If I didn’t have financial security, I would have jumped at the first job.
Financial independence has allowed me to create a context to unleash my creativity.
In doing so, I found what makes me tick and is likely to do so until my last day.
“Striving to become the best version of myself and helping people who share that desire.”
Writing and coaching are my vehicles.
They fulfill me intellectually and introduce me to incredible people.
Add autonomy and freedom. (I manage my schedule and the people I work with.)
Given that, why stop?
Despite these benefits, I keep the following point in mind.
When I recently started my coaching business, I was very intentional and put in place a few principles like:
And here again, my vision on this point has evolved 😀
My life is becoming a whole between personal and professional. I do (mostly) things I enjoy. I have a lot of opportunities to maximize time with the people I love.
So, if I need to sprint to launch a new offering (the case right now), I do that. I create an imbalance that I then offset with a cooler phase. Sprinting and light jogging.
It doesn’t matter what you do. To make a difference, you have to find customers. And that’s one of the big challenges I see for entrepreneurs and even more for those who sell themselves as a personal brand.
It’s easier to make noise about your product than it is about yourself.
You can have a great service, be very good, but if nobody knows, it won’t work.
Technology today allows you to multiply your exposure. But you still have to gather your courage and do it. Get out of your comfort zone. Tell your network. Create content.
Fear is often tied to false beliefs.
“This isn’t me.”
“I don’t know how to sell myself.”
“When people say no to me, they reject me.”
If you’re dreaming of a different life, that entrepreneurship is part of it, tackle these false beliefs before you do anything within your comfort zone.
But at the end of the day, no matter what you do, salaried, entrepreneurial, or nothing (FIRE purist), make sure you…
If you’ve been in corporate, you’ve heard this everywhere.
“Our mission, our values, our goals.”
And sometimes you get a sour taste of it. It’s relatively easy to plaster them on the wall and harder to live them.
And that’s even more true in our personal lives. It’s easy to talk about life, and it’s hard to live it.
But now you have no excuses. You are not dependent on your boss, or your company. You are in charge.😀
Most people don’t.
In the famous book “The top five regrets of the dying”, author Ware Bronnie, who was caring for patients in the last 12 weeks of their lives, summarized the 5 regrets as follows:
There are lots of methods to help you do one of the most important exercises in your life.
But none of them can do it for you. You have to give yourself time to reflect.
I like Marshall Goldsmith’s simple but comprehensive approach in his book “The Earned Life.”
The Triple-A
Aspiration: my why. There is no end date. By giving yourself time, you develop and refine it throughout your life.
Ambition: my goals. They have an end date. And ideally, they are in line with your aspiration.
Action: what you do every day. Without reflection, they tend to become an automatic response to all the demands and distractions of our days. Without realizing it, you end up spending your life doing them.
If you can gain clarity on these three axes and separate your happiness from the result, you maximize your satisfaction and limit your regrets.
I don’t believe in miracle recipes, but I hope everyone can get something out of it to improve their lives and prepare their FIRE :)
Whatever you do, put intention at the heart of your actions.
Happy journey.
PS: For those who want the whole story behind my early retirement, this is where it happens.
Reading Dror’s text, it first reminded me of my review of the book “The ONE Thing” (point 5), where the author explains the importance of balancing private life (family, sports, etc.) and “professional” life (personal projects, creative activities, etc.)
I agree with his analysis of how to manage this, i.e. don’t do a sprint-marathon for 1 year and forget about your family life!
The other thing that struck me in talking to Dror beforehand is that we all really seem to be repressed and fearful entrepreneurs in the FIRE community!
As I wrote:
Choosing the FIRE path over the entrepreneur path is therefore more of a psychological choice than a financial one.
Dror also confirmed this point that financial independence frees your creativity, and gives you the space to try new entrepreneurial adventures 1.
Finally, this whole article confirmed to me that the hardest part of the FIRE movement is the psychology! And I believe that gradually reducing my work time (as I’ve started to do) is going to be my way to early retirement.
Note to self: I’m sure there are books on “how to handle retirement” but I never googled it until now, because it was still far away but it’s getting closer and I’ll have to think about it!
And you, how does this FIRE experience sharing inspire you?
Header photo credit: Bouvier Maxence, Stoos - Frontalpstock - Klingenstock
Dror has had plenty of time to try out new businesses in recent months, including coaching based on his 23 years as a leader. As my feeling was good (he is a calm, humble and honest person), I agreed to give him a hand by talking about it here. In exchange, he offers interested MP readers the following:
“I am offering the first five responses an entire two-hour coaching session 1:1 with me. Here is the process.
Send an email to dror@optionstogrow.com with the title “I am interested (from MP)”. And a short presentation of yourself.
I will send a link to my calendar (for the first 5 readers only) with two dates:
- First date: 20 min. Assess if we can work together. (both sides)
- Second date: 2 hours of free full coaching.”
↩︎
I’m writing this on a Friday in the early afternoon.
It is 1:47 pm.
And you’ll never guess what I’ve been up to now?!?
The crazy thing is that this is the 3rd Friday that I have this feeling!
I wanted to wait until I was sure I was realizing and seeing how well I was fitting in.
I’m switch down to a 80% part-time at work!!!
This is a crazy thing.
I’ve been blogging since this morning 8am. It’s pure happiness!
I was afraid that Mrs. MP would think I was off work and ask me all sorts of things (like “By the way honey, I wanted to talk to you about…”, or “Do you have time to pick up MP kid #2 at his activity in an hour?”).
But nope, she acts like it’s a normal work day. She does it right!
Likewise, the MP kids are at school from morning until 3:45pm.
I swear it’s an amazing feeling.
I feel like I’m living a new life.
I told myself that I was going to test it really hard for 6 months to see how it goes. And that at worst, I could always arrange with my employer (to whom I explained that I just wanted to try it out) to go back to 100%.
But how can I tell you…
I will never go back!!!
I feel like I am already in early retirement.
The 4 day weeks are flying by, when I only subtracted one day.
And the weekends. Oh boy, the weekends!
Fridays are dedicated to the blog and its related activities. And since I’m at home, I take breaks during which I tidy up a bit here and there, pay the last bills received, scan them. And then, the few chores are done, and I go back to blogging. All day long!
Then comes Saturday. Where I can just enjoy time with my little family. Nothing else to do.
And I’m not talking about Sundays when I’ve completely disconnected from work, and feel like I’ve got a long weekend…
And it’s that feeling every week!
I thought it would fade after the novelty wore off. But no, it’s just an amazing pace of life.
I think I’ve found the perfect balance until full early retirement. And like I told you before, I like my professional job too. As a result, I feel like I’m living a daydream 7 days a week.
I am clearly lucky to have reached such a stage, and am very grateful.
This change of pace has allowed me to think again about my transition to a 100% FIRE life.
I still have some concerns about the psychological transition and associated social loneliness that early retirement at 40 can generate.
Especially after experiencing COVID during which I realized the importance of those coffees and other “jeudredis” with coworkers-friends at work.
I think my FIRE model is going to be to lower my work rate crescendo (vs. stop it completely overnight), in order to progressively appropriate these days of freedom.
For example: with this new day entirely at my disposal, I took the opportunity to go to lunch with another entrepreneur (in rental real estate for his part) last Friday. It’s a bit weird, because it feels like I have a new network, but in parallel to my usual professional life.
So here I am, wondering about it. But I’m not going to take it too far: I’ll go step by step, and I’ll see what happens.
The weirdest and “hardest” part of all this is telling myself that it’s OK not to earn 100% of my salary, but only 80%. I say this from the point of view of a frugalist who wants to optimize his income as much as possible.
In order to reduce this feeling of “regret” about not earning the maximum possible money for my FIRE plan, I set a goal to try to make up that 20% through my book and program income. But you can imagine that if I manage to do that some months, a corner of my brain still comes to me and tells me that if I worked at 100% I would earn even more… ^^
As they say, it’s the journey that’s most interesting, not what’s at the end!
Working part-time at 80% is such a great way to live!
If you get the chance to try it out, I can’t recommend it enough!!!
I’m currently experiencing this as a delicious taste of my future early retirement FIRE.
And you, have you always worked 100%? Or have you ever had a taste of part-time work? What about the impact on your FIRE plan in terms of financial and psychological aspects?
]]>For newcomers: True Wealth is one of the oldest robo-advisors in Switzerland. I didn’t talk about True Wealth much, because when it comes to asset management, we are more DIY than automated on this blog — in order to optimize our management fees as much as possible ;)
True Wealth are nevertheless serious and secure since they rely on one of the two following deposit Swiss banks for its assets: the Baselland Cantonal Bank (BLKB) or Saxo Bank (Switzerland) SA.
But at the beginning of November, True Wealth announced its 3rd pillar offer which shook up the competition of the classic pension funds (good for us Mustachian investors!) with one of the best offers on the market — at least on paper.
In fact, their ad did the trick as they are selling this competitive advantage in “0.0% True Wealth fee” mode.
So yes, True Wealth does not charge any fees on its behalf.
But as with any investment solution, the products themselves have fees.
So in reality, for a risky type of profile (99% of equities’ asset class as an investment strategy) such as the Mustachian investor that we are, we are at 0.14% TER (“Total Expenses Ratio”).
Then, by digging a little, I quickly realized that their pension solution is indeed free of True Wealth fees, but on the other hand, they are investing mostly via ETFs 1…
This means that you have to add stamp duty to the TER. This has its disadvantage compared to 3rd pillar retirement solutions such as finpension or VIAC which are investing mostly via index funds without these stamp duties to pay (that eat your returns).
And finally, you have to add the transaction fees and the currency exchange fees.
In total, we arrive at around 0.20-0.22% when investing your third pillar money at True Wealth.
But then, 0.22% is still lower than True Wealth’s competitor — aka 0.39% for finpension and 0.39-0.41% for VIAC.
So you could say that True Wealth pillar 3a is the new best 3rd pillar in Switzerland to maximize the returns of your retirement savings! 🎉
Except that…
True Wealth are very transparent in their FAQ, which I recommend you read here.
They indicate about their 0% fees:
The cost regulations of the 3a retirement savings foundation state that the Board of Trustees could introduce a management fee to a maximum of 0.225 per cent per annum on the securities portion.
Nevertheless, due to a contractual agreement between True Wealth and the Foundation, no management fee will be charged on the pension assets until further notice. If, contrary to expectations, the Foundation Board decides to introduce a management fee at the beginning of a calendar year (possibly at the beginning of 2024 at the earliest), we will inform our pension fund members of this in July of the previous year.
Idem, on the MP forum, an employee of True Wealth confirms that True Wealth’s strategy has always been to move towards a decrease in fees in the 10 years they have been in existence. This reduction will be possible thanks to the increase in the share of index funds in their pension investing solution.
Nevertheless, there is still some doubt.
What should you do if you are choosing your new 3rd pillar to invest part of your wealth?
For the moment, my decision is to wait before switching my 3rd pillar from VIAC or finpension towards True Wealth.
I will indeed set a reminder for myself at the end of July 2023 to see what happens with the Foundation behind True Wealth 3a.
If True Wealth stays with 0% management fees as announced (and I trust them enough since I’ve been following them since their debut in 2013 already), then I will name them as the best 3a pillar in Switzerland, open my account there, and report about my experience here on the blog.
If they add the 3a pension foundation fees of 0.225%, then they will still be in the top 3 of the best Swiss 3rd pillars.
See you on 31.07.2023 to take stock of True Wealth 3a :)
There is still time to save on taxes for 2022, and to fill up your 3a pillar to the max (6'883 CHF this year) to make your retirement savings grow by investing them AND save about CHF 1'000 in taxes each year!
You will find in this article all the details of my comparison of the best 3rd pillar for investing your retirement savings.
PS: in addition to the uncertainty of fees that may increase, the investment strategy proposed by TrueWealth’s 3a solution is far from optimal for us Mustachian investors who wish to be globally exposed to equities. Indeed, TrueWealth’s pillar 3a is limited to a maximum of 65% foreign currency exposure which is too low for my risk profile.
True Wealth indicates on their site and on the MP forum that they will gradually offer more and more index funds rather than ETFs for their Pillar 3a investment strategy. ↩︎
The title of my article is really clickbait, and yet it’s not for lack of trying to turn it differently ^^
Anyway, as long as it works and it allows us to increase our net worth by a few dozen CHF, we won’t deprive ourselves :)
I would like to thank Sidonie who shared this tip with me: thanks, you’re doing great!
I had already explained to you in a previous article that I regularly use the Rabattcorner cashback platform to get cashback on my online purchases in Switzerland (about a hundred francs per year) via their partner stores.
And as Sidonie noticed, Rabattcorner has a partnership with the Swiss online casino Jackpots.ch
To earn those CHF 70, here’s how it works:
As usual with our savings, each of our CHF 70 to Mrs. MP and myself will be directly invested in the stock market (via our broker Interactive Brokers) so that they make babies.
And thanks to the magic of compound interest, these CHF 140 will be worth CHF 312 in 10 years :) Now it’s up to you!
If you have other good deals like this via a cashback system in Switzerland, I’m happy to hear from you (reply to any of my emails to share this with me).
In the meantime, I wish you a good harvest of your CHF 70 on Rabattcorner :D
]]>Hey there, I’m Linda, 36, two kids (9 and 4), not married but living in concubinage with the father of my children in Zurich city.
I grew up in a proletarian family in Romandie.
My father worked in the industry sector while my mother was housewife with three children.
We had no pocket money, no vacation, no expensive hobbies or activities. But I still had a nice childhood.
We had to work if we wanted to earn any money.
So, when I was 14, I worked 2 hours per day (during the school vacation) in a pharmacy which gave me CHF 4.50 per hour.
After one week, I earned CHF 45.00, I was so happy!
I bought a silver ring that I wanted for so long :) I kept it as a memory of my first paycheck!
When I was 16, I could work as a cashier at Carrefour and worked every Wednesday’s afternoon, Thursdays after school (it was the “nocturnes” till 8 p.m.) and Saturdays.
I was making CHF 16.45 per hour and was financially independent from my parents.
I could afford new clothes, a mobile abo, and even vacation with my friends.
Then, during my studies I always had students’ job to be able to finance my expenses:
The most important thing was to be financially independent which meant to me at that time: be able to finance my expenses myself (because my parents couldn’t).
The younger me didn’t save money unfortunately.
I always spent it all, after paying all the bills first.
I wish my parents had given me some advice like “Save some money every month for special occasion”.
But I think they hadn’t had a financial education at all themselves…
It’s luck who steered me to investigate money management and personal finance topics.
Indeed, I started to educate myself about personal finance when I started to work in managing several pension funds.
That’s when I understood the typical Swiss 3 pillars’ system, and how retirement money is calculated.
My parents didn’t plan anything for their retirement (no pillar 3a, nor voluntary contribution to the 2nd pillar).
They will get the absolute minimum.
My father lost his job when he was 60, although he was never ill, and did a spotless job — he was even the one who trained the newcomers.
My mother was a housewife her whole life.
She thinks I am too anxious about the future, and I should take it easy.
They are lucky because they are confident about the future, and take life as it comes.
I want to be a multimillionaire.
I want to quit my corporate job.
I want to let my money work for me, while I can spend time appreciating my environment.
Then, I would spend time reading books (my reading list is so long!), going to film festivals, walking along the seaside and in the forest. Swimming once a week. Take the train during weekdays to nowhere, and visit a village randomly. Visit more often the Swiss French part of Switzerland.
“Slow Life”, that is!
My more realistic goal is to have enough money to live a decent life (like now), and not have to worry about money when I am retired.
I have two kids.
This make it quite difficult to save money, but there is always potential to optimize.
Below is how we managed to reduce our expenses, and have a minimalist lifestyle:
This gives this actual monthly budget:
Category | Amount (CHF) |
---|---|
Rent | 2'143 |
Food, lifestyle | 1'100 |
Health insurance | 1'250 |
Childcare | 650 |
Internet / mobile | 85 |
Public transpoorts | 42 |
Insurances (liability, car) | 80 |
Traffic fee | 50 |
Gas | 200 |
Donation | 70 |
Vacation | 300 |
Monthly total budget | 5'970 |
Currently I am saving a “nest egg” in order to reach 1 year of salary equivalent on our saving account.
I already saved 11 paychecks so far :)
It was not easy. It took me 3 years!
This money is only for urgent survival matters. Which means it is NOT for vacation, NOT for a new car, NOR whatever.
It is for unpredictable costs like a high dentist bill, an urgent reparation, or in case of incapacity to work.
As for kids, we have a saving account for each one. And the goal is to give them CHF 15'000 when they are 18 years old.
I didn’t have a saving account as a kid, but I wanted to build one for the kids and hope they will use it wisely.
When my one-year salary saving goal is reached (normally by the end of 2022), then I will start investing.
My investment strategy will be:
With regard to pillar 3a, I’ve one third pillar account at VIAC, and one at Frankly.
Unfortunately, I have a mixed pillar 3a account at a life insurance (since 2016) which is invested in a fund. I didn’t terminate it yet because I will lose money. I am waiting until I reach the breakeven point to stop it. Until then, I must pay monthly CHF 400 into it…
Then, as soon as I am 40, I will make yearly purchase in my pension fund plan.
This in order to increase my retirement income and save taxes. I already increased the pension saving on the maximum by switching on the higher pension plan of my company.
As a female person, I think woman should never stop working!
I’m working 80% since I finished my studies.
And although I’ve kids, I still think every woman should work minimum 60% (unless you are already financial free).
The reason is that senior poverty is a female matter.
Trust me, I see how much woman and man get as retirement pay, and the gender gap (precisely part time gap) is huge!
The risk of poverty is even bigger when you are a single parent.
Every person who works part time has a gap in his retirement income.
It is nice to spend more time with your kids, but childcare should be divided between both parents. And to be honest, do you want your kids to have to support you financially when you are a senior?
And finally, let me answer the follow-up question that MP asked me:
When you meet a female friend who isn’t aware of retirement nor personal finance topics, what do you advise or urge them to do? (and do they act upon it?)
To be clear: my female friends are often overstained with pension/finnacial topics.
Either their husband/partner is taking the lead of finances, or they are single and are a bit confused.
When they realize that I understand the topic, they bring me the financial statement of their pension fund (aka “certificat de prévoyance”), and I explain them how to interpret all those numbers and we check what their contract is stipulating.
For instance, some of my friends had several employers and did not transfer their vested benefit amount to the new pension fund, because they assumed it would function automatically.
So we first write at all the previous pension funds, and finally, to be sure, we ask at the 2nd pillar central office if there is anything left for that person.
Then we transfer everything at the current pension fund of my friend.
Also, I tell the ones who are living in a partnership (i.e. not married) to announce their partner so it is registered in the pension fund system, and in case of death the partner would get a widow rent.
It’s very important to do it while you are still alive (otherwise it can be very complicated).
So that’s for the second pillar.
Then I usually tackle with them the pillar 3a topic.
I always advise them to put the maximum amount on their pillar 3a (bank product and not insurance!!!). I therefore insist on a VIAC Global 100 solution.
Finally, some of my friends are good in saving monthly.
But, like many people (not only my female friends), they don’t invest the money… it stays on a normal bank account.
Often they doesn’t know where to start… and there is also a lack of interest.
For the ones who want to invest without doing it by themselves, I recommend the app “Findipendent” as it’s clear to understand, and easy to setup.
But they are still very skeptikal.
And most stick to their conservative saving account…
I like such stories a lot.
I find them inspiring for readers who didn’t yet start their personal finance journey.
What I also particularly like about it is the reality check of where people get stuck: psychology — whereas too often I focus on the functional how-tos here on the blog.
But most blockers are in one’s brain, not in how to do things…
Note taken for myself to dive more on this spectrum of personal finances in the future!
I was lucky enough to have a strong money education. Not that much on the how-tos, but on the mindset: save money, don’t splurge, plan for the future, work during summer if you want to have money, and all this kind of things.
And although my parents were handling their money well, they raised us within money limits.
This technique was the most effective when I transited from high school to university out of my home town.
My father did compute a monthly allocation that I would get. And that would be it.
It was paying the rent and basic food. No extra nor nothing…
It sucked back in the days 😅
But that was the most crucial part of my financial education.
It made me hungry.
That hunger made me look for student jobs that paid not very well… as this sucked, it led me to be creative and start my first freelance gigs.
The path wasn’t easy, but it was very instructive.
That’s why I relate a lot with Linda’ story.
And that’s also her kind of story that keeps motivate me to write on the blog every single week: to avoid other Swiss to rely on luck (to be in a job in finance like Linda) to get their personal finance in order and in control.
When I read what Linda does for her female friends about their 2nd pillars, i.e. to look for all their vested benefits to bring them back in one place, I was like:
Don’t you know about kala.ch?!
Indeed, this service — which is still free for private users as of this writing — does exactly the same thing as what Linda did with her friends…
Except that it takes only 3 minutes ^^
If you’re in a similar situation, I recommend you to check my detailed Kala review here.
Oh boy, I love this topic :D
First thing first, the first thing I’d tell Linda would be: you can optimize your setup even more in terms of fees of your pillars 3a.
Just swap frankly with finpension, and you will be all good with the two best third pillars out of there, namely finpension and VIAC. If you need to be convinced by numbers, just check my pillar 3a comparison article here (includes bonus welcome codes).
Then, one of my ongoing fights on the blog: those damn mixed pillars 3a!
I STRONGLY advise Linda to go through her calculations again, as I’m convinced her mixed 3a pillar isn’t different than mine, and that there is nothing such as a breakeven point with those scams…
Use my detailed article on the topic of mixed pillar 3a termination to triple-check this point, as the money implied in there is usually consequent.
I thank Linda for sharing her experience with her female friends who are stuck with investing.
First, it showed me that Linda wasn’t aware that my “Swiss Investor Program” for beginners was existing in German (on top of English and French). Now she knows — and you too :)
Second, it confirmed me that not everyone is ready to go with DIY investing from day 1 (that was actually also my case years ago), and that I should write more about the initial stages of any aspiring investor’s journey.
Because, indeed, solutions like findependent.ch make total sense if you compare them to a savings account or even a checking account. Moreover when you’re really good at saving money!
That’s a topic I don’t address much here, being a male myself.
But I find the angle taken by Linda very worthwhile, when you think at how the gap in retirement income can be huge. And even though not all female workers end up divorced at retirement, I also think like Linda that each and every Swiss female should have total control and peace of mind about their personal finances.
This in order to be independant, and live a life where they don’t have to work neverendlessly due to bad life planning and just relying on some luck that may never come.
And you, how does Linda’s story inspire you?
]]>The questions that come up the most are:
Here is the copy paste of my answer each time below.
The first thing to note is that the funds are not part of Credit Suisse’s balance sheet — they are segregated assets and do not fall within the bankruptcy estate (if a Credit Suisse bankruptcy were to occur, which is not the case as of today).
Also, it should be noted that the entity we are talking about for our pillars 3a is the entity “Credit Suisse Switzerland”, not the group.
As Daniel Peter, CEO of VIAC, explained to me: “The Swiss unit would also fall under ’too big to fail’ and would be rescued.”
Moreover, the funds are only kept by the bank on a fiduciary basis. This means that if Credit Suisse were to close its doors, another banking institution would take over this fiduciary part of the funds, and it would not change anything for us investors in these funds via our pillar 3a.
Finally, another point of re-insurance: there are VIAC and finpension that use these Credit Suisse funds, but also many other pension funds. In this respect, this unit has a very high relevance for the stability of the Swiss pension system, which strengthens the political backing if Credit Suisse should approach bankruptcy.
For my part, and this is just the opinion of a guy on the Internet who did his own research, I’m not going to change anything.
As a Mustachian, I continue to recommend a 100% stock strategy using either finpension or VIAC, which I believe are the two best pillars 3a in Switzerland to date!
In preparing this article, I looked at the differences in fees between Credit Suisse and Swisscanto funds.
The main difference is in favor of Swisscanto. Indeed, all their products are at 0% TER, while for Credit Suisse, there is one of their products that is at 0.09% TER. But considering that it only represents 10% of the “Equity 100” portfolio, it’s not that much.
Nevertheless, if I were to open a pillar 3a with finpension today, I would still go with Swisscanto for this mini reason.
If you haven’t already done so for 2022, there’s still time to open a pillar 3a account to make your savings grow AND save about CHF 1'000 in taxes each year!
And you, how do you live this risk of bankruptcy of Credit Suisse?
]]>And I’m glad I did!
Indeed, Zak recently announced that they were integrating a cashback system via the shopmate website.
Cashback with Zak works differently from the system I use with my credit cards, where I get CHF back on every purchase.
The system chosen by Zak is based on a third party cashback player: shopmate.
Concretely, it works like this:
shopmate is a partner company of Zak Bank.
It is a company based in Germany.
Its job is to negotiate the best discounts for its customers, which you and I then take advantage of via the Zak app.
You could also create an account directly on shopmate. But there are two advantages to do it via Zak:
When Zak gave me a sneak preview of the feature, I thought it was good news for us Mustachians.
I instantly went to the shopmate website and then…
Argh, the site is only available in German…
I almost thought that I wasn’t going to blog about it because it’s so uncool, etc.
But in fact, everything is much simpler than I thought because Zak takes care of the account setup in an automated way. It’s really only during setting up the account that you need to have some basic knowledge of German (don’t worry, I took screenshots for you), and then for the menus, but they’re quite self-explanatory.
Anyway, in pictures, as usual, this is the cashback activation in the Zak app:
Once you have activated the functionality in your Zak app, all you have to do is follow these steps to make your first cashback purchase at MediaMarkt, for example:
Once you have made your purchase, you will just have to wait a few weeks for shopmate and Zak to synchronize, and you will receive your cashback on your Zak account :)
Check out the Zak cashback FAQ here. It’s well done, and answers all the questions I was initially asking myself.
One of the questions you may have is which cashback system to use, Zak’s cashback or Rabattcorner?
Both, sir!
Indeed, at the time of writing, Zak’s cashback for an order on booking.com is 5%, while it is only 3% at Rabattcorner.
In our experience, these amounts change regularly.
As a result, before placing a large order, I always check between Zak’s cashback and Rabattcorner to see which one is more advantageous, and I choose the latter.
I think it’s cool that Zak is going down this path of adding value for their customers, rather than just thinking of them like other banks that are still raising their outrageous fees these days…
If you want to open a Zak account, you can use the blog code below:
And you, which cashback system do you use? Just one? Several? None at all?
]]>Indeed, finpension has decided to play it more transparent with their pricing marketing, by including VAT in their fees.
Until now, they were selling a tempting 0.39%, but that was exclusive of tax… so in the end with VAT it came to 0.42003%.
But since October 1, 2022, the finpension board of foundation has decided that the fee will be 0.39%, VAT included!
finpension was already mathematically the best 3rd pillar in Switzerland (cf. my detailed pillar 3a comparison here, including the famous “VIAC or finpension” question), and so they reinforce their position.
As good news never comes alone, finpension has also added Swisscanto funds to its list of investment products (as a reminder, they were only working with Credit Suisse funds until now).
It allows them to be less dependent on the goodwill of a single institution, and that, in business, is not so bad! :)
I for one am still staying with VIAC, mainly because of their really cool mortgage offer.
But if you are looking for a 3a pillar in which to invest your savings before the end of the year (and save about CHF 1'000 in taxes!), then finpension remains the best choice if the lowest fees are the most important for you.
And you, which 3a pillar did you choose as a Swiss Mustachian?
]]>And not in an unlikely currency, not even in euros which are melting like snow in the sun these days…
No no, we are millionaires in CHF!
I can’t believe it, and maybe it’s because of the way it happened…
I still think about this article I wrote in April 2015: my Millionaire todo list.
And here we are 7 years later, with a million CHF of net worth in the MP family.
The funny thing about this announcement is that I’m almost disappointed in how it happened.
You know me, as a good Mustachian, I like any increase in wealth to be the result of a long-term effort, not just luck.
But there, it was the opposite.
The first thing that made my net worth jump was the increase in value of our main residence by CHF 87'000, coupled with the possibility of 100% financing through the WIR bank.
Well, if you think about it, this is the result of a long term effort, because we took a long time to become owners, and we are not the kind of people who change houses every 5 years, so we benefit from the gradual increase in value due to the Swiss property market evolution.
I am looking forward to reinvesting these new funds in a rental investment in Switzerland by the way. But that’s another story.
The second element that is really due to luck is a sad event in our surroundings, which resulted in an unpredictable increase in financial capital.
For reasons of confidentiality, I will not elaborate on this subject.
But that’s life too… you can’t plan everything via a spreadsheet… as good a Mustachian as you may be.
So yeah, I’m a little disappointed that I didn’t have to count every CHF up to a million, patiently waiting for each health insurance reimbursement and other cashback from my credit card to finally pop the champagne :)
I always wondered what it would be like “the day I become a millionaire”…
Actually, as I write this, I am in a Regio on my way to work.
I still have two arms, two legs, two hands, two eyes. And the same doubts and motivations as the day before.
But there is still something that changes.
And I’ve noticed that already since we’ve passed the half million CHF mark.
The change is psychological.
It mainly concerns my job.
I feel much more comfortable challenging things, because I know that in the worst case scenario, I have a big enough cushion to roll over.
Afterwards, I’m not rude or disrespectful, but I have a lot less pressure to tell myself “Oh my God, if I say that I could be fired”.
And the funny thing is that this new behavior which dares more things, and which challenges the status quo… well… it’s paying off in salary increases :)
As I often discuss during our hikes with a close friend, the first million is the hardest. And everything seems easier after that.
Especially in terms of the opportunities that come your way (and again, I’m biased with how lucky I am to have this blog), and also in terms of the leverage you can get through IBKR’s margin account and mortgage setups through banks that are much easier for me to negotiate with than they were back then.
Now I’m looking forward to one thing…
Since it took me 8.5 years to go from CHF 48'500 to CHF 1'044'205, I can’t wait to see how many years it will take me to reach CHF 2'000'000!
Especially since 2 millions in the MP family means FIRE (Financial Independence, Retire Early). Well, let’s be precise: CHF 2'156'000 exactly.
I’m tempted to bet that in 4 years we’ll be there (don’t hesitate to bet too via the comments below).
The patrons are familiar with this table that I send them each month as an exclusive perk.
But today being special, and because I myself would be curious to know the details of a net worth of 1 million CHF, I will share my chart publicly exceptionally:
And you, it will take you (or took you) how many years to reach your first million of CHF?
]]>I don’t know where to start, it’s so heavy!
In a nutshell:
I was rereading for the n-th time the e-mail from a reader who thanked me for my detailed analysis about whether he should stop the hemorrhaging of his mixed Swiss 3a pillar linked to a life insurance, or resign himself to keeping it because it was too late…
In his situation, the numbers were clear! It was still time to stop the financial hemorrhaging generated by the scam his supposedly empathetic insurer had made him sign a decade earlier.
Which he did by transferring his surrender value to VIAC in a Global 100 strategy. Well, before drinking the champagne, he had to dry his tears when he saw that he had financed about CHF 27'000 of bonus to his beloved insurer… risk premium my a**!
Anyway, I was happy for him.
But I was still stuck with that damn mixed 3a pillar that was pledged to my fixed-rate mortgage. And I still had to keep it until 2025…
Or how to lose tens of thousands of CHF in opportunity if I were at VIAC or finpension…
Since I had a little time that day, I thought that there must be a legal way to terminate this 3a pillar…
So I went back to the master agreement for my mortgage, and all the pledging schedules.
Because in the end, it was the mortgage that was technically blocking me with the termination of my mixed 3a pillar.
Because if I only had this 3a pillar linked to a life insurance with no link to any mortgage, I could have cancelled it a long time ago!
While analyzing my contracts, I remembered that this damn insurance company had created a sub-entity to which it delegated all its mortgage contracts.
I even found the letter telling me how much better it would make my relationship with them thanks to dedicated AND ultra competent AND super mega nice people.
Since the master agreement for this sub-entity completely replaced the previous one (you know, from that “Switzerland” insurance), I went through every line.
Every word.
Every turn of phrase.
And then… surprise!
I didn’t believe it at first. I thought I was wrong.
I reread the 30 or so pages of the contract 3 times to make sure I hadn’t missed a line.
But no…
There was a contractual loophole!
As a reminder, at this time, we are in February 2022. This is important for the thread of the story, and for you to understand why it’s boiling in me so much, still as I write these lines.
My master agreement literally stated:
Provisions for amortization of the mortgage are set out in a separate product agreement. During the fixed term of the rate, only the agreed amortization can be made.
Then, in the product agreement for the master agreement governing the mortgage, this is what was mentioned:
Indirect amortization related to the mortgage master agreement: CHF 6'768.00 per year
With this last sentence, I had my loophole!
I reread and reread the document, but there was no mention that the product used was to be my famous mixed 3a pillar linked to a life insurance from my dear “Switzerland” insurer!
No mention meaning legally that any Swiss 3a pillar could do the job!
You can imagine how thrilled I was when I found this loophole in their contract.
I was full of hope. And fortunately when I think back, because I didn’t expect what would happen next…
In February, I sent an e-mail to my “Switzerland” insurance company to ask for the cancellation of my 3a pillar linked to a life insurance, and the replacement of my indirect amortization by a VIAC 3a pillar.
Initially I did not want to cancel my mortgage as well, because it suited me and the rate was OK.
Following my e-mail, my “advisor” explains to me that I cannot change my amortization method.
I reply that he is right, and that I want to keep my indirect amortization. But that I want to change the product, and that my contract allows me to do so.
The “advisor” calls me to tell me the same thing as by e-mail, and that it is not the policy of the “Switzerland” insurance. Which I object to… again.
He tells me that his director can call me back.
Let’s do it, because I have too much time to kill, as we all know…
The director calls me back the next afternoon.
He is now trying to understand my problem. As the management changes every 3-5 years in this kind of insurance, I explain to him that I was sold a mixed 3a pillar product whose predecessor had minimized or even omitted the disadvantages, and that their product was a legal scam.
And then, all of a sudden, a door opens:
Ah, but if it’s the type of 3a pillar that bothers you, we can discuss changing it for another normal 3rd pillar without life insurance, but it must be a product of our “Switzerland” insurance for your mortgage.
Uh, thanks, but no thanks!
But we’re making progress:
We are already around March at this point…
At the end of the call, I insist to the director that I know I am within my legal rights and that I want to break my mixed 3a pillar.
And then we go into big, BIG joke mode!
The director explains to me that the “Switzerland” insurance company subcontracts its mortgages since a few years. And that I have to call one of their “Credit Officer “ because she will be able to tell me if it is OK for them to make an “exception”…
But an “exception” to what for f*** sake?!? It’s in your contract!!!
Anyway.
So I call the “Credit Officer” of the daughter company of “Switzerland” who manages their mortgages.
At first I meet a nice person.
I explain to her that I want to change my 3rd pillar while respecting my contract which says that I must indirectly amortize CHF 6'768 per year.
She seems OK with the idea. But she mentions that I will have to leave my current mixed 3a pillar surrender value as collateral.
We would also need a life insurance policy as collateral.
“No problem!”, I said to myself, thinking of VIAC Life.
Frankly, I’m not that picky if I can at least stop the bleeding of having to pay the bonuses of the “Switzerland” insurers via my 3rd pillar premiums.
I mention VIAC as a 3rd pillar, and still no contraindication on the phone.
However, things are starting to go wrong because she is trying to convince me to stay with my 3a pillar linked to a life insurance policy which is “still a good product, and that at worst I’ll keep it for another 3 years and then I can change. After all, 3 years is not a long time?”
Naaaaaaah, not at all, and neither the CHF 12'500 that I’m going to throw out the window. You’re right, I don’t know why I bother with such trivialities dear Credit Officer… Couldn’t you give me those CHF 12'500, just like that, between you and me?
Once the phone is off the hook, I send her an email summarizing my request, along with the VIAC Global 100 3rd Pillar data sheet.
And then, first LOL!
In fact, it is not possible.
No way to pledge a pillar 3a invested in securities, even if completed with a pure life risk insurance.
I was actually not surprised…
But I was pissed off that I lost over 1.5 months to get back to the same result.
After this first failure, I took a break for 2-3 days to let the anger go and stay focused on my only goal: GET OUT OF THIS SH**** MIXED PILLAR 3A no matter what!
72 hours later, I pick up my keyboard again (thanks to the blog for the prose writing training!), and re-explain in very legal terms that their answer is not legally valid under our contract.
And that I therefore reiterate my request to close my pillar 3a and replace it with another one as a pledge for my mortgage.
Of course, I get an auto-responder by e-mail telling me that the person in charge of my file is on vacation for… 15 days…
Polite as I am, I wait patiently for two days after the return from vacation of Mrs. Credit Officer, to give her time to land.
Then I write her a short and very cordial email to know what is happening with my file.
I will wait another full week to finally get an answer.
And what an answer!
We cannot respond favorably to your request, and therefore, you will have to accept this biggest scam of history that is your pillar 3a linked to a life insurance.
Anyway.
Always remaining polite and irreproachable in my words, I answer this dear Credit Officer of “Switzerland” to tell me the point of our contract to which she refers to refuse my request.
We are now in mid-April.
I’m still waiting for two weeks without any answer… I try again.
And then I get a pamphlet summarizing the situation (in case I have amnesia) that mentions the contract that I have reread about ten times:
“Only the agreed amortization can be done… Sincerely. Thanks, bye, we won’t argue about it anymore.”
As I read this email, my brain thinks: “Oh boy, she doesn’t know who she’s messing with, this dear lady…”
So I’m getting into her contractual game.
I explain to her that I fully agree with her reading of the contract. And that as stipulated, the agreed amortization is: “Indirect amortization relating to the master agreement governing the mortgage: CHF 6'768 per year”. And that I therefore legally wish to change it.
I obviously wait 1.5 weeks more to get an answer. Answer that obviously does not come…
We are in the middle of May.
Tired, I ask to speak to someone higher up, or at least someone with the authority to decide on my case so that we can move forward because I’m really starting to boil — it’s been 3.5 months!
Unexpected answer in one day: the lady tells me that she takes calls during the week from this time to that time (implying that she can decide herself, and that she won’t pass me her boss).
I can’t tell you how motivated I was at that moment not to leave the call without an acceptable solution!
At that time, I had spoken with Ms. MP about writing to the management to explain to them how their business relationship handling was one of the worst I have experienced in my two decades of working life.
But hey, I’ll have better things to do once my pillar 3a is closed, I thought… like describing this whole crazy story to you so that you’ll have the strength to fight if you were in the same situation as me…
By the way, I thank you here dear reader for following me since the beginning. Because knowing that I could share everything with you on the blog once everything is finished, well, it gave me the necessary motivation boosts so that I wouldn’t give up along the way.
So I was saying.
It is mid-May.
I’m on my way to work, in my regional train with few people on board.
I feel as determined as ever, and ready to make a not-so-pleasant phone call, with the firm intention of not hanging up until I get my way.
And here, hold on tight because it is almost science fiction (in any case my letter to the management of the Lady in a few weeks will be very real!)
The Credit Officer lady, at the beginning however sympathetic, picks up.
Politely, I ask her if I am not disturbing her because I call early in the morning.
Ah, yes, Mr. MP, you are bothering me.
As a good Swiss, I apologize, and ask her when I can call her back.
And then………..
“Oh no, I mean, you are generally bothering me with all your emails for weeks. I have a lot of work and files to deal with, you know.”
This is what I look like at that moment:
I still manage to keep calm and focus on my goal.
I repeat my request, specifying that contractually, “Switzerland” is not in its right, and that I think that it is in both our interests to find an amicable solution to avoid the courts.
And then she starts to get on her high horse. That I’m bothering her on the phone, that the poor lady has about twenty (!) e-mails to deal with every day. That she has already answered my question and that no, it is not the policy of “Switzerland” to change the collateral pillars 3a, and that…
STOP!
You’ve gone too far, Marcelle!
You’ve just woken up the guy who’s not too friendly with insurance companies and bankers that was hiding inside me.
I cut her off.
My tone is suddenly much more authoritative and very angry.
I tell her that now she will listen to me. That this story has been going on for months, and that her company is not in its legal right. That I’ve already talked about it with a lawyer friend of mine, and that it’s going to be really bad if we don’t find a solution today.
And then, two things happen.
As if by magic, she will be able to speak with someone from the general management of “Suisse” (supposedly at least), to either propose that I close everything with them (pillar 3a AND my fixed-rate mortgage) with penalties of course, or change my pillar 3a.
The second option is unexpected, to say the least, in the way it is formulated…
Because it comes with threats:
I warn you, if you choose this option of only changing your pillar 3a, we will review your entire file, and I am not sure you want that.
Subtext: *“You could lose your mortgage with us."
It was at this point that the point of no return was reached.
Threats.
Here, yeah, we have indeed reached the summit…
Then, she summons me to think it over and to tell her again by e-mail what decision I take.
I hang up with a dry and firm tone: “Thank you, I understood the message, goodbye.”
My decision was now made: I wanted to get out of this business relationship at all costs.
But doubt suddenly invaded me.
What if she was right, and that “Switzerland” blacklisted me or whatever. And what if we don’t have a mortgage anymore from one day to the next?
I talk about it with Mrs. MP at night when I get home from work, and we agree that we need to make sure that the situation doesn’t turn against us.
By chance, I have an acquaintance who works in a bank (but he is nice, him, yes, this exists ^^).
I tell him the situation and ask him if we could be homeless without a mortgage?
He says no, because if I can only break my mortgage with penalties, so would the “Switzerland” insurance company, which would have to pay me a lot to suddenly stop my mortgage.
Here I am reassured, and reboosted to the max!!!
We are already around the end of May at this time.
So I send an e-mail to Mrs. “Credit Officer” explaining that yes, we want to go ahead and change our pillar 3a, and that we gladly accept that our file be revised at the same time.
All of a sudden things start to move faster.
After 3 days, I receive an e-mail from her.
She supposedly presented my file to her management, and these are the options available to me:
I immediately forward this mail to Mrs MP with this message: “We’ve won!!!!!!!”
I reply to the lady that I would like to make sure of a few details:
10 days pass… no feedback.
I ping her back…
The next day (around June 10), I get pushed back into my seat again: “We answer our customers in order of arrival!”
And underneath, I have the confirmation that everything is VAT included, and that once the mortgage is transferred to my new financial institution, my pillar 3a linked to a life insurance will be free of premiums, and that I could close it!
For the next two weeks, I spent many evenings playing with Excel files to make sure I chose the right option rationally.
I didn’t want to let my emotions get the better of me: I wanted to show her a certain finger virtually by closing all my contracts with this “Switzerland” insurance!
Most importantly, I also used these two weeks to make sure I could get a VIAC mortgage.
Basically, I laid the following two scenarios side by side:
Scenario 1 — Closing my pillar 3a only:
Scénario 2 — Closing my Swiss pillar 3a AND my fixed-rate mortgage:
And here are the results of the two calculations (tell me if you see an error or a missing variable — I hope not… ^^).
I expected this result, which confirms the magical power of compound interest.
The remaining 3 years of my fixed rate locked mortgage was enough to make all the difference in the long run.
And that, because I can reinvest the newly generated cash from the revaluation of our primary residence.
So at the end of June, I announced my final decision to the worst sales employee I had ever seen at an insurance company.
I was going to cancel my pillar 3a mixed life insurance (VICTORY!!!), and ALSO cancel my fixed rate mortgage :D
Since 31.08.2022 (due to the denunciation deadline of 1 month), I am FINALLY with VIAC for my pillar 3a, and I FINALLY have a mortgage entirely in SARON which is historically the most economical choice!
Champagne!!!
By the way, this VIAC mortgage via the WIR bank is really great.
I completed the application in less than 30 minutes.
I sent it by e-mail.
And in the same week, I had an answer and an agreement in principle!!
But since I wanted to have 100% financing (by pledging our 2nd and 3rd pillars) and not 80% as was the case with my “Switzerland” insurance, and to be able to use my newly generated cash after the revaluation of the value of our main residence, this did not fit in the standardized VIAC mortgage model.
Fortunately, the two WIR bank advisors I’ve had are really competent, and understand the true meaning of the banker’s job (i.e. providing a service rather than trying to rip you off as much as possible!)
Here are the new conditions proposed by the WIR bank for my new mortgage of our main residence in Switzerland:
1. Re-evaluation of property value
When you renew your mortgage in Switzerland, any bank will perform a revaluation of your property.
Good surprise in our case: our initial purchase price was below CHF 700'000 in 2016, and the WIR bank has valued the property at CHF 783'000 to date!
This gives us a growth of 12.5% in 6 years :)
However, it remains virtual because finally, as long as we did not sell our apartment, we do not see the color of this cash…
Unless… wait, we talk about it in a point below ;)
2. WIR bank mortgage
The WIR bank offered me a SARON type mortgage with a 3 year contractual commitment to obtain the interest rate of 1.07%.
That’s more than VIAC’s 0.68%, but I’m fine with that given the last item on this list :D
3. Pledges
The WIR bank asked us for the following pledges (i.e. if we can’t pay our interest or amortization anymore, they will tap into these cash reserves):
4. Amortization
The best thing about the WIR bank is that they didn’t try to sell me a life insurance, or even worse, a pillar 3a linked to a rotten mixed life insurance!
And above all, the great thing is that I can indirectly amortize my WIR mortgage via my pillar 3a VIAC invested 100% in shares!
No other Swiss bank or Swiss insurance company has ever agreed to this.
We agreed on an indirect amortization amount of CHF 7'400 per year, divided into two payments of CHF 3'700 on our respective pillar 3a VIAC.
This will allow us to have amortized the 2nd tranche of our mortgage (value of CHF 111'000) within 15 years, as required by the legal framework in Switzerland.
5. THE news: increase of our mortgage!!!
You, the former reader of the blog, remember that our initial mortgage was about CHF 550'000 for a property worth less than CHF 700'000.
That is 80% maximum of our apartment financed by a mortgage as the law requires.
Thanks to the revaluation of our main residence to CHF 783'000 by the WIR bank, and the fact that they take as collateral our 3rd pillars VIAC and our 2nd pillars, this is what happens:
Mortgage at 100% possible!!! 🎉🍾
This gives us in detail:
You can’t imagine how happy I am to publish this blogpost!
I FINALLY got rid of the worst legal financial product in Switzerland that was this mixed pillar 3a linked to a life insurance 🍾🍾🍾
Then, and this was not scheduled in the program, I release almost 175kCHF from the stone that will allow me to invest in a rental property in Switzerland :)
And finally: I will be able to write a factual, but very very salty letter to the general management of my former “Switzerland” insurance.
And for you who just stumbled upon this blog, the MOST IMPORTANT information to remember:
NEVER, NEVER, NEVER take out a pillar 3a with an insurer. NEVER!!!
The corollary of this is also to NEVER — as in: NEVER EVER — take a mortgage with an insurance company, because the latter offer attractive lower rates thanks to their products that they impose on you (such as my mixed pillar 3a linked to a life insurance), and that costs you in the end a lot more than if you had gone with a bank and a rate a little higher.
Another important point to verify when you take out a mortgage with any institution is to always have a fixed rate mortgage contract exit clause even if it implies penalties. In my case, I didn’t have it, so it was up to the insurer to let me out. The only extraordinary cancellation possible was if I sold my main residence. But there, in the end, they made a “commercial gesture” I guess to let go a disgruntled customer who was generating too much work by asking all his questions ;)
And finally, if you see yourself as a Mustachian in the making, never take out a long-term fixed-rate mortgage, but always take out a SARON mortgage, which has proven to be the most economical solution in Switzerland over the past decades!
On those good words, I will start my salty (and constructive!) letter to the director of the “Switzerland” insurance. Then I’ll move on to the much more interesting part, which is the search for our first rental investment in Switzerland :D
Header photo credit: Oleksandr Pidvalnyi (via Pexels)
]]>So the announcement is official today: neon also supports Garmin Pay with its Mastercard credit card starting today.
To use the Neon card with Garmin Pay, you must have a Garmin watch that is compatible with Garmin Pay, and an account in the Garmin Connect app.
The connection is done as follows:
neon continues to offer the following promo code to blog readers:
The promo code neon “mustachian” entitles you to a CHF 10 welcome bonus — must be entered during registration as it is not possible after
Thanks in advance if you use it, as it will allow the blog to receive a commission in return.
And you, what contactless payment system do you use? Via a smartwatch? A smartphone? Or is cash the only thing in your life?
PS: don’t mention it too much further because it’s not that frugal, but frankly, the Apple Watch for my part has been tempting me very strongly for several years. I’ve been resisting until now, but it’s been several times that this digital tool comes back on my “Wait 30 days and see if you’re still interested” list. To be continued ^^
]]>Anyway. Excuses, always excuses ;)
Basically, this Interactive Brokers program is an option you can activate to increase the return on the securities you own.
The concept is simpler than it seems:
Indeed, it seems almost too good to be true to be able to increase your yield with a click.
Like you, I tried to understand the risks behind this program (IBKR is really transparent and explains them in detail).
The first risk is that the borrower of your share does not return it for whatever reason.
And it should be noted that the SIPC (Securities Investor Protection Corporation, an institution that guarantees, among other things, the stock portfolio of each investor via an American broker up to 500k USD) does not guarantee the potential losses related to these stock loans via the IBKR program.
This risk is therefore very real.
And the SEC (U.S. Securities and Exchange Commission) requires Interactive Brokers to have a plan B if a borrower can’t give you back the shares you loaned them.
This Interactive Brokers Plan B is simple: each loan of X amount of stock is matched by the same amount in cash or U.S. government bonds by Interactive Brokers.
This means that if you lend CHF 100 through this program, Interactive Brokers must have CHF 100 in cash or US bonds in case the borrower doesn’t pay it back, so that you are guaranteed to get your money back.
So you can sleep on your two ears!
Except, there is another risk that comes with it…: that Interactive Brokers goes bankrupt.
And therefore no longer be able to pay you back for those shares that you have lent and not been paid back.
And it is this risk that is very real.
The way to mitigate this risk is to analyze IBKR’s financial health and its risk of bankruptcy.
I am not a due diligence specialist, but here are the reasons that give me confidence in IBKR (and not only for this yield enhancement program):
Based on these facts, as well as the reputation of IBKR built tirelessly since 1977 (!!!), I decided to trust them (once more).
So I’m going to test their stock yield enhancement program with my own 300k+ CHF invested in the stock market.
I found the activation really easy compared to other actions in the Interactive Brokers user interface.
You just need to go into your account settings, click on " Stock Yield Enhancement Program", then enable the feature by checking the box, and submit the form. That’s it!
In pictures, it looks like this:
Then you wait patiently for a few days (only one in my case), and you get an email like this when the program is activated for your account:
After that, you can check the next day to make sure everything is running smoothly by checking your activity records. You can’t do this the same day because the activity record is only available for the previous day at the earliest.
As you can see in the screenshot below, the SYEP program has been activated, and we can see that for the moment none of my shares or ETFs have been lent:
Here you go, your Interactive Brokers account is ready to receive its first interest from the Stock Yield Enhancement Program :)
It’s important to understand that when you lend an ETF or stock through this IBKR stock yield enhancement program, the stock is in someone else’s hands.
And so, when the day of the dividend payment comes, it is the one who owns the stock on that day who will receive the dividend.
No worries though, because if this happens to you, IBKR pays you this amount via a “Payment in Lieu” which simply means that it makes you a credit note. So you don’t lose the dividend.
However, the devil is in the details.
Because via a “Payment in Lieu”, IBKR does not handle any claim for recovery of the withholding tax… that money is lost to you forever.
BUT, because there is a BUT.
IBKR has planned for just that, and the shares that are loaned are usually called back to the borrower before the expiration date in order to capture the dividend and avoid payment in lieu of dividends. But sometimes you get a PIL, and lose the option to claim the withholding tax.
Anyway, for my part, I decided to try it out to see how it works in practice and to make up my own mind whether I will continue with this program or not.
I will now wait patiently for a few months to see how it turns out.
And no later than a year from now, I’ll debrief you on whether it’s worth it, and whether or not I continue to participate in this Interactive Brokers Stock Yield Enhancement Program.
UPDATE 03.11.2023: and here is what I think about this SYEP program by IBKR one year later >
And you, have you ever tested this Interactive Brokers program? If so, how did it work out?
]]>16h40. You realize that the weekend is almost over.
It is often in these moments that we realize with Mrs. MP that time passes too quickly with our children…
We say to ourselves that we must take advantage even more of each moment to store up nice memories together.
It’s kind of a downer…
Well, that was before.
While discussing Sunday evenings with my Kid MP #2, an idea came to us.
Every Sunday evening, we could introduce a TV-dinner in front of one single screen.
This would have the advantage of making us share the same thing, to discuss it during and after. This would strengthen the family bond and our memories.
But that’s not the most innovative part.
In addition to the “family TV dinner every Sunday evening”, we added the following rule: we choose each in turn the program. And the others have neither the right to complain, nor the right to go to bed, nor the right to take their cell phones!
The kids are like crazy because they can finally get us to watch The Minions or teen shows on Netflix (how cheesy is that… it can’t be, we didn’t watch that before… reassure me, please!)
Mrs. MP is also like a nut, because when it’s her turn, you can be sure that she chooses a very Frenchy comedy…
As for me, well, I have fun proposing documentaries like “Échappées Belles “ or even “Into the Wild “ (big failure, we rented it in… German version… so I had to find a plan B but it’s only a matter of time).
In the end, Mrs. MP got hooked and now, if we miss a Sunday evening because we are not at home, she finds us a replacement day during the week!
This means that we share on many different subjects between adults, and also with our children.
And nothing can buy such memories!
What’s your best plan for creating the best family memories for no money AND with fun?
Photo credits: Pexels (August from Richelieu), Universal Studios, Paramount/Vantage
]]>It didn’t start by chance with the FIRE topic, it took an event.
My partner and I own a house and we have been talking for some time about building a garage for our cars. And frankly, it is not a luxury, because we live in the mountains and given the snow that falls…
So we asked the bank for a loan, and you know how it goes…
Between the summer vacations of our advisor, the vacations of the municipal administration…
The authorizations were long in coming.
But we had to make the decisions, because the raw materials for our construction were taking 12% every week. So we confirmed the order, and we had to advance large amounts of money.
We had some money saved, almost enough to pay for the entire garage without a loan. But we wouldn’t have had any francs left over, and we wanted to avoid this situation in case we had to deal with an unforeseen situation.
But we had to advance so much money, that we actually ended up at zero… well, almost.
Last September, at the very beginning of the month, each of us had only CHF 70.00 left in our account…
Of course, it was only for a little while, because we knew that our salaries would fall at the end of the month. But we both work almost an hour away from home, so we have to pay for gas.
By “luck”, I was sick that month.
A flu.
And given the symptoms, my employer would not allow me to return to the office, so I was able to work from home for 2 weeks (and hey, some savings).
We then thought about how to use all this money that is “sleeping”, Reka checks for gas, Coop and Cumulus points, gift vouchers, the credit limit of our joint account, and as a last resort the credit card.
That’s when I started doing research on the internet, on how to save money, the usual stupid stuff.
I came across a lot of really interesting blogs, including yours 😉. The more I read, the more I wanted to know!
I have started to apply a lot of tips, the first of which is the weekly menus, established in advance. This has allowed us to keep our food purchases to a minimum, as well as other expenses.
Not that we were big spenders, on the contrary, who can brag about having become a homeowner at 23 years old!… 😉
But we knew how to cut back even more. We’ve always lived simply, both of us coming from families that taught us the value of money. My parents never gave me pocket money, and I found side jobs from the age of 14.
I had lost the habit of cooking our lunches, but now, it has become a real pleasure, and it is especially motivating knowing the savings we make. I challenge myself to find recipes with ingredients from the cupboard, it’s almost like a game! Even if I’m for sharing tasks, I rarely leave my place in the kitchen during the week!
After receiving our September salaries and our loan from the bank, we continued to apply our little frugal tricks in order to save a lot of money, and still do today.
My spouse is not very involved in the financial management of our accounts, not for lack of interest, let’s just say that he knows that I take care of everything, I’ve been managing everything for a few years now, (you know, my little side as an “employée de comm’”).
While reading your blog, this little seed germinated in my head, I also wanted to get out of this infernal routine metro-work-sleep.
Being able to decrease my work rate would be great, although it seems weird to talk about it so early. At 27 years old!
So I looked into the stock market, and I opened my DEGIRO account 😄.
And I love it!
I continued on my way by opening a third pillar at Finpension!
Well, the period is not very favourable, and I immediately put my nerves to the test by going from drop to drop. But on all the good advice I read, I don’t sell anything, and on the contrary, I take advantage of the lower stock prices!
I also created my little excel spreadsheets to calculate my expenses, my income and thus calculate my monthly savings percentage (42.5% in May, a record!).
I also manage the joint account this way. We always had a tendency to go negative, and then have to compensate.
But now, with this way of managing, we manage to save each month to anticipate the big bills for the house expenses.
Concretely, we each pay a fixed sum (identical each month), according to our salaries. The goal is of course not to have to re-add money each month.
But for example, we will soon have to pay a large bill for the maintenance of a vehicle, and the money initially put in will not be enough to pay. So I divide the amount of the bill in two and each of us pays the determined amount in addition.
This is a way we use for extra-ordinary bills. For the routine maintenance of the house, there will be no need to proceed like that since we are slowly saving money in this account.
I also figured out how to get a few extra bucks, by taking online surveys, via Rabattcorner, myHelsana (that rewards me for the sport I do), my employer who reimburses me for part of my sports membership, etc. All means are good!
Some unused things were sleeping in our closets, I offered them a second life by selling them. Hop, in the common pot.
Well, it’s true, my partner often calls me a boho, and certainly finds me too radical at times, but I see that my way of reducing my expenses encourages him to do the same.
Besides, wasn’t he happy when I got him a 2nd hand T-shirt of his favorite brand for 1.40 CHF?
I know I have to learn to loosen up and understand that he manages his money as he sees fit, but still? What’s with all these little expenses on the joint account? haha!
Let’s be clear, I’m not touching my partner’s account, he doesn’t want to go down the same path as me (for the moment maybe), and that’s his choice.
Lately, I’ve been thinking more and more.
My job sometimes gets boring, even though I love what I do.
But the fact that I work for someone other than myself bothers me, and I can’t stand this routine anymore.
We often spend our evenings thinking about a business project, and I think this will be our next step.
By the end of the year, I should be at ~100k CHF net worth, unless more renovation work on the house comes up.
It’s going up slowly, but I’m glad when I factor in the house mortgage that I’m at that amount.
In detail, my net worth (only mine) is distributed like this at the end of May 2022:
Going back to my calculations, I see that the calculation for the house was wrong, so I’m already over 100k CHF!
Let’s talk in 2-3 years to see if I will have exceeded the half million CHF! :D
Melanie follows the same model as in the MP family: a leader, and a co-pilot.
From what I’ve seen since 2014, it’s often one of the two people in a couple that takes the issue by the horns when it comes to personal finance. And rarely both.
Considering the complementarities necessary for a couple to last in the long term, I think that it is perhaps totally normal from a psychological point of view.
In any case, if this is your case, I reassure you that you are not the only one in this case!
And if on the contrary in your couple you are both pilots of the subject, then I’m interested to have your feedback.
I had the following thought while reading Melanie’s story:
Wow, that’s impressive! 27 years old, newly arrived in the stock market in the middle of a crash, and she buys without selling anything. No panic.
Frankly, I say hats off. Because when you invest 4% of all your savings in the stock market, and they melt like snow in the sun, I can tell you that there are more than one who would have stopped everything.
Anyway, she’s got the right mindset. It’s a sale during a stock market crash, so we buy as much as we can. And we don’t sell anything!
Melanie also makes perfect use of exemplification with her partner.
She says: “but I can see that the way I cut back on my expenses is encouraging him to do the same”
It reminded me of one of the human psychological traits that can make you rich or poor: “You are the average of the 5 people that surround you”.
Because humans are mimicking machines. So if your partner sees you doing something regularly, he will tend to imitate you in the long run.
Leading by example (rather than saying “do this or do that”) is the best strategy for getting your spouse on the path to financial independence and wealth.
Finally, I made the connection with my last article when Melanie explained to me that she was no longer comfortable working for a boss. And that she would like to be her own boss.
One more story that confirms the adage that every self-respecting Mustachian is often a fearful and repressed entrepreneur ;)
And you, how does Melanie’s story inspire you?
]]>The idea was (and still is) to allow readers who wish to do so to support the blog and the forum, and to receive exclusive content in return. The system works well. I have about 40-50 patrons. And frankly it’s so nice to have this kind of direct support, because I can see directly who is becoming a patron. It’s really rewarding.
The other alternative was not to have this system in place, and to sell the soul of the blog to the advertiser who pays the most. In other words, bye bye the independence of the blog, and hello to the excessive ads that flash everywhere.
No thanks! I hate ads. And I hate even more not being independent :D
Anyway, as I was saying, I chose Patreon at the time because their platform is well done with automatic monthly payments, the possibility to chat with patrons live, etc.
Except that, since recently, my newsletter tool also offers such a system.
So in order to simplify my setup (which is becoming complex with time), I decided to say bye bye to Patreon, and to transfer everything to my own system.
I also wanted to simplify the sponsorship model with only one option now (versus 3 before).
You can support the blog and forum for 5 USD/month (I wanted to put 3 USD but it was impossible with my tool, probably because of credit card fees), or 29 USD/year (= 2.42 USD/month). In exchange, you’ll receive these exclusive perks:
That’s it, and if you’re interested, you can register here:
Tell me in the comments or by email if there is any bonus you would like to have as a supporter (I don’t promise anything, but I’ll think about each proposal!)
PS: the CHF currency is not yet supported by my system, but it will come in a few months ;)
]]>I had carefully kept my eBills list from the time I switched my Swiss bank account from BCV to Zak.
It’s finally time to put it to good use!
For your information, I use Zak as my secondary backup bank and neon as my primary Swiss bank. And I had promised to all those who are with Zak as their primary bank to make this tutorial for them.
The cool thing is that it will allow me to answer the question: can we use eBill with two different bank accounts?
If you were away on another planet (or just in another country) for a very long time, the Swiss eBill system allows you to receive your bills digitally directly on your e-banking, and to pay them in one click!
No more paper bills to archive. And a lot of time saved when making your payments.
Basically: it’s a big win!
And this is how it works with Zak.
First of all, we will activate the eBill functionality in the Zak mobile app:
Once this step is over, we will now proceed to the eBill registration itself.
On this page of the eBill system, you will be able to either (1) log in with your login information if you are already registered on eBill, or (2) create an eBill account if you do not have one yet.
Since I already have an eBill account, I will click on the link below framed in orange:
And that’s it, your Zak eBill setup is already done!
And as you guessed from the last screen, you can indeed use eBill with two different bank accounts (from what I understand, you can even use eBill with several accounts — i.e. more than two).
I find it very convenient, especially if you are a couple and want to use only one eBill account for two.
So here you are in your eBill space, empty for the moment, because you have not chosen any invoice issuer:
So at that point, I pulled out my eBill list to search for all my eBill invoice issuers from that time. Let’s take the example of my Swiss health insurance company Assura:
And I continued this process for all the invoice issuers on my list. Then, I checked my transactions from the last 2-3 months on my YNAB budget app. There I found and added a few recurring bills that didn’t have eBill at the time.
Now that everything is set up, all you have to do is wait until you see this notification in the Zak mobile app to pay your first eBill:
Now you can say goodbye to paper invoices and payment slip scans and go about your business while your invoices arrive automatically in your Zak mobile app!
Liz, of the blog FrugalWoods, decided with her husband and daughters to leave everything in the city of Boston where they lived, to move to a huge 66-acre homestead in the middle of nature in Vermont, USA. She continues to blog (which makes her money), as well as write freelance articles. Her husband also continued his job in IT until recently. He officially retired early in 2021 at age 37, and divides his time between serving on the boards of two non-profit associations, participating in community volunteer projects in his town, parenting, and taking care of their property (making maple syrup, tapping trees, cutting firewood, repairing their many farm machines, mowing their fields, picking berries, etc.)
Like MMM, this couple doesn’t plan on sitting on their porch for 16 hours a day sipping cocktails, and not doing anything of their time.
Closer to you, in Switzerland, there is my long time buddy Mr. RIP who left a huge salary as a software engineer. Almost FIRE (Financial Independence, Retire Early), he just had a huge need for a change of life, and is still navigating what his future activities will be. But clearly, you won’t find him spending many of his hours on a beach in Costa Rica, but rather making videos on the subject of personal finance on YouTube in Italian! And I can assure you that it takes effort and time.
And then there’s my example: I’m going to switch to 80% in September if all goes well, so I can devote 20% of my time to this blog and its related projects that I love so much. Once FIRE, I’ll certainly continue in this vein with other writing-related projects.
I’ll stop here for the examples, because I could write a book!
All these life stories lead me to a question: aren’t all of us, Mustachians in search of being FIRE, in the end just repressed and fearful entrepreneurs?
Because, in the end, an entrepreneur is nothing other than a person who acts independently and is not placed under the legal subordination of another person. This is what distinguishes him from an employee.
But being an entrepreneur comes with responsibilities, which some will see as risks, especially financial. Because unlike the employee, the entrepreneur is responsible for creating his own salary. With all the anxieties that go with it. In particular, the fear of not earning enough each month to support their standard of living and pay their bills.
Whereas when you are FIRE, all that fear disappears. Because you know you still have that FIRE cushion that’s there. And so you can go about all sorts of things without worrying about the income it’s going to generate.
But in reality, it is often with this feeling of total freedom and financial security that personal and passion projects quickly bring in a non-negligible cash flow.
The subject of financial independence is therefore much more related to our psychology than to our net worth.
On the other hand, imagine an entrepreneur in his early twenties, such as Pasquale, the Swiss multi-millionaire who recently shared his adventure with us.
He decided to run his own business before becoming FIRE.
He couldn’t wait for a potential early retirement to live with the freedom that entrepreneurship provides.
He was in vital need of that freedom.
And this need was stronger than any potential financial security (even though he cautiously entered a known field, where there was demand).
This reflection started a few months ago was not meant to become an article, especially since I didn’t know what to conclude.
But the exercise of putting these lines in writing allowed me to see more clearly.
A Mustachian on the road to financial independence (aka FIRE) is a repressed entrepreneur, for whom financial security is more important than freedom. He needs the former to experience the latter.
An entrepreneur, on the other hand, has a greater sensitivity to his freedom, and his psyche will live well (or at least tolerate) the financial insecurity to achieve it.
Choosing the FIRE path over the entrepreneur path is therefore more of a psychological choice than a financial one.
Indeed, even if I had 1.62M Swiss francs of net worth to date (i.e. half the amount needed to declare myself FIRE in Switzerland), I personally could not quit my current job to live only from the blog and other personal projects. Because, psychologically, I would still have this financial insecurity hanging over my head, and would not be able to feel this total freedom. Which is purely a view of the mind, we agree :)
So I assume it: I am a Mustachian, in other words, a repressed and fearful entrepreneur!
And you, what do these cerebral peregrinations inspire you? If you see any links to topics, books, or mental models that I don’t have on my radar, I’d be very grateful if you’d let me know in the comments or by simply sending me an e-mail. Thank you!
Header photo credit: Tatiana Syrikova via Pexels
]]>After closing all my BCV accounts to switch to Zak, I was able to get the lowest fees for a Swiss online bank. But I had lost the handy eBill feature in the process.
I took care to write down my list of eBills at the time, so that it would be easier to transfer them when the functionality would be available in my new low-cost Swiss bank (see my PS at the bottom of the article).
So here is how the eBill setup works with neon. All screenshots are in English, but as usual with the neon mobile app, you can switch to French or German depending on your native language.
The first thing to do is to go to the “Profile” section of your neon mobile app, then click on the “eBill” button.
From here, you will be able to accept the eBill contractual conditions, and start the eBill registration process via neon (if you already have an eBill account — as I do — this is the same procedure):
Once you have accepted the neon eBill contractual conditions, you will be redirected to the eBill area on your web browser.
On this eBill web page, you will be able to do one of two things:
In my case, I already have an eBill account (option 2), so I click on the link that says “I already have an eBill account”:
And that’s it, the neon eBill configuration is already finished!
This is what your eBill neon space looks like when you have not chosen any invoice issuer:
Then, I just had to search for my eBill issuers based on the list I had carefully kept. Here’s what it looks like with my Assura health insurance:
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Once I added all the invoice issuers from my list, I went through my YNAB budget app to see my transactions from the last 2-3 months. I found a few recurring bills that didn’t have eBill at the time, so I was able to add them as well.
And then I spent a moment looking at the categories of invoice issuers to see if I had missed anything:
Once everything is set up, all you have to do is wait to see that little dot in the neon mobile app that informs you that you have a new eBill.
And in a few clicks, it’s paid for!
And now you are ready to go about your business while your bills are automatically sent to your e-banking system, without any paper or scan of the payment slip!
PS: don’t worry if you stayed on Zak, the same tutorial is currently being written ;)
if you have been on another planet for the last 10 years, the Swiss eBill system allows you to receive your bills digitally directly on your e-banking, and to pay them in one click! ↩︎
This is a welcome annual source of wisdom and pragmatism for us Mustachian investors.
It reminds me every time how important it is to share facts that may seem obvious to you, because they are often ignored in favor of more advanced and complex analyses, but not necessarily more useful or full of teaching…
The first passage from Warren Buffett’s 2021 Annual Letter to Shareholders that interests us is on page 11, as Buffett reminisces about what he taught his first finance students 70 years ago:
I have urged that they seek employment in (1) the field and (2) with the kind of people they would select, if they had no need for money. Economic realities, I acknowledge, may interfere with that kind of search. Even so, I urge the students never to give up the quest, for when they find that sort of job, they will no longer be “working.”
Charlie and I, ourselves, followed that liberating course after a few early stumbles. We both started as part- timers at my grandfather’s grocery store, Charlie in 1940 and I in 1942. We were each assigned boring tasks and paid little, definitely not what we had in mind. Charlie later took up law, and I tried selling securities. Job satisfaction continued to elude us.
Finally, at Berkshire, we found what we love to do. With very few exceptions, we have now “worked” for many decades with people whom we like and trust. It’s a joy in life to join with managers such as Paul Andrews or the Berkshire families I told you about last year.
This passage questioned me.
Is Buffett right in his quest to find the field of work that you love, so that you don’t feel like you’re working? Or is Cal Newport more accurate in his book “So good they can’t ignore you”, where he explains that you don’t find your passion, but that it is created with experience and gradual mastery of the craft?
As weird as it sounds to write this, I think Buffett is wrong, and Cal is more accurate.
Because yes, it’s important to find a career field that intrinsically attracts you (for example, numbers rather than mechanics for Buffett), but that’s not the most important thing to have long-term satisfaction.
From what I know of Warren Buffett’s life, what makes him seem to love his job so much is that he has become and remained a craftsman of the investment world for decades — the famous career capital that Cal talks about, that he has accumulated rare skills, which consequently allows him today to have control over his own time — aka autonomy.
On the other hand, I agree with the second precept of the Omaha oracle concerning the people you work with (i.e. to choose them as if you didn’t need money). This is applicable for sure if you are the boss of your company, or if you have a decisional power in the recruitment of your company, but less if you are lower in the hierarchical scale. But you can still apply this by choosing which team you want to work for, or which type of manager you want to work with.
But let’s go back for a second to the area Warren is talking about.
As a Mustachian looking to be FIRE (Financial Independence, Retire Early) at 40 in Switzerland, this speaks to me for the “early retirement” part of my life.
Indeed, the blog you read here has become my favorite side thing to work upon since 2014. And even if it didn’t make me money (which was the case for the first 5-6 years), I would still write it.
And finding that kind of field before you go FIRE is essential if you don’t want to fall into depression when you no longer have meaning in your life overnight via your regular job.
I recommend reading Cal Newport’s “So good they can’t ignore you” to find your own realm for your post-FIRE life, through a series of small experiments where you learn from your failures and successes, little by little — vs. seeking your passion in vain.
Warren Buffet continues to write in his letter to shareholders:
In our home office, we employ decent and talented people — no jerks. Turnover averages, perhaps, one person per year.
At the turn of a little sentence, Buffett distills some common sense that is unfortunately not given to everyone.
Decency, aka respect for good manners, as well as restraint in human relations, is something that is not always taken into account when saying YES or NO to a potential new colleague. We often focus too much on the pure skills that can be learned and improved. But decency usually comes from your upbringing at a young age, and is difficult to change.
But what could be more dangerous to a company than hiring a toxic employee with an overinflated ego who takes pleasure in bossing people around as if he were one of their parents?
Having been through this myself, Buffett’s point is a good refresher.
And even more so the second part of his sentence: don’t associate with jerks! It’s said :)
The last point in his letter that caught my eye was in this passage:
I would like, however, to emphasize a further item that turns our jobs into fun and satisfaction: working for you. There is nothing more rewarding to Charlie and me than enjoying the trust of individual long-term shareholders who, for many decades, have joined us with the expectation that we would be a reliable custodian of their funds.
Obviously, we can’t select our owners, as we could do if our form of operation were a partnership. Anyone can buy shares of Berkshire today with the intention of soon reselling them. For sure, we get a few of that type of shareholder, just as we get index funds that own huge amounts of Berkshire simply because they are required to do so.
To a truly unusual degree, however, Berkshire has as owners a very large corps of individuals and families that have elected to join us with an intent approaching “til death do us part.” Often, they have trusted us with a large – some might say excessive – portion of their savings.
Berkshire, these shareholders would sometimes acknowledge, might be far from the best selection they could have made. But they would add that Berkshire would rank high among those with which they would be most comfortable. And people who are comfortable with their investments will, on average, achieve better results than those who are motivated by ever-changing headlines, chatter and promises.
Long-term individual owners are both the “partners” Charlie and I have always sought and the ones we constantly have in mind as we make decisions at Berkshire. To them we say, “It feels good to ‘work’ for you, and you have our thanks for your trust.
This passage speaks to me, because this is how I see the relationship I have with you via my blog 1. At least the “you” I imagine when I write my articles.
One day you stumbled upon my site randomly (well probably thanks to Google), and since 2014, you’ve never left.
Because you know that I think long term. As much for my own investments as for anything I undertake. And that even in 10 or 20 years, this blog will still be your compass in the world of personal finance in Switzerland.
I think of my blog as one of those little family businesses that you love to drop by on Saturday mornings while going to your local market, even if you don’t buy from them every time. You feel like you are part of the same family, and you know that this kind of shop is here to stay.
We like it, because it is not a business, but a human relationship between two people; in our case, between a Swiss stranger on the Internet (me ^^) and you, dear reader.
As Buffett says, it’s so rewarding to have that direct relationship between what I’m typing on my keyboard at this very moment, and you reading those words on the screen right now.
No middle-manager. No sponsor imposing an editorial line on me. Just the two of us, here, sharing and growing together in our personal finances in Switzerland.
And for this long-termist mindset, I say to you: THANK YOU.
And you, what did you learn from Warren Buffett’s 2021 shareholder letter?
that’s how I think all business should be, and the world would be much better off on all levels. ↩︎
I hope you have a good weekend?
I am writing to you because I need your advice…
Two years ago I discovered your blog which confirmed that my direction towards FIRE (Financial Independence, Retire Early) was the right one, and even that the VT ETF was the best investment to get me there.
Except that these last few days, I see my savings melting like snow in the sun with this latest stock market crash… I know that you have already dealt with this subject in your book, but is it really the same as usual at this time? Have the rules of behaviour of the Swiss investor in times of stock market crisis not changed?
Kind regards,
J.
These days I receive many messages like the one from Mrs. J. above.
At the same time, you have to have a strong heart when you see the vertiginous fall of our favorite VT ETF during these last weeks of the stock market crash:
My portfolio is the same as Mrs. J.
It is in no way spared…
I went in a few days from about CHF 360'957 of assets invested in the stock market to… CHF 317'000. That’s a nice drop of about CHF 45'000… It’s Mrs MP who starts to complain 😱
“But what to do in case of a stock market crash with my ETFs?” ask the most junior Swiss investors among us…
A reminder for the newbies: a stock market crash is when the value of a security (ETF or stock) loses several percent of its value in a few days. For example, if you go from a VT ETF share value of 107 USD to 87 USD, well that’s a good example of a stock market crash :)
And my answer of how to react to any stock market crisis is simple:
And there you have it.
“Is that all? But, uh, really? So I don’t sell anything during a stock market crisis? Never?”
Yes. That’s all. And no, you don’t sell anything. Never.
At least, as long as you follow my long-term stock market investment strategy.
On this blog, we invest by buying and holding our ETFs/shares/bonds/real estate for the next decades. Not for the next few days, months or years. But for the next decades.
Oh yes, and just before you ask me: yes, all crises are different, and yes, the behavior to adopt is always the same. So I’m not going to publish such an article every time the stock market crashes, but only refer you to it next time, with the same 4 bullets list :)
On that note, enjoy this beautiful day!
Header photo credit: Andrea Piacquadio from Pexels
]]>Before I share with you what I learned from this very interesting interview of the CHF 25 millions, I would like to thank all the readers who sent me their questions for this interview. You guys.gals are the best!
With that said, here are the 14 lessons I took away from this exchange with Pasquale. Their order does not indicate their importance; I have simply taken the interview from beginning to end and added my notes.
Pasquale has made the choice to prioritize his life on all levels, which has brought him to the level of financial success where he is today.
His choice of career first of all. After careful consideration, he kept soccer as a hobby, and put everything into masonry. The “Rule of the 10'000 hours” did the rest.
Ditto for his family. Rather than flitting about, he found his life partner who was a crucial element in his mental stability (see point 6 below).
And finally there are his investments. He has focused on one investment vehicle — real estate in Switzerland — rather than spreading himself too thinly to test everything.
Add to that the fact that he was careful because of his education, and also thrifty.
Listening to Pasquale speak, I realized that he was Mustachian from a young age without realizing it :)
When Pasquale explained to me that appetite comes with eating, and that his passion for real estate grew as he practiced it, it immediately made me think of a book: the bestselling Cal Newport “So Good They Can’t Ignore You”.
In his book, he explains that the advice to follow your passion is one of the worst pieces of advice you can be given to succeed in your professional career (even if it means contradicting Steve Jobs, or at least looking at his famous quote in a new light).
For indeed, no one is born with a passion. It comes through a journey:
Looking back at the table of contents of this book, it’s as if it captures the essence of Pasquale’s success in one piece. I highly recommend it!
For my part, I’ve been following this same path for more than 8 years with my “passion” for writing which started with this blog you’re reading, then my book, then my first investment program for beginners. And I plan to continue to capitalize on that “career capital” too!
I agree 100% with Pasquale on this point. If you’ve been following me for a while, you’ll remember my misadventures in buying my main residence… first the quasi-illegal sales attempt by the advisor of a cantonal bank with a green logo. Then how I finally got screwed by my insurer concerning my 3rd pillar linked to a life insurance… twice in a row…
My recommendation when you buy real estate in Switzerland (or anywhere else) is to go in with not too little equity, in order to have some negotiating power. Otherwise, these bankers and/or insurers will eat you alive…
I still remember nodding my head when Pasquale explained to me what his father used to tell him when he was young about money. Because indeed, that’s exactly word for word what my parents always told me too…
It was so obvious to me before I heard it from someone else, that I never would have thought about making a blog post about it. But in fact, it always made sense in my brain because I was reminded of it for years.
It was never innate actually.
So, as simplistic as it is, it makes sense to point out here a strategy that works in education — Pasquale and I are living proof of that.
This strategy consists of repeating (and implementing in action) this little phrase regularly to your children from a young age. It doesn’t cost you anything financially, yet it will have a far greater impact than simply creating a savings account for your offspring.
Along the same lines as point 4, it was while listening to Pasquale speak that I realized that my ability regarding delayed gratification was not innate either…
This ability also comes from my education. And we can say that so far, it has worked for me. The most concrete proof is my net worth which has gone from CHF 48'000 to more than CHF 800'000 in less than 8 years. The famous marshmallow test was right.
My parents always taught me not to be gourmand in life, to want everything, and right away. Both in words, but especially in actions. They never made an impulsive and thoughtless purchase.
You know what you have to say and show to your kids every day now :)
I also recognized myself in Pasquale’s point where he explained the importance of personal stability (family, friends, entourage) in his financial success.
So when he explained this principle to me, I showed him the first page of my book:
Even Warren Buffett talks about it: “You want to associate with people who are the kind of person you want to be. That way you’ll be moving in the same direction. And by far the most important person in that regard is your spouse.”
I don’t remember where, but he also wrote something like this: “Keep the same woman and the same house all your life, and wealth will come automatically!”
The most misunderstood secret of how to become rich is not so much financial as it is human… finding stability in your family and in the people around you is your next goal.
Working hard is the first solid foundation for honing your skills and mastering your craft. That’s what I practiced for the first decade of my professional and investing career. Then I understood and applied the principle of leverage.
First, in my job, I learned to involve more people in my projects, in order to have an impact beyond what I could accomplish alone.
Then as an investor. I first used the stock market to get employees of 8'000 companies to work for me while I slept or went about my business. Then I took it to the next level, which is to put money I don’t have to work, via the purchase of our first investment property abroad. We repeated the practice with rental properties in Switzerland recently, as described in this article.
All you have to do, no matter what’s your field, is work hard to hone your skills. And once you’ve got the basics down, all you have to do is look for leverage to increase your impact tenfold. Start your own business? Investing? Hire your first virtual assistant? There are plenty of leverage opportunities. What will be yours?
Pasquale thinks that if you have CHF 1'000/month to invest at the age of 40 (with two children), the best thing to do is to open an account for your children so that they will have a “nice plus” when they start in life.
I don’t agree with that. There are two reasons for this.
The first is that I’d rather give my kids another gift for when they start their adult lives (see point 9 below). But in any case, not to put a silver spoon in their mouths, without them having to do anything. This is a point that ties in with one of Pasquale’s life lessons: by not giving me a “little push” to get started in life, my parents made me hungry. And I had to fight myself to get where I am today.
The second reason why I don’t agree with Pasquale is that you can start investing at 40 even with only CHF 1'000 per month. Because at 40 you still have a long future as an investor — at least 20-25 years when you can invest your salary savings in the stock market. And by following a Mustachian strategy like mine, you can expect to reach about CHF 600'000 after 20 years, and almost CHF 1'000'000 after 25 years.
Thanks to the magic of compound interest!
As I often say: the greatest wealth you can leave to your children is education.
The greatest wealth you can pass on to your children is education.
The education you give your children is the best gift you can give them. They are sponges, and absorb everything you teach them between 0 and 10 years old. And I mean instilling through actions, not theory.
So yes, even if you’re struggling to make ends meet at the end of the month, you can leave a huge legacy to your children. Starting today. And without having to spend any money.
“There is an opportunity in every failure”, Pasquale explained to me after his stock market setbacks due to a middleman.
Such a positive mindset will take you further than any amount of CHF! Because no fear will stop you thanks to it.
I’m not saying you won’t be afraid, I’m saying that whatever the fear is, you know you can overcome it. In business as well as in your relationships, such a mindset will bring you abundance and wealth because you will be unstoppable and will always rise again.
I was positively surprised to hear Pasquale praise VZ services (who have offices in Lausanne in case you wonder), as they were also the ones I turned to several years ago to get my FIRE (Financial Independence, Retire Early) plan validated at 40 as explained in detail in my book.
And clearly, from my experiences with Swiss banks and insurances, I can only recommend you to pay for an independent service, rather than believing that bankers and insurers do it for free, when in fact the cost of their services is hidden in their product fees. And in the end, it will cost you tens of times more than paying for a few hours of consulting from a financial advisor like VZ.
You need independence above all else in financial consulting.
Assumed highlighting: this blog is independent and will remain so. You can help it stay that way in the long run by supporting it via this win-win mean.
I can only agree with Pasquale’s recommendation to put your personal affairs in order in case something happens to you. It’s not fun to do, but once it’s sorted out, you feel lighter and your loved ones feel more serene.
I recently wrote my will so that it would be valid according to the official Swiss guidelines. And I also took the opportunity to create my mandate in case of incapacity. You will find more information about these two subjects in this article.
I didn’t expect Pasquale’s answer when I asked him what he would exchange his entire wealth for.
Some people say that rich people are venal and live in another world. Perhaps this discussion will prove to them that we are all equal when it comes to death and health issues. And that even a Swiss multi-millionaire has the same basic concerns and priorities as someone who earns CHF 3'500/month.
Pasquale said of one of his financial mistakes: “Investing my money through an intermediary [was a bad decision]. I had a lot of confidence in the intermediary, but it wasn’t enough. The right thing for me to do is to invest my money myself [and understand the ins and outs].”
I can only echo that.
Because that’s what I’ve been doing with the stock market for the last 8 years. I could have gone to a banker, and had them give me products with fees of more than 1% in commissions and such. Instead, (very) slowly but surely, I learned all the basics by myself, and I now master the subject.
I understand what I am doing when I invest my savings in the stock market. Without any fear in my stomach.
This is actually word for word the subtitle of my “Swiss Investor Program” for beginners, because it seems crucial to me too: “Start to invest your CHF in the stock market (while understanding what you are doing!)”
All this makes me say that Pasquale has indeed many features in common with the guiding principles of a Mustachian:
And you, what speaks to you in this life story? What do you agree with? Are there points where you see things differently? Do you have any other questions for Pasquale?
As I recently indicated in my newsletter, you’ll find here my paid program specifically dedicated to Swiss real estate investing for beginners.
If you prefer rental yields to investing in the stock market, and you are completely new to real estate in Switzerland, then this program should interest you.
What did you take away from this CHF 25 million interview? Share your feedback with us in the comments section below ⬇️.
Here is the next part of our interview with Pasquale, this Swiss man who is approaching 50 years old with a net worth of about CHF 25 million. Today, we will read the answers to the questions of the readers of the blog concerning his techniques to build his fortune, taxes and pension fund, psychology and philosophy of money, and finally, his mistakes and lessons learned.
MP: “How much did you start out with in life as you transitioned into adulthood (i.e. more dependent on your parents)?”
Pasquale: I arrived at my 20th birthday with CHF 40'000 in savings as a mason. I was saving CHF 1'000 per month since my apprenticeship. I continued like that while living with my parents, which allowed me to accumulate CHF 80'000 at the age of 24, and to inject it into my masonry business.
Did you receive an inheritance that facilitated your access to your first million? If not, how did you get to your first million (via what activities, how long did it take)?"
Pasquale: No financial heritage! Only the love of my family (my parents and my sister), and their trust. And that’s worth all the gold in the world as a legacy, really.
MP: “Can you tell us how long it took you to reach your first 10k? 100k? 1M? 10M? 25M?”
Pasquale: Yeah it’s pretty easy because I have a memory for numbers:
My first million came from the fruit of my hands via my masonry business that I created at 24 years old. I could obtain CHF 200'000 per year in salary over 5 years.
And to date, my wealth can be summarized as follows:
MP: “By what did you start out to develop your wealth? In other words, what was the trigger that set you on the right path to becoming rich? Was it a book, a particular inspirational person (like a mentor), a situation, an event?”
Pasquale: I would say it was some of the people I met through my work. I was always naturally drawn to people who were 10-15 years older than me, who I would listen to in order to learn from their experience.
And there was also the educational foundation of my father.
MP: “When you have a net worth of CHF 25 million, it is relatively ’easy’ to increase it by 1 million per year. But when you have a fortune of CHF 100'000, what is the key to make it grow exponentially?”
Pasquale: Time.
MP: “You started building your fortune 26 years ago. That was before the dot com crash, before the crash of 2008 — so, in a different world. How applicable do you think your experiences are to someone starting today? If you had to start over with no capital today, how do you think you could do it?”
Pasquale: Today it would be difficult, but doable. And it would be reproducible if you had time, if you took small step after small step, if you took the time to capitalize on your experience, if you learned by doing, and if you took calculated risks. There is no magic formula in real estate.
Ah, and yeah, and you have to beware of bankers! Some of them are real assholes!
MP: “So if we copy your method today, we can expect the same gains in 26 years according to you?”
Pasquale: Yes, even if it was difficult, it would be possible to follow the same path if you are lucky enough to have a supportive environment (parents, spouse), if you are ready to work hard at your job, and if you have a clear mind (i.e. serene, without any illness in your life or in a loved one).
For example, the most difficult time in my life to build my wealth was the time of suffering that was my split up.
For me, stability on a human and family level is a key element of any financial success.
And, in any field, an important point for your success is to learn to keep the assholes out of your life (people harmful to your well-being).
For me, stability on a human and family level is a key element of any financial success.
MP: “What role did luck play in building your wealth in Switzerland? Could your path be the right one if it was repeated many times?”
Pasquale: I would say that yes, I was lucky in the family I had and that I built. That was and still is my foundation. Concerning the business, I would say that I provoked luck by working much more than the others.
MP: “What were your most important habits that allowed your wealth to grow (and continue to grow)?”
Pasquale: I have three: patience, taking the time to analyze, and not focusing only on the result. But patience is by far the most important virtue in business. And prudence too.
MP: “Ergh, so I’m 64 years old. What would you advise me to do to increase my wealth?”
Pasquale: It depends if you have a family here. If not, then I would leave Switzerland to have a higher standard of living than here by lowering your daily living expenses.
And as for launching yourself in real estate, it would be faster to “shoot yourself” because no banker will follow you…
MP: “Is it better to put your efforts on what you earn, or what you save?”
Pasquale: Both. You need both. And you have to be careful not to lose what you have acquired. And you have to be thrifty, but without depriving yourself.
MP: “Do you know your savings rate, and how it has evolved from when you started, up until today?”
Pasquale: When I started, I was saving about 5-10%. And now I save 70% of what I earn. There’s about CHF 100'000 of monthly income coming in, and I’m living on CHF 30'000 [MP note: per month!]. Even though it’s huge — and I’m aware of that — the growth of my net worth was exponential, because my income increased more than my lifestyle.
By the way, since we’re talking about my current standard of living, I want to tell you that I achieved financial serenity long before this day. I would say it was from the age of 35 onwards when my house was fully paid off without a mortgage, I had a few real estate investments, and my family was (and still is, luckily!) in good health.
Also, I can’t imagine my lifestyle increasing indefinitely by spending more and more money on big cars (except if for an investment) and luxurious trips. My father and mother always told me to be humble, and to pay attention to people. And thanks to soccer, I learnt that just because you win 3-0 at the 88th minute [of a 90 minutes’ game] doesn’t mean that the game is won, and that the wind can’t change… you have to be alert, and never slacken off (including on expenses which, even if high, are under control).
MP: “What is possible in 10 years for a 40 year old man with two small children? How would you proceed at this point if you could only invest CHF 1'000 per month?”
Pasquale: I would say that with that amount of monthly savings, it’s too late to get into real estate. What I would do if I were him is that I would get a life insurance for my children so that they have a “nice plus” when they start out in life as an adult.
MP: “And if you started planning your retirement only today (without a big fortune), at your age — i.e. 49, knowing everything you have learned since you were 23, what would you do?”
Pasquale: Ergh, 49, that would really be the cutoff date to start in real estate. But I’d go for it. Just like if my entire wealth were to disappear overnight, and I only have CHF 100'000 left of my CHF 25'000'000, then I know I’d be able to bounce back with that capital and my network. I would be fine.
MP: “Do you have a particular book you would recommend for building my wealth from scratch?”**
Pasquale: “Rich Dad, Poor Dad” by Robert T. Kiyosaki.
MP: “In building your wealth, you must have lost money along the way, right? If so, could you describe that part of your journey — how it happened, why, and how you kept your cool when it happened?”
Pasquale: Well, actually, no. Real estate is regular enough for that if you don’t make hasty choices or with reckless risks.
But when I think about it, yes, I have lost some money. Each time it was when I trusted people working in big Swiss banks, but as I always say: “There is an opportunity in every failure”. And the opportunity in these cases was to understand that there are more assholes than I thought. And so, since then, I manage my business with my own hands and my own head.
There is an opportunity in every failure.
MP: “What do you think of blogs like the Mustachian Post that promote frugality to achieve financial independence?”
Pasquale: I have mixed feelings. I think you have to live without deprivation, because in the long run it leads to frustration and that’s never good. It’s like when you’re on a diet and you see a friend eating a great pie, but you say you can’t — but your brain isn’t convinced…
[I explain him in detail the concept of frugality for us Mustachians]
After your explanation, I do realize that my lifestyle was quite frugal, if we assume that a Mustachian does not restrict himself on the things that bring real value to their life, but cuts all other expenses drastically without any sense of sacrifice.
MP: “How does the taxation work in Switzerland when you only rely on the income from your investments? I guess you are not a professional trader, so in theory you should pay 0 tax (0 tax on investments, since that’s how it works in Switzerland, and no tax in general, since I guess you don’t have a job)?”
Pasquale: The Swiss tax system is advantageous in my opinion. Yes, I pay a lot of taxes on my rental income (i.e. I am in the highest bracket), but in return we have a global system (roads, schools, etc.) that is healthy and works well.
MP: “Are there things to do or not to do, especially concerning taxes and the OASI / pension fund (the OASI is compulsory until retirement and, in case of inactivity, it is proportional to the wealth)”
Pasquale: For my part, I am employed by my company and self-employed. What I recommend to my friends and family is to be careful with the AVS for married couples who retire. Indeed, the maximum pension for a married couple is 150%, and not 200% as logic would have it. It is important to get information on these financial matters as early as possible from independent organizations like VZ (they have offices in Lausanne).
MP: “Any tips to share in order to optimize your taxation when you are at your level (choice of canton or other)?”
Pasquale: It’s difficult, because you are taxed where the building is. And since I am not familiar with regions like Schwyz where the tax system is more advantageous, I will not venture there just for the taxes. So I concentrate on what I can optimize, i.e. maintaining my real estate in order to benefit from tax deductions, and consequently increase the value of my properties in the long term.
MP: “Do you have any particular advice to offer regarding the estate management of your wealth, once you have passed away?”
Pasquale: “It’s better to settle things cold when you’re hot, than hot when you’re cold.” That’s the only useful advice I’ve received from a banker :) So my advice is to sort out the will and mandate of incapacity (with the help of a trusted notary if you’re not comfortable doing it yourself).
MP: “Currently, from a more psychological point of view, do you lead a discreet life? Are your children/friends aware of your wealth and how relaxed your life is? Are you afraid of crooks, kidnappers or other bad people?”
Pasquale: I tend to follow the proverb “Let’s live happily, let’s live hidden”
.
My children know almost everything about my wealth, I explain everything to them. So much so that when my daughter was only 6-7 years old, and a friend told her “You’re lucky to live in a beautiful house like this!”, she retorted: “It’s not luck, it’s just that my daddy worked a lot!” — it brings tears to my eyes just thinking about it. I’m so proud to have been able to pass this mindset on to her.
It’s not luck [that we have such a beautiful house], it’s just that my daddy worked a lot!
Regarding jealousy about my wealth, I’m not too afraid of crooks, but I stay alert. I don’t trust a guy who comes into my life overnight. My instincts have had 50 years to sharpen, and I would say that out of 100 people, I’ve only been wrong twice so far.
And as for the kidnapping stories, I know that success can create jealousy, but as long as I am in Switzerland I feel safe in this respect.
MP: “Have you managed to keep your friendships and family relationships as they were before you acquired your wealth, or have some been lost because of the money?”
Pasquale: Yes, I kept all my relationships. Or at least, if I lost any, they were not good friends… But it’s funny your question because I regularly ask my closest friends: “Have I changed?!”
MP: “Are you afraid of losing your wealth overnight (stock market or real estate crisis)?”
Pasquale: No, I’m not afraid of that. It would still bother me, but I tell myself that it’s not that important. I’m much more afraid of losing someone in my family, even though I’m attached to my property, because I built it with my own hands.
MP: “What character or personality trait would you say made you different from everyone else at the beginning of your journey?”
Pasquale: Another great question from your readers! I would say it’s appreciation and mutual respect in all my relationships. If someone appreciates you, you will have better results than if someone fears you. I don’t like people who play with fear, because anyway sooner or later they will get stabbed in the back.
The other thing I think about when I think about it is discipline and seriousness. My mother always told me: “Be polite to people, greet people, be respectful, don’t steal, etc.” These are basics that have stayed with me and transpired through all my professional and personal actions.
MP: “They say that money makes you happy. Have your deepest values evolved with this material certainty?”
Pasquale: So clearly, we’re not going to lie to each other, getting economic security as a family man brings you more serenity. But, no, it hasn’t changed my deepest values, although it’s easier when you win than when you lose.
And yes, if it were possible, I would exchange my CHF 25'000'000 for something…
MP: “What did you get by building all this wealth? Happiness? Freedom? Security? Knowing where you are now, would you do anything differently? Would you trade your wealth for something — if so, what?”
Pasquale: Yes, my wealth has brought me freedom, and therefore happiness. And yes, if it were possible, I would exchange all my wealth for something: to be able to live until 120 years old with the people I love all in good health.
MP: “Do you think you’ll ever stop working? If so, are you afraid of it? If not, why not, and what will you continue to do?”
Pasquale: I hope to have ambition for something until my last breath, that my engine is always running for gardening or any other activity even not related to business. I hope that the day I stop breathing, I will say to myself: “I did what I loved until the end!”
MP: “What would you consider a good use of your 25 million Swiss francs today?”
Pasquale: It would be to be able to offer serenity to my descendants. And also to give my friends the benefit, without pampering them either. Because I wouldn’t want to feel higher than them. Sometimes I also think that I could go to the far end of Africa with CHF 500'000 in my pocket to change some people’s lives — and do it myself, without going through any association to make sure that the money goes where it should.
MP: “Why are you increasing your net worth? What are you saving for? What is your goal in life now? I think if I earned that much passive income, I’d probably spend most of it on good causes, and only keep what I really need. What do you think?”
Pasquale: I don’t do any of my current activities to increase my wealth, because what I have today is enough. I do what I do i.e. real estate in Switzerland, because I love it.
MP: “Is the increase in your wealth still a driving force or a side effect of what you have today?”
Pasquale: It was always a side effect, never a driver.
MP: “From a general perspective on life, what would you say to the 23 year old you if he were here today?”
Pasquale: I would tell him “Congratulations Pasquale, you must dream! Dream, go all in, and don’t waste the moments. Do what you love TO THE FULL, having fun with your friends when it’s time. Time goes by so fast. And at a certain age you think “Why didn’t I do it?”
Knowing that to this day, I am lucky because I don’t regret anything from the last 49 years.
MP: “What are the top 5 lessons learned from the biggest mistakes you’ve made along the way?”
Pasquale: There is only one, and that is to trust the right people.
MP: “During your great rise, there must have been moments when you could have slipped and hurt yourself (financially, relationally, etc.) — do you have 1-2 glaring examples to explain to us?”
Pasquale: So frankly, and without sounding pretentious, I would say no. I’ve always been a cautious guy, and I’ve taken it one step at a time.
MP: “If you had to do something again in your career, what would you change? And specifically in the beginning of your journey?”
Pasquale: Nothing.
MP: “What’s the biggest misconception you’ve ever had? For example, maybe you thought doing X or Y would be a bad thing, but you did it anyway, and it turned out to be a good thing in the end.”
Pasquale: Investing my money through an intermediary. I had a lot of confidence in this intermediary, but it wasn’t enough. The right thing for me to do is to invest my money myself.
MP: “What’s your biggest win in life?”
Pasquale: The relationship with my children. And if I have to be reductive and answer financially, then I would say the construction of my first building with my buddy!
In the last chapter of this CHF 25 million series, I will present the 14 lessons I learned from this interview with Pasquale.
Photo credits: Pexels (Kampus Production)
]]>Knowing that Zak has officially become our Swiss secondary bank backup in case of glitch with neon, my Minimalismo brain side thought we would close one of our two accounts (mine), so that we keep only Mrs. MP’s account.
My Documentalisto side felt a wave of panic: “Wait a second, let’s calm down my friend! What about all our banking history if we want to make a real estate investment in Switzerland tomorrow, and our mortgage lender asks us for our bank statements for the last 3 months? Haha, let’s not be too much of a smart-ass Mr. Minimalismo who wants to delete everything without thinking things through!”
And Minimalismo retorts: “So for one, we have all of our banking history in our fantastic budget app YNAB, and for two, all of our salaries and big expenses were going into Mrs. MP’s Zak bank account. So it’s all good, you calm down!”
As the two continued to bicker about the sovereignty of my data stored in the cloud, I thought Documentalisto was making an interesting point.
Where can I find all my Zak contract documents and other statements?
I’d never looked at that part of the app too much, but you find it super easy:
Then, what I asked myself was if it was really worth downloading them — me being paperless for over 7 years…
I first contacted Zak to ask them three questions in preparation for this article.
MP: Are all my documents stored in the Zak bank mobile app available as long as my account is open? Or is there a maximum length of time they are kept, and then deleted if they are older than that? (I was asking this because this was the case at my old school previous Swiss bank…)
Zak: All documents remain available as long as the account exists. Once the account is cancelled, the documents are no longer available to the ex-customer. That does not mean that the documents are deleted, but as ex-customer you do not have access to them anymore.
MP: Also, when I delete my Zak account, are all these documents zipped up and sent to me by email? Or do I have to download them manually?
Zak: The documents will not be sent to you, so you should download and save the documents you need.
MP: Alright, and is there a way to download all the documents in one zip file or something, instead of downloading them one by one?
Zak: There is no option to zip all files, so the document you’d like to have stored outside the app should be downloaded individually.
MP: Well, OK… but just in case, it would be convenient as a future feature of the Zak app :)
In the end, because my Minimalismo side often wins lately, and especially because my Zak account was not used for our daily expenses, I decided to download only my account opening contracts, tax receipts, and the last three months of bank statements.
If we had decided to close Mrs. MP’s Zak account, then I would have taken my time and downloaded each document one by one for safety reasons.
By the way, as far as Mrs. MP’s Zak app is concerned, I trust our Swiss banks not to lose our data (knowing that banks in Switzerland are required to store data for a certain time), so I don’t download anything as backup. It’s a parti pris with which I can sleep on my two ears. Especially since I have YNAB as a backup for my entire financial life!
Documentalisto came back to whisper in my ear: “But MP, do you know how long to keep your documents, especially your bank statements in Switzerland? Unless I’m mistaken, there is a retention period for bank documents that you must respect legally!”
A quick Google search, and here I am reassured by the Ombudsman of Swiss banking. In particular this article explaining how a person who no longer had his account statements could ask his bank to recover them from the archives. The text specifies that the banks themselves must keep all their records for at least ten years. Here I am, safe and sound!
On a side note: what do you think about me declaring myself Ombudsman of the Mustachians in Switzerland, and that my first paper (that I will send to all insurances? or the FINMA :D?) is about a ban on pillar 3a linked to a life insurance?! I think that would be a funky task!
And you, which strategy do you use to archive your Swiss banking documents?
]]>Today we continue the interview with Pasquale, this Swiss multimillionaire. We’ll talk about his lifestyle and his investments.
MP: “Are you FIRE (Financial Independence, Retire Early) today?”
Pasquale: Yes, by far. I could have stopped at 35 years old with my two buildings project, and earn 2-3x more than the average Swiss salary. And this only through my passive real estate returns in Switzerland.
MP: “Did you lead a frugal life when you first started out? Is that still the case today”
Pasquale: No, I wouldn’t say I’m frugal. I would describe myself more as a “normal” saver. I’ve never deprived myself too much. Another adjective that defines me well is “prudent”.
Today, I consider my lifestyle to be higher than average. Not to the maximum of what I could afford, but high.
MP: “At what points in your life have you stepped out of your comfort zone?”
Pasquale: When I was 16 years old and started my apprenticeship. That was no longer a joke, that was real life. The other time I stepped out of my comfort zone was when I started my own business at 24, working all week including Saturdays and Sundays. But I loved it.
MP: “How did you find your passion/path? When you started, were you driven by a passion for something or just by financial reasoning?”
Pasquale: “Appetite comes with eating” as they say. My passion for real estate has grown as I have practiced it.
As explained above, I chose this career after knowing that a job as a soccer player in Switzerland wouldn’t have allowed me to live there all my life… and also out of solidarity with my father, as I wanted to be with him and support him in our family real estate project (construction of my parents’ family home).
MP: “What is the typical week of a Swiss multi-millionaire, from Monday morning to Sunday evening?”
Pasquale: Ahaha, I’ve never been asked that one before! So, let me think. Actually, it’s quite simple.
From Monday to Thursday included, I am present in the company. I take care of the tasks that do not annoy me. Because I can never imagine myself retiring in the way that the average Swiss person thinks of retirement. I couldn’t last more than two days! I’m too afraid of being bored as hell, I need to do business, to have a concrete goal, to build things.
And then, from Friday to Sunday evening, it’s all pleasure/passion stuff (restaurants with friends, massage, walks).
And then during the year, I take a few days off here and there. It’s one of the privileges I’ve always sought, this freedom to be able to leave whenever I want. For example, recently, we organized a trip with friends at the last minute to do a part of the GR20 in Corsica! :)
MP: “Tell us about the women in your life in your 20s and 30s. Were you married or were you focused on your business? Is it worth it to get married before you reach your financial goal?”
Pasquale: In your twenties, it’s very important (at least for me!) to have a woman as a companion, even before creating a family. Being in a relationship gives you a balance, and prevents you from wasting your time with trivia. Another piece of advice from my experience is to have children after 30, and not before. Otherwise, you limit your risk-taking in your twenties, and therefore the opportunities that may come your way.
In summary, a man should go full throttle from the age of 20 to 30 while he is responsible only for himself, and take all the (measured!) risks at that time of his life.
On my side, I was in a relationship in my twenties with the woman who gave me beautiful children. Nevertheless, I split up at 44. Even if it’s not directly linked to my job, it played a role because you deprive your family of certain moments. And working too much can distance a couple.
MP: “How did you manage to reconcile your family life and leisure activities with your job and the building of your net worth? In terms of time to devote to it, and also money to allocate to it (re. feeling of deprivation)?”
Pasquale: We deprived ourselves with some things we couldn’t do as I was working. On the other hand, we never deprived ourselves of vacations. We even took more than normal, as I was the boss of my own company. And we clearly allowed ourselves more things, not far from luxury. It was a conscious choice of life.
*MP: “What advice would you give to the younger generation wishing to become homeowners in Switzerland?”**
Pasquale: Not to be afraid, but to be wary of bankers. Even if you have no choice but to go to them. But I recommend not to go while being limited on the liquidity to have some power of neogotiation, because otherwise they eat you alive! And another piece of advice: you must not let the accession to property in Switzerland result in many deprivations of everyday life, otherwise it’s not even worth thinking about it, you will only be unhappy on the long term.
MP: “Has your appreciation of money/spending changed? For example, did you change your lifestyle much between your first million and your 25th?”
Pasquale: Having money clearly makes you more serene. I used to see it as a tool, but the consumer society makes you calculate all the time. I actually calculate all the time nowadays because I like it.
But I would say that what has changed between now that I have 25 million CHF of wealth, and before when I was working, is that I curb my spending more easily now than before. Before, I was in the job, I was accumulating cash without worrying about my work, so I didn’t think too much about the potential lack of money. But now that I’m putting the brakes on my work momentum, it forces me to put the brakes on everything else, or at least pay more attention to it.
Save money when your pockets are full, not when they are empty…" my father used to tell me
MP: “Did you receive a specific financial education? A lot of explanations of concepts in your family environment? Or did you live in ‘misery’, and didn’t want that for your life?”
Pasquale: Zero education. Well, yes, actually. My father always told me “Save when your pockets are full, not when they are empty…” He never advised me to invest. But saving, yes, in an ant-like way, so that I would always have enough cash to eat in the hard times. Also, my father always taught me that debts were bad: “If you have [money], you buy, if not, you don’t!” It’s only later that I understood the game of money and debts, and the leverage effect possible thanks to the mortgage debt, especially for real estate.
If you have [money], you buy, if not, you don’t!
MP: “Can you list all the financial tools you are currently investing in? Real estate? ETFs? Others? And with what returns for each? And in what proportions?”
Pasquale: My number one investment vehicle is real estate in Switzerland. After that, I have a few percent of my wealth that I play with in “casino-mode”. Like when I bought oil and saw that it was at 13USD, and sold it 2 months later making 35% of profits.
I did try to diversify my portfolio by going to the stock market. Except that, not knowing much about it, I went through an intermediary each time. And the three times I tried it, I lost. So now, I only invest in what I can control myself without the help of a third party. For me, that means building real estate!
MP: “Did you train specifically in these areas? If so, how?”
Pasquale: I learned about real estate on the job. I learned as much as I could by always working with people older than me. I have an insatiable thirst for learning. And where I finally learned the most was on the construction site, listening to guys 20 years older than me telling me their mistakes, and explaining to me how not to repeat the same ones!
MP: “Where do you store any money that is not in real estate? Bank? Cheap online broker? Swiss private bank? Do you diversify, if so in how many different institutions?”
Pasquale: I don’t have much liquid assets! :D — because, as money comes in, I buy real estate to invest it. And also cars in investment-mode (50%), and the other half in pleasure-mode because I like certain cars. I have just enough liquidity to run with my regular expenses. If tomorrow, my Swiss rental income would not come in anymore, I could last a year with my lifestyle. And all this cash is stored in a “standard” Swiss bank.
MP: What is (are) your most ethical and profitable investment?"
Pasquale: Real estate.
MP: “Do you remember what you invested in each bracket; i.e. from zero to 10k (aka your very first investment, and with how much capital), then 10k to 100k, then 100k to 1 million, then 1 million to 25 million?”
Pasquale: I invested my first capital entirely in the land for my masonry warehouse, then in the land for my house (CHF 120'000).
I then invested CHF 250'000 in this project of building in the East of Vaud. Then afterwards it was each time in new real estate projects according to the opportunities.
And between each investment, I kept everything in savings in the bank.
MP: “In terms of risk management when you started out, were you more of an aggressive ‘all-in’ type, or rather conservative?”
Pasquale: I’ve always been conservative, thoughtful, and careful. When I bought my first property, it was with cash I had. And when I take risks, they are measured so that none can put me out on the street.
MP: “Have you adjusted your investment mix as you got older (less risk)? If so, how? If not, do you plan to do so one day, and if so, how?”
Pasquale: Up until today, I have continually invested in real estate by taking out mortgage after mortgage. But next year, that’s going to change because I’m going to pass the 50 years old mark. I will no longer invest in real estate for yield, but only in real estate development so that all the money I put in, I get it back in the short term.
Also, the other axis of adaptation of my wealth management strategy is going to be to diversify all my mortgage sources, so that I end up with one property per financial institution. Because I can’t repeat enough that certain bankers are assholes, and you should never have all your eggs in one basket, because otherwise they have too much leverage — not to say rudely that they have you by the ba***.
MP: “What’s the riskiest investment you’ve ever made that really gave your net worth an exponential boost? Is it like Donald Trump’s “little million dollar loan” that he found on his way to financial independence?”
Pasquale: This was my first building at the age of 35, acquired with CHF 254'000 of my own money that I had earned with the sweat of my brow!
MP: Next reader question. “Looking back, what was the decision or technique that worked best in his investments (if you have more than one, feel free)? And the one that was the worst?”
Pasquale: My investment technique that has worked the most is to go step by step. Building real estate slowly but surely. I calculated, built, saw that it worked, and then I continued regularly. You shouldn’t be greedy and want everything right away.
My worst investment technique was to speculate on the value of a piece of land close to my home, being too confident that a bid difference of “only” CHF 50'000 could not work against me… In the end, I lost the offer to a less stubborn buyer, although I didn’t want to let the opportunity pass. So if you really want something because it’s a good deal, take a step back, and seize the opportunity.
My best investment technique? Take it step by step, without being greedy, and let time do the rest.
MP: “If you were receiving between CHF 10'000 and CHF 100'000 today as a 30 year old seeking long-term financial independence, where would you invest? And where would you not invest? (i.e. in the economic environment of 2022)”
Pasquale: I would go into rental properties in Switzerland, and only in Switzerland because we have political security and some monetary stability. I wouldn’t invest in cryptos, because, in my opinion, without competence or insider trading, it’s too risky for me.
To explain to you why I would not buy elsewhere than in Switzerland, it is because I tried the adventure of real estate in Italy. And I was a victim of the exchange rate and the purchasing power of people who could not buy… So for me, the safe bet is real estate in Switzerland.
MP: “How much time did it take you (and still does) to manage your investments per day/week? Do you still only do it by yourself?”
Pasquale: I outsource all my property management to a real estate agency. And the rest of the management of my investments — which consists of controlling the payment of the rents on my account mainly — only takes me 1/2 day a week.
MP: “How long does it take you to decide on a new investment (analysis, risk management)? How do you do it concretely?”
Pasquale: With age and experience, quickly. I can see if a real estate investment opportunity in Switzerland is good after looking at it between 30 seconds and 15 minutes. If it looks good, I dig in.
In concrete terms, it’s a 50% mix of expertise in calculating returns, experience, know-how, and competence (type of land, what to build on it), and the other 50% is linked to my knowledge of the real estate market in the region where the opportunity is located.
MP: “Have you ever invested using a leveraged financial system (Lombard loan, mortgage, etc.)?”
Pasquale: Yes, I only invest via mortgage. I borrow at 1%, and that gives me at least 30% leverage.
On average, per operation, I aim for 15-20% return on equity.
But I’m talking about my investments here. Because of my conservative side, my house where I live has no mortgage, because I want to be free. Afterwards, if one of my children explained to me that he understands the risks of a mortgage on his private home, and that he wants to use a mortgage to not block his cash and take advantage of the current low rates to make his savings grow elsewhere, then I would let him do so.
MP: “What do you think about cryptocurrencies? DeFi? Do you invest in them? If so, in what proportions?”
Pasquale: I think that out of 100 people, there is one who knows about it, and the other 99 are fools.
But I like this idea of decentralized finance, especially if it can get the banker out of the way in the middle!!!
In the next part of the interview with Pasquale, we will discuss the techniques to build his fortune, taxes and pension funds, psychological and philosophical aspects of money, and finally his mistakes and lessons learned.
That’s why I thought I had to share with you the inspirational boost that is Pasquale’s story.
“But who is this Pasquale?”, I hear you ask, you who have just arrived on this blog.
Pasquale, it’ s the famous person of whom I spoke to those who are registered to my newsletter. He is 49 years old, and has accumulated a net worth of CHF 25 million.
I’ve met him in real life; he’s a chill, and he likes to share his story if it helps others learn from it, and also avoid his mistakes.
Ready?
MP: Hello Pasquale. We finally managed to find the time to do this interview. Thank you for having me in your home so that we can talk numbers without worrying about the next table!
Pasquale: With great pleasure Mr. MP. I’m not sure what to expect, but let’s do it :)
MP: What I’ve learned from analyzing other people’s careers is that we all see our lives from too subjective a point of view, too biased. So, I’m going to ask you to describe your life from birth to today in an objective and journalistic way. Without trying to draw any conclusion or postulate. After that, I will ask you more specific questions where you can be as subjective as you want. Is it working for you?
From 0 to 10 years
Pasquale: OK, so, let’s see… I am the son of an immigrant. I was born in a commune in the east of Lausanne.
When I was 4 years old, my family and I moved back to southern Italy. My father’s mother was ill, and he had always promised to be with her for the end of her life…
My father was a mason, so he started his business there when we arrived.
As for me, from the age of 4 to 10, I lived the best years of my life as a child thanks to the freedom that the Southern villages provide.
Nevertheless, from a purely economic point of view, those years were hard in southern Italy. My father had a hard time getting paid for his masonry work. He was a nice guy… I remember how he suffered from not being able to make enough money from his business, even though he was a hard worker… When I watched him, I told myself that I didn’t want to become like him. I said to myself: “Pasquale, when you grow up, you won’t trust people blindly.”
If there is one thing I remember from my 0 to 10 years old period, it is that I learned to recognize assholes!
Seeing my father work hard and not get paid taught me how to recognize assholes!
This doesn’t mean that I don’t trust anyone, mind you. Because I find that I am basically a “good guy”, it’s just that I grew up sharpening my negative vibe detector ;)
My mother was a housewife. She was able to educate (in my opinion) me and my sister in the best possible way, without any pressure of academic or other results. With all this family surrounding me, I received all the love a child can dream of, and I am still very grateful for that.
From 10 to 20 years
After 6 years of hard work with his own masonry company in Italy, we came back to Switzerland because the economic situation became too hard.
I developed my passion for soccer during those years. So much so that I wanted to make a career out of it. My dream came true when a Swiss professional club offered me a first trainee contract! But, with the seriousness that characterized me, I asked a friend who had already started his internship… that’s when I learned that he earned less than a masonry apprentice…
My mother had seen my father work so hard as a mason… she didn’t want me to follow that career. But she didn’t stop me. But for me, it was either soccer or masonry so I could work with my father. The reason pushed me towards this manual profession. As my apprenticeship progressed, I liked the job more and more. But it was hard.
I had joined the same company where my father worked as an employee. We worked like crazy. And while the real estate crisis was in full swing in Switzerland in the early 1990s, my father and I took the risk of building our own house. Mortgage rates went up to 7.75% at the time, it was crazy! But we worked and worked, every Saturday and Sunday, and we were able to keep our house. It was not an easy time, but it made me strong.
From 20 to 30 years old
After getting my feet wet and learning the masonry trade, I decided to attend masonry foreman school. I successfully obtained my federal mason foreman certificate at the age of 24 (note MP: for those who are not in the field, a foreman is like a site manager who manages and supervises a construction site from A to Z).
Then, the first trigger for my future wealth appeared. As it happened, I found myself hierarchically under the son of my employer. Apart from the power conferred by his title, this guy was not competent in his field. One day, we got into a heated argument over a project.
I went home at night (I was still living with my parents), and I remember saying to my father: “If this jerk can be an entrepreneur and run a business, then we can too!”
My father was 48 at the time, and I was over 25.
A few months after that fight, we both quit our jobs and started a masonry company together!
We didn’t count our hours. We worked about 14-18 hours a day, including Saturday and Sunday. I was lucky that my wife understood this “hard-working” side and supported me with this rhythm. But as time went on, and as I gained experience and met new people, I realized that you can’t make a fortune by working your ass off.
Nevertheless, it’s only thanks to the work of my hands that at 28 years old (in the 2000’s) I was able to buy my first land, where we built our masonry warehouses. And that, without having to ask for any loan from the bank — because the banks don’t lend you money when you are an independent mason with “only” your income…
From 30 to 40 years old
I then accumulated other funds thanks to the services of my company and the savings I made on certain contractors, because I managed the sites myself. Because yes, the banks recognized these hours of mandate (construction management) as downpayment funding. This is what allowed me to build two houses. One to live in with my family (i.e. my kids and myself), and another that I rented.
The machine of passive and recurring returns was launched.
I also took over my father’s shares in our masonry business. It was convenient for him because he was close to retirement, and it also allowed him a more serene end to his career. And it suited me to be the owner, in terms of name and reputation for the relationship with my customers.
It was at my 35th birthday that the real trigger of my net worth happened…
Because of my job, I was immersed in real estate day and night. Together with my father, we had acquired our own masonry company, and then, I built my two houses.
On the eve of my 35th birthday in 2007, a friend of mine, an architect (the same one who encouraged and trusted us when we started our own business), suggested that I join a consortium of 4 contractors to build two buildings in Eastern Vaud.
When an opportunity arises, and it is interesting, I tend to go for it. So I accepted my friend’s consortium proposal, on one condition/proposition: that only 2 entrepreneurs would be involved. He and I. And not four.
He accepted.
Everyone around us told us that we were crazy to build in such a “remote” region of French-speaking Switzerland, that it would never be rented, etc.
But we were confident, we had done our research and analysis of the local market. We found a banker to follow us.
We didn’t pay attention to the naysayers because we knew what we were doing. We built the two buildings. And we rented it all in a few weeks.
Moreover, my architect friend was 15 years older than me, so I wanted to take advantage of the opportunity to learn as much as possible from his experience. He was a mentor of sorts, even an elder brother (we are still good friends today).
This was the trigger that made me change my mind about my net worth. Working your ass off is good. It teaches you the reality of the field. But once you understand that, then moving to mortgage leverage is the next step.
The machine was in motion. Since this first real estate project in Switzerland, we have been able to mortgage and re-mortgage. It’s the first million that gets you off the ground. Then, the banks agree to follow you, because you can put your buildings as a guarantee. Besides, all my mortgages are linked to my buildings, and nothing is linked to my company so as not to put it in danger.
It’s the first million that gets you off the ground. After that, it becomes easy [with the banks].
From 40 to present (i.e. 49 years old)
From my late 30’s until I was 45, I was fully engaged in my business as an administrator/manager.
And in parallel, I continued to build buildings with a snowball effect on my monthly rental returns.
If it were up to me today, I would only do real estate development. And no more building sites. But my employees are like family to me, and I can’t imagine closing the company. So I’m keeping it.
On the other hand, since 5 years, I am much more passive in my company. I mainly take care of my properties privately, and bring my relational and business side to my company in terms of contact with our clients. And I refocus our business on projects where we do the overall promotion of the properties, because that’s where there’s still room for profits to be made.
Thinking at everything we just discussed, the only thing I would like to emphasize is that yes, I have a theoretical net worth of about 25 million CHF today, and that yes, I make a lot of cash that certainly makes people dream. But all this cash, at the root, comes from my hands as a mason. It didn’t come overnight on a silver plate.
MP: Wow, what a life journey!!! I would have some lessons to draw from this whole story, but I will detail them at the end of the article. In the meantime, let’s move on to the readers’ questions, which I’ve grouped by theme.
MP: “What is your profession and do you think that currently, if someone enters the same profession, he will be able to have the same wealth as you at your age?”
Pasquale: Looking back, being a mason and/or administrator is very difficult for three reasons:
MP: “Was knowing French and/or German key to your success?”
Pasquale: The language did not play, no.
However, what played a key role in this was my communication and interpersonal skills. This is much more important in my job than the languages you speak.
On a more personal note, I miss English socially, as, in my opinion, it is a sign of “ignorance”. That’s what I would like to work on one day.
MP: “At what point did you decide to stop working for a company (when before, you needed a guaranteed salary)?”
Pasquale: It was life that led me down this path via a conflict with my boss’s son at the time. He was a person who wanted to be a boss, but didn’t have the skills. He was forced by his father to take over the family business… without the right entrepreneurial mindset to go with it. The clash with this person made me start my own company.
MP: “Were you able to make your fortune entirely in Switzerland, or did you also have to rely on international trade/clients?”
Pasquale: Only and entirely in Switzerland, yes. And only through the leverage of real estate.
MP: “Did you start your business with the intention of growing it to several million Swiss francs?”
Pasquale: Not at all! I didn’t have a specific goal. I did everything as time went on and as opportunities arose. Money was never my primary goal. I liked to build things, and leave a trace. I never said to myself: “My goal from now on is to make as much money as possible!”
Well, if I think back, I still had a goal in my subconscious. I was looking for independence for the freedom it brings you. That’s what I’ve been repeating to my children since they were very young: “True wealth is freedom!”
“True wealth is freedom!”
MP: “Did you encounter many obstacles to do business in Switzerland? If yes, which ones? Which one was THE most important, and how did you overcome it?”
Pasquale: Hmmm, good question. I would say that the hardest part was being the son of an Italian immigrant, but maybe it was also my strength. A lot of the old native-born Vaudois people were looking forward to laughing that I was screwing up. I overcame that by working hard and being more serious than the others.
In the next part, we will discuss Pasquale’s lifestyle and investments.
Photo credits: Pexels & Google Maps
]]>But all of them hesitate when they see that they will lose thousands or tens of thousands of CHF by closing their pillar 3a life insurance…
Having been a victim of this rip-off (sorry, can’t call it anything else!) twice… I can only understand their upset and questioning.
It always starts like that:
Hi MP! I have a question regarding my life insurance policy with Helvetia. It is a guarantee plan, linked/restricted pension (pillar 3a). I started investing CHF 6'768 per year since 2016, and the contract ends in 2051. Part of the contract is invested in incomprehensible derivatives, but at least it’s not all sitting in a savings account earning nothing.
The guarantee in case of life amounts to CHF 173'020. According to your advice, I asked what the surrender value would be and this is what they told me: “Surrender value = CHF 15'378.87, and the credit balance of the cash account = CHF 564.00 (total payment in case of surrender: CHF 15'942.87)”
Since I have already paid CHF 40'608, that would mean that I would lose more than half of the amount invested… so I wonder if it’s really worth closing this 3a pillar, and transferring the surrender value to a VIAC pillar 3a account with the Global 100 strategy. What do you think?
And my answer is always the same: trust only the math and the data, and definitely not your human aversion to losing money.
Luckily, the insurance company of the reader above provided him with a document showing different possible scenarios of the surrender value of his 3a pillar life insurance at term (i.e. in 2051):
I specify that these figures are valid as long as the pillar 3a life insurance premium of CHF 6'768 is paid every year until 2051.
The other option of our reader is to terminate his Helvetia contract, recover only the surrender value, and invest this amount (as well as all future premiums) in a VIAC pillar 3a invested in global ETFs (via the VIAC Global 100 strategy).
If we put the numbers down, we get:
I put all this data into my “Compound Interest Calculation” spreadsheet, and here’s what comes out with the same stock market returns as the Helvetia pillar 3a simulation:
[1] If you really have CHF 0 left in 2051, you’ll have other things to worry about, like a World War III, and nothing will go right. In that case, I don’t think your 3a will be a big concern. In a more balanced world where you would have saved CHF 212'214.87 (15'942.87 + 6'768 x 29), and where you would retire in 2051 in the middle of the biggest stock market crash of the 21st century, one could imagine that your 3rd pillar VIAC would be worth only half or even a quarter (in the worst case) of your invested amount, i.e. about CHF 111'000 (if divided by 2), or CHF 53'000 in the worst case scenario divided by 4.
The answer to the question “to terminate my pillar 3a life insurance or not” is clear to me by looking at this table:
Data as of 2051 | Pillar 3a life insurance Helvetia | Pillar 3a VIAC Global 100 | Difference if VIAC choice |
---|---|---|---|
Guaranteed | CHF 173'020 | CHF 0 (or rather CHF 53'054) | -CHF 119'966 |
Performance 5.38% | CHF 497'532 | CHF 797'074 | +CHF 299'542 |
Performance 6.35% | CHF 612'052 | CHF 1'002'005 | +CHF 389'953 |
Performance 7.06% | CHF 714'627 | CHF 1'188'489 | +CHF 473'862 |
If I were the reader who sent me the above e-mail, I would switch to VIAC with a pillar 3a invested in the Global 100 strategy and terminate my Helvetia pillar 3a “Guarantee Plan - Linked Pension” with a big smile.
I would like to clarify an important point: I would take this decision because my risk profile is quite high, and I can sleep very well with all my 3rd pillar invested at 100% in the stock market. This knowing that in the worst case I could always count on my 1st and 2nd pillar, and especially (!), on my ability to bounce back and generate new income.
And I can understand that this is not the case for everyone, and that some people need more guarantees regarding their private savings for their retirement.
And you, have you ever been ripped off by taking a mixed pillar 3a linked to life insurance? If so, what will you do after reading this article?
Header photo credit: Mikhail Nilov from Pexels
]]>When I last posted about the best free Swiss digital bank, a reader — thanks Jimmy! — saw that it bothered me a bit that I couldn’t deposit cash for free with neon.
So he replied to me in a comment:
It is possible to deposit your cash for free on your neon account! Just buy a Twint top-up at the Coop => transfer money to your neon account => it’s on your neon account in a few hours or 1 day maximum ;)
Nice “TWINT neon” hack!
And above all, it makes the solution even better than any other bank, because the Coop is about 3x more present on the Swiss territory than any other Swiss bank :)
And digging into the TWINT FAQ, I realized that the network is even more extensive than just Coop, as you can buy these TWINT top-ups (also called TWINT credit codes) at the Swiss Post Office, Coop supermarkets, Coop Brico+Loisirs, and also at Coop City (food and non-food).
Jimmy’s news was very timely, as I had a videoconference scheduled with one of the co-founders of neon to discuss their future features. I told him about this hack, and his answer was quick:
So cool! That’s a really smart way to use the TWINT system to get around the fact that you have to pay for cash deposits to your neon account via the post office normally! I’m going to talk to my FAQ team to see if we can add a line about it :) Thanks to Jimmy anyway!
As we discussed this solution further, he told me that I should still check the maximum cash limit that one can deposit, because there had to be one if TWINT wanted to stay within the anti-money laundering rules.
Jimmy to the rescue again: “Hello MP :) I have Twint Prepaid, and I had been able to top up a maximum of CHF 2500/day on it, but on their site the limit seems to have been lowered to CHF 1'500/day. And there is also a limit of CHF 5'000/year (cf. the TWINT FAQ) for top-ups. As well as another offloading limit of CHF 5'000/year of your TWINT credit (money that can come from your own top-ups, or from other people who have paid you via TWINT) to your bank account.”
It’s better than nothing! And it should be more than enough for our needs with Mrs. MP.
So I’m going to modify my comparison of the best free online Swiss digital bank, and add this bonus point for neon :)
And thanks again to you Jimmy for your very useful comment for the Swiss Mustachian community!
]]>Hey MP, what do you think about MoneyPark for a new mortgage or a renewal?
So, listen, at the time when they were still called DL, I went to see them about our real estate purchase in Switzerland. But as I had already been to several banks myself before, the advisor told me that it was better to continue my research alone. Because the risk was that my files would be presented twice to the same institution, but not necessarily to the same person, and that could create duplication and other confusion.
So I never used them myself. But the appointment I had at the time had pleased me in terms of the consultant’s skills.
And since I’ll have to renew my Swiss mortgage in a few years, I’m already starting to prepare the ground. And rather than keeping all this valuable information to myself, I thought I’d ask the readers of the blog if they had any feedback, and turn it into a consolidated article. I’ll share my opinion on Moneypark at the end of the article.
My purchase concerns a 200 m2 house in Aargau for CHF 750'000 without notary fees.
This was a new mortgage, taken in November 2016.
The costs of MoneyPark were CHF 0, without using special offers like neon or others.
I took a 10 year fixed term Swiss mortgage (MoneyPark did not recommend LIBOR/SARON). The final mortgage rate obtained was 1.05%, while the average Swiss mortgage rate was about 1.9% at the time.
My mortgage is in 2 installments over 10 years each.
Finally, MoneyPark proposed me only one offer (the most advantageous).
I took out my 2nd and 3rd pillars for the purchase.
And I chose an indirect amortization via a pillar 3a linked to a life insurance (this was the condition of Allianz Suisse).
My mortgage lender was Allianz Suisse.
Since we signed our contract for the mortgage in 2016, I can’t really say if the costs MoneyPark charges were the same as today.
I know that the broker for our house had an agreement with MoneyPark, and for that they did not charge us a fee.
But we also asked MoneyPark if we should pay them for their services. And they said “No” because they get a commission from Allianz Suisse for bringing in new customers. So we figured that was the way their business model worked.
It might be worth asking MoneyPark how it works today. I’m pretty sure they still get a commission for referring new customers.
I bought two apartments in two times, respectively of 135 m2 and 115 m2, in the canton of Vaud.
Each time it was new mortgages. My purchases were made in June 2015 and January 2021.
I got a preferential price of only CHF 500 at MoneyPark thanks to my company (Nestlé).
Concerning the setup, a bit complex, it was done via 8 (!) different tranches for each purchase, but essentially in fixed rate over 10 years (MoneyPark did not advise me LIBOR/SARON).
The final mortgage rates obtained were 1.87% and 0.97% (market rates were quite similar).
And MoneyPark offered us only one mortgage offer each time, the most advantageous one.
I withdrew my 2nd pillar for the purchases.
For the amortization, I chose the indirect amortization via a pillar 3a linked to a life insurance. For both apartments. Despite your advice, I preferred to choose life insurance for my husband as well, because if something happens to one or the other, one person will not be able to pay the mortgages for both properties. After long reflections and debates with our financial advisor, I chose the PAX pillar 3a solution from Crédit Agricole next bank.
In the end, I recommend MoneyPark one hundred percent, because they are a very trustworthy and professional team. The cost of their services will save you a lot of work, and you will probably get better conditions than if you went to the banks yourself.
I bought a house of 170 m2 in Vernayaz in Valais. The purchase price without notary fees was CHF 820'000 + CHF 25'000 for the installation of solar panels.
So it was for a new mortgage. My purchase took place in September 2021. I paid the services of MoneyPark CHF 490 through the partner offer of the Swiss neobank neon.
But finally, I did not take out my mortgage through MoneyPark… I’ll share all the details below.
The mortgage I got through a private contact was at 1.05%, compared to 1.11% with the only better offer MoneyPark could provide me — all from the same bank!
I withdrew all my Swiss 3rd pillar, and I had to insist on withdrawing part of my 2nd pillar, and pledging the rest in order to reduce the monthly cost for a small impact on my retirement.
So I am a brand new Swiss home owner. I contacted Moneypark to get my mortgage and my experience was pretty bad overall.
There were 4 phases with them:
Phase 1
February 2021: contact to estimate the amount of the property I could afford. Good contact and I learned a lot from my advisor.
Phase 2
September 2021: we found the property of our dreams. I contact again MoneyPark so that it confirms to the real estate agent that the property was well in the budget. There too, they were very efficient and in less than 24 hours the property was definitely reserved with the real estate agent. It was afterwards that things started to go wrong.
Phase 3
Still in September 2021: for the search of mortgage, I specify him well that I would not like to make a mixed life insurance for the pillar 3a of indirect amortization (I reread page 302 of your book several times!) I also came in with a very specific amortization plan (a mix of Pillar 3a and direct amortization). The advisor was not very responsive from that point on. She strongly insisted on the benefits of mixed life insurance… Then she found me a mortgage. It was a relief, because our financial capacity was only 35% and few institutions accept such a high rate. The conditions of her Swiss mortgage proposal were:
Since this is a big topic, I also contacted my girlfriend’s cousin who works in real estate. She also found me a mortgage, better than the one from Monepark, with the following conditions:
I would like to point out that these 2 offers are from the same bank (!), namely, the Cantonal Bank of Valais.
And you see the 1.11% rate? Well the 0.01%, in my opinion, is the bonus for MoneyPark…
Phase 4
So, clearly, I choose the cousin’s offer. When I told MoneyPark that I didn’t choose their offer, the advisor told me that I would have to pay penalties (WTF!). I sent her back the terms of the contract, and she finally decided not to enter into a conflict with me. To this day I still haven’t received the basic fee invoice either (50% off by going through neon).
So much for my experience. I will also publish a more detailed article on my blog jefaisconstuire.ch (in French), but clearly my experience will have more impact on your blog :) (thanks again for the latter by the way!)
I do have experience with Moneypark. And I have never concluded with them for the following reasons:
I bought a 120 m2 apartment in Freienbach in the canton of Schwyz. The selling price without notary fees was CHF 1'190'000.
The mortgage taken was a new one (i.e. not a renewal). It was in April 2020. And I paid about CHF 2'000 in fees to MoneyPark (I did not use any promotional offer).
I chose a 10-year fixed rate mortgage with a mortgage rate of 0.79% (MoneyPark did not recommend LIBOR/SARON). At the time, the market average was about 1.10%.
MoneyPark offered me two deals, and I chose the one I thought was the best.
I opted for a 50-50 split between direct and indirect amortization. As for the indirect amortization, I started with a pillar 3a linked to a life insurance with SwissLife.
The financial institution with which we took our mortgage is the pension fund ALSA PK.
In the end, I was satisfied with MoneyPark. They were competent and available.
I am in the middle of renewing my mortgage. For me it’s a bit different, because now I left Switzerland to settle abroad. And I have a lot of problems to find a bank that is willing to renew my mortgage. I contacted MoneyPark and HypoPlus from Comparis. HypoPlus had better offers if I stayed in Switzerland.
The Swiss property we are talking about is a 78 m2 apartment in Promasens in the canton of Fribourg. I paid it CHF 350'000 excluding notary fees.
It was for a renewal in October 2021 that I contacted MoneyPark.
I didn’t pay them because we couldn’t find a solution.
My application was for a 10 year fixed rate mortgage. MoneyPark’s mortgage rate quote was ~1%, and Comparis’ HypoPlus quoted me 0.80%.
In the end, I intend to go towards the proposal of HypoPlus of Comparis which recommends me the Banque du Léman (with which I am currently in discussion).
I bought a 120 m2 house in the canton of St. Gallen with a mortgage of over CHF 400'000.
It was a Swiss mortgage renewal in my case. It was in January 2018. I paid about CHF 200 to CHF 400 in one-time fees to MoneyPark.
I wanted a 10 year fixed rate mortgage. MoneyPark did not recommend a LIBOR/SARON mortgage.
Finally, the mortgage rate I got was 1.5%. It was a very competitive offer for the time. It was for a 10 year single tranche mortgage (MoneyPark did not recommend LIBOR/SARON).
I asked MoneyPark for several variations (annual refund, easy cancellation, etc.). In the end, I chose the model recommended by MoneyPark (more details below).
I did not withdraw my 2nd pillar or my 3a pillar.
For the amortization, MoneyPark convinced me to sign 3 contracts: 1 for the mortgage, 1 for a life insurance contract, and 1 for a household and private life insurance. This combination of 3 contracts allowed me to obtain this attractive rate.
We signed with Allianz Suisse.
In conclusion, my experience with MoneyPark was mixed:
Based on this experience, if I had to go through this process again today, I would rather go to a “pure” credit comparison service (HypoPlus, hypotheke.ch, …) and focus more on the options I really want to have. Because at the end of the day, you’re trading convenience with long-term contracts, vs. more work for constant renewals with short-term contracts.
I bought an apartment (based on plans) in a PPE for a delivery planned during this summer 2022. It is 120 m2, located in La Neuveville (canton of Bern), and cost me CHF 850'000 excluding notary fees.
So, it was for a new mortgage that I used MoneyPark last September 2021. I paid a fixed fee of CHF 980 (I did not use any promotional offer).
My goal was to find a 10 year fixed rate mortgage. MoneyPark did not recommend LIBOR/SARON.
I got a mortgage rate of 1.06% through MoneyPark. The average market mortgage rate was 1% at the time.
MoneyPark proposed me 3 offers.
I only pledged my 2nd pillar for CHF 40'000 for this acquisition. And I took an indirect amortization via a pillar 3b contract with Allianz, linked to a life insurance. And I took out my mortgage with Raiffeisen.
I had no choice in putting together the file for the 3b pillar, so that it would be viable from a death risk point of view!
The Allianz product is Balance Invest, and the periodic premium is split in 2:
I am aware that this life insurance is the negative point of the financial package by the fact that I am bound, but the long term calculation and the tax advantages by the pledge of my LPP (which allows me to keep everything I have acquired to date for retirement and tax savings), and no need to touch my pillars 3a have a strong impact; this package will also allow me to acquire a second property or a larger main residence at maturity in 5 or 10 years, while retaining this property.
In the end, I found a very good service and support from DL MoneyPark Neuchâtel. It was a time saver, because they go where the file will pass, and negotiate for you at the bank.
I bought an old house of 200 m2 in Sion in the canton of Valais. I paid CHF 1'950'000 excluding notary fees.
The purchase took place in April 2020. I needed a new mortgage at that time.
I consulted MoneyPark, but I did not go with them in the end, because my bank (Credit Suisse) offered me a better deal. MoneyPark, if I remember correctly, put me in touch with BKB (Berner Kantonalbank) which had a good proposal (the only one presented by MoneyPark by the way), but not as good as CS. It’s obvious that it’s much easier to deal with people who know you — i.e. Credit Suisse in my case — and that’s probably the reason why the proposal was better from the beginning of the discussion. And so I didn’t pay any fees to MoneyPark.
Concerning the CS mortgage itself, I took a 10-year fixed tranche, and another 5-year fixed tranche. Credit Suisse offered me a contract at 0.69% for the 10-year fixed rate mortgage, and 0.67 for the 5-year fixed rate mortgage. In comparison, the market mortgage rates were between 0.80% and 1.00%.
I have not withdrawn my 2nd pillar or my 3a pillar. And I am paying off my mortgage directly by making an annual payment.
If I had one piece of advice to give to anyone who is starting to buy a property in Switzerland, it would be to look around the market, not to be older than 50 or 55, and never to be retired ;) Your ability to repay is judged by your income (and its regularity).
Ten years ago, I bought a 115 m2 condominium in Assens (Vaud). The purchase price doesn’t mean much anymore, because the market has gone up a lot in 10 years. But for those who are curious, I paid CHF 710'000 for this apartment in 2012.
I am in the process of renewing my mortgage, and I am thinking of choosing MoneyPark but nothing is signed yet.
Their fees are normally CHF 490, but thanks for the info, I just signed up at neon, and I’m going to ask for the 50% discount at MoneyPark! Thanks for the tip, I owe you a pizza on this one :)
I’m thinking of going with a 10 year fixed rate mortgage. I already had a 1st free interview with them, and they are not pushing SARON. I was the one who asked, but they don’t advise it in my case. On the other hand, they give me an update on the pension plan (which is very good) and suggest tax optimization with a linked life insurance, or BVG buyouts (in my case, it will be without).
For now, the mortgage rate proposed by MoneyPark is 0.94% over 10 years, with pledge of my existing 3a pillars, and maximum amortization indirectly via a bank 3a pillar. In comparison, for a fixed mortgage over 10 years, UBS offers me 1.30% and Raiffeisen 1.24% (you know those who drive a Porsche ^^). VZ offers me 1.10% and about 0.70% in SARON.
I am still in discussion with them now, but the decision will be made very soon as I have to renew my mortgage in 2022.
As mentioned above, I am not withdrawing my 2nd or 3rd pillar for this renewal. On the other hand, I have to pledge my 3a pillars. But well, it’s better than in 2012 when I was entitled to the whole thing… pillar 3a linked to a life insurance. I know, it’s not good, but you didn’t have your blog back then… But the goal is to blow up the linked life insurance once the mortgage renewal is done. I had signed (and am still under their contract) with UBS in 2012…
I bought a newly built apartment in a PPE in Nyon in the canton of Vaud. The apartment is a 3.5 which is about 100 m2, with 16 m2 of balcony. I paid CHF 945'000.
This was our very first purchase, therefore our very first mortgage. We used MoneyPark from May 2020 (contract signed with Moneypark) to May 2021 (invoice received from Moneypark). We moved into our new apartment in May 2021, which was also the month our mortgage started. We paid MoneyPark CHF 980 including VAT. This amount includes about 30 to 40 emails and/or phone conversations with my advisor, and 3 or 4 meetings of about 1 hour each.
We ended up choosing a 10 year fixed rate mortgage at 0.92%, in one tranche. Since mortgage rates are low, the consultant recommended a fixed term loan rather than LIBOR/SARON, which I agreed to without reservation.
At the time we set the rate at 0.92%, the average market mortgage rate (10-year fixed term) was between 1 and 1.1% (as indicated on the “Bon à Savoir” website).
The cool thing is that we got several offers from MoneyPark:
At the time, we did not have a 3rd pillar, and we did not withdraw our 2nd pillar. There is however a pledge of CHF 35'000 on my 2nd pillar in case we could not pay our amortizations. The bank also asked for a life insurance of minimum CHF 120'000 for me, so that my wife could keep the apartment with her salary.
We therefore chose an indirect amortization strategy via the 3rd pillar of La Baloise for an amount of CHF 10'500 / year. The maximum remaining amount of about CHF 3'266 (6'883 x 2) was invested in a 3rd pillar VIAC. I refused to sign a pillar 3a linked to a life insurance, because I was not comfortable with the products. I took a private life insurance with La Vaudoise which costs about CHF 350 / year to cover CHF 200'000 in case of death.
If you are interested, here are the details of our amortization:
The bank issuing our mortgage is the SoBa Bâloise Bank.
If I were to give a friend advice about MoneyPark today, I would say that when we decided to buy our apartment, we knew that our financial resources were good but far from excellent. We had the 20% (+ 5% for other expenses) required for the purchase of our new home, and a combined salary of CHF 190'000 gross (which was more than enough). However, at the time, my wife was on a fixed-term contract, and the banks refused to take her salary into account. My own bank (BCV) accepted a loan of CHF 650'000… so we had a gap of at least CHF 100'000.
Since we needed to secure the apartment we wanted on short notice (we didn’t have much time for this, and we didn’t have a loan confirmation at the time), a colleague of mine recommended his own counselor at Moneypark whom I called. After reviewing our resources, the advisor told me that he was able to find the required loan based on my salary alone, but at a bad rate (he quoted me a rate between 1.4 and 1.5% at the time). However, he was confident that he could find a better loan if we gave him more time (we had 1 year to find better conditions). In less than a week, in order to secure our reservation with the real estate developer, our Moneypark advisor was able to find a first confirmation loan with BCV (funny enough it was with BCV…). He then found more interesting conditions with other banks and we were able to buy our apartment at a good rate (we finally took a loan of CHF 780'000 at 0.92%).
Without the help of this advisor, we would not have bought the apartment we now live in (and I must say that we do not regret our choice at all). For people with limited financial resources or little time, going through a broker is a great help to explore. As far as I am concerned, I totally recommend the services of DL Moneypark in Nyon.
If we do the math, we have 11 feedbacks. Of the 11, 2 did not take out a mortgage with MoneyPark. And so, out of the remaining 9 who received a proposal, 6 of them were offered a mixed pillar 3a linked to a life insurance.
Let’s be clear, paying for convenience is TOTALLY OK with me. Even though I’m often on the DIY side of things as a Mustachian, I can understand and sometimes do pay for convenience when I want to put my time and effort elsewhere. But, and this is a big BUT, paying for a service (in this case, MoneyPark’s research fees) AND receiving (or even being forced to receive) such crappy products as 3a pillars linked to life insurance: NO THANKS!
Again, this is only my personal opinion, and surely each MoneyPark advisor is different (the proof is with the last advisor in Nyon), but in most of the examples, we end up with pillar 3a linked to a life insurance…
Based on this alone, I would not recommend MoneyPark to a Mustachian.
Even if I trust people by default, the fact that Helvetia owns 70% of MoneyPark’s capital bothers me regarding their independence… Because at the end of the day, the interests of both companies are directed by one and the same group behind.
This is a second warning that makes me not recommend MoneyPark.
The day I have to renew our mortgage in Switzerland, I will do it this way:
And yeah, of course, I would definitely NOT sign up for a pillar 3a life insurance policy, no matter what!
…you are in the same situation as Stefan from Nyon above: you don’t want to miss out on your dream property, and your file is borderline. The only thing you have to take care of is to force your MoneyPark advisor to accept YOUR financing plan with, for sure, NO mixed pillar 3a linked to a life insurance, and at most a life insurance alone (which is much cheaper in the long run than those mixed pillars 3a linked to a life insurance!!!)
One of the readers contacted me following my request for feedback. She told me that she had to pay an exit fee when she wanted to change her Swiss mortgage provider. And she had no choice, because it was written into her original contract. In her case, we’re talking about CHF 500, so that’s something I’ll pay attention to. Because when you sign for 10 years, you don’t necessarily look at this kind of small amount (wrong!), but I’m sure it’s easily negotiable.
Although I am very critical about MoneyPark, I am still an open-minded person. So if there are one or more advisors who are readers of the blog, and who have a mindset in line with us Swiss Mustachians, then I’m interested to know more if you can adapt your strategy easily without having any problems with your management (by favoring LIBOR/SARON which is historically the most advantageous, or by proposing fixed mortgages with a minimum of life insurance, and especially not linked to a pillar 3a :)).
If this is your case, you can contact me by replying to any email received via my newsletter.
What is your experience with MoneyPark and/or any solution to find your first mortgage or renew your mortgage in Switzerland?
You can share it with us via the comments section below (or by return email).
]]>This adventure, which was just a small personal project at the very beginning, has become an integral part of my life. And I love it!
As usual, we’re off for a little retrospective of everything that’s happened, and we’ll follow up with my outlook for 2022.
Before dwelling on the heart of my personal project which is my blog, let’s review its little brothers and sisters who were born over time:
I published my book in November 2020. And what a long way I’ve come since then!
During 2021, it became a bestseller in French-speaking Switzerland, selling more than 1'000 copies.
As I write this, we are at 1'621! That’’s pretty amazing, and gratifying.
The next stop I’m aiming for, without putting too much pressure on myself because it’s not a goal in itself, is to be able to add a “Bestseller in Switzerland” sticker on the cover when I’ve sold more than 3'000 copies.
Another good news arrived a few weeks ago: my book is going to be on sale in a bookstore of a well-known group in French-speaking Switzerland ;)
If you own an independent bookstore or similar, contact me if you’re interested too.
And what makes me most excited about this project is the impact it has on readers:
The average of all the 158 ratings is 4.6 stars on 5!
I also thank whoever added my book on goodreads. It feels weird because the first thing I felt was this imposter syndrome as an author… but once I got past it, it’s really cool, so thank you!
Below are some of the comments that keep me motivated after 8 years of seeing so much impact in the lives of readers:
Message of Renars:
Comment of Robin:
Feedback of Jeremie:
Another one from Marco:
And one from Aljosha:
And the last one from Mikhail:
Even after all my articles and my book about investing in Switzerland, I was still receiving emails from readers.
Émilie wrote to me last summer:
I’m scared to death of the stock market, Marc. Can’t you make an exception for me and accompany me on a private coaching session? I’m really too worried about making a mistake with my savings, because I’m a complete newbie in investing.
Indeed, I don’t want to do as much private coaching as in 2020-2021, because it takes up too much of my energy — compared to writing.
So I suggested to Émilie to condense all my notes and slides created for my coaching sessions into one program. She loved it. And most importantly, she finally started investing in the stock market!
Convinced of the need, I conducted two alpha and beta cohorts of my “Swiss Investor Program” in French only, with about twenty readers.
These two small groups allowed me to finalize all the details of this program made for the Swiss, by a Swiss.
The promise of the (paid) program is to allow any “Swiss newbie” with zero knowledge of the stock market to begin investing their CHF in the stock market — while understanding what you are doing! And this in 6 weeks.
And so, that’s how I launched the first public cohort of the Swiss Investor Program two weeks ago. I look forward to seeing the next feedback like David’s last December:
In order to keep as much time as possible for writing blogposts, I’m thinking of opening the registrations in January and September each year for the French version.
If you’re interested in learning more, you can see all the details of the Swiss Investor Program on this page.
Finally! Let’s talk about the heart of this anniversary: my blog!
“We want numbers MP!!!”
For the geeks and voyeurs that we all are, here are the stats of the blog (including revenues and profits!)
Let’s start with the metric that doesn’t serve any purpose as such, but that always pleases the ego: the number of pageviews over the year.
3'706 subscribers at the end of 2020, and 4'694 subscribers at the end of 2021.
The open rate has also increased from 60% to 65%. It is especially this last figure which is important to me, because it reflects the real interest of the readers.
2020 was a pretty crazy year in terms of visibility with the report on TTC. In 2021, we see a slowdown — quite normal — because I don’t expect to be on TV or radio anytime soon.
But the increase of +44% of visitors and +6% of page views is still quite respectable for a “normal” year at media level.
Compared to 2020 and its 49 articles, I wrote “only” 32 blogposts in 2021. Nevertheless, I always focus on quality rather than quantity.
The two explanations I see are less time available at the beginning of the year due to my job, and at the end of the year with the release of my “Swiss Investor Program”.
I am always listening to new needs regarding the topics I cover. So don’t hesitate to write me by answering directly to one of my newsletters!
As I told you above, the blog has been featured only 4 times in 2021, respectively in kath.ch, Le Temps, Aargauer Zeitung, and… the “UBS Young” blog :D (see my media page to learn more).
If you are a journalist or a member of a community (such as a university newspaper or any other media), contact me via media[at]mustachianpost.com if you are interested in an interview on the topic of financial independence in Switzerland (aka FIRE). And we’ll gladly talk on the phone.
Now we get to the crunchy part! At least, it’s my opinion when I visit other blogs or e-commerce sites :)
“But how much does a blog earn in Switzerland?!?” I asked myself 8 years ago. My former future self would be happy to read this article :D (and maybe also discouraged by the time it took and still takes every week ^^).
Before I tell you all the numbers in “open business” mode, a little clarification.
One of my reader buddies recently asked me:
“But Marc, aren’t you afraid of making people jealous? And that some people won’t come to your blog anymore after reading this article?”
I retorted: “Are you jealous yourself when you read these figures?”
“Oh well, clearly not. On the contrary, it inspires and motivates me to exchange with another Swiss entrepreneur who thinks like me!”
My answer: “That’s it! That’s exactly why I’m so transparent: to inspire readers. To bring them value. And the advantage of this strategy is that the ones who stay are the people I want to talk to and who inspire me in turn (i.e. and not the jealous ones)!”
Without further ado, the numbers of the blog:
2018 | 2019 | 2020 | 2021 | |
---|---|---|---|---|
Revenues | 4'671.05 | 18'374.37 | 98'619.36 | 106'983.09 |
Expenses | 415.38 | 8'413.92 | 27'274.58 | 21'098.14 |
Profits | 4'255.67 | 9'960.45 | 71'344.78 | 85'884.95 |
Concerning ethics, I’m putting back the same paragraph I wrote in 2020. It is more valid than ever:
“Profit is the tied of ethics. In other words, how not to fall into the “make cash at any cost with the blog”, and end up losing readers one by one.
Because let’s be clear, I’m the first one to unsubscribe from a blog if I start to see that the opinions become biased by money.
So this topic is very close to my heart and that translates into things like:
And let’s not forget our fantastic Swiss Mustachian/FIRE community which can be found on our forum. I share some interesting statistics with you below:
2018 | 2019 | 2020 | 2021 | 2016-2021 | |
---|---|---|---|---|---|
User | 210 | 344 | 951 | 843 | 1'794 |
Posts created | 5.2k | 6.9k | 17.7k | 22.4k | 55k |
Unique visits | 15.6k | 30.1k | 50.9k | 70.4k | 175k |
Pageviews | 691k | 1.1M | 2.3M | 3.5M | 8M |
You are seriously a bunch of crazy people! Can you imagine, 8 million page views since 2016!!!
I would like to take this opportunity to once again thank our two moderators Julianek and Bojack for their involvement in making the forum a quality place. Thank you!
And thanks also to you who participate and keep this great Swiss FIRE community alive!
As I do every year, I thank all blog patrons via Patreon: Johanne, Amalie, Charif, Yuè, Raphael, RaC, Ștefan, Cenk, BRO, Rúben, Nicolas, Christian, Raphael, Paolo, Ferdinando, Martin, Nicolas, David, Pranav, Matteo, Alain, Bocherens, Gordan, linlin, Jean-Claude, tcies , Célien, MrCedFre, Simon, Fabrice, Andrei, Timo, Adrian, Cédric, Patrik, Przemek, Roddy, et Alberto.
My key word for 2022 is going to be “balance”. Balance in terms of my lifestyle to achieve serenity between family, job, personal projects.
Balance also for the blog in terms of the subjects I tackle so that it remains interesting for all the readers.
And finally balance in terms of diet, sleep, sport in order to put my health back at the center.
This brings me to the big personal change I announced in the title of the article.
I’ve had the idea in my head for a long time…
Picture this: work Monday through Thursday, then have my entire Friday dedicated to the blog and its little brothers and sisters. Wouldn’t that be heaven?
I talked about this a lot with J. Money and Thomas de Sparkojote when I interviewed them for my book. Both of them were advising me to give it a shot, and that I wouldn’t go back… that finally convinced me.
After discussing it with Mrs. MP, I’m going to take the plunge next September if everything goes as planned at the job.
On the one hand I’m excited and impatient, and on the other hand I tell myself that I’m going to lose several thousands of francs a year. But I reassure myself that I’ll have more time to concentrate on the blog, and make sure that my 20% less at work is compensated by my personal project — or even more.
There’ s also the worry of whether it will delay our FIRE (Financial Independence, Retire Early). But the only way to find out is to try it!
I can’t wait!!!
Whatever happens, you’ll be the first to know about my peregrinations via my newsletter :D
In view of the need of the blog’s French-speaking readership for a helping hand to dare to start investing in Switzerland, I decided to translate the SIP into English AND German as well.
I expect to launch the Swiss Investor Program in English in February, and the German version in March.
As a reminder: if you are already investing in the stock market, this (paid) program is not for you.
On the other hand, if you’ve never dared to try the stock market, but the idea of making your money work for you while you sleep is something that appeals to you, then I think you would benefit from it.
As for the French version, I will offer a 30% discount on the future standard price.
You can register to the waiting list via the button below to be notified when registration opens:
You’ll also find behind the button above a FAQ with all the questions I’ve been asked since the launch of the program (and if you have more, you can send them to me at contact [at] mustachianpost.com).
So much for this new blog anniversary! I couldn’t finish without thanking you, dear reader, who is reading these few lines. You who share my writings with those around you. Without you, all these projects would have no meaning. So THANK YOU, from the bottom of my heart!
On that note, I’m off to blow out my 8 candles! 🎂
]]>“I told you I’d win in the end,” Minimalismo shouted to Frugalisto.
“Yeah, well, admittedly we’re even. But considering how much time MP will save with this new Swiss banking and credit card strategy, you could borderline call it a tie. Because yes it’s a minimalist decision, but frugal too!” retorted Frugalisto, with a hair of bad faith…
Nope! That’s 1-1, the ball is back in the center, my friend!" concluded Minimalismo, not a little proud of himself!
For the new readers, these two protagonists are the two people in my brain (yeah, it’s crowded up there! :D) who are fighting over whether my frugal or minimalist side will win. They nag each other more than they hate each other, because in the end, they agree on one thing: efficiency is one of the most beautiful things that exists on our planet.
For the new Mustachians among you, I remind you that the average Swiss person spends CHF 300 in bank fees per year for his household.
By choosing a free Swiss digital bank that is just as reliable and secure, you can therefore afford to have CHF 300 more to invest annually, which represents an accumulation of assets of CHF 4'440 in 10 years. And all this just to make the unique effort of changing financial service provider.
“Where do I sign?!” was my reaction the first time I did my calculations.
Since 2019, I am an avid user of the Swiss neobank Zak. It is my primary Swiss frugal bank. And neon was until then my secondary Swiss backup bank, in case the primary one had a problem (app not accessible, transfer blocking, etc.)
In addition to these two Swiss bank accounts, I have set up a Swiss credit card system optimized to maximize the cashback we earn each year.
This is where Frugalisto won last year. Because our system consisted of 5 Swiss bank cards… not very minimalist.
Until the end of 2021 we had these Swiss credit cards:
I was more in exploration mode back then. And I’m going back to consolidation and simplification mode now.
But first, let me explain why I am changing my main Swiss bank.
For the MPs, 2022 is going to be the year of efficiency and simplification!
Before I list the things that led me to make these changes, here’s a reminder of my comparison that made me choose Zak over neon as my primary bank beforehand:
Mustachian criteria | Zak | neon |
---|---|---|
Free | ✅ | ✅ |
Online and mobile | ✅ | ✅ |
Secure | ✅ | ✅ |
Free bank transfers in Switzerland | ✅ | ✅ |
Free bank transfers in the Euro zone (via SEPA) | ✅ | ✅ |
Free Maestro debit card | ✅ | 🚫 |
Free ATM withdrawals | ✅ (Bank Cler) | ✅ (2x) |
Free cash deposit at ATMs | ✅ | 🚫 |
ISR/QR code payment via scan | ✅ | ✅ |
eBill support | 🚫 | ✅ |
Accessible physically | ✅ | 🚫 |
Download of account statements in PDF format | ✅ | ✅ |
Live push notifications | ✅ | ☑️ (SMS) |
Apple Pay/Google Pay/Samsung Pay | ✅ | ✅ |
(best free Swiss bank 2021 comparison)
Then, there were the following events during 2021. So I re-evaluated the situation to see if my setup was still the most optimized for our situation with Mrs. MP.
The main criterion that made me stay with Zak was their Maestro card. Because in the countryside, this card was accepted everywhere in the small stores and grocery stores, compared to the Mastercard debit card from neon.
Except that the situation changed a few months ago and all the banks are gradually stopping Maestro in favor of debit cards. And merchants are adapting and, for my part, now accept all debit cards.
This left Zak with only the two advantages of being able to deposit cash for free, and having a network of physical branches (those of Bank Cler, which offers the Zak mobile app solution).
Regarding the cash deposit possible for free via Zak, and possible via neon but paying because via the Swiss Post, there has also been a change. Or should I say it is coming. Because neon is going to arrive all of a sudden with an extension of this service via a very widespread partner in Switzerland. But it will still be paying…
As always, I mentioned this to Mrs. MP, who replied: “First, we don’t have as much cash as before that enters with our other side business, and second, since you want to keep Zak as your backup Swiss bank, we can always use it to deposit cash, right?”
Solved! As always, have a talk with Mrs. MP :)
I was taking a little hike with a friend in a nearby forest, when we started discussing my opinion of Zak or neon. I was explaining my point about physical agencies. And he would quickly interrupt me to ask me why I didn’t apply the same rule for my online broker. Or for my car insurance…
Good point!" I exclaimed. “Especially since I have much less to worry about with my Swiss banks, since I have a primary and a secondary one in case of a problem.”
He answered: “Yes, and especially, having tested their customer service by phone — in French and based in Switzerland! — I can assure you that it is even more convenient than having to go to a physical agency! They answer quickly and efficiently the phone from Monday to Friday from 8am to 5pm, and by email on Saturdays too.”
I talked about it with Mrs. MP, who is of the same opinion as my friend. As long as we kept Zak as a secondary bank with some cash on it, she was also for switching to neon if it simplified our Swiss personal finance management.
So I broke my own glass ceiling on this (well, halfway, because we’re still keeping Zak as Plan B with its physical Bank Cler branches).
I love the Zak team, and their attempt at transparency via their public roadmap. Except that after many requests to their product team, I still don’t know if it’s postponed because of Bank Cler’s internal strategy, or because of technical integration issues, or what have you.
Compare that with neon who already offers eBill, AND shares sensitive info about their roadmap with me in full trust mode, and it all ended up bringing me to this idea:
“Zak or neon? neon or Zak? In the end, I’m really starting to prefer neon as a potential main Swiss neobank…”
Because frankly, I was starting to complain a lot about those paper or email invoices (vs. the simplicity of eBill).
It took a simple email from the co-founder of neon for me to decide to take the plunge and make neon my primary bank.
He explained me in his email that they would finally be able to offer live push notifications (instead of the old school SMS), with their new Mastercard! Indeed, until then, it was their future ex-card provider that was not very up to date technologically :D
In fact, I had also overlooked that Zak was a handy tool for reconciling my Swiss bank account with my YNAB budget… so I went straight back to the neon co-founder, who told me that the feature was coming in Q1 2022… OK, so that was it, I was switching my main bank to neon!
neon will be my main Swiss digital bank from 2022 onwards.
And Zak, which is still a very cool product, becomes my secondary Swiss backup bank.
So here is my new best free Swiss bank comparison for 2022:
Mustachian criteria | neon | Zak |
---|---|---|
Free | ✅ | ✅ |
Online and mobile | ✅ | ✅ |
Secure | ✅ | ✅ |
Free bank transfers in Switzerland | ✅ | ✅ |
Free bank transfers in the Euro zone (via SEPA) | ✅ | ✅ |
Free debit card | ✅ | ✅ |
Free ATM withdrawals | ✅ (2x + Sonect) | ✅ (Bank Cler) |
Free cash deposit | 🚫 | ✅ |
ISR/QR code payment via scan | ✅ | ✅ |
eBill support | ✅ | 🚫 |
Accessible physically | 🚫 | ✅ |
Download of account statements in PDF format | ✅ | ✅ |
System of pots for YNAB sync | ✅ | ✅ |
Live push notifications | ✅ | ✅ |
Apple Pay/Google Pay/Samsung Pay | ✅ | ✅ |
This change from Zak to neon also allowed me to optimize my Swiss credit card system. Since we would always have cash in our neon account (since it was our new main Swiss bank account), we would also be able to use their Mastercard debit card regularly.
UPDATE 01.09.2022: the latest version of my Swiss credit card strategy can be found in this article.
As a reminder, my goals are:
This is where Frugalisto took a hit…
But as he told Minimalismo above, he is not entirely wrong about the fact that he won a little too!
Because in addition to not having to think between 5 cards, there is especially the time I spent doing my accounting by having to look at 5 different banking platforms.
Thinking about the Monito comparison (see picture above), and the fact that we don’t spend that much in foreign currencies, I decided to switch to a Swiss 3-credit card system, even if it means losing a few CHF per year.
So here is — in order — how I minimize my Swiss credit card fees, and maximize my cashback:
Payments in Switzerland in CHF
Payments abroad or in foreign currency
Withdrawals of CHF
And for the day I have large amounts to exchange between CHF and another currency, I always keep my Wise account. Although by default, if we are talking about large amounts, I will go through Interactive Brokers first for my foreign exchange transactions with the lowest fees.
neon and Zak continue to offer the following coupon codes to blog readers:
If this is your first time to open such an online bank account in Switzerland, you will find a detailed tutorial of how to create a Swiss bank account at neon (and also Zak) with supporting screenshots in this blog post.
Zak (backup Swiss bank of MP): the promo code “Y06JPR” entitles you to CHF 25 welcome cash
If you wanna know more about my neon bank opinion, check this article.
And to summarize, here is the Swiss Mustachian setup that I recommend to you from now on:
My free Swiss bank accounts
My Swiss credit cards
a. Payments in CHF in Switzerland
b. Payment in foreign currency and/or abroad
c. Withdrawals of CHF
And you, what bank setup do you have in Switzerland nowadays?
PS: if you ask why I don’t talk about Yuh, BCV, Credit Suisse CSX, or Raiffeisen, it’s because my opinion about them hasn’t changed. These banks are not Mustachians enough :)
PS2: if you are in couple, I recommend you to read this article to manage your couple finances without a Swiss joint account in a serene way
]]>The aim of the paper is to assess the impact of divesting from certain companies that do not meet ESG criteria. Companies considered as “bad performers”.
“Isn’t investing in ESG ETFs a form of greenwashing for private investors?” I asked myself after reading it…
This study seems to confirm it:
“Excluding bad performers would have two main objectives: the first is to alter business practices by depriving the firm of funding and reinforcing the stigmatisation of its current practices; the second is to reduce risk and improve portfolio performance.
The effectiveness of exclusion, particularly through managerial incentives and stigmatisation, seems limited, variable, and dependent on various factors. Two conditions must be met in order for the first two channels to have an effect: first, the investors must publicly declare their intention to divest and, second, the amount divested must be sufficiently large or even very large. Both conditions are necessary to create sufficient pressure on prices, which could incentivise management to improve business practices, as well as to raise stakeholder awareness.”
The report concludes:
I’m personally exploring more and more impact investing. And I find it interesting to realize that to have an impact, you don’t have to see the world in black or white. For example, it’s better to be an active shareholder and make a big company change by even two percent (i.e. involving the behavior of thousands of employees), than to exclude it and think that it will be erased from the world in a snap of the fingers…
Hence my initial question: is investing in ESG ETFs with exclusion strategies really only serving the investor’s conscience (and the fund fees a bit more to pay the analysts)?
I enjoy discussing and challenging the status quo on these kinds of topics. You can argue your opinion — constructively as usual! — in the comments section below.
PS: if you are interested in this kind of topic, I recommend this article “Consumers or investors, who has the (real) power to change the world?” that I wrote a few months ago
]]>I get this question from many readers. Indeed, Zak and other Swiss neo-banks do not provide joint accounts for couples in Switzerland yet.
My answer is still the same to this day: this is not a problem for us, as we use the YNAB budget app to manage our finances as a couple — and this, regardless of how many Swiss bank accounts we have, joint or not.
So we only have one main Swiss bank account with Zak, in one of our names.
The most useful feature of Zak that we use is their Pots system, which makes it very easy to reconcile our Swiss bank account transactions with our YNAB budget — see my video about it below.
Concretely, all the money we receive goes into a default pot. And once the transaction is entered into YNAB, we transfer it to our pot called “YNAB” in the Zak mobile application. This way, if our Zak default pot has a balance of CHF 0, it means that we are up to date with our YNAB management.
If you’re interested in our method, you can read about it in this article how I got Mrs. MP on board with this joint budgeting system, and how we actually manage it.
But today, it is not so much about technique that I want to talk to you about, but rather risk management in case of a big glitch with your spouse, such as a death, an accident or a sudden serious illness.
As said, only one of us legally owns our money on a Swiss bank account (Zak for our part) for the management of our personal finances.
Even if I am optimistic by nature, and know that human beings are capable of finding solutions to any problem, I prefer to prevent myself from big problems (for those that are foreseeable, that is).
When I talk about big glitches, I’m talking about serious stuff. Imagine: our Swiss bank “joint” account is only in the name of Mrs MP. Then, (knock on wood right now!) she dies, or ends up in a coma after a terrible accident, or whatever the macabre scenario is (really nice to talk about this at 5:56am…)
In such a situation, besides being in an unimaginable state, the last thing I would want is to be bothered (to keep it polite) by Swiss administrative considerations that mean I no longer have access to our money.
So here are the 3 things we put in place to solve this issue.
In the scenario where the Zak account is in Mrs. MP’s name, this means that I also have a Swiss Zak account in my name.
“Yeah, cool, but what good is it to you if it’s empty!?” I hear you mutter.
On the one hand, it’s not empty, because we always leave 1'000 or 2'000 CHF “lying around”. That’s the advantage of managing our budget with the YNAB app, because with this system it doesn’t matter much where the money is.
And on the other hand, even if it was empty, the advantage of having my own Swiss bank account in my name is that if something bad happens, I can ask my company to change the IBAN they pay my salary to. As I’m writing this, I’m thinking that I could ask them to pay my salary to my account, and then set up a recurring transfer to our “joint” account in Mrs. MP’s name. But hey, since my company is pretty reactive, I haven’t done that yet (and also because I’m optimistic, maybe wrongly so on this one ^^).
So that’s for the structure part of our frugal system of bank accounts in Switzerland.
After that, there are two other useful legal considerations to know in Switzerland.
This is always the kind of thing that we put off, and often it’s too late when we need it. In our concrete case without a joint Swiss bank account, the idea is that each spouse indicates in his or her will that the other spouse receives the entire estate without any reservation — including our “joint” Zak account.
There are rules of Swiss law that must be respected in order to have a proper will. Like writing it by hand (aka holographic will), not by computer and then signing it.
I recommend this article from VZ on how to write a will in Switzerland (in French, but Deepl is here to help you — and if you speak German, see this VZ link). It is clear, concise, and answers the most important questions.
I thought I was good after doing this.
That was until there was a case of incapacity of discernment in my surroundings…
As VZ well says on his site: “If you are no longer capable of discernment, the Child and Adult Protection Authority (CAA) decides on important matters concerning you. By means of a mandate for incapacity, you take the lead.”
This mandate is applicable if you find yourself incapable of discernment following a long coma after an accident, or if you are a victim of senility or dementia.
Yes, it’s scary to talk about it, but it’s better to be covered, knowing that it only takes one A4 page to write, and then you’re safe.
I googled “mandate for incapacity template” 1 and downloaded several free ones from different banking and insurance entities. And then I drafted it together with Mrs. MP.
So, there you have it, with all that in place, I’m really serene that we don’t have a joint account per se (and in real life it’s like having a free Swiss joint account). And even if you have one, these key actions are still important to perform, to be prepared for any eventuality — as much as it’s possible — and enjoy your life to the fullest.
Question for you: am I missing an important legal point? Have you already written your Swiss will and mandate for incapacity according to Swiss law — if so, which model did you use?
PS1: for newcomers to the blog, Zak offers you CHF 25 of welcome bonus with the referral code of the blog “Y06JPR”. The blog will also get an affiliate fee, and I thank you in advance. As a reminder, I only recommend products that I use myself in everyday life.
PS2: if you work at VZ, and you know someone in marketing who would be interested in doing an affiliate partnership together, I’d love to hear from you because I adhere to your policy of independent — hence paid — financial advice!
Photos of cottonbro from Pexels
I voluntarily do not put links to templates, because firstly, the sites of these institutions change regularly (without updating the link…). And secondly, because the Swiss law can evolve so it’s better that you look for and get updated information. ↩︎
When you really look in detail, it’s not so much for transparency as to force us to invest in “Made in Europe” investments and avoid putting our money in US ETFs… not so cool in the end…
This regulation came into effect in 2018 in all European countries, and it should be the case for foreign brokers active in Switzerland from the beginning of 2022. Including Interactive Brokers.
The problem is that nobody on the web is sure what will happen in a few weeks. The big question being: will I still be able to buy my favorite US ETF with Interactive Brokers as a Swiss citizen?
So I tried to get the info from the source: at Interactive Brokers :)
Here is my discussion with Interactive Brokers support:
Hello,
Following the PRIIPs regulation, it is said that Swiss citizens with an account via IBKR UK will no longer be able to buy US ETFs (like my favorite ETF Vanguard VT) from January 2022. Other websites say that this will not change anything.
Could you please clarify whether, as a Swiss citizen and IBKR client, I will be able to continue to buy my VT ETF as usual after 01.01.2022?
Thank you in advance for your answer.
First response from Interactive Brokers support:
Dear Mr. MP,
With regard to the possibility for Swiss residents to trade in US ETFs, you may note that currently, Swiss residents should be able to open new positions in US ETFs.
However, after January 1, 2022, certain restrictions may be imposed on them with respect to opening new positions in US ETFs.
Therefore, we kindly ask you to check with us from that date onwards so that we can provide you with the relevant information.
We thank you for taking note of this,
XYZ
IBKR customer service*
Uh, yeah, great… thank you so much… I’m really moving on here!
So I insisted a bit:
Hello XYZ,
Indeed, I know that it is still possible to trade US ETFs nowadays.
May I ask why we don’t know yet what will happen after January 1, 2022? If this is the regulation, it should be easy to get a YES/NO statement, right?
Thank you in advance for your support!
Answer:
Dear Mr. MP,
Please note that unfortunately we are unable to provide you with any information on this matter. If restrictions are put in place after January 1, 2022, an announcement in the form of an electronic communication will be sent to you.
Cordially,
XYZ
IBKR Customer Services
You couldn’t take more risks in your answers dear Interactive Brokers…
So, I’m going to wait until January 3, 2022 to try to place an order for my favorite VT ETF via Interactive Brokers.
I’ll update this article with a screenshot if it worked. If it didn’t, no worries, I’ll also write about how I’ll adjust my ETF portfolio as a Swiss Mustachian investor :)
Good news, it’s still possible to buy US ETFs in 2022 in Switzerland 🎉
The proof in this screenshot:
Do you have any other information from a reliable source about being able to buy US ETFs as a Swiss investor in 2022?
Header photo credit: Kevin Durango from Pexels
]]>I don’t know if it was your case, but during my studies in Switzerland, I really struggled to find good tips to get a student job in Lausanne and Vaud… I wish I knew where to look (blogs, forums, or others…)
In the early days of the Internet, there was Ados Job, which by the way still exists. Now they even have another sister organization called Ados Pros that offers individual coaching and job placement assistance. As they write: “Students and young people can thus benefit from quality follow-up in the writing of their applications and find a small job alongside their studies.”
But what I was missing at that time was to have concrete feedback from real people. And also to know the salaries of these student jobs.
That’s why I called on the Mustachians who follow this blog (thanks to all of you!), so that it would be the most exhaustive and representative of a maximum of Swiss cantons.
I will update this article as I receive new responses. So send me an email (by replying to one of my newsletters) to share your good plan for a side job in Switzerland while studying!
Without further ado, here is the list of 11 student jobs in Switzerland, with their salaries revealed!
As we are on a blog that has to show the way to FIRE (Financial Independence, Retire Early) in Switzerland, I remind you why it is interesting to earn money while being a student, and especially how to use it to create your wealth:
Now that that’s out of the way, we can get to the crispy stuff 💰!
In which city or canton?
Bussigny-près-Lausanne (Vaud).
Name of the company?
Felix Construction.
How did you hear about this student job the very first time (family, friends, online community, etc.)?
I would always sign up with employment agencies during summer vacations, during my apprenticeship, and then during my studies.
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
Few students have a truck driver’s license, so I could easily find a job during the vacations. As I was obliged to do the army, I made the necessary to do my license during the army.
If a reader is interested, can you give him a contact in this company?
Unfortunately the company is in liquidation today…
How much did you earn per month net? (or per hour net)
I don’t remember, but much more than the other students who worked as a temp at the shop during the summer vacations. Moreover, this job as a driver was very nice, because I was driving all over the French-speaking part of Switzerland.
During my studies, I had various tutoring jobs at the university. This was a long time ago (2010s!), but these student jobs still exist, as studies have not changed much in the last few years.
In which city or canton?
Zürich (Zürich).
Name of the company?
University of Zürich.
How did you first hear about this student job (family, friends, online community, etc.)?
The Association of Psychology Students University of Zurich (www.faps.ch) runs a mailing list. This is where the tutor mandates were advertised. Some student jobs were proposed by the professors themselves, who mentioned them during lectures.
They were also posted on Facebook in the psychology groups or on the university’s website.
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
One of my tutorials was monitoring the OLAT online learning platform, recording courses and supporting teachers with these platforms. I originally worked as a web designer, and I was able to bring my expertise to it.
Other tutor jobs were remedial courses for younger students, so to speak.
I had to attend the classes (or watch the recordings), and go into more depth with the students during the lectures.
FYI, there are tutor jobs where older students teach younger students. They teach and review the lecture material. Of course, you have to have understood the course yourself (which is why I never took such a course, I did give it :-)).
Another activity counted as tutoring was attending the general assembly of the institute. All the professors met on this occasion, 3 to 4 times a semester. Also present were 4 representatives of the intermediate body (doctoral students, researchers, etc.) and students.
I was at the time a member of the student association of psychology, and therefore a student representative.
There are similar positions, for example in the ethics commission or the canteen commission. You just have to keep your eyes open and be a little interested in the content.
Often the student association is also directly approached by the institute management to see if they can send someone.
So you can write to the association and say you’re interested in this kind of thing if there are ever any openings.
The workload was extremely variable. For the most part, I had to read the minutes and documents and confer with my
consult with my colleagues. A tutoring position, of course, requires much more commitment.
If any reader is interested, can you give them a contact at this company?
Association of Psychology Students University of Zurich (www.faps.ch).
How much did you earn per month net? (or per hour net)
In my day, I received about CHF 1500 per semester for each tutoring job.
The settlement was always in January and July.
You certainly can’t make a living at it, but it’s a good boost! You learn a lot and can build valuable networks for your future professional career.
I hope that my contribution will help student readers to realize that you can also earn money while being in university, and that it also allows you to gain interesting experiences while being paid.
Having spent many years at university, I had many student jobs, most of them related to what I was studying. However, I also had a small job open to everyone, which might be of interest to your readers. I should mention that I left that job 3 years ago, but it is still possible to apply. Job offers specifically for students are posted on the internet at regular intervals.
What does “Synthesizer Operator” mean?
Very concretely, it’s a position in audio-visual in which you are responsible for inlaying all the elements of the images that go live on the air: texts, names, subtitles, diagrams, score, etc.). I have worked mostly on sports programs (e.g. Sport Dimanche) or live soccer, ice hockey, Olympic games.
In which city or canton?
Geneva (Geneva).
Name of the company?
Radio Télévision Suisse (RTS), Sports Department.
How did you hear about this student job the very first time (family, friends, online community, etc.)?
Via the University of Geneva’s job platform (https://emploi.unige.ch) accessible to the University’s students. My girlfriend had sent me the offer. As far as I know, the job offer was also published on other platforms and with other institutions (universities, colleges).
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
I got the job because of my knowledge in sports. Before any interview, I had to pass a general sports knowledge test of about 1 hour, without help.
The questions were either very specific (i.e. who was the world champion in downhill skiing in 2020?) or general (i.e. at what interval are the summer Olympic games organized?), with varying levels of difficulty.
So personally, I got the job because I scored the highest on the test out of all the applicants present.
However, after I started working there, I realized that many of my colleagues had not scored fantastically well on the test, but had been hired anyway through networking or “piston”. RTS is indeed a rather “family” company, in the sense that it likes to hire people who have connections with existing employees. Many of my colleagues were sons/daughters, nephews/nieces, cousins, etc. of journalists, directors, sound engineers employed by RTS.
If a reader is interested, can you give him a contact in this company?
Unfortunately, I can’t give a contact in the company. You will have to brush up on your sports knowledge to get hired ;-)
How much did you earn per month net? (or per hour net)
The position was paid by the hour, with varying rates depending on the type of show (live or studio show), time of broadcast (weekend, live overnight, etc.) and location (studio, onsite at the stadium, etc.).
The occupancy rates also varied from month to month depending on our unavailability which we could always indicate. So there are months where I worked on about ten shows in a month and earned the equivalent of CHF 1000.- net and other months where I had time and took all the live shows I could (weekends, evenings, nights all together) and earned CHF 3500.- net.
The net hourly rate is therefore a bit difficult to calculate precisely, but I would estimate it at CHF 35, which was a nice sum for a student. On top of that, there was a meal allowance of, if I’m not mistaken, CHF 40 if we had to do the show outside, plus a night allowance of CHF 80 if we had to go home later than midnight (which happened quite often during the field hockey season when we had to go to Fribourg, Zurich, Zug, etc.)
I am retiring at the end of this year and I would like to offer you student jobs within the association I managed. It is an inter-community school association.
We are regularly looking for young people for supervised homework or as auxiliary monitors for summer camps. You can access our webpage dedicated to student job vacancies in Switzerland here.
In which city or canton?
Morges and Vallée de Joux (Vaud).
Name of the company?
Association scolaire intercommunale de Morges et environs (ASIME).
How did you hear about this student job the very first time (family, friends, online community, etc.)?
I created these student job offers :)
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
Application.
If a reader is interested, can you give him a contact in this company?
Administrative Director: Vincent Hacker.
How much did you earn per month net? (or per hour net)
Homework substitute approx. CHF 33/hour, summer camp counselor approx. CHF 80/day (room and board).
In which city or canton?
In the canton of Geneva (for 3 years), and in the canton of Vaud (for 1 year).
Name of the company?
Local swimming club (GE), a chain of clinics (VD).
How did you hear about this student job the very first time (family, friends, online community, etc.)?
A family member saw an ad.
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
I first started as an assistant coach (with a lower salary) while I got my “Jeunesse & Sport” swimming certification, and then I coached kids aged 5-14 on my own.
If any reader is interested, can you give them a contact at this company?
He/she should ask their local swim club, or any other sports club where they can get a J+S (a good level of practice is required, but not necessarily a competitive level, at least I never did).
How much did you earn per month net? (or per hour net)
I started at CHF 32.-/hour (assistant), then I got CHF 42.-/hour (with J+S) in the canton of Geneva. When I moved to the canton of Vaud, I ended up giving private lessons (1-2 children) for CHF 60.-/hour (actual time, no preparation included, but still a good salary at 20 years old).
For 1.5 years, I had this student job as an e-commerce parcel deliverer. I did it in my spare time (very flexible hours) during my studies 2018-2020. I enjoyed driving around the city and occasionally getting a small tip from satisfied customers. With this job, I had some sense of community as I was part of a team, which made me somewhat happy with the side job besides the obvious reason — the salary.
In which city or canton?
Zürich (Zürich).
Name of the company?
notime AG.
How did you hear about this student job the very first time (family, friends, online community, etc.)?
Ad on Instagram (via an Instagram story).
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
I just asked, and took an easy driving test. Then I took a subsidized course for the A1 driver’s license.
If any reader is interested, can you give them a contact in this company?
Yes, just send them an email (notime AG). They are looking for new drivers for the holiday season (including Black Friday).
How much did you make per month net? (or per hour net)
CHF 21.00/hour net.
I worked in the same company for six years during my studies, here are my answers:
In which city or canton?
Zürich (Zürich).
Name of the company?
I can’t name the company. It was an eyewear company that was starting up.
How did you first hear about this student job (family, friends, online community, etc.)?
I heard about it from a friend who got the same job through an online platform.
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
It was a startup. I didn’t even have a job interview, I just started. I didn’t need any expertise for my job, I was just cleaning the product, but after a few weeks I was able to find other tasks, and ended up helping out as an optician.
If any reader is interested, can you give them a contact at this company?
No, sorry. Especially since I don’t work there anymore, and they don’t hire students for the work I used to do.
How much did you make per month net? (or per hour net)
I started out making CHF 22.50/hour, and when I left, I was making CHF 26.50/hour.
I have a company that offers jobs to students in Switzerland.
It’s a student logistics job where you have to take care of sending and receiving cameras and lenses for rent.
In which city or canton?
Bern (Bern).
Name of the company?
Rentalens GmbH.
How did you first hear about this student job (family, friends, online community, etc.)?
I distribute flyers at the University of Bern.
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
Knowledge of office work, computers and logistics. Preferably knowledge of photography.
If any reader is interested, can you give them a contact at this company?
Yes, send an email via the Rentalens website contact page.
How much did you earn per month net? (or per hour net)
CHF 20.-/hour to start, then +CHF 1.- per semester.
I had a very flexible job with a high salary. However, I was not paid during school vacations as they were included in the salary.
In which city or canton?
Canton of Vaud.
Name of the company?
State of Vaud.
How did you first hear about this student job (family, friends, online community, etc.)?
Friends.
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
Sending applications to institutions, and registering on Mireo.
If a reader is interested, can you give him/her a contact in this company?
All schools are possibilities.
How much did you earn per month net? (or per hour net)
When I left high school, I was paid CHF 65 gross for 45 min, and with a Bachelor’s degree CHF 78 gross for 45 min.
And the work is prepared by the teacher. From time to time, it was to watch a movie during 2 periods, so not a bad job ;)
In which city or canton?
Canton of Vaud.
Name of the company?
App App (Appui aux apprentis).
How did you hear about this student job the very first time (family, friends, online community, etc.)?
I used their services when I was an apprentice myself.
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
Good qualifications for tutoring apprentices.
If any reader is interested, can you give them a contact in this company?
Yes (contact MP by email, and he will forward your request to me).
How much did you earn per month net? (or per hour net)
CHF 31/hour, 4 hours per week.
A few years ago, I was a student in Lausanne and I found a job as a ground assistant for hot air balloon flights. I know that the company is still running and that they are regularly looking for new assistants, but I am not sure of the current salary.
In which city or canton?
Lausanne (Vaud).
Name of the company?
Ballons du Léman.
How did you hear about this student job the very first time (family, friends, online community, etc.)?
Friends.
How did you manage to get this student job in Switzerland (expertise, networking, specific knowledge)?
They require this type of profile:
If a reader is interested, can you give him a contact in this company?
job@ballons-du-leman.ch
How much did you earn per month net? (or per hour net)
Flat rate pay per flight and working time that can change. We are talking about CHF 120 for 6 hours of work.
You can find the latest ad posted on Facebook by following this link.
In addition to all these good tips to find a side job in Switzerland, in parallel to a training, I also received two other interesting hints:
Vincent: As a student, I used the Ados Job platform. They don’t seem to be too active anymore, as it seems to be mostly ads for other websites now, whereas I had found a camp counselor position on this site a long time ago.
More relevant: coople.com. This is a staffing agency, but unlike Adecco or Manpower, they focus on short-term “assignments” ranging from a few weeks to just a few hours. They are very active in the German part of our country, but they also have an office in Lausanne and attract many new companies. I have worked with them on about 100 assignments in fields that do not require specific education (i.e. physical work, handling, etc.). The pay varies from CHF 24 to CHF 27 per hour before deductions. It’s super easy to sign up with them, and then apply for job openings.
Cris: There are also student jobs posted on university websites like the University of Basel website. Another good plan to find a small student job in Switzerland: look at those offered by other students on the WhatsApp group of the current class.
And you, what is (or was) your student job in Lausanne or Zürich or anywhere else in Switzerland? How much did you earn?
As said at the beginning of the article: I will update this article as I receive new answers. So don’t hesitate to send me an email (by replying to one of my newsletters) to share your good plan of a side job in Switzerland while studying!
Header photo credits: By Mediacom EPFL — Travail personnel, CC BY-SA 4.0
]]>As you can imagine, that means I’m using what’s called leverage by investing with more money than I have.
I can already hear you saying that I told you to never use that, and that I would never use it myself…
You are so right! :)
Except that as usual, when you learn the mechanics behind what scares you (like investing in the stock market for the first time), the emotional side slowly disappears in favor of the rational.
This is what happened with my first margin loan at Interactive Brokers.
One of the only blogs I still read about the FIRE (Financial Independence, Retire Early) topic is Mr. Money Mustache’s. I think he’s cool because he’s very critical of every topic he writes about, and transparent as I like about his own shortcomings.
He published an article in January about margin loans at Interactive Brokers, which introduced me to a new world of investment possibilities. At first I read it thinking “Ah, interesting that MMM is playing with this, then I archived the article, because it seemed complex and not necessary given my situation”. Then while discussing real estate with a friend, I saw the potential and got back into it.
I then checked out other sites in the field to see what was being practiced in the Mustachian community regarding borrowing money to invest.
Basically, a margin loan is nothing more than a standard loan where you borrow money from a broker.
If we take an example with my online broker Interactive Brokers (aka IBKR), it goes like this:
Basically, this margin account toy can quickly become financially dangerous. Because in addition to being able to lose everything faster, you can also get into debt faster in case of a huge crash.
On the other hand, if you use it carefully and prudently, this tool can allow you to generate cash from money that is not yours.
Reading various articles on the subject, and understanding that it is very unlikely (i.e. it can still happen!) that a stock market crash will divide my assets’ value by 4, I set myself a conservative maximum margin lending limit of 25% of my stock market assets.
That way, the worst that can happen is that I end up with CHF 0 in stock market assets. But no debt.
Is this a dangerous game? Yes, clearly. Can I sleep soundly with this limit? Yes. If that’s not your case, you can close this page and keep your IBKR account in “Cash” mode (i.e. no margin).
I, for one, keep this financial tool for the following things:
Thanks to the margin loan, I can always be invested in the stock market to the maximum of my capacity. So my money works even harder for me.
And so it was thanks to this tool that I was able to seize the opportunity to invest in Swiss real estate last summer. A few clicks and I had CHF 70'000 in my Swiss bank account!
This allows me to collect CHF 3'850 per year (7% guaranteed return - the 1.5% loan interest from IBKR) without having to resell any of my ETFs.
An important point: this leverage is not free! But the price at IBKR is unbeatable compared to other online brokers.
Below CHF 90'000, it costs you ~1.5% annual interest. And from CHF 90'000 to CHF 900'000, it’s only ~1%.
And the best part is that it only takes you 5 minutes online to get such a loan. No forms or bank advisors to satisfy. The process is as easy as pie, and fully automated.
And here’s how you can turn your Interactive Brokers account into a cash provider for opportunities one can’t miss:
Then I simply made a withdrawal from IBKR to my Swiss private bank account. The funds were available the very next day.
And this is how my margin loan appears in IBKR:
You who are reading this, and who know a lot more about margin lending than I do, is my plan completely flawed? Would you advise me something else than what I described? (in a constructive way please, as usual on this blog)
PS: I’m telling you one last time that you really need to understand what you’re doing before you start such adventures with your money. It’s said!
]]>If you are subscribed to my newsletter (see bottom of each article), you know that a few months ago I was looking for a new investment opportunity in Swiss real estate. I say new, because I had just finished a Swiss real estate investment that had given me a 55% annual return.
So I followed my rule that works every time to find new investment opportunities: talk about the fact that I am looking for an investment opportunity. Every day, to at least one new person.
After a few weeks of patience, a reader contacted me to propose an investment with a guaranteed 7% return, in Switzerland.
Concretely, her proposal was:
Having just come off a similar 55% investment, I was fairly hesitant to wait until I found something better.
How to find a real estate investment in Switzerland?
Talk about it to a new person every day!
Except that two points entered the equation in parallel.
Uno: I didn’t have any other more interesting opportunities, besides the stock market. The latter being much more diversified (8'000 companies vs. one person), and offering fairly decent returns over the long term… but nothing guaranteed.
Secondly, I had just taken the time to understand a financial concept that I had always left aside until now. A concept that allowed me to invest money without blocking mine…
The second point intrigued me enough that I wanted to play it ala “skin in the game”. But I’m not crazy either, so I wanted something guaranteed to test the waters. We agree that the risk/return ratio with a peer-to-peer loan is great. But as usual, I did my due diligence by tracing this person’s life, then meeting her together with Mrs. MP and her critical thinking skills.
Result: at the end of August, we signed a loan contract with a guaranteed 7% return for a real estate investment in Switzerland. And this, with money that is not ours, technically speaking (I will save the explanation of this financial mechanism for the next article).
Moreover, we met a very nice new person, with whom I hope to test other business opportunities in the future.
I’ll update you next year on this investment, and we’ll see if I’m getting my interest, or if I’m in a legal procedure to get my CHF 70'000 back. YOLO as the kids say!
And you, have you found any interesting opportunities of real estate investment in Switzerland lately? With what annual return?
PS: I’m still looking for an investment with a 15%+ minimum return for 2022, other than the stock market. If you have an opportunity to propose, you can write to me at the email address I use to send you my newsletter.
]]>If you remember, it took me a while to apply for the Cashback Amex because I thought American Express credit cards were accepted almost nowhere in Switzerland.
While chatting with some readers via the blog comments and the forum, I realized that I was out of date…
Because indeed, I am surprised even now to see the high rate of adoption at the Amex in Switzerland.
The Cashback Amex has therefore become our default credit card for all our payments in CHF in Switzerland and online (and we use the Cumulus Mastercard when the American Express isn’t accepted). All this in order to optimize the cashback we can get by simply changing the type of credit card we use.
I should also point out that this is a 100% free credit card the first year, but all subsequent years as well (like the Cumulus Mastercard).
The result is: CHF 338.10 in cashback after this first year of use. That’s great!
If you’re wondering how this cashback actually works, it’s quite simple.
Swisscard indicates on each monthly invoice the amount of CHF you have accumulated, and when it will be credited to you.
Then, when the time comes (once a year, that is), you see on your credit card bill a little new line in “-” compared to all your other expenses in “+”. In pictures it looks like this:
If you want to follow this same frugal credit card strategy, you can order your free Amex Cashback via this link.
And you, which credit card do you use for your purchases in CHF in Switzerland and online? And above all, why (advantages, cashback, etc.)?
N.B. the only reason to use a credit card as a Swiss Mustachian is for this cashback. This implies the intransgressible rule: you always pay your bills in their entirety as soon as you receive them. If you don’t feel up to it, archive this article right now and move on to the next one!
]]>She replied: “Really? I had some when I was young, and I thought it was a cool way to learn how to manage my money, and to make me responsible. I would go out and buy candy, and I understood that I couldn’t buy more than the money I had.”
“Yeah, but I think it’s getting them used to have money without doing anything… I’m not a big fan of that…”
“Hmmm… OK, well think about it, but I’m really keen that we do it,” concluded Mrs. MP.
We were at an impasse, and no decision had been made about the pocket money for children.
I though about writing a “Ask the readers” article to get your opinions.
But, as is often the case, I started with Google first.
I’ve read several interesting articles on how to teach a child to use a budget.
Fun fact: I learned along the way that Swiss Germans start to educate their children about money earlier than Swiss French speakers… And also that children in the German part of Switzerland get more pocket money allowance than the French part.
But above all, the more I read, the more I had to do some introspection in order to accept that my parents might not have done everything right… And that giving pocket money may not be seen as easy money. And that on the contrary, it can be a great tool to put your children on the right track, and also to learn to talk about it without taboos from a young age.
One sentence in particular finally convinced me that I had to revise my copy.
It comes from the “Budget-conseil Suisse association”: “Only when you have money at hand do you learn to manage it.”
Once I understood the purpose of pocket money, my Mustachian brain immediately went into overdrive thinking: “Uh huh, but now we’ll have to get some more cash out of our budget!”
But how much, concretely?
That’s how I came across the recommendations of “Budget-conseil Suisse”:
Age of child | CHF per month |
---|---|
6 | CHF 4 |
7 | CHF 8 |
8 | CHF 12 |
9 | CHF 16 |
10 | CHF 25 |
11 | CHF 25 |
12 | CHF 30 |
13 | CHF 30 |
14 | CHF 40 |
15 | CHF 50 |
16 | CHF 50 |
17 | CHF 50 |
18 | CHF 50 |
I also learned an important educational element: not to use the restriction of pocket money as a punishment. Pro Juventute explains it well: “Usually, children show two types of reactions: either they don’t care because the amount of pocket money is not high, they don’t need it for the necessities of life, and they may be saving most of it anyway. Or because they only change their behavior out of fear and not out of discernment, which only reinforces the power relationships between parents and children. Neither of which is favorable.”
In addition to these recommendations, as a good Mustachian, I will obviously add the following rule of the game:
Pay yourself first, with 50% of any income you receive.
That is, any money they are paid should be divided in two: one part directly into the savings account, and the other part to do whatever they want.
As we had told our children over the summer that we were thinking about whether or not to give them pocket money, they kept asking us if it was YES or NO…
For my part, I had finally broken through my educational glass ceiling… and announced to Mrs. MP that she was right… (ah the little squabbles of who will have the last word ;))
“Is pocket money good or bad?” — I nowadays think it’s a good personal financial tool.
As a personal finance geek, I had already imagined opening a bank account for each of our children, with the option of a Maestro card.
The idea behind it was to train our kids to the principle that paying by card is one of the best ways to have money worries because everything is virtual. And that the best way to deal with it is to be confronted with it while being accompanied by your parents.
Especially because nowadays, with online shopping and COVID (bouuuh cash is dirty), we are often forced to pay by card.
Except that… Mrs. MP has put her feet up against the wall! For her, it was cash or nothing.
Because she too had her own beliefs linked to her own upbringing.
The key to any couple that lasts being communication, we discussed it quite a bit. And after I explained to her my point of view concerning the danger of the “virtual” effect of banking cards, she also changed her mind. Even though she thinks that the feeling of having cash is cooler. But since the kids will be able to withdraw money at the ATM, she was fine with it in the end.
But before I could tell the kids the good news about their future pocket money, I had to find the most frugal and Mustachian Swiss bank for children!
My first instinct was to check if Zak or Neon, my two favorite free banks in Switzerland, offered accounts for such young children. But unfortunately, they didn’t… (if you ever read this dear product departments of these banks, it would be super helpful to us Mustachians!)
That’s how I found myself comparing the offers of the classic banks… oh joy!
The choice quickly narrowed down due to the age of the last MP kid being under 10 years old. The interesting offers were from none other than… UBS, Credit Suisse, and BCV…
I was not thrilled with the idea of having to go back to one of these banks… but then again, financial education for children in Switzerland is priceless!
After a careful inspection of each product sheet, BCV proved to be the most advantageous with its 100% free Juniors formula including:
For those of you who have been following me for a long time, I had to learn to separate the personal problems from the BCV business itself (see this article for the juicy details).
So we made an appointment at a local BCV branch to open our toddlers’ two Junior formulas. And after having signed about ten forms each (no joke!), their accounts were opened!
Even if I prefer digital banking to open a bank account, I thought it was cool to do it in a branch because of the “solemn” aspect of the moment when our kids pass a milestone in terms of autonomy — only fools don’t change their mind!
But I’ve already told my kids that they’ll go to a Swiss neo-bank as soon as they’re old enough to do so — and that at that point, they can do it from their bedroom, in less than 5 minutes!
You’re getting to know me by now.
I had already done this slides’ thingy to Mrs. MP when I wanted us to put our whole financial life together.
So I did the same thing to properly present the concept of Swiss pocket money to our kids, so they would take it seriously, vs. just explaining it to them off the cuff between two game sessions on their Switch.
They are in French but Deepl is there for German and English speakers.
As we went through these slides, one of my MP kids asked us: “But what can we use our savings for and when?!”
We then were able to explain to them the concept of saving up for something bigger like a crazy new freestyle scooter, or a trip, or anything else. In order not to confuse them too much about the Swiss standard, we didn’t (yet!) tell them about FIRE (Financial Independence, Retire Early) :) one thing at a time.
Another question that showed me the power of financial education via pocket money was: “But what if I don’t spend all my half of the allowance? What happens? Do I lose the money or do I keep it for the next month?” To which I replied that of course he kept it, and we didn’t cut his allowance the next month! But that a smart thing to do was to always spend less than you earn, and put it in the savings account if there was any left at the end of the month.
I’m frankly impressed with how our kids have taken to it, and accepted this 50% “Pay yourself first” rule.
It is the most valuable gift they can be given for their entire future lives — far more than any inheritance could ever do.
So there you have it, I’m looking forward to sharing with you the next part of the MP kids’ adventures with money. The next step will be to get them to invest in the stock market!
But in the meantime, I’m interested to know how you manage your kids’ pocket money and financial education in Switzerland? Do you give any? If so, how much and how? And how do you teach them to manage it?
]]>But that’s it: we are three quarters of a millionaire in CHF, and we have exceeded the CHF 300'000 invested in the stock market!
I’ll let you read on for all the details.
For the newcomers here: I like this journal format, because it allows me to deal with subjects quickly without having to wait for me to reach the said subject in my (very) long list of articles to write.
It’s a bit like we’re going for a walk together, on a sunny Sunday afternoon in autumn, in one of our forests in the canton of Vaud, and I’d give you an overview of my life as a FIRE (Financial Independence, Retire Early) wannabe.
This time it’s a done deal, we’ve passed the CHF 750'000 net worth mark (just a reminder, you can use my method to calculate yours).
I was predicted, but until you experience it, it’s hard to believe. But it’s true that compound interest has an incredible snowball effect.
So, well, nothing more to say except that the next stop will be for the million CHF!
For the past few months, I’ve been more in a mode of “income increase” rather than in an “absolute frugality” mode.
The good news is that it’s allowed Mrs. MP and myself to get a raise!
But I was struggling with this a while back. I was feeling guilty about not being able to manage both focuses at the same time.
Then, about a year ago, I discussed this with Philip Taylor (the guy who organizes FinCon in the US) when I interviewed him for my book. He’s a little older than I am, so he has more experience with a lot of things. He was explaining to me that he too, works in cycles. And that it was totally okay.
Focus on increasing his income for a year. Then, full-on frugality for 3-6 months going through all his budget optimizations again. And so on.
Like many topics in life, it reassured me that I wasn’t alone with this issue. And now I accept it — without squandering all of our cash when I’m focused on increasing our income either — because in the end, all that matters is widening the gap in our savings rate between expenses and income.
Speaking of which, just don’t think I don’t keep a budget anymore: I still do my monthly tracking to make sure we’re staying within the 8.5kCHF average spending per month.
Except that lately, we’ve had quite a few big expenses. But at least, thanks to our budget, we are aware of it, and we can act on it to rectify the situation.
That’s the second big announcement of the day!
What’s really weird is that when I open my Interactive Brokers mobile app, I don’t feel anything special about it…
I don’t think to myself: “Oh my God, this is so cool, imagine, I could go to a Lamborghini garage and buy 2 or 3 cars (used, don’t kid yourself)!”
So the saying that “you get used to everything” is true.
Nevertheless, it’s a nice step in terms of savings invested in the stock market so far. Especially that, when you think about it, we went from about CHF 0 of savings invested in the stock market in 2014, to CHF 300'000 in 2021. That makes me smile more than thinking about a Lamborghini or a Ferrari :D
We FINALLY invested in a new real estate project in Switzerland in a very interesting way.
Teaser before a detailed article: we invested CHF 70'000 at 7% guaranteed return. This is much less than 55% (see this article), but still not so bad!
Otherwise, our investment in France is going strong with a building full of tenants that is doing well. And yes, I know, I still owe you more details on this… it’s coming, it’s coming ;)
My LLC is also running smoothly in terms of paperwork and accounting (I use Bexio and am fully satisfied with it — if you’re thinking of opening an account with them, let me know because I think I can get an affiliate code with the blog, that always helps ;)).
As someone who loves to always learn new things in new areas, I am served! Especially with the Swiss commercial register, the Swiss VAT system, and lots of other goodies. It’s really interesting.
I have discussed this topic at length with a reader who is a psychologist, as well as with Liz from Frugalwoods during her interview for my book.
The further I get into my FIRE journey, the more I realize that the “math and budgeting” aspect is actually the easiest. And also the most covered on all the FIRE blogs.
On the other hand, there is very little coverage of what goes on in our brains. Because it’s much more complex to grasp — for me included! But between high and low regarding expenses and income, then depression and mourning of one’s old pre-FIRE life when one passes the cape, until the experience of the post-FIRE life, well, all that, it needs to be prepared!
And it happens to everyone. For example, J.D. Roth (the famous “Get Rich Slowly” blogger) explained to me that he was subject to a lot of soul-searching about what to do with his life. So yes, it’s a rich person’s problem, but it’s still a problem to deal with, and one that can be very hard to get over if it makes you fall into depression.
For me, the confinement also made me ask myself a lot of questions.
“Will I really quit my job overnight when I reach my ‘Fuck-You Number’?”
“What about the blog where, finally, I only have virtual interactions most of the time (voluntary, for anonymity reasons)? Will it really fill the void of social interaction left by my old job?”
In short, a lot of open questions, and few answers for the moment. Anyway, I’m preparing myself for this because I know that the psychological aspect is just as important as the monetary aspect of the FIRE movement.
And during all these reflections, I live my life more and more in the mode: enjoy life now, keeping the same frugal level of spending, and seeing it all as an adventure.
I’m trying to apply the saying that in many areas, it’s the journey that’s most interesting, not the final destination.
Which reminds me of a story.
The other day, I was at the Eni/Agip station in Mont-sur-Lausanne. I was in line to pay for my gas. And there was a young man in front of me who, in addition to his bread, asked for a EuroMillions ticket.
I said to myself: “In fact, I think I would be disappointed if I won the EuroMillions today. First, I wouldn’t have the satisfaction of winning my first million myself. And secondly, I wouldn’t be able to share my adventure on the blog anymore, because it would be so biased and irreproducible…”
In the end, it doesn’t change much, because I never play the EuroMillions :D
So, here I am, oscillating between FIRE and “Coast FIRE” as they say in our realm. That is to say that yes, I have my deadline to stop working at 40, but it’s much less “deadline” than in the past, because I’ve created the conditions now so that if it’s at 43, well that’ll be OK too. I put less pressure on myself, but still in “frugal badass” mode, just with less stress! Don’t mess around, MP is still MP ;)
Our kids are growing up (naaah!), and they are asking us more and more questions about money (yeahh!). In fact, they are even fans of the game “Pay Day” because they feel like grown-ups, and it brings us back to childhood because both Mrs. MP and I played it when we were younger!
And it’s true that this board game is great for explaining simple concepts like “you have money at the beginning of the month (i.e. your salary), and if you blow it all in the first two weeks, well, there’s no magic, you can’t pay your bills at the end of the month… or you’re in the red in your bank accounts…”
And my children to answer: “But Dad, in real life that never happens to us, right?”
Uh…
“Yup it can happen! It’s just that we, with Mom, put aside our money so we don’t have to worry. But imagine, if you budget money for your groceries and your cell phone bills. Everything is fine for the month. Then, on the 23rd, your washing machine breaks down. How do you pay for it? Well, in our case, we have some money set aside to deal with these emergencies. But there’s no magic, money doesn’t fall from the sky :)”
All these recent discussions led us to talk about a subject on which we disagreed with Mrs. MP: pocket money or not pocket money?!
We ended up agreeing (she was right, again… ^^). And so, I’m currently writing a blogpost to explain to you how we’re going to handle pocket money for our MP kids — how much pocket money, how to manage it, which Swiss bank account for kids, etc.
I’ll also explain in detail why I didn’t want this, but that Mrs. MP finally convinced me, and I had to break some of my own educational beliefs about it :)
Only fools don’t change their minds!
The readership of the blog is becoming increasingly diverse.
It goes from those who have no idea how to invest in the stock market in Switzerland, like Nathalie who wrote me: “It’s soooo much Chinese for me, that I’m dying of fear of losing the little money I earn with so much effort… my starting line is zero (because the negative does not exist in knowledge)”
And at the other end of the spectrum, there are those who are experts and who teach me every day in terms of macro-economics and all the rest.
I have to say that my impact is huge with these beginner people who are exactly where I was when I started my FIRE adventure in 2013…
And, clearly, this win-win opportunity aligns well with my desire to monetize my time spent on the blog a little bit in a smart way (i.e. by doing something other than accepting the dozens of external sponsored blog post proposals that are very interesting monetarily speaking, but boring and BS marketing to death for both you and me!)
Rather than think about it and hesitate, I just went for it. The course lasts about 6-8 weeks. It is currently in the final alpha version with a first test group, and only in French for the moment. I’m going to go into beta mode (i.e. the content will be almost frozen), open to more readers. If you are interested in being informed of the evolution of the latter, you can click in the link you received via my newsletter.
So much for the news of my FIRE journey. And you, where are you? Net worth, savings rate, cool projects in your life? Share it all with us in the comments section below!
]]>When I first received his email, and skimmed his YouTube channel, I was like: “Yeah, cool story bro, but no thanks. I don’t like myself people showcasing the tools that bring the most affiliate revenues like Bluehost. So I won’t showcase your story on my blog.”
A few months afterwards, I stumbled upon one of his videos. Then, I took the time to watch it in full. And I felt a real authenticity in his review. I realized that he was earlier than I am in his journey, and that for his needs, what he recommended was my own choice for other projects years ago.
“Only fools don’t change their minds” as the saying goes :)
So let’s see what we can learn from his experience in order to generate additional income in Switzerland ourselves too!
MP: Salut Simon! Welcome and thanks for agreeing to participate in this interview. Can you introduce yourself in two or three sentences: demographics, single or family, location?
Simon: Ciao MP :) Thank you for inviting me! I’m currently 27 years old (almost 28). No family yet, but I have a wonderful girlfriend, whom I spend a lot of time with. And I live in Wallisellen, ZH.
MP: Thanks for the intro. Then, explain to us: what does your side gig consist of, concretely?
Simon: It’s basically my YouTube channel(s) (Metics Media & Collection Crypto). I uploaded my first video in March 2018. Back then, it didn’t make me much money.
But I quickly realized that YouTube videos can stay relevant for years. This means that once a video is uploaded, and indexed in the search results, it can generate passive income for months and years to come. I still earn today from videos that I made over 2 years ago.
The revenue comes mainly from YouTube ad revenue, and affiliate commissions.
I mainly create reviews, explainer or tutorial videos, which is the perfect kind of content for affiliate marketing. So every time someone uses my affiliate link (aka referral link) in the video description, I will get a commission if this viewer who clicked becomes a customer.
For example: I’ve created a video on how to set up email marketing automation using the platform getresponse.
When people type in “getresponse” or “getresponse tutorial” in YouTube, my video will come up on top. Then, if people use my link in the video description, and become a paying customer, I’ll get a $100 reward.
And below is a screenshot of my getresponse affiliate account: 11 paid accounts so far in September, so $1100 in affiliate commissions. Pending earnings is higher because I have to wait like 3 months until the commissions are paid out via PayPal.
MP: Nice! I’m not going to surprise you with my following question, since we’re here to talk about money (!): how many Swiss francs do you make per month since you started? Has it changed over the years? And will it continue to increase in the future?
Simon: No, I’m not surprised haha! When I started I wasn’t making any money from ad revenue, because you need at least 1'000 subscribers and 4'000 hours of watchtime in a 12 months period in order to apply for the YouTube Partner Program. However, I was making some commissions with affiliate links, maybe a couple of hundred Swiss francs per month.
When I reached the requirements and got accepted for the YouTube Partner Program, I made 90 Swiss francs my first month (February 2019). In August 2021, that same channel made a bit over CHF 10'000 from YouTube ad revenue. Next to ad revenue, it also generated roughly CHF 8'000 Swiss francs from affiliate commissions.
So currently, I make around CHF 18'000 from my main channel, and roughly another CHF 3'000 from my new channel that I’ve started in March 2021. So currently around CHF 21'000 per month from my online business overall, about 50% from ad revenue and 50% from affiliate commissions.
So yes, it did change a lot over the years, and it definitely has potential to go a lot higher if I put in the work.
MP: That’s for a freakin serious side gig you got here! Congratulations!
Can you describe when in your life you first had the idea of becoming a YouTuber? And how did it come to you? And also why (need for more cash, need to do something else than your actual job, other)?
Simon: I was studying to get my Bachelor in aviation, and become a pilot. I wanted to work and make some money on the side, but I could find a job right away. So I started looking for online jobs, and ideas on how to make money online.
The first thing that has worked was building up Instagram theme pages, and monetizing them either by selling promo posts, or selling the entire account. So I would just start Instagram accounts and reposted viral content in different niches like travel, fitness, luxury, cars, etc.
Depending on how many followers the accounts had, I asked for $30-$100 USD per promo post. And I sold accounts that had 30k-500k followers for $200-$3500 USD per account. My income was fluctuating a lot from month to month. Some months I made $1000 USD and others I made $5000+. My best month during that time was $20'000 USD when I sold some big accounts.
During that time I made some videos for my clients on how they can keep growing the account they have just bought from me.
After a couple of months I realized that I could also make money on YouTube, and that it was a lot more passive than my original Instagram business. At some point I gave up my Instagram business, and started focusing on YouTube only. So I kind of fell into it like that.
MP: So, tell us how you got started, step by step, from the idea to the first time, and especially in parallel with your job?!
Simon: My studies and my job were always my priority. So I’ve invested my free time to build my business. Luckily, I did have a lot of free time and gaps in between my studies. Even now that I’m working full time theoretically, due to the corona crisis, I wasn’t flying for over a year which gave me a lot of time to work on my business.
The cool thing with the kind of content I’m creating on YouTube is that it’s pretty much “evergreen". Which means I don’t have to stick to a schedule to make sure I don’t lose views on my channel. For example, now that I’m flying again since July 2021, I haven’t uploaded a single video but my views and revenue stayed the same (and even increased a bit).
MP: And in the future, what are your next steps with this side project (developing it further, stopping because it takes too much time, other)?
Simon: Building an online business definitely opened my eyes to what is possible in entrepreneurship vs. having a regular job. Currently, I’m flying again and my time to work on creating more content is limited. I’m thinking about taking a break from my job to fully focus on my business and see how far I can take it.
MP: Finally, what would you recommend to my readers who maybe hesitate to start their own side gig? And particularly how to start a side hustle on YouTube?
Simon: Building a YouTube channel or any business for that matter takes time. In the beginning you don’t see any results. This is the hardest time in my opinion, and it’s where most people fail. So you’ll have to commit yourself to a certain amount of time where you’ll keep going, even if you don’t see big results.
I also recommend finding people who are already successful at what you’re trying to accomplish. Study them and find patterns. Try to understand why they are successful. Adopt what works and try to make it even better.
Specifically for YouTube: there are many different types of channels having success on YouTube. There’s also many different ways on how to monetize a channel. I think it’s important to have a plan, execute on it, and then readjust based on the feedback you get. Don’t keep doing something that doesn’t work, but double down on what’s working. That’s how I made progress on YouTube and in online business in general.
For those of you who would like to start a YouTube channel, here’s a video of mine that might help you. It’s basically breaking down my process on how I get videos ranked for YouTube search.
That’s quite an incredible story. I mean, 21kCHF/month, that’s not even a side hustle anymore!
So if you now hear another parent telling his son/daughter that YouTuber is not a viable business, you can point them on this article :D
I should add, for the younger readers here, that this is true if, and only if, you do so with authenticity and the will to add value to people lives on the long run. This includes not accepting very (very!) interesting monetary proposals from some shady brands. Else it’s called BS useless marketing!
Last, I relate a lot with Simon when he says that’s in the beginning that most people fail. Because they think short-term instead of long-term. I think that’s the most important learning you should take away if you wanna follow a similar path.
Finally, if you too are interested in participating in this series of “How to make extra money on top of my salary through a side hustle in Switzerland?”, then please contact me via the following email: contact [at] mustachianpost.com
]]>But that’s it, I received the total of CHF 16,500 in interest for my investment of CHF 30,000 over one year!
I’ve told you this many times before, and it’s the “simplest” advice you can imagine, but it works.
The secret?
Tell as many people around you as possible about your desire to invest, and do it relentlessly. Your baker, your hairdresser (oh no, we Mustachians cut our own hair), your small village shopkeeper, your cousin’s friend who is an electrician, or your uncle who knows a lot of people in the construction industry. In short, you understand, at every opportunity, you talk about your desire to invest.
To increase your chances, you specify the amount such as “I have 10-30kCHF to invest, would you know someone in real estate, or with serious good plans?”
And at the same time, you are patient. And you don’t rush into the first project that feels like a scam or costs too much, but you analyze the proposals in a purely rational way.
As proof that it works, I just used it successfully again last August, and signed another investment at 7% annualized return contractually guaranteed (it’s not 55%, but it’s not that bad either ^^).
In the early winter of 2020, I got to know a reader who works in real estate in the canton of Vaud. We exchanged as with many of you about the FIRE (Financial Independence, Retire Early) movement, investments, etc.
And he saw one of my articles where I said I was interested in investing in real estate in Switzerland.
What got me this email:
Hi MP!
Potential investment possible on project in small-swiss-town-xyz. 2 twin villas for sale on plan.
Either to be bought once built, or to be bought on plans.Financing needed within 2 months.
55'000 fr. in total to block the operation. Duration approx. 1 year. Good return, 30'000 fr. at stake. You can also only lend me 30'000 fr. as it’s our first collaboration, with 16'500 fr. at stake.Is this potentially of interest to you?
If so, I can present you the project and give you all the details.
I need to position myself to reserve the land within 8 days.
Let me know!
I learned later that he was writing quickly to me from his car between two appointments, and that’s why the email sounded like a jerky little ad with a bit of a scamming tendency… — from my blogger’s point of view, don’t take it the wrong way bro, if you’re reading this :D
And I must admit that a time frame of 8 days was stressing me a lot, for someone I only knew through the Internet…
So I answered him in a direct way:
It seems too good to be true this 55% return. What’s the financial set-up behind it?
Also, what kind of “contract” do we have that binds us together that assures me that you are not a scammer, and that you leave with the cash?
And can you send me your extract from the register of commerce and lawsuits of the company, and any other doc that can show that we can really trust each other? (I have a good feeling, but it’s still the internet :))
He explained to me one of the keys to how it is possible to have such a return: it represented “only” 10% of return in his mind. Indeed, he was going to make about CHF 165'000 profit on the operation, and he was giving up 10% (aka CHF 16'500) to pay the investor who would bring him the missing 30kCHF.
In his opinion, without this contribution of funds, he could not position himself on the project, and without positioning himself, he’d earned CHF 0. So it is normal for him to remunerate a deal like this.
As for the contract, he was also of the opinion to go in front of a notary to settle everything. I can tell you that this point reassured me, because the notary would verify his identity dutifully.
At the beginning, we talked about me sharing in the risks of the project.
The biggest risk being that the building permit is not accepted, and therefore that the operation would stop there. We were talking about a risk of CHF 20,000 for the costs incurred with the surveyor, the thermic engineer, etc. for the inquiry of the file. We had agreed to share this risk with a ratio to be defined. But he had checked with the town regarding the LAT (Loi sur l’Aménagement du Territoire), and it was in order so the file would pass, oppositions or not.
The other risk was that the villas would not sell, and therefore he would not have the cash flow to pay me the interest. In this case, he would rent them out. With conservative calculations, we would arrive at a return of 9.8% on my CHF 30'000 invested. There is worse as an investment ;)
In the end, in order to test a first collaboration and to reassure me — and also because he had spoken with the Syndic directly who had confirmed that it would pass, he proposed me to remove the whole “Sharing the risk” part of the contract so as not to complicate the deal. Proof that he was sure that the villas would sell without any problem with their price well aligned with the market — which is what happened in reality.
There were other elements that reassured me. Like when he answered my question about his extract from the commercial and lawsuits register (which I actually ordered myself in parallel on the website of the canton of Vaud for CHF 18):
No problem, I can bare my soul. But anyway, we have to meet to talk about it in detail and see the feeling. For the moment it was a proposal. If you are interested in a serious follow-up, we have to meet in real life
But know that I am an independent like many architects, and a lawsuit in a professional capacity has an impact on my family. I don’t have an SA/AG that buffers this, so I’m very careful about what I do. Also, I am member of several networks in the field on Vaud with banks, lawyers, notaries and company. If I do something stupid I don’t plant a nail in the canton anymore :)
These two signals finally reassured me that he was serious, and not a scammer (or maybe he was a good one :D). Because someone who values the meeting in real life, and who cares more about his reputation than the money he could lose, that sets for a good foundation (according to my values).
To give you an idea, the deal went according to the following timeline:
If you are going to invest in such a 1-1 mode, I can only add a “CAUTION” paragraph here, because it is really risky. And 55% is not that much, because you are putting all your money on a private person, vs. 8'000 private companies governed by trade rules when you invest in a global ETF.
As a result, here’s the minimum of the minimum “due diligence” that I recommend before you try this kind of investment:
Your goal is to be your own private investigator. You want to find out anything suspicious before you sign.
If everything looks good to you, that’s when you can consider taking the risk. Because ultimately, any investment never comes without risk.
Are you ready to get out there in order to find such deals?
So here’s the exercise I recommend. Not complicated, and terribly effective:
So that’s it for the details of this incredible human and business adventure.
Now, I have three questions for you (you can answer them in the comments or by answering me back via email):
I always bring Mrs. MP on board for these kinds of investment projects from now on. On the one hand, because it’s her money too. But mostly, because she can detect things that I can’t see (must be a male vs. female thing), and in any case, four eyes and two instincts are better than one :) Finally, only she has the power to calm my ardor when I see the positive of an investment, while she doesn’t feel the person. ↩︎
My first reaction was: “Arghhh, how am I going to pay at the local grocery store now? Will I always need to have cash with me?
And I’m not the only one living in the countryside with this constraint it seems, considering the emails I received from readers when Zak recently announced that they were replacing their Zak Maestro card with a new VISA debit card.
As I’ve been investigating this whole thing for the past several months, I’ve learned a plethora of new and interesting stuff, at least for any self-respecting personal finance geek ;)
Until COVID, my grocery store had this policy:
Credit cards take about a 2% fee for each transaction. For example, CHF 0.60 for a transaction of CHF 30.
The Maestro card, on the other hand, “only” charges a flat fee of CHF 0.26 per transaction. So I only accept Maestro cards or cash to avoid losing too much in fees.
But the COVID has passed by, and with it, more and more people willing to buy things on the internet. Except that the Maestro card is not often accepted for online payments.
As a result, one bank after another, we saw more and more debit cards arrive.
So much so that since 2020, many agree that the Maestro card will disappear.
Except that, as a happy resident of the countryside, I was concerned…
Indeed, my local Swiss merchant explained to me: “The Maestro card is still the best for us, because the flat fee of CHF 0.26 per transaction is ‘reasonable’. But the banks are really shameless with their new debit card that they are pushing to use, as they took the opportunity to introduce new fees:
He continued to explain with examples:
Transaction of CHF 30
Card | Merchant fees in CHF |
---|---|
Maestro | 0.26 |
Mastercard Debit | 0.25 |
Visa debit | 0.39 |
Transaction of CHF 15
Card | Merchant fees in CHF |
---|---|
Maestro | 0.26 |
Mastercard Debit | 0.17 |
Visa debit | 0.24 |
For small amounts that represent a large part of my turnover, it is quite interesting.
But imagine for my cousin who owns an electronics store near Fribourg… for a large amount like for example a transaction of CHF 1'000, it gives you this:
Card | Merchant fees in CHF |
---|---|
Maestro | 0.26 |
Mastercard Debit | 5.00 |
Visa debit | 9.70 |
We are really lucky in Switzerland, when we see how well we are defended as consumers compared to other countries where corruption and monopolies rule.
According to Wikipedia: "The Price monitoring is the Swiss federal office responsible for investigating and identifying possible abuses of the prices of goods and services. It was founded in December 1972 and reports to the Federal Department of Economic Affairs.”
The article continues:
"‘Monsieur Prix’ is the title most often used to designate the ‘price supervisor’ in charge of the office. His role is to check the evolution of prices on the Swiss market, to detect cartels that could develop and to inform the population. Its tasks are governed by the federal law on price monitoring (LSPr). In the case of an abusive increase or decrease in the price of a good or service, he can put pressure to bring it back to a previous level. In 2007, the work of ‘Monsieur Prix’ would have allowed to save the population 290 million Swiss francs thanks to his interventions.”
Monsieur Prix has made it his mission to bring Worldline/Six Payment Services Ltd (aka SIX) — Switzerland’s leading payment service providers — to their senses.
And he succeeded, as announced in its latest newsletter of 19.08.2021 (page 8):
In order to limit the significant increase in fees for high-value payment transactions, the Price monitor has taken action and has reached an amicable settlement with SIX for a fee cap (CHF 2.- for Mastercard Debit and CHF 3.50 for Visa Debit and VPAY). This protects merchants selling more expensive goods such as bicycles or household appliances from excessive fees, for example.
It also states:
“However, it should be pointed out that the majority of operations involve relatively small amounts. In 2019, 50% of the transactions were for an amount of CHF 30 or less. During the pandemic, it is even likely that this share of small transactions, which benefit from this new model, has become higher. The Price monitor estimates that this new model would make about 75% of the new Visa debit card transactions cheaper and more than 50% of the Mastercard debit card transactions cheaper.”
As a result, since this announcement, my countryside store owner has explained to me that he and all the independents stores he knows now accept debit cards without a second thought. Phew!
As a regular user of Zak’s Maestro, I had a few cold sweats when they announced that they were discontinuing it.
But after my in-depth analysis and discussions at the village store, I was reassured. I won’t need to look for a new bank :)
And you, did you have had debit card rejections since the fees were capped?
PS1: FYI, Zak’s new VISA debit card replaces the previous two — handy if you were using their Maestro and digital credit card. As with many banks in 2021, their new debit card does not charge fees on foreign transactions abroad, and is usable with Apple Pay, Google Pay or Samsung Pay.
PS2: as usual, I only recommend products I actually use. And for Zak, you still have access to a CHF 25 welcome bonus by using the blog code “Y06JPR” (make sure you put the code in capital letters in order for it to work)
]]>Proofreading has long been a side job for this language enthusiast. It’s actually through this medium that the idea for this article came about, as she did the final proofreading of my book in German (I recommend her without hesitating if you need DE proofreading) — thanks again to you!
So let’s see what we can learn from her experience in order to generate additional income in Switzerland ourselves too!
MP: Hi Nicole! I would like to welcome you and thank you for agreeing to participate in this interview. Can you introduce yourself in two or three sentences in terms of demographics, location?
Nicole: Hello Marc, thank you! I am 27 years old and come from the canton of St. Gallen. I have been living in the canton of Fribourg since the beginning of my studies in languages and literature. I used to be a German teacher, and then a proofreader and project manager in a Swiss publishing house.
MP: Thanks for the intro. And then, explain to us: what does your side gig actually consist of?
Nicole: For the past eight years, I’ve been correcting texts for people around me. In the publishing house I was able to hone my skills, before founding my own proofreading company for German, Lektorat Odermatt. So the side gig became my main gig. I proofread books, translated texts, magazines, scientific works, applications, websites, etc.
MP: I won’t surprise you with my next question, since we’re here to talk about money (!): how much Swiss Francs do you make per month since you started? Has it evolved over the years? And will it continue to increase in the future?
Nicole: At the beginning, I didn’t ask for money. Then it was very irregular and depending on the requests, 50 francs here and 600 francs there. Taken seriously, the income was about 1000 francs per month. Now we are at several thousand per month. I hope to earn five figures soon so that I can hire staff and put more money aside.
MP: Can you describe the moment in your life when the idea came to you to become a proofreader? And how did it come to you? And why (need for more cash, need for a change of scenery from the job, other)?
Nicole: I have always enjoyed editing my loved ones’ texts. After my studies, I wanted to deepen my knowledge of the field by opting for an internship in proofreading. It was exciting to discover the production of books and to get to know the authors. I was hired after five months.
Unfortunately, as time went on, I was doing more and more marketing and sales. Because of the Covid-19 pandemic, there was less work in my favorite field. This is how I got the idea to become a freelance proofreader. It was also your book ‘Free by 40 in Switzerland’ that motivated me to think about what I really wanted to do, what I would do if I didn’t have to earn money.
MP: But now, tell us how you actually got started, step by step from the idea to the first time!?
Nicole: After a few relatively big projects (book, master work, etc. at 1000+ CHF each), I felt that I could live from this independent activity. I bought all the necessary material: monitor, books and software. I took a small business creation course at Amon Consulting in Bulle, I created a website myself, did some advertising and received some requests.
MP: Just out of curiosity, have you set a minimum amount of money you need to earn to live? If so, how much? And have you managed to do it so far?
Nicole: Yes, inspired by your book, of course I did a lot of calculations ^^ I need 3'000 francs to live. I also had to dip into my savings, especially for investments in the business. As far as turnover is concerned, I am aiming at an average of CHF 9000/month. This amount includes all the expenses of the business, my salary, social security contributions, vacations, etc. So it is impossible to compare with an employee’s salary!
MP: Also, before you started, did you wait until you had X months of salary saved up in advance, or not at all? If so, how much exactly?
Nicole: No, I have a slightly different approach than most FIRE (Financial Independence, Retire Early) seekers — although financial independence is still important to me. I had obviously saved quite a bit, but I decided to go with some financial risk. I prefer to thrive already now. If I had a full-time job that I enjoyed and kids, I probably would have decided differently.
MP: And in the future, what are your next steps with this personal project (development, stop because it takes too much time, other)?
Nicole: I would like to get more exposure, grow, hire more people, work less and enjoy life more. Financially, I want to save what I couldn’t during the creation of the company. In concrete terms, I will try to contribute at least 1000 francs per month to my third pillar — in my opinion the ideal pension plan for non-employed people.
MP: Thanks again for your participation in this series anyway! And all the best to you with your new company!
I must say that Nicole’s story impressed me when I read how naturally she dared to take the plunge. After all, as she says, it’s easier in your twenties without children or mortgages. It’s certainly a lesson I’ve experienced myself: the longer you wait to take on a big project, the more potential excuses pile up. So you better start today ;)
The other point I want to highlight is her method of calculating how to create her own independence. She simply listed her essential expenses (CHF 3'000), and that’s her goal to reach each month, while doing what she loves and is good at.
It’s a good plan if you find (like me sometimes) that the goal of having to reach X million CHF is overwhelming.
Finally, if you too are interested in participating in this series of “How to make extra money on top of my salary through a side hustle in Switzerland?”, then please contact me via the following email: contact [at] mustachianpost.com
]]>Knowing that, until now, I was recommending DEGIRO for Swiss investors not expecting to reach that 100kCHF milestone for a few years, I logically received many emails asking what was the cheapest and easiest way to transfer ETFs from DEGIRO to Interactive Brokers.
Before I share my point of view with you, I remind for the newcomers on the blog that:
As for me, I’ve been with Interactive Brokers for almost 5 years now, and it’s the online broker I recommend to all Swiss readers no matter how much money they have to invest.
After, regarding the location in the US, everyone is free to think what they want. Personal finance is aptly named: it’s personal!
There are two ways to transfer your ETFs from an old broker to a new broker:
At first sight, the automatic method is more interesting. On the one hand, because it seems easier. And on the other hand, because you don’t risk to sell at a price X, and to buy back at a more expensive price Y — if the stock market has increased in the meanwhile.
Except that the ETF transfer method has a cost. And also, it’s not that automatic and easy if I believe the info shared in the MP forum.
As usual, let some small calculations give us the answer :)
To simplify the reading, I will speak in CHF without taking into account any exchange rate.
Let’s say you have a portfolio at DEGIRO such as:
The costs on the DEGIRO side are CHF 10 per position (1 position = the VWRL ETF, so no matter how many shares of this ETF you have, it’s CHF 10).
Then, the stock exchanges also take transfer fees that are passed on to you. They vary between CHF 40 and CHF 100. I had found an image on imgur listing all these fees by stock exchange, but I couldn’t find it back. So we will take a CHF 50 average to make it simple.
This is how much a portfolio transfer of ETFs of CHF 34'910.54 would cost us:
In terms of the time it takes, Interactive Brokers says it takes between 4 and 8 days for the basic FOP transfer method to process incoming transfers. On the other hand, stories on reddit and the MP forum of our Swiss FIRE (Financial Independence, Retire Early) community speak more of 4 to 8 weeks depending on the cases where DEGIRO took time to answer Interactive Brokers.
So the question now is whether this patience can pay off compared to a manual transfer, or whether there is no point in waiting.
I have no idea what the stock market will be like tomorrow. So I assume that we will be unlucky with the pessimistic scenario that we will sell at a certain price, and that we will have to buy back at a more expensive one, because the market will have risen in the meantime.
In order to keep it real, I took the most conservative values in the history of our two ETFs over the last few months. This gives us a scenario like this:
Note: I am not taking into account the transaction fees on the Interactive Brokers side, as they are so minimal that it would not change my conclusion.
At the beginning of the article, I thought that a manual transfer would be much easier and faster. But I didn’t think there would be such a difference in a bull market.
So I recommend that you choose the automatic position transfer option if you need to switch from DEGIRO to Interactive Brokers as a Swiss investor.
Indeed, we’re talking about saving CHF 933.82 by… doing nothing, except being patient, and filling out some forms :)
And yes, one could also try to do “time the market” by waiting for the right moment to buy back. Except that the right time may come in a long time (several weeks, months, or years), and that this time lapse has a potentially huge opportunity cost.
If you choose to switch online brokers, I summarize the optimal steps for an automatic transfer of ETFs:
And of course, while waiting for the process to be completed, you can continue to invest regularly, but with your new Interactive Brokers account — so you don’t care if it takes a while to transfer in the end :)
The cheapest way to transfer securities from your DEGIRO account to your IBKR account is the basic FOP transfer method. It has low fees. It allows you to save money compared to the “manual method”. Get your DEGIRO account number, and use the IBKR request form to transfer your assets.
And you, have you ever had to switch online brokers and transfer your positions? If so, I’m interested in hearing about your process and your views in the comments below.
N.B. I did not make my usual screenshots, because I myself did not have to transfer my children’s ETF portfolio to Interactive Brokers. Indeed, after thinking about it, and considering the small amounts invested, I thought I would keep this DEGIRO brokerage account in order to continue testing myself firsthand what I recommend to Swiss investors wishing to keep a European broker.
]]>For the record, I’m a young man, soon to be 32, married, we have a 2 year old boy and we live in Geneva (OMG the rent!)
When I left school 14 years ago, I joined a local bank, and have been there ever since.
In the last few years, I’ve been dealing with mandates that were completely outside of client advice, and following a merger between offices, I had the opportunity to join a back-office team where I got my feet wet in the fascinating field of accounting. It was a good timing since at the same time, I discovered YNAB, what a treat!
As they say: “Shoemakers are often the worst shod…” First of all, the unconsciousness of youth made me open (much too) late a 3rd pillar, and it took me many more years before I took the step to invest it in funds (half of it… via the bank where I work… one tends to remain “secure”).
From a family budget point of view, my wife had a complicated start in her professional life (employer not paying several salaries, some periods of unemployment here and there). We had a few years with credit cards loaded to the brim (paying the installments as much as possible, and especially interests!), as well as a consumer credit to finish the last expenses of our wedding (it is now, by writing these lines, that I realize with big astonished eyes, by which crazy period we went through!)
The arrival of our son was the trigger: we did not want to live on credit anymore. Fortunately, in our troubles, we had a certain monthly savings rigor in order to foresee the important annual payments (thanks to my mom for teaching me that). So we dipped into it, paid off all the debts, and finally found a much less stressful end of the month. Subconsciously, we had been using YNAB rules 2 and 3… that’s when we started using the app for regular budget tracking (and credit card coverage management!!!)
I find myself stuck though, when I have the ability to easily open a securities account for investments. But today, I don’t detect in my budget an amount of savings that could be allocated to it (one shot or regularly)…
What do you recommend in this kind of situation?”
What a journey! First of all, congratulations on getting out of credit card debt and getting your finances under control before your first child was born!
Next, I’ll answer your question in two parts.
As is often the case, the secret is simple — but you still have to take action!
Here’s what you need to define — together with your partner:
Indeed, when you saw the heresy of paying interest on a credit card, you unconsciously created a goal with a precise amount, and, as if by a miracle, you were able to reach it with your wife.
Define the why, and the how will follow.
While for many years you didn’t care about all that cash you were paying in the wind.
As the saying goes: “Define the why, and the how will follow.”
A good example is my FIRE (Financial Independence, Retire Early) goal: “I want to have CHF 2'156'000 in net worth by age 40 to be financially independent.”
Compare that with the following counter-example: “I’m going to start saving a little each month, because one day I’d like to stop working before the official retirement date if I can.”
You get the idea.
And let’s be clear: my savings goal is very ambitious, but it works just as well with smaller amounts like the need to change your car for about CHF 8'000, or the desire to buy a house in the country with its necessary CHF 200'000 deposit.
Now that the strategy is laid out, you’re going to have to put it into practice.
Your goal is to save money every month, no matter what, to reach your monthly savings goal.
The important part of the above sentence is the “no matter what”.
For that, I’m not re-inventing the wheel, and recommend the method described in the book “Rich Dad Poor Dad”: pay yourself first.
In short, if you don’t pay yourself first, then you will always come last after your bills, taxes, unplanned outings with friends, etc.
Because as Robert Kiyosaki asks in his book, you’ll freak out more if it’s taxes that are chasing you, or if it’s your remorse for not saving? Well, we agree, taxes are scarier. And that’s the power of his method. If you pay yourself first, and you’re CHF 100 short of paying your taxes, you’ll do whatever it takes (additional hours at your job, side gig) to come up with the money. Whereas if you had paid your taxes first, and you were CHF 100 short of your savings goal, 99 times out of 100, you would say to yourself that it’s not that of a big deal, and would make excuses like it’s not easy, life is hard in Switzerland, and blah blah blah…
This tactic is unbeatable.
For the application, you will need two (free!) bank accounts. I recommend Zak and neon, as explained in this article (with my blog’s promo codes allowing you to earn CHF 25 and CHF 10 respectively).
Once you have two bank accounts, here’s what you do:
And the same diagram with concrete amounts in CHF:
This method is great if you don’t manage to save money, because you don’t see the cash available in your bank account A, and you don’t have easy access to it at all.
And you, what’s your unbeatable method for saving money every month?
]]>Hi MP,
I am writing to thank you for all your articles and your book which I loved! I have started to put many of the tips into practice and the CHF are starting to add up :)
Also, I had a question: my boyfriend tells me that global ETFs are cool for us, Swiss “retail” investors, but he tells me that fintech is getting bigger and bigger these last years, and that it would be worth investing in a fintech specialized ETF. What do you think? (he also told me about cannabis ETFs but I think it’s too weird… :D)
Thanks in advance for your feedback!
Apart from re-explaining to her the principle of diversification and the lowest possible fees, and that no one can predict how this or that specific market will evolve, I had no other concrete and recent data on the subject.
Except that in the meantime, I came across the economic paper “Competition for attention in the ETF space” (whose one of the authors, Francesco Franzoni, is from Lugano — hello to you if you happen to be passing by, and thank you!) from earlier this year.
The title is not very revealing, but the content is very interesting. The researchers wanted to analyze the competition for investors’ attention in the ETF field.
They write:
“Since most ETFs are transparent investment vehicles that passively replicate indexes, ETF suppliers cannot tout portfolio managers’ past performance and skill (as in mutual funds) or rely on product opaqueness to promise high yields and shroud risk (as in structured products).”
ETFs were born in 1993.
Their objective was simple: maximum diversification by replicating global indices at low cost to the investor.
Then, the world of ETFs became industrialized with the magnitude that retail investors gave it by rushing to buy them.
Logically, all the financial players wanted their share of the cake. But in a very competitive field with little margin, you have to be creative to sell.
We have thus witnessed a transformation of the simple and Mustachian world of ETFs into a jungle of new specialized products with high fees to allow the financial players to continue to make profits. All this sprinkled with marketing as we like it…
Analyzing data from US ETFs between 1993 and 2019, the team behind this economic paper indicates:
Both types of investments are valid. If I pay less in fees but have less performance, and the gamblers pay more in fees but have more winnings, it’s the same.
The rest of the paper explains that this is not the reality. In fact, specialized ETFs perform worse than highly diversified ETFs after their launch. This is easily explained: specialized ETFs are under the spotlight at launch for their hype. This implies that they are overvalued because all the investors are betting on them. Then, the performance is not there, and the bettors sell to buy something else, which makes them lose money because of their excessive trading compared to Mustachian investors who keep their diversified ETFs over time.
The conclusion of the article is clear:
“The original ETFs, which are broad-based products, are beneficial investment platforms, as they reduce transaction costs and provide diversification. Specialized ETFs ride the same wave of financial innovation. However, these products compete for the attention of unsophisticated investors who chase past performance and neglect the risks arising from the underdiversified portfolios. Specialized ETFs, on average, have generated disappointing performance for their investors.”
Source at the origin of this article: Competition for attention in the ETF space (PDF), by Itzhak Ben-David, Francesco Franzoni, Byungwook Kim, and Rabih Moussawi
]]>But just to make sure I didn’t miss out on a cool new service in 2021, I’m interested in knowing which ETF database you use to research what you invest in?
You can answer in the comments below, or by emailing me directly, whichever you prefer.
]]>Nevertheless, I received lately several emails asking me my opinion about Yuh, the new Swiss neobank by PostFinance and Swissquote. I had seen the announcement of its release, but had not paid more attention because how to do better than Zak, efficient and free? :)
But while digging into the Yuh website, I saw some features like multi-currencies that could allow me to simplify my banking system.
Hence, instead of copying and pasting my answer by email, I thought it would be more useful for everyone if I made an article about it in my “Quick Answer” series.
Before going any further, I’d like to point out that I’m only comparing the banking part here.
Indeed, in addition to payments and savings, Yuh offers an investing feature. Except that the rates are too expensive for a Mustachian with 0.5% of transaction fees.
Whereas with Interactive Brokers or DEGIRO, if you invest for example CHF 10'000 in an ETF, you only pay a few dollars or even nothing at all — compared to CHF 50 (= CHF 10'000 x 0.5%) with Yuh.
Ditto for cryptocurrencies: it costs you 1% in transaction fees, compared to Coinbase Pro which only charges 0.5%.
And the same goes for foreign currency transactions. This is one of the things that immediately made me think that maybe Yuh could replace my various Wise, formerly TransferWise and Revolut solutions.
Except that Yuh charges 0.95% fee on every foreign currency transaction… Too bad!
Then, I give you here the list of criteria I use to choose my best Swiss bank:
So this is what Yuh looks like in comparison to my current Swiss bank Zak:
Free ✅ (Zak = ✅)
No opening fees nor account fees.
Online and mobile ✅ (Zak = ✅)
Yuh bank is completely online, and their mobile app really looks slick. It does the job.
Secure ✅ (Zak = ✅)
With PostFinance and Swissquote behind it, Yuh is secure. In addition, it uses the Swissquote banking license which protects your assets up to CHF 100'000.
Free bank transfers in Switzerland ✅ (Zak = ✅)
It’s free, in CHF and EUR.
Free bank transfers in the Euro zone (via SEPA) ✅ (Zak = ✅)
Ditto, free of charge.
Free Maestro debit card ✅ (Zak = ✅)
Yuh offers a free Mastercard debit card.
I know this is a point of contention among readers, as many of you have no use for a Maestro. But it’s also the purpose of my blog to provide a personal, real-world perspective. And with our life in the countryside where we regularly have stores that only accept the Maestro, it remains a criterion for us for now.
Free ATM withdrawals ✅ (1x/week) (Zak = ✅)
I put a ✅ because 4 withdrawals per month are enough in our situation.
On the other hand, the daily withdrawal limit is CHF 1'000 and the monthly limit is CHF 10'000, and that could bother us in some situations.
Free cash deposit at ATMs 🚫 (Zak = ✅)
I couldn’t find any information about this, so I assume that you just can’t deposit cash via the PostFinance offices. And that you have to use a (paid) postal slip like with neon.
ISR and/or QR code payment via scan ✅ (Zak = ✅)
The mobile application of the neobank Yuh supports this feature.
eBill support 🚫 (Zak = 🚫)
No eBill support for the moment.
Accessible physically (via real people in real offices) 🚫 (Zak = ✅)
As I said above, Yuh has no direct link to PostFinance and its offices. Too bad, it could have been a good argument for Yuh.
Download of account statements in PDF format ✅ (Zak = ✅)
Not having opened a Yuh account (I have too many already!), I’m not sure about this (if you’re a customer with them, I’m interested to know). But from what I’ve read via their chatbot, there’s a “My Documents” section in the Yuh app, so I assume you can find your statements there. To be confirmed.
UPDATE 21.07.2021: confirmed, it exists, thanks to Xavier for the info!
Live push notifications ✅ (Zak = ✅)
Same as the point above, all the demo videos I’ve watched don’t mention this point. To be confirmed.
UPDATE 21.07.2021: confirmed, it exists too, and thanks also to Xavier for the info!
In addition to my usual criteria, I also mention that the Yuh mobile app does not support standing orders or non-SEPA transfers at this time.
Also, Yuh’s pricing model will change in 2022 but nothing is very clear yet on who will have to pay what…
Yuh is a free neobank that competes with Zak, neon, Yapeal and CSX. And that’s good for us as customers because such competition can only benefit us.
Likewise, I like Yuh’s idea of having multi-currency functionality in the same app as my main bank.
On the other hand, the following points make me not take the step of opening a Yuh account:
So for my part, I’ll stick with my system based on a primary bank — neon, and a secondary backup one — Zak, as explained in this detailed article.
]]>While I like this image, this idealization carries the risk that you, dear reader, will feel guilty if you fail to follow or implement this or that frugal practice.
That’s why, even though it stresses me out every year to publish this article, I make sure to publish all of our expenses so that you realize that I am far from perfect. And that no one is. And that therefore, you can breathe and take all that FIRE (Financial Independence, Retire Early) stuff a little more easy.
That being said, as I explained to you last year, I changed my budget categories in 2020 so that I could more easily compare my expenses with the Swiss statistics.
If you’re new here, and you’re wondering how it’s possible to be able to know all of your annual expenses in such detail, look no further! The answer is called YNAB.
Enough blabla, pants down now:
Category | 2020 amount (CHF) | 2019 amount (CHF) | Comments |
---|---|---|---|
Food | 21'126.60 | 18'043.89 | Details below |
- Groceries | 17'941.27 | 13'971.15 | I put this increase on the account of COVID: we ate a lot more at home, the children also consume more with age, and we unleashed the budget a little more post-confinement… |
- Restaurants | 2'748.63 | 2'637.65 | We’re staying with the same numbers, with a strategy of “It’s the exception rather than the rule” |
- Lunch at work Mrs. MP | 313.60 | 771.55 | Thank you COVID :) |
- Lunch at work Mr. MP | 123.10 | 663.54 | Thank you COVID :) |
— | — | — | — |
Housing | 17'860.22 | 17'676.06 | Details below |
- Mortgage interests | 9'328.80 | 9'328.80 | |
- Maintenance and repairs | 427.20 | 393.60 | |
- Concierge | 451.20 | 416.60 | |
- Electricity | 744.95 | 749.15 | |
- Water | 163.80 | 152.15 | |
- Building insurances | 574.20 | 528.35 | |
- Maintenance abos | 590.40 | 543.20 | |
- Banking fees | 36.00 | 35.00 | If only we could go to Zak :) |
- Renovation fund | 492.00 | 454.00 | |
- PPE management fees | 754.20 | 694.35 | |
- Heating and hot water | 1'933.8 | 1'781.4 | |
- Purification and water taxes | 590.00 | 648.50 | |
- Garbage tax | 300.00 | 100.00 | |
- Property taxes | 464.80 | 464.80 | |
- ECA | 34.50 | 40.60 | |
- Furnishings | 412.82 | 1'211.41 | |
- Other one-time costs | 561.55 | 882.65 | Payment of excess expenses from the previous year |
— | — | — | — |
Telecoms and tools | 3'512.23 | 1'538.58 | Details below |
- Mobile and home internet abos | 2'033.40 | 1'346.40 | Cf. our setup in this article. Also, we have renewed our phones after hard negotiations, and the costs are included in our subscriptions |
- Online computer backup service | 72.00 | 72.00 | |
- Software, online abos (e.g. YNAB), etc. | 117.83 | 120.18 | |
- New laptops et smartphones | 1'289.00 | 0.00 | Computer change planned in the budget :) |
— | — | — | — |
Transports | 4'649.60 | 9'945.46 | Details below |
- Auto insurance | 323.30 | 323.30 | We changed our car insurance to save CHF 2'253 over ten years. All the details in this article |
- Car tax | 103.10 | 103.10 | The advantage of driving a car like ours |
- Swiss motorway vignette | 0.00 | 20.00 | “Free” vignette last year thanks to an offer at Nestlé if you bought a certain amount of groceries |
- Vehicle technical inspection | 0.00 | 130.00 | |
- Car expenses and repairs | 541.75 | 3'435.16 | |
- Gas | 1'485.04 | 1'757.40 | Thank you COVID, but we did drive quite a bit (and the children’s activities don’t help — what an excuse ;)) |
- Tolls and parking | 363.31 | 1'284.72 | That’s a pleasure! Hence the interest to travel in Switzerland and not abroad ;) |
- Public transport | 1'833.10 | 2'891.78 | Thank you COVID! |
— | — | — | — |
Medical | 18'158.40 | 17'879.58 | Details below |
- Health insurance HIA | 9'014.40 | 8'745.60 | Our basic insurance for the four of us at Assura, as recommended in this article |
- Supplementary health insurance LCA | 642.80 | 622.80 | Complementary for alternative medicine, and dental insurance for children (fortunately we took it for orthodontics as recommended by all the parents in our entourage) |
- Doctors and pharmacies | 8'500.80 | 8'511.18 | Almost identical to last year, it’s funny — as a reminder, all these expenses are due to orthodontics for our children (a large part of which was reimbursed, but we still count that in the expenses because we had to take out the cash) |
— | — | — | — |
Personal expenses Mr. and Mrs. MP | 7'332.00 | 2'385.57 | Details below |
- Clothes and shoes Mrs. MP | 976.03 | 573.69 | No thanks to COVID, with more time to surf online… |
- Beauty and care Mrs. MP | 2'329.21 | 446.03 | As noted by many female readers, as age advances, expenses in this area increase |
- Sport Mrs. MP | 317.00 | n/a | Sign up for a group activity because she needed to be with people! |
- Freedom budget Mrs. MP | 2'875.09 | 1'204.10 | All the information on this category is detailed in this article |
- Clothes and shoes M. MP | 560.87 | 161.75 | Renewal of summer and winter shoes, as well as hiking shoes. We should be good for at least 2-3 years for the former, and 10 years for the latter |
- Sport Mr. MP | 32.00 | n/a | Bike helmet |
- Freedom budget Mr. MP | 241.80 | n/a | New headphones for remote work, and Netflix for when there’s a show I want to watch (no thanks to COVID :)) |
— | — | — | — |
Gifts | 2'229.74 | 1'017.16 | Details below |
- Gifts | 2'229.74 | 1'017.16 | If you take out a big gift to celebrate a special event for Mrs. MP and I, we still spent quite a bit more in this category. Is it the deconfinement effect and all the people we were invited to between the two waves? |
— | — | — | — |
Birthdays | 1'840.48 | 2'156.75 | Details below |
- Birthdays’ presents | 1'840.48 | 2'156.75 | More or less stable. Perfect :) |
— | — | — | — |
Christmas | 1'068.87 | 989.65 | Details below |
- Christmas’ presents | 1'068.87 | 989.65 | More or less stable. Perfect :) |
— | — | — | — |
Children | 7'488.82 | 9'760.53 | Details below |
- Childcare | 3'982.45 | 6'353.35 | Thank you COVID! |
- Clothes and shoes kids | 873.22 | 700.04 | More or less stable. |
- School supplies and outings | 23.25 | 415.01 | |
- Extra-curricular activities and supplies | 2499.90 | 2'257.13 | The respective activities of the toddlers, with the necessary supplies for each one |
- Kids’ hairdresser | 110.00 | 35.00 | It increases (too much for my taste ;)) |
— | — | — | — |
Entertainment and vacation/leisure | 5'470.55 | 9'151.55 | Details below |
- Leisure and tourism (museums, baths, etc.) | 2'546.58 | 1'425.4 | We went out more on weekends than on long vacations |
- Entertainment (movies, books, Teleboy, etc.) | 183.97 | 189.00 | |
- Billag/Serafe | 365.00 | 365.00 | |
- Holidays | 2'375.00 | 6'050.97 | Not as big and not as far, but just as cool! |
— | — | — | — |
Taxes | 19'114.80 | 20'275.25 | |
- Taxes | 19'114.80 | 20'275.25 | |
— | — | — | — |
Miscellaneous | 3'810.11 | 2'486.66 | |
- Miscellaneous | 3'613.61 | 2'292.96 | Exceptional administrative costs as well as a private event. Without that, we were in the same ballpark as 2019 so that’s OK |
- Private liability insurance | 196.50 | 193.70 | |
— | — | — | — |
TOTAL CHF | 113'662.42 | 113'306.69 | The 2019 amount is to be taken with a pinch of salt as I changed my categorization, so it’s possible that some transactions are not counted (such as exceptional professional training). For 2020, we are still too high compared to my psychological limit of 100kCHF, but hey, the numbers don’t lie! (even if without orthodontics we arrive around 108k, but with “but” we would remake the world ;)) |
After creating this whole summary table, here’s what I get out of it:
And rather than playing the game of what we could not have spent here and there, I’m more interested in getting your feedback on the categories where I inspire you; and conversely, where you have ideas for drastic improvements compared to the current situation.
I’m looking forward to reading you in the comments below!
And else, how went your spendings in 2020?
]]>After a good ten years of working at a desk, my back started to complain because I did not take care of it enough during all this time…
For me it’s mostly the right side of what my osteo calls the “sacroiliac”. You know that thing in the lower back that hurts when you get up from the couch or bed after being there for a while.
That’s when I realized that my twenties were behind me… :D
Me, who was the first to make fun of my older cousins who told me “You’ll see in five or ten years, we’ll talk again about it ;)”
So, what do you do when your back hurts?
Osteo!
The first time, it relieves you like crazy, and you promise your practitioner that “Yes yes, you will do more sports”. And this last two or three days. Then you miss it “just once”… and in fact after a week, you have stopped everything…
At least, that’s how it went for me!
Until the day my frugal side woke up.
Indeed, it costs a lot of money to go to the osteopath every month. And most of all, I want to be as healthy as possible so I can travel the world when I’m 40. I don’t want to feel old already, and even less so once I’ve reached financial freedom!
I thank my osteopath for giving me these tips and tricks instead of just saying “See you in a month ;)” thinking about the cash he was going to make with a recurring client!
The cool thing about these muscle strengthening exercises is that they start out very gentle. So I’m not as put off by it. I would even say that it motivates me because I know that it’s easy at first. And then once it gets harder (it’s all relative for the more athletic among you!), I’m already into it so it’s all good.
Before I reveal what my exercises are, there is something key to success.
This is the time of day when you are going to do these two sequences of exercises.
If you want to succeed, it has to happen in the morning. And there’s no excuse (kids, job, blahblah). You get up 12-15 minutes earlier, and that’s it.
Why in the morning?
It’s quite simple.
In the morning, just like your smartphone battery, your willpower and motivation are 100% recharged. So it’s guaranteed that you’ll have enough strength to motivate you to do your sport.
Whereas if you plan it later in the day, you have no idea how much motivation you’ll have left depending on what happened in your day.
The habit is ingrained in me. My first goal of each day is to exercise. Because any wealth is useless without health.
But let’s get back to the exercises in question.
Three years ago, I told you that I had started doing the 7-minute sports program.
Except that after several months of practice, I had chronic shoulder pain.
So I talked to my osteopath who recommended the following “anti-back pain” sports program:
Exercise 1: Shoulder warm-up
I start with:
A tip from Mrs. MP who was watching me one morning: concentrate your efforts on when your arm goes down/closes by doing the movement slowly (rather than during the stretch), because that way, you retain the elastic and that’s where your muscles work the most — and indeed it gets hotter!
Exercise 2: Strengthening of “deep” abdominal and back muscles
After warming up my shoulders, I do the following 8 exercises for 30 seconds each, with 10-15 seconds of rest between:
Since I’ve been doing this every morning, miraculously, I no longer have lower back pain!!! The key being in the daily repetition.
It will surely seem obvious (and very light as a “training”) to the athletic readers, but anyway, it changed my life. And that’s the most important thing!
But that’s not the only thing that has improved my back well-being.
One of the first things you tell yourself when your back starts to hurt is that you absolutely need a new, more ergonomic office chair!
Because it’s logical, if you have a comfortable chair, your back won’t hurt as much after 8 hours without moving.
I was ready to spend CHF 1'000 on a high end chair because I wanted to be in less pain.
But fortunately, my famous osteo came to my rescue.
He explained to me that the human body is made to move, not to be immobile for hours in front of a screen (it seems so obvious to write it, but it wasn’t obvious to me at the time).
And he pulled a big ball out from behind his desk and said: “This is what you need. This will fix your back problems.”
This kind of ergonomic ball is perfect for maintaining a toned posture, as you are forced to position yourself well in order to work comfortably. And the best part is that it has an “automatic alarm” system to get you moving that is unstoppable… I’m talking about your “deep” abs. When they start to hurt, it means you’ve been sitting still too long, and it’s time to take a break and go for a walk and stretch.
Combined with my muscle strengthening exercises, this is the solution that solved all my lower back problems!
I highly recommend the brand VLUV (model STOV for our part) which sells stylish ergonomic balls (vs. the transparent plastic ones you see in yoga rooms). If you can wait a bit, QoQa proposes them regularly.
Also, be sure to take the time to read the size guide to choose one of the two sizes offered — it’s very well explained on all VLUV retailer sites.
There is one more tool I use to get rid of lower back pain.
As my osteopath mentioned above, our human body is made to move. According to him, we should be in motion every 10 minutes at least. Being geeky and discplined (one can’t change himself!), I thought that I must not be the only one to have these back pain problems… so I looked for an application for my laptop that could alert me to take breaks.
That’s how I discovered Strechly.
It’s a simple app that reminds you to move every 10 minutes for 30 seconds, and every 30 minutes for 5 minutes.
So yeah, it’s a little sad that you have to have an app for that, but at least it helps me.
The good news is that your health will improve, but so will your wallet!
In terms of investment, it gives us:
And in terms of yield, if we count that you avoid going to the osteo once a month, at a rate of CHF 120/session, that makes us CHF 1'440/year of savings.
And since you don’t let this money sit in a bank account, but rather invest it so that it grows while you go about your business, that makes you CHF 22'539 more each decade thanks to compound interest!
And you, what do you do to keep your back (and the rest of your body) in great shape?
]]>Before I explain our method in detail (simple and efficient as possible), I have to tell you where we come from in terms of saving for our children.
When our children were born, Mrs. MP and I wanted to do the right thing as responsible new parents. So we opened a special “kids” bank account in a local bank. When I say special “kids” one, it’s because this kind of account is usually opened from the birth of the child until he/she turns 18, so the bank generously offers you a huge 0.10% extra in interest… really, thanks for that!
And so, on each of these children’s bank accounts, Mrs. MP and I agreed to put CHF 50 per month 1. And we would also store any money they received from relatives for birthdays or Christmas or whatever.
And then I fell into the FIRE (Financial Independence, Retire Early) movement.
When I realized that we could grow our kids’ savings at 6-8% return instead of 0.25%, you can imagine what happened…
I called the bank and explained that I wanted to close our kids’ bank accounts :)
Except that, it wasn’t that easy. Because the banker answered me something like: “Ah, but Mr. MP, it’s not possible. The accounts are in the name of your children, and in order to protect them from some not-so-correct parents who use their money without their consent, well you can’t touch that money except under certain conditions!”
Me: “Excuse me!?! Is it April 1st or what?”
Me after ten seconds: “Uh, all right. And what are the special conditions to be able to withdraw this cash and close these accounts anyway? (thinking deep inside: do you really think I’m going to let a bank block my money, and believe that there is a law that really allows you to do that!)”
The banker explained to me: Then we need a valid written explanation that you are going to use your children’s money to buy something that is for them (with proof of purchase ideally)."
And I thought inwardly: “Yeah, sure! So I store cash in your bank, and then I have to explain to you why I want to withdraw it… “
If I’m constructive and less of a complainer, I can actually understand why the bank does this, because it’s true that some parents act anything but in the best interest of their children. But still, it’s too much interference for my taste.
Anyway, we had by chance a room rearrangement planned at IKEA, so we could take out the few hundred (a thousand at the most) francs. And we closed the accounts right away.
I’m telling you all this so that you can understand our choice of brokerage account system for our kids.
Following this banking episode, we decided that whatever type of account and institution we chose to invest our kids’ money in, we would do so in the following manner:
The idea behind this system being simple: that we keep total control over our kids’ money until they reach the age of majority — vs. the banks or whatever financial law that may come down.
Then followed the famous questions that every Swiss investor asks himself (no matter how old he is ^^):
My kids’ case corresponds to the same criteria of my own Swiss investor situation, namely: investing for at least 10-15 years, able to bear a risk of 7-10 (10 being the most risky), maximum 15-30 minutes of management per quarter, and no need for this money (aka it wouldn’t be cool if we lost it all, but it wouldn’t be a big deal either because we don’t depend on it).
As a result, I have not changed anything and apply the same investment strategy to them as to our own situation with Mrs. MP:
As I said in the introduction: simple, and efficient.
If you’re saving money for your kids, I’m interested to know:
We still need to clarify the strategy we’ll adopt to offer/give/transfer them this cash so that our kids make the best use of it. We agree that it won’t be to buy the latest smartphone or anything useless. But we still need to define precisely at what age they will be able to touch it, do we allow them to withdraw only the dividends to teach them what an investment is, or do we let them screw up by withdrawing everything, etc. We still have time to see what happens so it’s fine :) ↩︎
So that the full history is presented: I initially invested the money for our children in the stock market via my 3rd favorite broker Cornèrtrader (broker based in Switzerland). But after they introduced an inactivity fee, I decided to transfer the kids’ investments to DEGIRO (step that I described in detail in this article)
However, if today you ask me which Swiss broker I recommend (because you are not ready to choose one abroad for whatever reason), Cornèrtrader remains my recommendation ↩︎
Today, I’m sharing with you the story of “The Biquette and her biquet” as they introduce themselves on the web.
The background remains my beloved frugality, but the form is different. That’s why I thought it would be interesting to share their story with you, because it gives you another perspective on the subject.
And, a rare thing on the blog, we’re going to cross the border today to escape to the French Pyrenees.
Enjoy the read!
Randomness led me to your blog (well no, it’s more the YouTube algorithm than randomness that suggested a video in which it was about frugalism and your blog…).
I fell into it and, piqued by curiosity, I started to read the articles one after the other, not all of them, there are so many!
I alternated between enthusiasm, disappointment, ideas to take, common points and differences. This recent discovery (end of May 2020) led me to look back and see how far I myself had come. I had never really looked back before… And for that, thank you very much, I am rarely satisfied and this time, I took a self-satisfaction shot!
I’m not Swiss, I’m frugal in my own way, and I’m not looking to become rich with euros, but rather with knowledge, sharing and happiness.
I recognized myself in part of your introduction, and I wanted to share my story which starts in the same way (I had a childhood, from what I perceive, close to that of Mr. MP). The rest of the story takes a parallel path, which perhaps leads in the same direction, or at least the one I hope to reach: individual and family happiness, but also collective, as well as the desire to share what makes us happy to help others become happy too.
My dear husband, whom I define as the social element of our couple: he is the one who has the ideas for outings, who invites people spontaneously on a weekday evening, who develops our network by reaching out to others (of all ages, social classes, origins…), who is interested in subjects that I would never have thought of thinking about one day, and seeks out different points of view to form his own opinion, leaving himself the right to change his mind. He is rather “impulsive” and “relational”. He’s the geek of the house (always on his PC developing new tools in the open source world), but he’s not the king of practical organization even if he’s improving.
As for me, I am an emotional and pragmatic person. I am grateful to have met my Biquet of a husband who brings this social side to my life (which has allowed me to meet a lot of people I would never have spoken to otherwise, as I am rather shy), even if I appreciate having one or two weekends where we stay quiet in order to recharge our batteries. In our couple, I assume a good part of the “mental load”, I manage (well, since I read “How to onboard your partner on a common budget”, the term “manage” doesn’t seem to me the most adapted ;) — now I would say rather “I take a look at”) the planning, the budget, I remind the priorities… “Organizer” as he calls me. Less impulsive and less confrontational, I’m the one who gets involved in our village. I also love to have small attentions to please others.
We both love to cook and we do it quite well! Because what’s better than a good meal to share quality time with family and friends.
As far as jobs are concerned, we are both lucky to have a stable job for the moment, rather pleasant, motivating and of public utility, with flexible schedules, we work remotely part of the week (well, now, we telework at 100% “thanks” to COVID). Afterwards, everything is not rosy either, and we hope to reduce our “salaried” time as much as possible, or even to stop, without certainty, and by considering new activities. It doesn’t matter if they are voluntary, entrepreneurial, or remunerative, but in any case we hope that they will create values (at least moral ones) and joy around them.
We don’t have children (yet), but we are seriously preparing for it: a little boy is on the way for July 2021! And so, it changes a bit the situation, I plan to take a parental leave (3 years in principle, but I’ll see how it goes) to take care of the little one, and to look for new activities closer (geographically, but also to my values).
We both grew up in the countryside (in France near the Swiss border!) For us too, raising children requires being in the middle of nature, as well as having closer and deeper contacts with people (vs. the often individualistic and superficial side of the cities, and even more so the French cities near the Swiss border). It is in front of the Pyrenees that we found the nature, the land and the mentality that we like.
Growing up, I was fortunate to be well educated about money by my mother.
She showed me early on the importance of saving.
I also remember this little green notebook that I received when I opened my first bank account (I still have it in a box, I think). Like Mr. MP, I never had any pocket money either, I used to go to yard sales to sell the toys and clothes I didn’t use anymore, I used to sell lilies of the valley with my brother on May 1st at the roadside in front of our house. And as soon as I could, I did small summer jobs.
I have always been very careful with money, my mother used to gently laugh at my attitude the few times we bought a scratch card. It was a customary treat in my family, but very occasional. My mother, during a shopping day (often in Switzerland), would offer my brother and me a scratch ticket. When my ticket was a winner (which was often the case, because I am, well I was, because I don’t play anymore, rather lucky), I would just play the amount of the ticket I bought at the beginning. It was a principle that I had set for myself without really knowing why, while my brother encouraged me to play again because he rarely won…
I also have a vague memory of having used an accounting software to handle my accounts when I was a teenager, I kept the credit card receipts and entered them once a month in the software but it didn’t last long…
I abandoned my account book and the retrieval of bank card receipts rather quickly when I left my parents’ house for the much lighter follow-up (my memory only…) of my only bank account on which my salary fell. Being a very little spender, my savings slowly but surely grew, without paying attention.
I then learned (too late for my taste!) the definition of the word “debt” by understanding the mechanism of monetary creation, and from now on, I conceive debt as intrinsically bad, even for buying a house!
As I read the articles in the series “How to onboard your partner on a common budget”, I realized that I had never asked myself about money management in our relationship, nor about other possible ways to do it. I know that many people manage their finances separately with or without a joint account, but I had never thought about how they do it on a daily basis!
And as I read the story of Mr. and Mrs. MP, I realized how lucky I was, that with the Biquet, we functioned like that: in our couple we NEVER did any calculations between us!
We started to live together after a few months, but in a flat with two other friends. At that time, we set up a very simple system: a box where we all put the same amount in cash at the beginning of the month, and a sheet of paper next to it where we wrote what we spent. As the months went by, we adjusted the amount we put in at the beginning of the month, because we had overestimated at the beginning (living together is cheaper than living alone). And when we stopped the roommate, we divided in 4 what was left in the box! We then made several other roommates together and separately, which functioned more or less like that.
Then when we moved in together, we alternated (approximately) the payment of the bills but without doing the calculations or even talking about it. So we have no idea who paid more than the other and we will never know… Since, we have always each one our account, and we continue to pay the invoices alternatively (in a completely approximate way) and to have a checkpoint every two months approximately to know how much saving we have.
It was when I was looking for a place to start a family (9 years ago now) that I started to assess our overall savings and regular expenses with the goal of staying out of debt.
For that, I made a balance sheet of our savings since I met the Biquet (sum of all our pay slips compared to the balance of our two accounts by removing the respective initial contributions).
This was THE big surprise!
Without restricting ourselves and without even realizing it, we systematically put aside 50% of our income each month. I redid the calculations several times because it seemed impossible. I then started estimating our future expenses to estimate the budget that we could expect to build the house. And indeed, I fell again on 50% of our wages.
The estimated budget over 5 years was about 200'000 euros. Finally, little by little, I realized that we were saving more than expected, because I had overestimated our expenses as, at that time, we were very interested in and initiated to minimalism (which I prefer to call “happy and voluntary sobriety”, or “do it yourself”).
It took us a long time to find our place to live (3 years of research and paperwork) but it allowed us to increase our savings and to mature our project: to build our own house on a 3 hectares land.
With the motto:
It was a risky project, and we were well aware of it… not being in the business, never having held tools, and considering the statistics of divorce in the couples starting in self-building… It was not a foregone conclusion.
But now we can say it, the project is finished, the house is finished, and we got married to celebrate it.
In retrospect, I think it was a bit crazy to jump into this venture and not be aware of all that was involved. Having a rough budget with large margins and not too much detail allowed us to get started. On the other hand, a very detailed budget can prevent one from getting started.
The cleanest energy is the one we do not consume
An example to illustrate: the tiling job. Whether in terms of manpower, time or budget, we did not realize that tiling required so many steps: a screed, a re-tiling because the screed is never perfect, especially when it is the first one we do, transporting the tiles, storing them, laying them (with glue), then the baseboards, cleaning, grouting, cleaning again… If we had made an exhaustive list before, we would have been afraid and we might not have done it. There, we discovered by ourselves as we went along… a bit like the pleasant side of hiking where you discover at the last moment the steep climb that you have to climb to see the pretty lake behind…
Building this house taught us a lot about what we were capable of doing with our hands, with our money, with others, together.
I tracked our construction budget fairly closely via a spreadsheet listing past, planned and anticipated expenses for the house by line item (including water, electricity, gas, beers and meals offered to those who helped us).
I kept this table updated every month or so, and made sure it was in line with the amounts in our bank accounts for the coming months.
The first objective of this follow-up was to get to the end, the second, which led me to go into detail, was to answer a question that often came up from our acquaintances and our encounters: how much does it cost to self-build your house? Or how much does a self-build house cost per square meter?
And in fact, there is not one answer to this question but as many answers as there are people. It depends on the choices of the self-builders, it can go from simple to double or more. And it’s also possible to make a house for really cheap… cf. the blog Sauve Qui Paille
We have often favored local resources and craftsmen, buying second hand, without ever negotiating the prices (we hate doing that both), but being interested in the part that went to the craftsman, in the way he worked, where he got his supplies, from time to time by bartering services…
And we had a lot of help (in manpower) from our friends, families, colleagues and even strangers who are now friends, like we never imagined… More than 100 different people came to help us at least one day during the 5 years of construction! My father, not convinced at the beginning, invested a lot in this construction and took pleasure in it, as a hard worker, he put our foot in the stirrup (we are rather “late workers” than “early risers”).
The house ended up costing us more than we expected, because we built a basement and bought 2 additional acres that were not in the budget…
This led us, reluctantly, to resort to loans during construction:
The house, now “finished” and paid for, we are progressively decreasing our work time.
Since the beginning of the construction, we have been working part-time (80% of the time to have more time to do things ourselves).
We intend to continue this trend.
Here is the financial statement of our self-build house:
Expenses items self-build house France | Planned € (CHF) | Actual € (CHF) |
---|---|---|
Purchase of land + notary + taxes + networks + energy | 80'000 (88'224) | 77'900 (85'909) |
Tools | 10'000 (11'028) | 8'200 (9'047) |
Excavation + Foundations | 5'000 (5'512) | 6'500 (7'166) |
Basement | 10'000 (11'028) | 24'000 (26'468) |
Framing + Carpentry + Roofing + Siding | 50'000 (55'147) | 72'000 (79'411) |
Carpentry | 25'000 (27'573) | 24'000 (26'468) |
Ground + Floors | 10'000 (11'028) | 14'000 (15 443) |
Partitions + Straw + Coatings | 10'000 (11'028) | 15'000 (16 546) |
Electricity | 10'000 (11'028) | 3'500 (3 861) |
Plumbing | 10'000 (11'028) | 2'900 (3'199) |
Layout + Kitchen + Bathroom | 15'000 (16'545) | 8'400 (9'266) |
Heating + Ventilation | 10'000 (11'028) | 7'200 (7'943) |
Outside arrangements + Phyto + WC | 8'000 (8'825) | 5'000 (5'516) |
Manpower (food, hotels) | 20'000 (22'063) | 11'000 (12'135) |
Total | 273'000 (301'212) | 279'600 (308'494) |
Gradually, thanks to the autonomy of our house, we went up to a savings rate of 75% of our incomes each month (which are exclusively constituted by our two salaries: 5000 euros for 2). This will allow me in the next few months to stop working! We will take stock in one year to see how we manage with one more inhabitant at home, and a salary in less.
We have various possibilities depending on the state of our finances and how we feel about this change. The Biquet could take my place and I could go back to work, or I could find another part-time or seasonal activity, or the Biquet could, if all goes well, also reduce his activity or even stop it temporarily, or not!
Reading the MP blog made me want to go further in my quest for autonomy by estimating the “incompressible” financial resources that we will need in the future. This will allow us to have an idea of budget for new activities, and to know to what extent we could do them voluntarily, or if they need to be remunerative. In particular, we wanna continue our investment in the rural world around us. The latter made us discover the sufferings and difficulties encountered by many farmers and breeders. We could also notice their financial sobriety and comfort which are generally not chosen… but which make them often happy, supportive and generous people.
The most important saving is the money you don’t spend on things you can do yourself
Let me describe our daily expenses (in addition to insurance and taxes):
Food
This is our biggest expense, but one that is largely annualized (year-round commitment, with payment in advance) because we operate with a AMAP that we manage and that allows us to have a weekly basket of vegetables, bread, cheese, occasionally meat and soon eggs, honey and maybe fruit. So, instead of making a menu and shopping according to it, we make our menu according to what we have in our basket and in the garden… This leads us to be inventive in the kitchen!
And for the future we should reduce our expenses even more because we planted an orchard 5 years ago (about thirty fruit trees of different varieties, some early, others late, allowing us to spread out the harvests).
We also make our vegetable garden. Without spending a lot of time on it, we already manage to harvest enough to sometimes have to make some preserves or to give to the neighbors to avoid wasting.
What remains to be done is to pass the stage of breeding, to make grow animals, and to be able to kill them to eat them.
For the other products, we buy as much as possible locally (often organic) and directly from the producers or at the market (flour, fruits, oils, dried fruits, wine, beers, fruit juices). There are still some products (toilet paper, vegetable milks, white vinegar, bicarbonate and soda, sugar, chocolate, fish, white clay, etc.) that we buy in supermarkets or organic stores, but a way forward would be to buy them in a buying group.
During the construction of the house, having less time, we bought more processed products. I used to do our laundry, household products, toothpaste, beauty products, leavening for pizza and pie dough, cakes, sewing… and since the house is “finished”, I’m slowly getting back to it, not as fast as I would like. I haven’t made any toothpaste, beauty and household products yet and I have a lot of mending to do, a task I don’t really enjoy… instead I’ve started making baby gifts for friends’ kids, bread bags, reusable wipes, bedding. And the prospect of making outfits for the little one that is about to arrive attracts me much more.
The raw materials
We buy our wood from the sawyer or the carpenter depending on the type of wood we want. As for the ropes, nails, screws, staples, and other fabrics, we often buy them from the local material dealer from whom we bought all or most of the construction materials for the house, or on the internet on dedicated websites, or even on leboncoin.fr for used stuff. We’re more the type to boycott Amazon and Cdiscount… but we sometimes go to the big DIY stores.
Gas and car repairs
We have 2 old cars (1995 and 2006) with as little electronics as possible to do the simplest repairs ourselves. But now, the Biquet has taken a liking to it, so he’s even getting into the more complicated stuff! And thanks to the remote work, the gasoline expenses have been greatly reduced (we live 60km from our workplace, we manage to have common schedules).
Electricity
We privileged an “ethical” supplier and we are rather reasonable in our consumption (few electric material: neither shutter, neither alarm, neither dishwasher, neither dryer, nor TV…), we cut what consumes energy when we leave… And we are looking to buy a hot water tank with thermal solar panels (if possible without heat transfer fluid with the principle of the thermosiphon) to separate ourselves from our electric tank of 15 liters (that was a used one, which has already more than 15 years of functioning), and that we connect 15 minutes before the shower and the dishes and that we switch off afterwards.
Water
We recover rainwater for the watering of the garden and we installed dry toilets. We have just bought a water filter for the drinking water and we intend to dig a pond to have more storage of rainwater (and I negotiate hard with the Biquet to associate a natural swimming pool to it because I fear the heat and adore water).
Firewood
For the first years, we had 6 steres of wood delivered in addition to the falls of the construction of the house (we had to consume 3 in 2 years for the heating and the barbecues). For the future, we will participate in communal cuttings (free wood in exchange of participation in the cut) or we will buy a parcel of wood to make it.
Restaurants and bars
Our favorite “paying” leisure, once a week (or even more), often in cultural places, associations privileging local products, accessible to all financially (sometimes even in free participation). Well, I must admit that 2020 allowed us to make savings on that! Finally, not that much, because we tried to support them by buying meals in advance or, a thing that we never made before, buy take-away lunches.
Gifts to friends and family
We don’t limit ourselves to please, but we tend to do it ourselves.
Internet and phone subscription
We go through the 2 and 3G only. We have no smartphone but a 3G router for internet at home. So it costs us 30 euros per month for internet (100 Gb), and 3 small packages of cell phones (including one for my father).
Books and games
A lot of recycled and used books, or borrowed from friends.
Holidays
We haven’t taken many vacations lately… and the ones for 2020 (our honeymoon) are postponed to an unknown date. We were supposed to go to Andalusia for 3 weeks by van… Instead, we went for one week in a van with a 2 days sailboat rental (150 euros including night) to Collioure.
Sport
Building the house was our daily sport. A sport that pays off big time!
Now that it’s over, I’ll have to find a solution because, let’s say, the pounds are piling up…
I can’t imagine spending my energy in the wind, so I’m thinking about ideas for physical activities to maintain myself: a pedal-powered washing machine, an exercise bike that would recharge batteries or grind grain, or even change jobs for something more physical! My Biquet is not made the same way, he is always in good shape…
Kid stuff
We realize that a minimum is necessary… We have the chance to have several friends who already have children and who lent us or give us a lot of things, our parents (well our mothers especially) had kept a lot of things of our childhood too and the rest, we find it very easily and for not expensive on leboncoin. So, what seemed to us to be a budget to plan is not really the case…
Here is what it looks like in a screenshot of my spreadsheet:
Our big expense in the last 10 years (other than the house) has been the wedding. But that’s another long story.
In our quest for autonomy, we are also experimenting with the free currency movement, which is based on the relative theory of money allowing goods and services to be exchanged locally, independent of the debt currency that is the euro (or the Swiss franc of course). For now, it has mostly allowed us to meet very enriching people (again, I’m not talking about money but knowledge).
In 2013-2014, I too started writing (there are a lot more photos than text, so writing is a big word…) to share our project with our family and friends from afar, and also to help those who are starting out because the few blogs we had stumbled upon were very helpful!
MP note: I think Biquette perfectly sums up what makes me love personal finance and frugality (with all that they allow everyone to achieve) when she says “The rest of the story [of our lives at MP and myself Biquette] takes a parallel path, which may be heading in the same direction, well the one I hope to reach: individual happiness, family happiness, but also collective happiness, as well as the desire to share what makes us happy in order to help other people become happy.”
Thanks again to you Biquette for sharing your experience. Inspiring!
]]>And anyway, people like buying sh** on Wish or Alibaba so much, it’s sure it’s gonna be a hit, and you’re bound to become the next billionaire once you sell your company to Facebook (to whom else…!)
So, you talk about it to two or three friends that you convince in 5 seconds, and you end up with CHF 50'000 of capital.
Two weeks later, on a Monday morning at 9am to be precise, you open your e-commerce site selling your wind bags in 1kg and 3kg versions.
Monday morning, 9:01 am. No sales. Well OK, people are just starting their work week so it’s not the best time to buy wind at this time. You wait.
Monday 14h, still nothing.
You say to yourself that you should have launched on Tuesday, because it works better this day.
Tuesday noon, still nothing.
The issues begin to arise, because you burned all the CHF 50'000 of capital with the production of plastic bags to contain the wind, and in the creation of your e-commerce website.
And suddenly, you have an epiphany:
But damn, I’m stupid, wind buyers, they spend their days looking for useless articles, in the evening, on Google. I just need to place some well-targeted ads, and that’s it! The only problem is that I have to find CHF 15'000 for my marketing!
You call some of your family members, and it’s done.
That same night, you launch your marketing campaign that sells hot air!
Fast forward a week later, and… still 0 sales.
You tell yourself that you must have misjudged your potential buyers, and that in fact, you think you know that they are nowadays more on Facebook and Insta (it seems that it’s more fancy to say Insta than Instagram, so I’m adapting ^^) than on Google. You need cash again, because well, you’ve already burned your CHF 15'000 at Google!
This time, you’re harpooning people a little further out in your surroundings, telling them that your genius idea is going to be a hit! Except, they ask you how many bags you have already sold…
Well…
OK, so if they don’t understand business, it’s not their fault. So you ask your colleagues, then you even go to startup incubators. But you always get the same door in your face…
But with unpaid invoices to produce your wind in 1kg and 3kg bags, you find yourself in the debt collection register, and prefer to close your company by declaring bankruptcy.
You guess that the world was not ready. And you decide to go for your new crazy startup idea, reassuring yourself that even Steve Jobs was misunderstood in his early days…
Yes, we investors have a role and a responsibility to play by giving cash to the companies we invest in, so that our CHF make babies. But in the long run, those who have the (real) power to change which companies exist in this world, are the consumers (who also happen to be ourselves). Because without consumers, there is no cash coming in, and investors (as well as the stock market indexes that our dear ETFs mimic) are not going to hold on to such a company that is selling on a cash infusion. On the contrary, they will quickly move on, and give the seat to another company that answers a real need with real customers.
And that’s the key to pushing the world in the right direction (i.e. the right direction being the one you feel is aligned with your values): by consuming yourself in such and such a way, and by showing this way to the people around you.
The idea for this article came to me as I was wondering if I influence the world more with an investment into a VT ETF, or via my purchases as a consumer.
My conclusion is that my greatest power to influence which companies make up our world (according to my vision and values) lies primarily in my consumption, as well as in what I teach my children and via this blog about frugality and conscious consumption.
Because in the end, in the long run, companies that sell wind will eventually disappear from the indexes I invest in, because they will run out of customers, and therefore cash. While those that still have customers will continue to operate (even without investors).
After that, it’s easy to avoid feeling guilty if we turn a blind eye to companies that are less aligned with our values in an index. Because even though we are not consumers of them, we will remain their cash infusion provider for a while yet. But until not so long ago, it was either too complex or too expensive to put your money in sustainable investments called ESG (for Environment, Social, and Governance). Except that things are changing, and in a good way in this field. And it’s finally becoming interesting from a purely investor’s point of view, so I expect to talk about it in more detail in the future.
And you, what do you think about the power sharing between consumer and investor? (let’s keep it constructive in the comments because I know it can get pretty subjective :) — any political comment will be deleted)
PS: and above all, in addition to your opinion, I would be interested in finding economic research papers on the subject with data explaining whether my reasoning “consumer > investor” is quantifiable in any way
]]>Especially when you’ll know that you could also make babies with this money of yours :)
“MP, sorry to interrupt you, but could you please remind me quickly what a vested benefit is?”
Ah yes, good question! Because I myself didn’t know what it was when I received a letter after a job change some years ago.
Basically, when you are an employee, you contribute to the BVG (also known as the 2nd pillar) with your employer. The money you accumulate there is to pay your retirement when you get there (the “real” one, not our FIRE (Financial Independence, Retire Early) :D).
And when you change employer, or you become unemployed, or you take a sabbatical, or you leave Switzerland for a while, well, all the money from your BVG goes into a transitory account called a vested account. Other names you may have heard that refer to the same money are: exit benefits, or vested benefits.
And if you take up a new job as an employee, it is your responsibility to apply for the transfer of your vested benefits to the BVG pension fund of your new employer.
The first question you ask yourself is what the hell should you care about knowing whether you have so much money in vested benefits, because at the end of the day, it’s money locked up for your retirement, right?
I would answer that first of all, it’s still interesting to know whatever happens for the calculation of your net worth. Because as a FIRE wannabee, it is important to know the amount of all your assets so that your calculations are as accurate as possible.
Secondly, you might also be interested in knowing that you have money in vested benefits for the following four reasons:
Because yes, these are four conditions where you can touch your cash which is in the BVG.
But the reason I’m talking to you about this today is mainly to explain that this vested benefit money is automatically put into a blocked account with the BVG’s Substitute Occupational Benefit Institution of the Swiss Confederation after two years without any news from you — it’s kind of the last Swiss safety net to prevent these assets from being lost/forgotten forever.
And I might as well tell you that, in general, BVG assets are invested conservatively (and that’s normal, it’s for your retirement after all), but then when they end up in the Substitute Occupational Benefit Institution, your returns are going to be really not great… (even negative if you look at some previous years). To give you a concrete example, the 2021 rate of this Institution’s fund was 0.01% of return…
The alternative to that is that as soon as you know you have vested money, well, you transfer it to VIAC or valuepension in order to invest it (there’s a future article coming up about which platform to choose based on your situation), and get it make babies while you go about your business.
Because let’s imagine that you change job at 32 years old, with CHF 40'000 in vested benefits, and that the official retirement age in Switzerland is still 65 years old, then here is the difference of return if this capital is invested at 0.01% (Substitute Occupational Benefit Institution) or at 6.5% (via VIAC or valuepension):
So, the moral of this story is that yes, you are suddenly very interested in knowing if you have any vested assets lying around so you can start making them work for you as soon as possible!
After realizing how much cash you are losing by not investing your vested benefits, you naturally ask yourself:
But MP, how do I know if I have any vested assets that I forgot to collect?
The answer until the end of 2020 was: “Go to the website of the 2nd Pillar Central Office (the institution that ensures the link between the BVG pension funds and the insured), which will do the research for you. It’s almost easy, just send a letter!”
“A letter? In 2020? Seriously?”
Except that, since 01.12.2020, there is a team of guys from the Jura (the founder is from the same network as Icanfly, it must have something to do with the clean air of the region ^^) who saw a business potential behind this nice old website from the 2000s and its processes via paper forms.
To make it short, the team of Kala has created a mobile application that allows you to search for your vested funds in the more than 1'500 pension institutions in Switzerland, and this, literally in 3 minutes (if you have your ID card and AHV number at hand). The screenshots (see below in the article) of my application are the proof.
And it’s free.
Too good to be true?
That’s what I wondered too, because I didn’t want to enter such confidential information in such a first app that came along.
Hence, the first thing I do: I check on LinkedIn who is in this company. And there, outch, the founder and director works at Swiss Life Select. Big warning in my brain like “Swiss Life Select = insurance = 3rd pillar that I don’t like at all” :)
And my brain goes on “Yeah, they’re going to sell the data to the insurance companies, so no thanks! Bye!
After some peregrinations on the kala.ch website (especially their FAQ), I see that no, they are not going to sell the data.
Also, digging deeper into Diego’s resume on LinkedIn, it turns out he’s not “just an insurance guy”, but rather a serial entrepreneur with a job on the side :)
Intrigued, my rational brain tells me that it would be interesting to dig even deeper, by asking my questions directly to the founder.
I’ll put his LinkedIn profile here if you want to see his background in detail.
My preconceived ideas about Diego and Swiss Life Select immediately fell apart because he is such a cool guy from the Jura (I love this region :))
So, I didn’t beat around the bush, and I was quite frank with him. I’m putting the summarized transcript of our Zoom discussion below:
MP: What is your business model since it’s free for the end customer? How do you make money? Do you resell the data to insurance companies and stuff?
Diego: It’s funny because this is always the first question I get asked.
Basically, our business model is not based on B2C (i.e. for customers like you or your readers). We don’t make money with this version of Kala. It’s an investment actually, but I’ll explain that later.
First, let me answer your question. In fact, Kala’s business model is based on B2B, which is a pro version for brokers, bankers, insurers, fiduciaries, and other law firms. In Switzerland, our estimates show that there are 65'000 requests made to the 2nd Pillar Central Office every year, of which 50'000 are made by professionals. Their needs are for financial or retirement planning, or in the event of death with the management of inheritance, or even divorce.
And knowing that this kind of application work towards the Central Office takes between 6-8 weeks of file follow-up, well, there are quite a few advisors who don’t do it because it’s long and tedious.
It is by selling Kala to the pros that we will do business.
MP: OK cool, that makes me feel better. But then, why are you making this app available to the general public?
Diego: As I told you before, we actually see it as an investment.
We made this app available to the general public for two reasons:
MP: OK, but will it stay free for life or not?
Diego: So listen, for now, I can guarantee that until the end of July 2021, yes it will be free.
After that, depending on how things go with the professionals, we will potentially stop the general public app. Or we will ask for a small financial contribution from the user. We don’t know yet.
So, the only advice I can give you and your readers is to test it now ;)
Oh, and to be totally transparent, once you’ve received your answer from the Central Office (via a push notification in the Kala app, and also by mail directly from the Central Office), we have an employee who will call you to know if you’re happy with the service, and if so, if you can rate us on the application stores. In no way will he force your hand in terms of what rating you put, but it’s to help us with marketing.
MP: Interesting, and thanks for the honesty, we appreciate that at Team MP. Silly question maybe, but why not fund yourself by proposing cool vested benefits products (and receiving a business referral fee) if you ever see that the person actually has money?
Diego: Hey, we did think about it. And we even started to activate this feature recently. For the moment, once you know that you have vested funds, you will be offered to invest them via Mirabeau and Gonet investment funds, in 3 clicks. I know that you would prefer VIAC or something else, but for the moment, we are not yet partners with them. But Mirabeau and Gonet are private banks with hundreds of years of experience behind them, and they are the first ones who approached us and agreed to completely digitize the application process. And let’s face it, it’s still much better than the returns offered by the Substitute Occupational Benefit Institution :D — for example with the Gonet fund most used by our private clients, which is quite “safe” (30% equities, the rest in bonds and real estate) and costs “only” 0.73% TER, which is not so bad compared to the competition (and especially, again, compared to the fund proposed by the Substitute Occupational Benefit Institution! :D)
You think of everything :) You’re right, we prefer VIAC on my blog, but nothing prevents the readers who find funds to make the transfer request manually. Another question that remains in my mind: you guarantee me that you never sell the data to third parties?.
Diego: Yep, 100% guaranteed. If we do that, we’re shooting ourselves in the foot, because in 2021, people don’t get fooled anymore, especially with such data and a free product.
So no, we will NEVER resell the data we have.
I even add that everything is stored in Switzerland (Hostpoint), and that we are compliant with the GDPR.
And as for security, all communications between the app and the server are secured via SSL. And in terms of data, the photos of the ID card and the signature are encrypted.
MP: Oh good, you anticipated my questions related to security. If we continue with the technical side, how do you manage to ask 1'500+ pension institutes? Do you have a lot of interns? :D
Diego: Ahah, no you’re crazy. We don’t query all these institutions manually. In fact, what we do is to use the service offered to the citizen by the 2nd Pillar Central Office, and it is they who do all the scanning. We have “just” automated the visible part of the iceberg for the end user with the input and sending of the requests.
And to tell you how well it works; we launched the service on 01.12.2020, and by 26.02.2021, we had already processed 3'331 requests!
MP: Oh wow, not bad! It’s taking off well. And if I apply after we finish our call, how long does it take for me to receive the information from the 2nd Pillar Central Office?
Diego: So, normally we would say about 2 weeks. But since we launched Kala, the 2nd Pillar Central Office has been overwhelmed with new requests… ahah… so now we say 25 to 40 business days to get the answer in the app.
And how it happens, well, it’s simple:
After this exchange with Diego, it reassured me and frankly, it’s a pretty cool idea and system.
Even if I know I have (normally :D) no vest benefits lost, I couldn’t resist to test the Kala app. And also like that, it allowed me to make you screenshots as you like so much :)
And indeed, I can confirm that if you have your ID card at hand, as well as your AHV number (available on your health insurance card), then it really only takes 3 minutes :)
The proof in pictures:
I was quite skeptical before talking with Diego, but now I am 100% reassured as I understand their business model.
I strongly recommend you to apply via their mobile app while it’s still free (until the end of July 2021).
And if you find lost BVG assets, well:
You can save up to CHF 4'440 per decade by making the right choice for your Swiss online bank.
Hence, it’s worth looking into it.
As I do every year, I look at the solutions available to optimize my bank fees as much as possible. And also, in order to answer the new questions I receive from readers of the blog.
“Zak or Neon?”
“Neon or CSX?”
“What about Yapeal, is it good or not MP?”
My answers below!
But first, let’s take a look at the criteria I use to choose my best Swiss bank in 2021:
One point that doesn’t matter much to me is payment via Apple Pay, Google Pay or Samsung Pay cell phone. Nevertheless, it is becoming more and more important for some of you, so I will add it as an additional criterion in the tables below.
An important point to note is that I don’t talk about credit cards in this article. In fact, you can optimize your costs much more, as well as your cashback earnings, by choosing two different institutions for your Swiss bank and your Swiss credit card. You will find all info about my Swiss credit card setup on this page.
My goal is not to become the Comparis of personal finance, but to help you get straight to the point in your choice of the best Swiss bank for a Mustachian.
So let’s eliminate paid solutions (with no added value in return) in the first place:
As a result, we still have the usual suspects that we have had for a few years now: Zak, neon, Raiffeisen, and also the BCV (for the canton of Vaud).
Let’s see how each of them meets our Mustachian criteria.
Mustachian criteria | Zak |
---|---|
Free | ✅ |
Online and mobile | ✅ |
Secure | ✅ |
Free bank transfers in Switzerland | ✅ |
Free bank transfers in the Euro zone (via SEPA) | ✅ |
Free Maestro debit card | ✅ |
Free ATM withdrawals | ✅ (Bank Cler only) |
Free cash deposit at ATMs | ✅ |
ISR/QR code payment via scan | ✅ |
eBill support | 🚫* |
Accessible physically | ✅ |
Download of account statements in PDF format | ✅ |
Live push notifications | ✅ |
Apple Pay/Google Pay/Samsung Pay | ✅ |
[*] If you’re a regular Zak user, you know that eBill is really their black spot. They’ve been announcing it for more than a year now, but it’s still not available…
BUT, there is light at the end of the tunnel, as the product team responded on their Trello board (where they announce Zak’s product roadmap) in early February that it should happen in about 2-3 months. Fingers crossed!
Mustachian criteria | neon |
---|---|
Free | ✅ |
Online and mobile | ✅ |
Secure | ✅ |
Free bank transfers in Switzerland | ✅ |
Free bank transfers in the Euro zone (via SEPA) | ✅ |
Free Maestro debit card | 🚫* |
Free ATM withdrawals | ✅ (free 2x/month) |
Free cash deposit at ATMs | 🚫 (via postal deposit slip) |
ISR/QR code payment via scan | ✅ |
eBill support | ✅ |
Accessible physically | 🚫 |
Download of account statements in PDF format | ✅ |
Live push notifications | ☑️ (via SMS) |
Apple Pay/Google Pay/Samsung Pay | ✅ |
[*] neon does not offer a Maestro card. This can be entirely OK for some people, or annoying for some people who live in villages where some shops only accept this means of payment.
As a reminder, Raiffeisen is one of my favorite Swiss frugal banks thanks to their membership program, which, when you join it, gives you access to their culturally very interesting MemberPlus loyalty program with more than 500 free museums. And the same goes for Swiss castles, discounts on train tickets, and other discounts on events.
What’s more, this offer is interesting because the free admission applies to the Raiffeisen customer, but also to three accompanying children.
To take advantage of this offer, you need to be:
If you are a fan of culture and museums, apart from the few hundred CHF of blocked assets, this offer is worth it because the annual fee of CHF 40 is quickly paid back.
Mustachian criteria | Raiffeisen (shareholder account) |
---|---|
Free | 🚫 (CHF 200 to CHF 500 to become shareholder) |
Online and mobile | ✅ |
Secure | ✅ |
Free bank transfers in Switzerland | ✅ |
Free bank transfers in the Euro zone (via SEPA) | 🚫 (CHF 1/transfer) |
Free Maestro debit card | 🚫 (free the 1st year, then CHF 40/year) |
Free ATM withdrawals | ✅ (Raiffeisen ATMs) |
Free cash deposit at ATMs | ✅ |
ISR/QR code payment via scan | ✅ (via a second mobile app…) |
eBill support | ✅ |
Accessible physically | ✅ |
Download of account statements in PDF format | ✅ |
Live push notifications | ☑️ (via email, or SMS…with a fee!) |
Apple Pay/Google Pay/Samsung Pay | 🚫 |
Finally, the last Swiss bank to review is the BCV. I don’t go around all the cantonal banks, but I assume that others also have attractive offers like this.
For the record, we were at the BCV for our MP family accounts until a few years ago.
We used to take advantage of their offer of “free management fees as soon as you have at least CHF 10'000 there” instead of paying the CHF 3.5/month fee.
Except that when we bought our main residence, we could see their business practices (the whole story here under “1/ Hard pressure from the salesman”). And since Zak and neon arrived on the market at the same time, we closed all our accounts and they will never see us again.
I’ve also heard other stories that I can’t talk about publicly on the blog, but which confirm to me that I won’t go back there.
And on top of that, I don’t like having 10kCHF of blocked money because I sometimes go below that amount.
But in order to be as fair and objective as possible, I include them in our Swiss bank comparison 2021.
Mustachian criteria | BCV |
---|---|
Free | 🚫 (CHF 3.5/month, or free from 10kCHF with them) |
Online and mobile | ✅ |
Secure | ✅ |
Free bank transfers in Switzerland | ✅ |
Free bank transfers in the Euro zone (via SEPA) | ✅ |
Free Maestro debit card | ✅ |
Free ATM withdrawals | ✅ (BCV ATMs) |
Free cash deposit at ATMs | ✅ |
ISR/QR code payment via scan | ✅ |
eBill support | ✅ |
Accessible physically | ✅ |
Download of account statements in PDF format | ✅ |
Live push notifications | ✅ |
Apple Pay/Google Pay/Samsung Pay | 🚫 |
If we put the four free Swiss online banks we just saw side by side, this is what we get:
Mustachian criteria | Zak | neon | Raiffeisen | BCV |
---|---|---|---|---|
Free | ✅ | ✅ | 🚫 | 🚫 (free from 10kCHF) |
Online and mobile | ✅ | ✅ | ✅ | ✅ |
Secure | ✅ | ✅ | ✅ | ✅ |
Free bank transfers in Switzerland | ✅ | ✅ | ✅ | ✅ |
Free bank transfers in the Euro zone (SEPA) | ✅ | ✅ | 🚫 (CHF 1) | ✅ |
Free Maestro debit card | ✅ | 🚫 | 🚫 | ✅ |
Free ATM withdrawals | ✅ | ✅ (2x) | ✅ | ✅ |
Free cash deposit at ATMs | ✅ | 🚫 | ✅ | ✅ |
ISR/QR code payment via scan | ✅ | ✅ | ✅ | ✅ |
eBill support | 🚫 | ✅ | ✅ | ✅ |
Accessible physically | ✅ | 🚫 | ✅ | ✅ |
Download of account statements in PDF format | ✅ | ✅ | ✅ | ✅ |
Live push notifications | ✅ | ☑️ (SMS) | ☑️ (email) | ✅ |
Apple Pay/Google Pay/Samsung Pay | ✅ | ✅ | 🚫 | 🚫 |
If you’ve been following me for some time now, my opinion hasn’t changed since last year.
My strategy is to use Zak as my primary Swiss bank, and neon is my secondary Swiss bank in case the first one has a bug with its mobile app (since they are both mobile and online banks by default).
My reasons for choosing Zak remain the same:
As in previous years, I have promo codes for the Team MP members in 2021:
The promotion code “Y06JPR” entitles you to CHF 25 of welcome cash
The coupon code “mustachian” gives you CHF 10 of welcome bonus — to be entered during the registration because it is not possible afterwards.
As a reminder, I wrote a detailed tutorial on how to create a Swiss bank account at Zak and Neon with screenshots in this blog post.
To summarize my best Swiss bank comparison, and to declare which is the best free Swiss bank 2021, here is what it looks like:
Position | Free Swiss Bank |
---|---|
1 | Zak |
2 | neon |
3 | Raiffeisen |
4 | BCV |
Zak will suit you if you want the “security” side of a Swiss bank established for almost 100 years, but with all the functionalities of a mobile bank — or almost, let’s hope that eBill comes soon — as well as basic options such as cash deposit at the ATM and a Maestro card.
If you couple this with my Swiss credit card strategy with maximized cashback, then you will get the most frugal banking system in Switzerland that will allow you to save the famous CHF 4'440 over the next decade.
As far as the Raiffeisen is concerned, we are not big enough consumers of museums/culture for their offer. And also, we don’t want to feel “obliged” to go there just to make it profitable. But it remains a very good frugal option if that’s your case.
Finally, the BCV offers a frugal solution with its “Direct banking pack”, but knowing that I have other options with Zak and neon, I will abstain as long as it is the case given our past experience with them! What’s more, I don’t want to have to block CHF 10'000 at a bank :)
And you, which free (or at least frugal) Swiss bank are you with?
N.B. if you choose to open an account with Zak or neon, I will receive the same amount of compensation as your welcome gift — without you paying anything extra, of course. I am writing this down transparently so that there is no misunderstanding between us. This kind of partnership is what allows me to finance a part of the costs and especially of my time that I spend writing the blog. Thank you in advance! And as already explained many times, please know that I only share the services and tools that I personally use in real life. I recommend them in the hope that they will be as valuable to you as they are to me.
Some legal addition: the information on Zak is intended exclusively for persons living in Switzerland. A Zak account can only be opened with domicile in Switzerland.
]]>I come from a lower middle class family, with an Italian immigrant father. I have a university education with a lawyer’s Master degree. I have always been attracted by nature and frugal lifestyles, sometimes bordering on asceticism. It was mainly for ecological reasons that I limited my consumption in general.
I learned early on to work for a living, because my parents could not finance me in full. I worked on the assembly line in the metal industry, in a cement factory, I did housework, in short, every little job imaginable to support myself.
My parents have always been acutely aware of the value of money and risk averse in general. They knew what hard earned money meant. They made few investments, except for real estate purchases as a primary residence that turned out to be very profitable (they took advantage of a particularly favorable economic climate).
So I spent little but had no basis for personal finances. My limit was the negative of my bank account. I had a vague idea of what was coming in (salaries, income) but no idea what I was spending and on what. As long as I had enough money left over to go on vacation and pay for the Friday night caipirinha, I was fine.
With my job, I was forced to think about the management of the patrimonial interests of others, especially financial (real estate law being my favorite field).
One thing leading to another, this started a deeper reflection on the management of my assets.
I tried to discuss it a little around me.
But I realized the abysmal lack of interest of people on these issues. Apart from the famous “Setup a 3rd pillar to deduct it from your taxes” or, worse, “Talk to your financial advisor at your bank”, it was the void…
So I pulled out my self-learning hat and spent hours and hours reading blogs and watching videos on the subject.
That’s when I came across MP’s blog where I’m now writing these lines as a guest reader :)
In fact, at the time I was looking for an online broker, and I was about to get robbed by the “e-banking” or Swissquote type trading platforms. And then I read MP’s article on the subject, and I switched to DEGIRO.
It was the best decision of my life in that respect, given the capital I had to invest.
It was a game changer.
I then read the other posts on the MP’s blog (and also the one by Mr RTF).
I didn’t see all the little financial leaks that were emptying my assets on a monthly basis. So I decided to fix these openings to limit the flow of my expenses. Here is a non-exhaustive list of some of the measures I took:
This gives us a total of CHF 51'825 in 10 years:
Savings in CHF | Per month | Per year | Per decade |
---|---|---|---|
Banking fees | 20 | 240 | 3'762 |
Mobile abo | 16 | 192 | 3'010 |
Rent | 60 | 720 | 11'272 |
Internet abo | 30 | 360 | 5'638 |
Lunch at work | 150 | 1'800 | 28'167 |
Total | 276 | 3'312 | 51'825 |
MP note: not a bad return for “just” reading a blog!
In short, reading MP’s blog gave me the courage to “put my ba$^# on the table” to talk straight, and start taking care of my finances.
And the Grail of Frugalism: I started budgeting ALL my income and ALL my expenses, with a monthly savings rate calculation.
It radically changed my life.
KNOWLEDGE is POWER.Raphael
When you have access to data, it allows you to make more surgical decisions.
And keeping a budget with goals also creates accountability to yourself. When you’ve been chasing a 40% savings ratio for 3 months, there’s a “pain” in dropping to 25% or 35% the next month.
Being very competitive with myself, it has created an incredible virtuous discipline in my life, forcing me to be more and more creative to take care of my savings rate.
The process took place over many months. But there was a gradual, iterative, almost magical evolution that took place.
Taking control of my “small finances” sharpened my intellectual reflexes, and put in place management and investment principles.
Creating a budget put in place a rigor and a kind of accountability for my finances.
I started keeping a budget at the beginning of 2020. I had a 30% savings ratio in January.
In February I had 41%, in March 42%, in April 76% (but you have to count the bonus), in May I reached a cruising pace of 50% savings. That’s still a 20% increase in my savings rate compared to the beginning of the year, without depriving myself of anything but simply fixing the financial holes.
By calculating my savings rate and keeping my finances up to date, I realized that I was saving quite a bit and that this money was “sleeping” on a savings account that was losing value every year due to inflation.
I have invested in the stock market and in various financial assets thanks to MP’s “reassuring” articles on the subject.
Seeing the amount of savings I had, and not wanting to invest everything in finance, I decided to diversify by investing in real estate as a primary residence. I was able to do this because I knew what I had and, more importantly, how much I was spending and saving each month.
I currently live in a small studio (1.5 room) in the center of Lausanne. Not expensive. Centered. But very noisy and old.
I found a 2.5 room apartment to buy on the outskirts of the city, being in the countryside and quiet, but 20 min from Lausanne by bike, and 10 min by train. Being single and without children, I thought it was perfect for my period of life. And if one day I meet a lady who wants to share my daily life, I could always rent this property which is very well located.
When I did my calculations, I realized that my rent (including interest, charges, and maintenance) would be CHF 700/month. Unbeatable. Currently, I pay CHF 1'000/month for an apartment twice as small and 30 times older.
Well I admit, this calculation does not take into account the transfer taxes, notary fees, interest, rental value, etc.
But considering that I wanted to move to a larger apartment of 2.5 rooms (or even 3.5 if I was a couple), my rent would be around CHF 1'500 to 2'500 depending on the location.
Even taking into account real estate charges of CHF 800 or 900 or even CHF 1'000 per month, we are far from a rental cost.
By the way, I did the projections on Moneyland.ch, and the calculator tells me I’m a winner with the purchase, as soon as I keep my property for 4 years. Taking into account that I intend to rent it out when my civil status changes, I take little to no risk.
This reduction of “rent” will also have for goal to limit my expenses in order to start an independent activity, in order to diversify my income.
Only happiness to come.
Frugalism has taught me, or rather reinforced, core values: responsibility and discipline.
These values are intimately coupled with another: self-education. With enough time and mental availability, we can find all the solutions in the world. You can manage your finances, your retirement, your taxes, etc.
And even if some investments turn out not to be very fruitful afterwards, you will always have made the best investment: in yourself.
To take charge is to train oneself, to enter into a process of perpetual and iterative improvement. The important thing is not the goal of the journey, but what we learn during the journey, as Ray Dalio so well said.
Naturally, I already had a very frugal lifestyle, but MP’s advice opened my eyes to the investment capacities I had, and above all to take the step of investing in real estate and the stock market in particular.
What was most impressive was not really the savings that resulted (even if there were some, and beautiful ones!) but especially the small founding principles that made me aware of the value of my capital and my investment power.
And above all: dare. Dare to take the plunge into the concrete stuff!
PS: Dear MP, I wanted to thank you for all the time you have invested in this blog and in your research. It has an exponential beneficial effect that I myself have benefited from.
By the way, I have read the first 5 chapters of your book and I think it is an excellent manual for starting out in life. It should be read by every little Swiss school kid. It’s so simple, but so essential!
Best wishes to you, Mrs. MP and to the little MP kids, Raph
If you too are interested in sharing your inspirational journey with Team MP members, please email me at contact [at] mustachianpost.com
]]>Actually, his two side jobs!
He is a fan of the blog, originally from Toronto, Canada (😍!), and he lives in Vaud now and works as a teacher.
To boost his income with hopes of retiring early, he has taken on two extra jobs, one as a referee for ice hockey and another as a private tutor.
In addition to his regular job, Tom earns between CHF 800 and CHF 1500 per month.
So let’s see what we can learn from his experience in order to generate additional income in Switzerland ourselves too!
MP: Hi Tom! Welcome and thanks for agreeing to participate in this interview. Can you introduce yourself in two or three sentences: demographics, single or family, location?
Tom: Salut Marc! Sure thing. I’ve been working abroad for 10 years now as a teacher. I am originally from Canada, and I now live in canton Vaud with my wife and dog. We have been in Switzerland now for 5 years and hope to stay for many more, we love it here.
MP: Thanks for the intro. Then, explain to us: what does your two side gigs consist of, concretely?
Tom: As a teacher, I am able to offer my services as a private tutor and I currently have two students that need some extra math help. We meet 2-3 times per week and I help them with their homework or other concepts they might be struggling with.
I also referee ice hockey matches across the Romandie region (pre-COVID) in the SIHF’s second league.
MP: Nice! I’m not going to surprise you with my following question, since we’re here to talk about money (!): for each side gig, how many Swiss francs do you make per month since you started? Has it changed over the years? And will it continue to increase in the future?
Tom: This income isn’t steady, and it is totally seasonal, which I like.
During the fall and winter months there are a lot of hockey games and they are in need of referees. I could be busy every night of the week if I wanted, but I am able to set my own schedule and I usually make about CHF 200 per match. This covers some costs with fuel and my time to drive between my house and the ice rink.
I also only tutor when students are at school and I am able to charge CHF 85 per hour for this service. In total, I probably average around CHF 1'200 in additional income from September to April.
MP: That’s for some serious side gigs you got here! Congratulations!
For each side job, can you describe when in your life you first had the idea of becoming a hockey referee and a tutor? And how did it come to you? And also why (need for more cash, need to do something else than your actual job, other)?
Tom: I began refereeing hockey at 14, and it was purely for extra income.
I got paid $15 for a 1 hour game and, as a teenager, it was nice to have extra money.
As I improved my skills as a referee, I started getting paid more per game. I continued to referee through University as a way to earn some extra money.
I also started to really enjoy being on the ice in a different capacity than playing.
And it’s also a really social profession, and it helps keep me in shape!
Tutoring came later, and I only started doing it more frequently once I started being able to charge more money. Some people prefer hiring an experienced teacher as a tutor for their child and it was only once I became more experienced that I started getting more tutoring jobs.
MP: So, for each job, tell us how you got started, step by step, from the idea to the first time, and especially in parallel with your studies at the time!?
Tom: Where I grew up in Canada, there was always a need for referees.
I wanted to earn some extra money, so I signed up to take a course that would allow me to be assigned games. Each year you take a refresher course and register to referee again each year.
Then, 10 years ago I moved to England and I reached out to the ice hockey league there to see if they needed referees. Of course they did, and the process was very similar to my experience in Canada. The only difference this time was that I had to drive much further and on the other side of the road!
When I moved to Switzerland, the SIHF was very accommodating for me and allowed me to enter into their officiating system quite quickly. I began refereeing in the 4th league and I’m now a referee in the 2nd league. Here, we take an annual course, and are always working on improving our skills as officials. We have online platforms for entering our availability, and I can be assigned games anywhere from Geneva to Raron to Fribourg. For some hockey players the transition to refereeing is quite natural and can be a way for many of them to continue their hockey career in a different capacity.
As for tutoring, I actually started doing it in high school, for free, because I wasn’t sure if I wanted to be a teacher or not.
I spent a year tutoring a few students and I started to enjoy helping them so much so that I went on to study education in University. Of course, tutoring fits well with teaching; and in each school I’ve worked at, they have been good at connecting students that need extra help with teachers that are willing to tutor.
Usually you are asked for your availability and you work out a mutually agreeable time to meet.
I am a mathematics teacher so there are always students looking to get extra help so there is never a shortage of students for me. I usually have to turn away pupils because I am too busy. It is convenient for me as well since I can tutor students after work and in my classroom so there is no need to waste time between my work schedule and my tutoring schedule.
MP: And in the future, what are your next steps with these two side projects (developing them further, stopping because it takes too much time, other)?
Tom: I really love working with the SIHF and refereeing hockey. It does become a nuisance sometimes when I have other things I need to do, or when I am assigned a game in Geneva on a Wednesday night (over 4 hours in the car for CHF 200…)
It isn’t really about the money, since we don’t get paid a lot, but I sure wouldn’t do it for free.
I would love to referee professionally, but my time has come and gone in that regard, so for now I will keep doing games while I have time. I’m sure eventually I won’t be able to fit it into my schedule anymore, and I will have to cut back on matches, but I don’t think I’ll ever quit completely. I want to stay connected to the game and give back to the hockey community that has been so influential in my life.
Tutoring is also something that I will keep doing in the future.
Right now I have 2 students and I am happy with that. I’ve had more in the past (when I was saving to pay for my wedding), and it became too much to balance.
It is a nice job in the sense that I can add more clients as I need, and if it becomes too much I can move around my schedule to suit my personal needs.
I think in both cases, the reason why my side jobs work so well is because I am able to choose my own schedule and I can do everything on my own terms. I don’t have to commit to certain hours and I also don’t need to report back to any sort of boss.
In a way, I am self-employed and can make as much or as little as I need.
I think the key with trying to earn money on top of your day job is to find something you are passionate about and skilled at doing, so that you will enjoy the extra time you need to spend working.
For me refereeing and tutoring are both very rewarding and the financial part comes as an added bonus.
Thanks so much Tom for sharing your inspiring side hustles’ journey. Keep enjoying the freedom and flexibility of these two side jobs, as well as the additional monthly income you make :)
If you think about it: Tom makes about CHF 1'150/month on average. This means that every year, he gets an additional CHF 13'800. And if he invests it during the next decade, this will add CHF 215'915 to its net worth!
It motivates you to start something similar :)
Another important implicit element that I want to outline is what Tom did to get started with both of his side jobs: talking about the wish to get those. As I explain in chapter 7 of my book, this is one of the key to see opportunities abound. It may sound stupid, but at the time you start talking about such will to make money via side jobs, your network effects start to compound like crazy.
Finally, another interesting fact from Tom’s story is how it confirms that passion is created through craft and deep work, and not the other way around. Because when you analyze his path, you see that he took the referee job for money at first, then became so good at this craft that it became a meaningful passion to him. And it was the same path for tutoring which led his way to his teacher job (on top of his side gig). If you want to read more about this topic, I highly recommend you reading the book “So Good They Can’t Ignore You: Why Skills Trump Passion in the Quest for Work You Love” by Cal Newport.
If you too want to start making more CHF on top of your actual salary, here a small exercise to not only get inspired by Tom’s story, but also to put it in practice:
Finally, if you too are interested in participating in this series of “How to make extra money on top of my salary through a side hustle in Switzerland?”, then please contact me via the following email: contact [at] mustachianpost.com
]]>As a reminder, before this article, I only had one pillar 3a at VIAC with the Global 100 strategy.
So I had to open 4 new pillar 3a contracts at VIAC. And it was much simpler than I would have thought.
A VIAC portfolio corresponds to a separate pillar 3a contract.
After a few clicks, I was happy to have my five 3a pillars as desired:
It’s child’s play! It took me more time to make screenshots than to create the portfolios :D
Once the opening of my new VIAC pillars 3a was done, I went to retrieve the information to make the money payments on each of them:
The VIAC team did a really good job of simplifying the interface. You can find all the information where you look for it.
As explained in this article, I will now fill up my four new VIAC pillars 3a before transferring any new money to my current one. And this, in order to optimize my Swiss taxation to the maximum.
So my next step was to delete my existing standing order that was transferring money from my Swiss Zak bank account to my current VIAC pillar 3a portfolio:
That’s done!
Let’s move on to the next step.
Next, all I had to do was create four new standing orders in my Zak ebanking mobile app to each of my four VIAC’s 3a pillars.
For the record, it’s actually only the ISR reference number that changes between each portfolio; the rest of the information remains the same.
Note: I have already made a payment of CHF 568 in January 2021. As legally the maximum amount pillar 3a in 2021 is CHF 6'883, I took the remaining amount CHF 6'315 (= 6'883 - 568) and divided it in eleven months, then in 4 portfolios, which gives me the CHF 143. From 2022, I will do the same mathematical operation again, but over 12 months.
And that’s it :)
So here I am, ready to save several thousands of CHF on my taxes when we withdraw this pillar 3a from VIAC!
As a reminder, this method works with any 3a pillar. So make sure you set it up as soon as possible in your life to optimize your Swiss taxes ;)
]]>Last year, I detailed all my Swiss tax deductions in this article — thanks again to Jani for her two extra tips at the bottom of the article. I also thank Mihnea who explained to me that in his Lucerne tax return, he was deducting an amount of Swiss francs that he sends to a needy family member in another country (a kind of social contribution deduction).
Everything was going well in the best of all worlds.
My tax optimizations were running like clockwork.
All I had to do was copy my VaudTax file from year to year, and it would go very fast.
For 2020, on the other hand, we’re going to have a lot of fun — at least for the canton of Vaud…
Indeed, overall, I will use the same tax deductions as for 2019 (see link above).
But in the small print, with this damn COVID, I’m going to have a lot of fun counting the number of days that Mrs. MP and I were or were not home office… (cf. this article talking about the Romandie cantons’ situation). We also need to see if we are eligible for home office expenses with the room we now dedicate to it.
On the other hand, if you’re lucky enough to live in Fribourg, Valais, or Zurich, it will go much faster because you’ll be able to declare everything as if you were going to work as usual (i.e. not doing any home office).
What are you going to deduct from your taxes in 2020? (specify the canton, because there are really big differences)
Please reply in the comments section below if possible, in order for all Team MP’s members to leverage your Swiss taxes tip(s)
]]>This tax optimization, which is well known to the Swiss, has become even more valuable in recent years, because you can now invest this pillar 3a money 100% in shares. This is what I have been doing for several years using VIAC, and more precisely their portfolio strategy called “Global 100”.
But what is less well known is that you can save tens of thousands of CHF in taxes when you are about to withdraw this cash (because yes, you have to pay taxes when you withdraw your money from a pillar 3a…)
But to do this, you need to put a strategy in place as soon as you start contributing to your pillar 3a.
You can save tens of thousands of CHF in taxes with the staggered withdrawal of your pillar 3a money! In percentage terms, that’s Swiss tax savings of up to 70% — that’s pretty crazy!
And the most incredible thing is that it’s all legal (I’ll give you the details below, because the rules differ from canton to canton, of course)! But nobody teaches you this at school though…
The whole trick is based on two points.
The first point is that Swiss law currently says that your pillar 3a money must be withdrawn at the earliest five years before reaching normal retirement age. That is to say at 59 years old for a woman, and at 60 years old for a man.
The second point is that the tax you will pay on the withdrawal of your Swiss pillar 3a is progressive in percentage. Imagine that your 3a capital is CHF 273'040, and that you withdraw it all at once, then your tax will be 8% for example (for a single man, without children, and living in Zurich). But if, on the contrary, you withdraw this money in four installments (i.e. 4x CHF 68'260), well, the tax rate will only be around 5%.
The idea is therefore to spread the withdrawal of your pillar 3a over several years in order to benefit from this Swiss tax rebate.
VIAC explains it so well in pictures that I put their graph here:
The tax advantage between a staggered withdrawal and a one-time withdrawal is CHF 7'823. And that, without making any effort apart from opening four accounts :)
Since we talk about a percentage tax increase, it means that the bigger your pillar 3a capital is, the more substantial the Swiss tax saving will be.
For example, if you pay 8% tax on CHF 750'000 of pillar 3a capital via a unique withdrawal, you will pay CHF 60'000 in taxes, whereas if you pay only 5% via four withdrawals, you will pay CHF 37'500. That means you will save CHF 22'500 thanks to a staggered withdrawal!
And we don’t stop there! Because as we, as a good Mustachian, we invest all our pillar 3a in the stock market, we can optimize even more on our tax bill!
As you are beginning to know, the earlier you start investing in your life, the bigger your initial capital will be thanks to the magic of compound interest.
Let’s imagine that you have an investment horizon of 40 years for your pillar 3a.
If you fill in four pillar 3a pillars (all invested in the stock market) one after the other every 10 years, your first Pillar 3a pillar will be bigger in the end because compound interest will have had more years (i.e. 40 years) to “make babies” (via dividends and the capital increase of the shares you invest in).
Your second pillar 3a opened 10 years after the first one will therefore have had less time in life (i.e. 30 years) to benefit from compound interest. And the same goes for your third and fourth pillars 3a.
In image it looks like this:
Between a staggered withdrawal and a one-off withdrawal of the pillar 3a invested on the stock exchange, the tax optimization presented above amounts to CHF 68'433. And this, always thanks to a simple opening of four different accounts (i.e. maximum 1 hour of work, nice ROI!!!)
And as the taxation on the pillar 3a is progressive in percentage, you will therefore pay more taxes on the withdrawal of your first pillar 3a, a little less on the second, etc…
But nowadays, it has become so easy to open pillars 3a in one click in an app that nothing prevents you from optimizing even more this tax saving on your pillar 3a.
The key to maximum tax optimization of a pillar 3a invested on the stock market is therefore to divide the annual payment on your pillar 3a into five equal parts (five being the legal maximum allowed number of pillars 3a).
Result: after 40 years, you find yourself with exactly the same amount in each of your pillar 3a. And so you have optimized your taxation as much as possible as shown in this picture:
Swiss law states that you can start withdrawing your pillar 3a capital at the earliest five years before the official Swiss retirement age (65 and 64 for men and women respectively in 2021).
The other law to be respected is that you cannot withdraw your capital from a pillar 3a partially. So if you have two pillars 3a with CHF 30'000 each, you cannot withdraw CHF 15k from one of them. You must legally withdraw either 1x 30k, or 2x 30k.
This is why you often hear that you should create a maximum of five Swiss pillars 3a to maximize your tax liability when withdrawing from them.
The question I asked myself after I realized that I needed at least five pillar 3a contracts was:
But I think I read somewhere that the canton of Vaud is stricter in terms of tax evasion, and limits the number of withdrawals of the pillar 3a to only two in the five years preceding retirement, is that true?
Apart from bank and insurance documents, I could not find a single legal source confirming these statements on the site of the canton of Vaud.
Hence, I wrote to the Cantonal Tax Administration of Vaud :)
Their answer surprised me — yet another proof that one should not believe what people say on the Internet :D
First of all, they told me that they would not be able to pronounce on the pillar 3a legislation in several decades because it will surely change between now and then.
Then, they literally told me that “for the moment there is no limit set by the Canton of Vaud on the number of pillar 3a accounts”, but that one should not play too much with this kind of accounts, at the risk of it being considered as tax evasion.
Knowing that other cantons are cooler with regard to this rule, and that we don’t know in which canton we will live with Mrs. MP when we pass the legal Swiss retirement age, we will therefore create a minimum of 5 pillar 3a accounts. And at worst, if we stay in Vaud, we will withdraw 2 pillars in one year, and the other 3 in another year, and it will be considered as 2 withdrawals as it seems to be the implicit rule that is authorized and applied by the Vaud tax authorities.
I “discovered” this Swiss tax trick during my research for my book. I had heard about it before, but I had never taken the time to understand it in detail, and above all to act on it.
Except that when I wanted to put it into practice last week, I found myself facing another problem…
Mrs. MP’s VIAC pillar 3a has only one portfolio (i.e. 1 portfolio = 1 pillar 3a account at VIAC), which amounts to already 41kCHF at the time I am writing these lines…
So I asked VIAC if I could divide my pillar 3a into five, by any chance? But no, it’s not possible.
My solution will therefore be to create four new portfolios on my VIAC account, which I will fill in equal parts each year until my four new portfolios have the same amount as my current pillar 3a.
I am currently checking VIAC competition and I might want to test Finpension or another pillar 3a invested in the stock market in 2021.
But is this possible if I already have five Pillar 3a contracts in progress at VIAC?
The answer is yes!
As mentioned above, there is no legal maximum number of how many pillar 3a contracts you have in Switzerland. You can open as many as you want. Even if you only put CHF 5 into it to test a service.
Where the law comes into play is when you want to withdraw this money when you officially retire. At that point, you will simply have to close more than one pillar 3a in a year, and the total of these closures will form the basis for calculating your tax on your pillar 3a capital in that year.
It’s as simple as that :)
This is what we just learned:
As usual, I took screenshots of each step when I implemented this Swiss pillar 3a tax optimization strategy with VIAC (via several Global 100 portfolios). And I made a tutorial out of it :)
And you, do you already apply this method of tax savings via pillar 3a to stagger the withdrawal of these 3a assets?
]]>I had just read her the reminder that we had put ourselves 6 months after adapting our couple’s budget system, which said “Discuss if frustration level decreased/disappeared (“Freedom” budget Mrs. MP)”.
As I have already explained in the past on the blog, we have set up a budget category called “Freedom” within our couple budget.
We took the idea from the founder of YNAB (you know, my favorite software that brought us from 50 to 600k in 7 years).
He and his wife had one concern at the time: since they had all their finances in common, they felt obliged to justify their expenses to each other; even when one of them bought a coffee or a magazine for less than CHF 5.
So they set up a budget category called “Freedom”. They allocated 50 USD per person in each of the categories “Freedom - Mrs.” and “Freedom - Mr.” And each of them could spend this 50 USD without any justification to the other person.
So we decided 6 years ago to set up this system with Mrs. MP, after I gave her my PowerPoint presentation to convince her to combine all our finances as well.
We talked a lot about how much money we were allocating to each other.
For my part, I had announced CHF 50 per person, knowing that I myself would never use this budget. Because the few things I bought, such as books or online services, I budgeted them in advance.
Mrs. MP voted for CHF 100, citing the high cost of Switzerland. She explained it to me:
With CHF 50, I have a lunch with a friend in Lausanne, and then I have nothing left for the month!
Our points of view differed, but when budgeting as a couple, you have to make compromises if you want to have a chance that it will work in the long term 1.
So we started with CHF 100/month of “Freedom” budget for Mrs. MP.
At the beginning of last year, I was still feeling some tension about the budget flexibility allocated to Mrs. MP, but I didn’t address the unfortunate subject (it was a big mistake for me to bury my head in the sand! — I am not perfect unfortunately ^^)
While several of my blog posts mentioned this CHF 100 “Freedom” budget for Mrs. MP, the message from one of the readers in particular caught my attention. She basically said “I’m voting for an increase in Mrs. MP’s Freedom budget. CHF 100 is clearly not enough for a woman in Switzerland!”
I joked about this and told Mrs. MP that she had some female readers who supported her.
And that’s when she explained to me with an open heart that it weighed on her, and that she felt frustrated on a regular basis…
Her two main points were:
For my part, I realized the obvious.
I didn’t want Mrs. MP to feel this level of frustration for decades to come because, even after FIRE (Financial Independence, Retire Early), we would have to respect our set spending level.
And above all, because I am the first to argue that the FIRE path through frugality should not mean deprivation. But that’s what she felt.
It was hard for me to admit it, but we had to consider increasing these expense items (“Freedom” and “Beauty care”).
I really wanted to play it “open-minded” and asked Mrs. MP what we could test to decrease her frustration, while remaining reasonable (it was this last point that made me afraid to discuss this budget category again, as I was afraid it would increase too much).
After several discussions on the subject, we came up with the following proposal:
The Cartesian that I am reported this in CHF: an increase of about CHF 2'000 per year, or CHF 20'000 over ten years (without compound interest).
The pill was hard to swallow.
But looking back, this 20kCHF represented only 1% of our net assets of CHF 2'156'000 so that Mrs. MP could live our common project in a pleasant way in the long term.
We therefore decided to test this new budget over 6 months.
And to put all my good will into it, I told Mrs. MP that we were going to put a reminder 6 months later in our family calendar, in order to verify that things were going better. Immediately said, immediately done!
One Sunday morning, as we were clearing the breakfast table, I said to Mrs. MP with some apprehension: “Ah, by the way, we’ve been testing the new amount for your ‘Freedom’ budget category for 6 months now and more times at the hairdresser’s. We had put this reminder on to see if your frustration had diminished, you remember. What do you think of it now?”
Drum roll with all the possible scenarios running through my mind: from “It’s not enough, we have to increase to CHF 1'000…”, to “I’m fed up with this FIRE objective, I want us to stop everything. And that we stop budgeting above all!”
Mrs. MP’s response: "My level of frustration with our budget and finances has completely disappeared. Thank you, especially for not charging extra beauty care to my Freedom budget. Because they are important to me. And frankly, if they stay that way, as far as I’m concerned, you can save and invest as much as you want :)"
I was almost shocked.
So much so that I asked her: “OK. What a good news! But then, from 0 to 100, how frustrating do you feel now about our budget as a couple?”
“Zero”, she said.
My reaction:
You can’t imagine my relief to know that Mrs. MP no longer has any frustrations, and that she is now 100% aligned with our budgeting to be able to stop working both at age 40.
In short, this is what I have done to improve budget management in our couple:
This method of budgeting as a couple via a “Freedom” category worked for us. And I think it can work for many others because the risks are less since we only talk here about “discussing budgeting as a couple” :) Anyway this is the key to our success in the MP family!
And you, do you manage your budget as a couple together? If so, how do you manage this type of “Freedom” expense? Feel free to share any example of a couple budget, or any method you use!
For the newcomers on the blog, the project to become FIRE in Switzerland at 40 years old came from me at the base. Except that I didn’t see myself stopping working while Mrs. MP would still have 25 years to go, because it means we wouldn’t be able to do long trips or that kind of thing. So I decided to take my dear and dearest on board this crazy FIRE project. She still has trouble visualizing what it will look like, but seeing our net worth evolve from month to month, it’s no longer a utopia for her now. It seems mathematically plausible ^^ ↩︎
I had proposed to go with this “2x/year to the hairdresser” at the beginning when we started budgeting. But in the end, I had never dared to reopen Pandora’s box by asking if it was OK or not… Mrs. MP was moaning a few times but I thought it wasn’t that bad… yeah yeah, I know, big red card for me on this one… ↩︎
No, this year I have to admit that I feel confident that this project is going to last a little while longer (at least until we are FIRE (Financial Independence, Retire Early) at 40 I think). I’m so passionate about writing, sharing, and teaching personal finance in Switzerland, that it’s no surprise that this habit of blogging is now well established.
I often talk about “my blog project”. But now it includes so much more with the release of my book, the 1-1 coaching, and all the exchanges I have with readers. But let’s start with the most impactful first.
I can still see ourselves (Mrs. MP and I) being interviewed by an anthropologist (hi Fanny!) for her book dedicating a whole chapter to frugalism.
That was just one year ago, in January 2020.
On the verge of leaving, Fanny said me after I told her about my book project which was paused: “Frankly, your point of view on the FIRE movement in Switzerland is worth reading by the greatest number of people. And if you don’t write it, someone else will do it for you. And then you’ll regret not having taken the step.”
That was the trigger.
I thought there would only be a hundred (at most!) readers of the blog who would want to please me and buy my book. Considering the titanic task that such a project represents, I wondered if it was worth the time, energy, and financial investment I put into it.
Then I remembered my situation in 2013, when I was looking for an A-Z guide on how to become FIRE in Switzerland at the age of 30-40. I would have paid dearly to have such a book in my hands.
So I took the plunge.
I announced that the blog would be slowed down until the end of August. It will have been until the end of September in the end.
But eleven months later, that was last November, my book (with a real ISBN and everything) was available for sale.
But how many did you sell, Marc?!" I hear you whispering behind your screen.
I’m having trouble realizing it, but… 717! That’s incredible.
Pierre Novello, the renowned Swiss writer in personal finance and journalist for Bilan, explained to me that for a first book, a few hundred copies sold would already be a lot. He went on to give me a few statistics about authors in Switzerland: “A book is considered a bestseller in French-speaking Switzerland if 1'000 copies have been sold, and for the whole of Switzerland, 3'000 copies must be sold.”
These figures help me to realize the result of this small personal project. Can you imagine that? Having written a “bestseller” in French-speaking Switzerland by myself? That would be swag! :)
I would like to take this opportunity to thank all the supporters of the first hour of this book project, as well as all those who bought it. Sincerely, thank you from the bottom of my heart for your trust.
For several years now, I have been offering personal financial coaching. It’s a bingo keyword to simply say that I try to share as much of my own experience as possible so that people can in turn transform their personal finances (budget, investment, taking action, etc.).
I love the moment when I see the click in the eyes of a person I coach. It’s transcendent. And compared to the blog, I see the direct impact with concrete results (vs. the sad and soulless analytics…).
But after several discussions with close friends, and introspection sessions with myself, I realized that this type of coaching takes a lot of energy from me. As a result, since the end of last year, I haven’t taken on any new people.
I will see if it is temporary or if I manage to find a new channel for transferring my knowledge in such a personalized way (see my new project for 2021 described below).
Although the two projects above are exciting as much as possible, my blog remains the heart of my personal project. I love writing, publishing, getting feedback from real people living in Switzerland who have better ideas than me, testing them, improving my own situation, changing other people’s lives. It’s a crazy virtuous circle!
Let’s see together how it has evolved over the past year through a few key figures.
Ah no, actually, wait. There’s one number I’d like to share with you first! A figure that doesn’t mean much when you evaluate the quality of a blog. It’s even called “vanity metrics” because it only inflates your ego, but doesn’t reflect the depth of your blogposts or any gain you might make from them.
But who cares? I’ve decided that we’re going to allow a little moment of pleasure for our beloved ego:
“Here we go, are you happy dear emotional brain side?!” interjects my Cartesian brain.
“Yeeees, Mr. Grumbler!” answers my emotional brain, quite proudly ;)
And so, here are the other figures for 2020:
1'974 registered at the end of 2019, and 3'706 registered at the end of 2020.
And this, with the same average opening rate of 60%. It is especially this last figure that matters to me, and guides me to know that I do not spam my readers.
The increase in 2020 was quite significant with +140% of visitors and +249% of page views:
I have refocused a lot of my available attention on writing over the past year. This resulted in 49 articles in 2020, compared to 28 in 2019. Nevertheless, as I always say, quality always prevails over quantity as far as I’m concerned.
The year 2020 was quite incredible in terms of media coverage of the FIRE and frugalist movement in Switzerland.
The crazy thing for me was the blog’s appearance on TV in the RTS’s TTC show a year ago. I would like to thank their team again, and especially Corinne for her understanding of my desire to remain anonymous.
As far as newspapers and websites are concerned, it was no less than 14 interviews and mentions of the MP blog. And you can add 10 more if you count the re-publication of the Tages Anzeigner article in ten other local Swiss German newspapers!
As I said before, I include in my “Blog” project everything that goes around like 1-1 coaching (which brings in cash, I’m not going to hide from it), sales of my book, and affiliate links.
I still have the same position as last year about the profits of any personal project: “There is a direct correlation between the value you add to your readers, and the profits you can make from your personal project. No middlemen, no two-year sales cycle, or that kind of thing.”
Except that this year having been very fruitful for the blog and co, I find it a delicate topic — not for me or for you who understand my motivations, but for the Swiss police of the FIRE movement!
Because, as long as you earn a few hundred CHF with your new project, everyone applauds and encourages you. And that’s good because it seems legitimate in view of all your efforts.
But when a personal project starts to take off and look like a business in terms of profit and loss, readers (especially those who only superficially visit the site) start to ask questions (I don’t blame them because we haven’t known each other for a while), and to wonder if this site is really authentic…
To those readers who feel jealousy rising, I simply suggest to them to change their state of mind and to take this as a source of inspiration. Because basically, I was like them, admiring and/or being jealous of the success of blogs or other online services. Then one day, instead of ruminating, I acted. It took me 7 years to get there, and hundreds of hours of passion per year (evenings, weekends, vacations).
Whatever happens, I remain comfortable in my shoes announcing such a turnover because I have never tried to pass on such a product or service out of pure financial interest.
And I count on you to call me to order if you see any drift :D
Because finally, between the close friends I made via the blog, and all the readers who write to me, I can tell you that I have an advisory board that allows me not to let this blog project go into a wall because of greed.
Without any more blah blah, here are the numbers that still surprise me after doing my apothecary calculations:
2018 | 2019 | 2020 | |
---|---|---|---|
Revenues | 4'671.05 | 18'374.37 | 98'619.36 |
Expenses | 415.38 | 8'413.92 | 27'274.58 |
Profits | 4'255.67 | 9'960.45 | 71'344.78 |
Concerning ethics, I let you read the paragraph of my 2019 review which remains my current line of conduct.
In case you’re new to the blog, the whole Swiss FIRE community can be found on our forum.
Here are the statistics of the latter:
2018 | 2019 | 2020 | 2016-2020 | |
---|---|---|---|---|
Users | 210 | 344 | 951 | 1'295 |
Created posts | 5.2k | 6.9k | 17.7k | 32.8k |
Unique visits | 15.6k | 30.1k | 50.9k | 105k |
Pageviews | 691k | 1.1M | 2.3M | 4.5M |
Many thanks to Julianek and Bojack, our two moderators, for their involvement in this great community.
And I thank you, dear reader, for making this community live and be useful to every newcomer to the MP Team.
I take advantage of this annual retrospective to thank all the patrons of the blog via Patreon: Adrian, Alain, Alberto, Andrei, Andrey, Bocherens, BRO, Cédric, Célien, Chris, Christian, Daniel, David, Dominik, Fabrice, Ferdinando, Franchin, Gordan, Jean-Claude, Julien, Kevin, KP, Krzysztof, Laurence, Laurent, linlin, Marco, Margaux, Martin, Matteo, MrCedFre, Nicolas, l’autre Nicolas :), Paolo, Patrik, Pranav, Przemek, Renārs, Roddy, Rúben, Sam, Sebastian, Simon, tcies, Thomas, Timo, et Zik.
Your support means a lot to me.
My year 2021 will be marked by two key words and a new project.
I saw this idea on another blog to choose a keyword as the focus of your year. I found it interesting, so I’m trying it out. I chose two in the end.
The first one: lifestyle.
In 2021, I want to define more consciously the lifestyle that I want to have, and leave only the remaining space for my job and my personal projects. Rather than the other way around.
The two main actions related to this keyword are going to consist of:
My second keyword for 2021: completion.
It will mainly consist of finishing the guides that have been started, and tidying up and finishing several drafts of articles before starting others.
And… because well, I would be bored if I didn’t have a good big motivating project :D
The project started in the summer of 2020, and it will see the light of day in 2021.
I’ve always found it hard to understand how some readers had blockages that, for me, had no reason to exist…
I understood that everyone has their own story. But when I gave a detailed recipe for budgeting or investing based on my experience, what was stopping someone from getting started?
I knew that this type of problem was related to the mindset of these people. But I didn’t know how to transform that mindset.
But, thanks to the magic of the encounters made via the blog, a reader (Anela) came to enlighten me. Easy for her, because it is her full-time job to break beliefs, blockages, and other glass ceilings.
After many exchanges during the summer of 2020, the idea came to us to “synergize” our skills.
What would happen if my in-depth knowledge (7 years!) of personal finance was mixed with personal transformation expertise?
And BIM! Our 100% Swiss online program project “Budget Investissement Mindset” was born.
To answer the questions I have received most often after having spoken informally about it:
To be even more precise, this program is for you if these two types of emails I receive speak to you. The first one: “Hi Marc, your blog is awesome. I kind of figured out how to make a budget, but despite my efforts I can’t save. And to be honest, I often end up in the red, I’m fed up with it. What do you advise me to do?”
Or else: “Hey Marc, frankly it’s great your blog and especially your advice to start investing. I understand everything you write! But… I still haven’t opened my online broker account or bought an ETF. I don’t know how to explain it but I’m scared to death of the stock market and I can’t get started. But thanks for your blog, it’s a gold mine!”
So, we’re going to start with a first pilot version which will be only in French. And when it’s a hit, then we’ll certainly think about English and German speaking people later on.
Places will be limited for the first edition in order that we see how we manage to hold the load (spoiler alert: because in addition to videos and all the written content, there will be live sessions)!
I had two big blockages myself to the idea of offering this type of program:
As a result, I had no reason not to take the plunge. At worst, even if I don’t like it, I will learn from it and grow out of it.
Most importantly, I’m sure we’re going to change lives. Knowing that this is already happening with my blog posts (thanks again for your inspiring feedback), such a personalized program will only exceed my current results.
I’m really looking forward to starting 2021 with all this!
I’m now going to go and negotiate a homemade cake with Mrs. MP so that I can blow out this seventh candle with the one who is one of the three pillars of my life (the two MP toddlers don’t know about the blog yet).
But before that, I thank you again. You, the long time reader of this blog for 7 years already. Or you, the brand new reader who is passionate about the FIRE movement in Switzerland and who is happy to have found a community with the same state of mind.
Without you, all these projects around the blog would make no sense. So sincerely, THANK YOU!
]]>Last month, Heiko, a reader of the blog just shared with me a frugal tip about renting in Switzerland that I couldn’t keep only to myself.
MP: Welcome on the blog, Heiko. So, I heard that you know a trick to lower your Swiss rent in cities with low vacancy rate?
Heiko: Hey MP, great blog and good stuff you’ve got there.
Indeed, as we moved to Switzerland two years ago, we learnt a nice little trick about rents that can make you save a ton! (we did it)
MP: I can only agree on savings on such an expense, as renting is part of the Big Three 1 expenses that one should put the most focus on. Indeed its impact is recurring, hence the compound effect can be huge over a lifetime. Please tell us more Heiko!
Heiko: It’s actually pretty simple. When you move, and in your city there is less than 1.5% apartments/houses free, the landlord is legally required to give you a document stating the rent that the previous tenant paid, to inform you about your right to ask for your rent to be lowered, and the exact process of how to.
That sounds a little ridiculous, but we actually did it. This simple method decreased our rent (after (!) just signing our rental agreement) from CHF 3'500/month to CHF 2'950/month.
This tenant right is explained on this “Mieterinnen- und Mieterverband” website page, as well as on this “Asloca” website page.
You can find the status of your city (about the 1.5% limit) on the Federal Statistical Office website. They have a great map where you can visualize the status of any Swiss city or town or village. Here is the link to it in French, and in German.
MP: Wow! If we run your figures through the compound interest calculator, we’re talking about savings amounting to CHF 103'267 over 10 years (by investing them to make them grow), that’s huge! Can you detail us the process please?!
Heiko: Of course :)
First, we signed our rental contract.
It’s important not to talk about the fact that you want to ask for the rent decrease upfront, because then they will choose someone else to get the apartment.
In our case, we live in Zürich. And because there is less than 1.5% rentals free, our landlord had to give us this form. We saw that the previous tenant paid 26% (!) less than we did.
So we became part of the renters association — mieterverband.ch (asloca.ch in Romandie) — which cost CHF 100 a year. They analysed the case, and said we had a 99% chance of winning. They then explained us how to do it, and gave us the letter templates to send to the landlord. (We just had to fill in our names.)
MP: Quick pause here. Would you recommend anyone trying this trick to go through the renters association? And why?
Heiko: I can only encourage you to do so, yes.
First of all, you only have a 30 day window to start your battle. Imagine you send the letter wrong, by simply having some technicality incorrect. You send the letter and obviously, the landlord takes quite some time to process it. In the end you might lose the 30 day window and then pay every month (!) hundreds of francs more.
And second, the tenants association (Mieterverband / Asloca) can only do their job, if they get their membership fees. This also includes the more long-term effort of pushing the political agenda to be more tenant friendly (and more or less 2/3 of Swiss inhabitants are tenants). This will allow most of us in Switzerland to be better off.
Just think about it: the fact that you can reduce your rent as described here is based on this effort. So yes, I see the membership fee as an investment, that will allow me to save more money in the future :-)
MP: OK, I see. Please continue then. How did it go on concretely?
Heiko: After sending our letter, the landlord offered us around CHF 3400 instead of CHF 3500.
The renters association warned us that it was the standard process, and that we should press on them, as we had a right to see their earnings reports, which they would never ever give.
So we pressed on.
Then they asked how much we wanted less. We said at least CHF 550/ month (that was gambling negotiation as we took a number we thought was way too high).
They immediately agreed, and now we are both happy.
We save an additional CHF 6'600/year, which indeed compounds to CHF 103'267 as you explained earlier.
But we’re also a little sad, because we should have asked for more…
MP: I love that. But one worry comes to mind. Don’t you risk that they kick you out because they don’t make as much money as they could in such a big city?
Heiko: Nope! That is the best part of it. Because even if they would give you a discount of 1 cent per month, it counts as a “win” and therefore, you are protected from them kicking you out for 3 years (!!!). This is called retaliation protection.
MP: Thanks so much for sharing your frugal story on the blog. If you got more, you know where to find me ;)
Heiko: That was a pleasure MP. Moreover if it can help other Swiss people to save more, and get faster to their FIRE (Financial Independence, Retire Early) goal!
And you dear reader, did you ever tried this trick? Do you know any other about Swiss rents (aside this one that I already described in a previous article)?
as I detailed in my book, The Big Three are these three recurring impactful expenses that have a non-negligible impact on any budget, namely food, lodging and transportation ↩︎
Zak has been my primary Swiss bank for a year now. As explained in my comparison of the best Swiss bank 2020, I chose Zak for three main reasons:
Like all these neo-banks, there is only one mobile app with Zak. If it crashes, there is no web alternative. That’s why I made Neon my secondary bank.
This setup suits us well.
And what’s clear is that we haven’t regretted for a single moment having left BCV and the dubious practices of some advisors with their clients (cf. our mortgage experience).
Nevertheless, all is not rosy at Zak’s, and they could still improve many things. Here are the 4 positive and 4 negative things I observed after 1 year of use.
Being a big fan of my budgeting software YNAB, I need to reconcile my bank’s transactions with YNAB. Reconciling means having the same amount in YNAB and Zak.
In YNAB, it’s quite easy to track because I can mark each transaction with a small “C” (for “Clear”). Except that in many apps and e-banking, there is no such feature to “mark” a transaction.
Except with Zak.
Indeed, I hijacked their pot system to meet this need. Any new transaction (credit or debit) that happens on my Zak account automatically comes in the “Daily life” pot. In my system, this pot corresponds to transactions that have not yet been entered into YNAB.
When I reconcile my two systems, here’s what I do:
Whether you are using YNAB or an Excel file as budget system, this pot mechanism will help you. It’s really handy!
Also, if you are just starting out in your working life, and you only have one Zak account (and therefore no budget as such), you can very well use the pot mechanism as your main budget system. It’s ultimately quite similar to YNAB where you assign CHF into each expense category, and where you know what you have left in each category at any given time.
Honestly, it was starting to get annoying to have to “ask Dad (aka Zak)” when I had transfers that exceeded the limit of CHF 5'000/day or CHF 10'000/week.
It only happened once every 2-3 months when I wanted to transfer our savings to invest them via Interactive Brokers, for example, or when we had to pay our mortgage interest on top of all our other recurring monthly payments.
“Hello Dad, yes it’s Marc, could you authorize my transfer that exceeds CHF 5'000 please?” — no thanks!
According to Zak, since this neo-bank was aimed especially at young people, they thought that such a 5-10kCHF security barrier was more than enough. Which I can imagine. Except that since a large part of the Swiss Mustachian FIRE (Financial Independence, Retire Early) community has an account with them, I think they were fed up with getting phone calls all the time ;)
Anyway, for several months now, the limit has increased to CHF 25'000 per week. And I never had to call them again. O joy!
It’s a bit weird to write this in 2020, when every mobile app I use in my daily life offers this feature…
But in the end, if you compare to Neon (which still sends notifications via SMS — for free, fortunately!) or even worse to Cembra for my Cumulus MasterCard (which sends SMS, but only if you pay CHF 4/month!!!), well Zak is rather ahead on this point in Switzerland.
Indeed, I find it very convenient to have a live notification of when a transaction takes place on my account for two reasons:
Although it didn’t bother me too much, I think it’s cool that Zak decided to go “all digital” for the account opening verification.
No more need to make a call with an advisor to check which face you have (especially when you’re doing it from the warmth of your bed), everything is automatic now and only takes 7 minutes.
So much for the positive “highlights”. I don’t mention the other basic features like payment, transaction view, or view of my balance. These are basic points; it’s normal that they work.
Let’s now move on to the points that Zak needs to improve.
When I switched from BCV to Zak at the end of 2019, this latter announced eBill support for the end of the year (2019, that is). Then it was postponed to spring 2020. Then, due to technical problems, they decided not to announce any more date on their public roadmap.
Frankly, I hesitated to go to Neon at the beginning because I was so used to the practicality of eBill.
After a few months without it, I got used to scanning my invoices in batch once a month, and it’s fine. There are worse things in life.
But still, I think it’s (really) a shame that Zak put other features (like digital identity verification instead of videoconf) before eBill. So I asked my contacts in the Zak marketing team about it. Here is their answer:
“Unfortunately, I can’t answer this question in detail. We were hoping to have eBill much sooner. We get a lot of questions about it, and it’s not easy to explain why eBill is still not available. The fact is that the functionality seems more complex than expected, which is why its release has been postponed several times. We are still working on it. Hoping to release in early 2021.”
At least we can see that this is an internal concern and not a marketing strategy… For my part, I am still wondering whether I should switch to Neon as my primary bank, but for the moment I am (still) waiting a few more months.
60% of the time, the beneficiary information is not contained in the ISR when you scan it. This means that you have to fill in the beneficiary manually. This is for example the case with our childcare solution. Every month, I have to type in the recipient information manually. So, yes, we’re talking about luxury problems, but still, it’s a pain.
What would I like? That the app would record the recipient’s information. And at worst, if it has changed in the meantime, I’d adapt it. But very often, companies don’t change their address like that.
I hope that with time it will get better.
Afterwards, I know that Zak has implemented the scan function for new QR-invoices. Since I never received any, I don’t know if autocompletion is better through this way (if you know, tell me about it in comments)?
Maybe that’s why Zak doesn’t develop more ISR functionality in the end.
I’m a big fan of double-authentication security, especially when it comes to my CHF ;)
It’s now a habit for me that, when I log in, I have to enter an SMS code to confirm my identity.
Except that in 90% of my apps, I log in, the SMS is received in the background, and I see it displayed just above my keyboard (I’m on iOS), and I just have to type it to fill the field and log in (or do any other secured action).
Except that on Zak, it hasn’t been coded “correctly”, so it doesn’t take advantage of the ease of use offered by my operating system… So I have to open my SMS app, open the “conversation” with Zak’s robot, remember the code (because no copy-paste is possible on Zak app side…!), and go back to the Zak app to enter the code (with letters moreover, which I find harder to remember than numbers).
So yes, again, there are worse things in life. But hey, I’ve warned that I’m going to talk about the things that bother me in my everyday use. So there you go: “Dear Zak product team, please, can you adapt your code a little bit to make my life a little easier every day?”
I was going to finish my list of things to improve with the previous point, but I received this comment from Lola recently on the blog. I thought it was good to take it into account because I myself have never had a problem with the standing order feature (I have 7 standing orders in total, which I haven’t touched after setting them up.)
Here is Lola’s feedback:
“I’ve been using Zak since the beginning of the year after reading your article. I’m having some problems with the use, especially with the standing orders. Impossible to delete from the app, you always have to call them. And modifying is often not allowed either [1]. I had another inconvenience with the standing order for my rent. Most of the time it works, but it happened twice that it doesn’t work (even though it’s a standing order, so it’s the same operation…). And the app doesn’t warn that the payment hasn’t been made! And since I usually connect just once a month, I don’t see that it doesn’t go through and that the payment amount has been reimbursed. So I get a reminder fee… I called them to report the bug, and I asked for compensation for the reminder fee. But they don’t enter into such discussions. According to them the problem comes from the fact that I don’t write “Suisse” at the end of the recipient’s address. And since my app is in Italian, it automatically writes “Svizzera”. But if you look at the other payments I’ve made, a lot of them have gone through like that… And this same standing order is one of them.”
Not a great experience… Dear Zak team, I hope you’ll fix this soon!
[1] I never faced this issue, and the rare times I tried, I could edit my standing orders without issue.
Compared to very good apps like Revolut, Zak (and Neon too I think) have some progress to make. As much on the functionalities as on the fluidity of the app.
Nevertheless, for me who only uses the app a few times a month (except for the practical part of the pots), it does the job it should do without too much hassle. And in terms of choice, it’s in my opinion still the best free mobile banking alternative here in Switzerland.
So I will continue with Zak as primary bank and Neon as secondary bank.
And you, are you happy with your Swiss bank? Which one did you choose?
PS1: the coupon code “Y06JPR” that entitles you to CHF 25 of welcome cash is still valid with Zak (to be entered in the app once your account is validated). The blog will also earn an affiliate commission, and I thank you for that — as usual, I’m careful to be objective and only recommend products I use myself every day.
PS2: I have recently been asked several times for my opinion on CSX, the new digital and mobile solution from Credit Suisse. My point of view is that the “big” banks are finally moving in the right direction, and that is positive for us as customers in the long term. But when you look at the details, you can see that they still take us for stupid people with their free solution that still charges you CHF 2/withdrawal at their own ATMs… So for the moment, I won’t check their solution in details because Zak and Neon are doing better for the frugalists that we are.
]]>That’s what I told myself when I saw a new month below the 50% savings rate… Too many expenses… planned, but also unexpected. As in September, it remains exceptional and non-recurring expenses, so that reassures me.
If you are new to the blog, I recommend reading the article that introduced this series about my net worth.
Also, following questions from some readers, I would like to point out that the green or red figures below correspond to the relative evolution compared to the previous month, and not to the absolute amounts of the current month.
CASH FLOW AND SAVINGS (-CHF 13'325.54): And there is the drama… :D
As usual, let’s take a look at our unusual expenses first:
Concerning unusual cash inflows (i.e. excluding our Swiss salaries):
STOCK MARKET INVESTMENTS (+CHF 14'313.27): And it’s on the rise again.
In terms of the movement of my investment portfolio, it has moved quite a bit. Indeed, the French bank we used for our first investment property did not want to follow us for this new commercial building project of 600'000€. Honestly, it was more of a relief than a disappointment since I much prefer the simplicity of managing the stock market (cf. the comments to myself section in this recent article).
As a result, I didn’t wait a second, and I made a transfer from our Zak account to our Interactive Brokers investment account of CHF 16'000! And we bought about CHF 16'600 of ETF VT, and the rest in Japanese and European Daubasses shares.
Speaking of Daubasses, we also sold an American company line for a nice annualized return of 246%. But don’t get too excited because it’s only one stock in a portfolio of 30, and the goal is that the overall return over 7-10 years should be about 15%. Which is not at all the case at the moment. So we enjoy the appreciation, but we stay calm, we breathe, and we go about our business while our bills are making babies, slowly but surely.
P2P INVESTMENTS (+CHF 0.00): No surprises on the Mintos side. I’ve stopped all investment, and I’m gradually getting my cash out. It’s not that I wouldn’t want to go faster, but the Mintos “Invest & Access” program doesn’t allow me to. Once the account is completely emptied, I will close it definitively and do a post-mortem article to explain in detail my motivations for not continuing in P2P investments.
CRYPTOCURRENCIES SPECULATION (+CHF 181.52): Once it goes up, once it comes down. As unpredictable as we thought. The day I’m at +1 million CHF, I’ll sell. In a century maybe…
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (n/a): Nothing to report because I make my lump sum payment at the beginning of the year (only Mrs MP is lucky enough to be at VIAC… my 3rd pillar being one of the guarantees for our mortgage), and my updated surrender value also comes at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 917.01): As Mrs. MP’s pillar 3a is invested at VIAC 100% in global equities, its value also varies according to the stock exchange (and not only according to the CHF 564 paid monthly). This means that this October, our portfolio has gained CHF 353.01 (= CHF 917.01 - 564.00).
SWISS LLC/GMBH/SÀRL (-CHF 2'200.00): As announced in a previous article, we finally opened our account for our Swiss LLC. We are going to use this company to declare the income from the blog and other projects (coaching, book) and thus optimize our tax situation.
And we were able to observe our first disbursements on our LLC account at the Migros Bank:
I’ve planned a feature article to tell you the whole story. Be patient, it’s coming!
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
REAL ESTATE INVESTMENT IN SWITZERLAND (n/a): As a reminder, the 30kCHF invested here is a participation in a Swiss real estate project (i.e. not in my own name). I am still considering getting 55% of annualized return.
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 717.15): The magic of real estate investment: the loan repays itself “on its own” thanks to the rents.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (-CHF 799.55): The cash flow is negative in October because we had to pay the property tax which amounts to about CHF 1'275.
In terms of financial independence, we are at 24% of our objective of CHF 2'156'000 with our net worth of CHF 523'486.11.
Which visually gives us this:
In the end, we finished with a savings rate of 23% for October 2020. We continue to move towards a very good vintage with a savings rate of more than 50% for 2020. But we have to be careful with the last two months of the year not to be unreasonable in terms of expenses.
As mentioned in this article, I have decided to hold myself accountable to you for our monthly expenses. This is in order to continue to train our frugal muscle.
As a reminder, our goal is to be below CHF 8'500 for our Swiss family of four.
Also, I don’t take into account the business expenses related to blog/book/etc., nor the advances we make for people who will reimburse us later. On the other hand, I do take into account the medical expenses (including orthodontics which cost us an arm) even though we know we will be reimbursed for them. And I also take into account the expenses related to our investments such as the property tax of our investment building for example.
Of course, I’m starting with the worst month in a long time, but I’m assuming the situation! Drum roll… CHF 13'316.96
I avoid the purple card because the expenses were “one-shot” like vacations and medical. But it’s still a good red card :)
And you, how much net worth, savings rate, and spending were you at in October?
PS 1: I celebrate with this article the 200th blogpost on the blog 🎉 — thanks to you for your fidelity
PS 2: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 3: I’ve added a new “bonus” for the blog’s patrons. Since last month, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
]]>As a good Mustachian, it’s worth looking into.
Especially since you only have until November 30, 2020 for your potential new basic health insurance to receive your cancellation letter, and for your new insurance to receive your registration (I might have a trick that can help you solve this in 3 minutes at the end of the article, if ever).
Our basic health insurance currently with Assura will cost us for 2021:
As every November, I perform the following checkup of our health insurance contracts:
We could still save a few CHF by opting for the “HMO” option. By choosing this option, an insured person must, in case of illness, systematically go to a health network center (HMO practice) first. However, I personally prefer to refer to my family doctor first (as he knows all my history). And this latter is not part of the healthcare network.
So we are left with the second cheapest model from Assura: the PharMed. This model requires two things: 1. to always go through our family doctor first, and 2. to take our medication in Assura approved pharmacies (Sun Store, BENU, and Amavita for the most part).
That’s it for Mrs. MP, our children, and myself.
If, on the other hand, you have significant savings potential on your side, then take action, because this is one of the easiest recurring expense items on which to save money (see reader David’s case study). And if you are lazy about sending the various letters (false excuse!), then go to the very bottom of this article — I may have a solution that could help you.
I am often asked the question, so I take the opportunity to slip the answer for all readers who hesitate between the different deductibles (CHF 300, CHF500, CHF 1000, CHF 1500, CHF 2000, or CHF 2500): one just need to do the calculation :D
The Internet being a beautiful invention, we obviously have a plethora of calculators for the optimal Swiss health insurance deductible. My two favorites are Bon à savoir (in French) and Moneyland.ch.
For each of them, all you have to do is enter:
And that’s what you get with our two calculators:
All you have to do is choose the deductible amount that saves you the most.
Our current supplementary LCA/VVG insurance with Groupe Mutuel will cost us for 2021:
Same as for LAMal, I perform the following checkup annually:
I advise you to really read the small lines of the offers received from the insurances because a difference of the simple to the double is very often explicable by a less good coverage.
During the summer, I received a request from the Swiss startup icanfly SA to know if I would be interested to talk about their product on the blog, especially with the upcoming health insurance changes.
As I regularly receive this kind of request, I was ready to politely refuse (read “Mark as spam” :D). But when I saw that the company was Swiss, and that the guy seemed to have really understood that my blog was not aimed at Americans (ergh…), I took the time to answer him by asking him if it was a serious project, how many customers they already had in the past, etc. (see “Mark as spam” :D).
To my (positive) surprise, I discovered that it was a SA/GA company (so that’s reassuring because the 100kCHF of capital for the foundation of the company already had to be put down), that the director was based in Switzerland, and that they have been handling about 1'500 customer inquiries/year since 2017 without any media or other advertising. So the project looked serious.
They are financed by affiliate commission (like an independent insurance broker), but it doesn’t change the premium you pay (i.e. you wouldn’t pay more through the Swiss health insurance website of your choice).
I hesitated to talk about it here because I did not test the service to the end as I am not changing LAMal/KVG this year. But given the simplicity of the trick, I thought I’d tell you about it, mentioning that it’s “at your own risk, and that it doesn’t have the MP family approval stamp this time”.
The concept is simple: you enter your personal data, compare the results, choose your new insurance, fill in some other information, sign, and that’s it. They take care of sending the cancellation and the new affiliation.
The easiest way is to watch their demo video:
Some important information:
So there you go, a service to try if you understand what you’re doing. Anyway I’m interested in your feedback if you test it — please share it via the comments below so that other readers can see your feedback.
And you, do you switch of Swiss LAMal/KVG and LCA/VVG health insurance in 2021? And why?
N.B. we are fortunate to be quite healthy in the MP family. This article is just a sharing of how we choose our Swiss health insurances for our particular case. So please take into account your own situation and make your choices according to your state of health. Because I am not a doctor nor an insurance broker myself :)
]]>In 2013, I discovered this FIRE (Financial Independence, Retire Early) movement via American blogs, while I was looking for ways to save more money to buy our main residence in Switzerland.
When I found myself confronted with the void of information for the Swiss, I decided to launch my blog in 2014 to document my Swiss FIRE journey.
In 6 years, we acquired our home, and our net worth have grown from CHF 50'000 to over half a million CHF to date. We are now focusing on our main goal to stop having to work for money at the age of 40 in Switzerland.
My path has been featured in media such as the NZZ, Le Temps, the Tages Anzeiger, and in RTS’ TV show TTC.
As I often explain, a person pursues financial independence for one of three reasons: the dream of freedom and independence, the fed up of a professional or personal situation, or by fear of running out of money now or in retirement.
Whatever your situation (personally, it’s the dream of deciding about my life every morning that motivates me), financial independence means never having to worry about money again.
Visit another country for 6 months? No problem, as no more need for a salary once FIRE.
Tired of having to answer to incompetent managers? Same here, we have other things to do with our lives!
Difficult month ends, even in the red sometimes? That’s a thing of the past thanks to financial freedom.
For the first time in Switzerland, this methodology for becoming financially free more than 25 years before the legal age has been compiled into a guide from A-Z, listing every step to be taken to make this freedom a reality in anyone’s life. (To learn more about the details of my method and understand how it really works, you can read the complete table of contents on the dedicated page of my book.)
I decided to write this book with three main objectives in mind:
If you are interested in not having to work (ever again!) for money long before your 65th birthday, then I let you consult my dedicated page. There you will find all the info on how to buy my book, and its different bonuses available.
In 2013, I had the same choice as you did between red pill, i.e. taking my life in hand by taking action to fly towards financial freedom, or blue pill, i.e. closing my browser and continuing my routine life from paycheck to paycheck until I retire. I’ve made my choice. It’s up to you to make yours today.
]]>It often raises interesting questions on my side, so I thought it would be cool to share it with as many people as possible. Especially since investing is one of the key levers to be able to live on the returns of one’s investments once financial independence is achieved.
I still don’t know how regularly I’m going to publish this kind of report. We’ll see how much interest it generates.
To date, here is a complete list of all my current investments:
Stock exchange
Real estate
Vehicle | Amount in CHF |
---|---|
VT ETF | 78'863.15 |
VWRL ETF (which I have stopped using since May 2020) | 56'923.40 |
My value investing stocks | 30'971.94 |
My Swiss shares | 22'566.99 |
Mrs. MP’s VIAC 3a | 34'968.45 |
VWRL ETF (no fees) for MP children | 10'726,09 |
France building (notary fees and bank file) | 19'389.46 |
Swiss real estate loan | 30'000.00 |
Total | 284'409.48 |
As a reminder, I started my journey as a Swiss investor in ETFs via Interactive Brokers in October 2016 (I used to invest via Swissquote beforehand, but I no longer have a report from this period).
Then, in June 2019, I started investing in value by following to the letter (for the moment) the purchases and sales of the Daubasses.
I buy shares of my Swiss company (not listed on the stock exchange) almost every year, and this since 2014.
I don’t have as good a report as Interactive Brokers for these shares.
Nevertheless, by entering my values in this Moneyland.ch yield calculator, I arrive at an annualized yield of 10.57%. Not so bad!
As mentioned above, Mrs. MP’s 3a pillar is invested in shares as much as possible.
We moved to VIAC in June 2018.
N.B. VIAC only offers the “time-weighted return” calculation, and not my preferred “money-weighted return” calculation.
As a reminder for newcomers, CHF 50/child/month is paid into a DEGIRO investment account since their 2 years old. This money will serve them for an important life project (we still have to align ourselves with Mrs MP :)). But clearly, it won’t be to take a VW Golf in leasing, or to go partying in Ibiza during the summer vacations :D
We transferred our children’s investment account from Cornèrtrader to DEGIRO at the end of 2019, after Cornèrtrader added overnight inactivity fees.
During our investment period via Cornèrtrader from December 2016 to November 2019, the time weighted annualized return was 6.62%.
As DEGIRO does not currently offer a view with the annualized return, but only the performance in nominal value (i.e. how much I earned in CHF compared to the money I put in), I calculated the return myself via this Moneyland calculator. This gives us this result:
By combining the periods of the two platforms, we arrive at an annualized return of 3.91%.
Concerning our rental building in France, rents are falling and repaying the property loan at the expected rate (including the planned rental vacancy).
We are still counting on an internal rate of return of 14-15% according to the forecasts of the Horiz.io (formerly rendementlocatif.com) tool:
I don’t think I’ve ever given you so many details about this project.
To sum up, a real estate entrepreneur proposed me to invest in the construction of a small Swiss real estate project by lending him cash. CHF 30'000 to be precise. High risk, little diversification, and therefore correspondingly high return. 55% to be transparent.
It sounds crazy written like that, but I’m not crazy and don’t drop 30kCHF like that. We went past the notary’s office for an IOU. And also, the 55% is how I calculate my return. For the entrepreneur, it’s different. First of all, thanks to my cash, he was able to carry out the project — otherwise it wasn’t possible. And secondly, my “55% return” corresponds to “only” 10% of the total capital gain he will make. Pure win-win as I like it :)
Vehicle | Inception date | Annualized return |
---|---|---|
VT ETF | 2016 | 5.18 |
VWRL ETF (which I have stopped using since May 2020) | 2016 | 3.29 |
My value investing stocks | 2019 | -8.73 |
My Swiss shares | 2014 | 10.57 |
Mrs. MP’s VIAC 3a | 2018 | 6.37 |
VWRL ETF (no fees) for MP children | 2016 | 3.91 |
France building (notary fees and bank file) | 2019 | 14.96 |
Swiss real estate loan | 2020 | 55 |
I share below the comments I made to myself while writing this article. If you have others, share them with me via the comments section at the bottom of the article.
I’m late with the evaluation (usually annual) of my allocation between the different vehicles. In recent months, I have been operating more on performance opportunity than on a strict methodology. This needs to be corrected. Although at first glance I’m pretty much in stocks, which suits me well.
Seeing the performance of my VT and VWRL ETFs, as well as my VIAC strategy, this only confirms my recommendations that this is the way to go for any “average investor”.
In any case, I continue to transfer all our savings to it happily, and regularly!
The more real estate opportunities I have (in France), the more I tell myself that it’s quite a lot of work to manage (purchase, notary, tenants, repairs, etc.), and that I much prefer to invest in the stock market where everything is just a click away. On the other hand, buying a rental property in Switzerland, close to home, might please me. At least once, for the experience.
I saw that Frankly and Finpension were coming to titillate VIAC’s business model. Seeing how things are moving these weeks, I let all the announcements happen before updating my comparison (in early 2021 I think). What’s more, the marketing figures of the newcomers have to be dug up to make sure we’re talking about the same thing. And also in terms of the security of each new tool, in particular finpension, which does not offer formal identity verification when opening a 3a account with them.
Part of my brain is telling me: “You should sell all the Swiss shares of your company, and transfer that cash into a Swiss index ETF. It’s far too risky to acquire shares in the company that employs you. Because you have your salary and cash depending on them… “
Then, the other part of my brain replies: “Yeah, but you’ve seen the great performances all along. It’s just getting better and better. Yes it’s anything but diversified, I’ll give you that, but it’s only 20kCHF. Come on, I promise, let’s make a deal; I’m not buying it again for tens of thousands of CHF, and you let me keep them, please…!”
It’s hard to be me, I swear :D
I don’t jump to any conclusions about this portfolio because we haven’t even had it for a year. Nothing to add :)
Since I invest for the long term, I don’t really care about the month-to-month volatility of my investments. I really don’t. So each of my reports of this type will always be “since the inception date of the said portfolio “, and never “since last month”.
I understand the difference between MWR and TWR (see end of article). On the other hand, I cannot explain how I arrive at an overall average TWR of 11.79% when my shares are at -8.73% and my ETFs at 4.87%. Either I really didn’t understand something (quite possible!), or there is a bug at IB (I wrote them an email to understand the why of the how).
A member of the Sharesight team contacted me a few months ago to introduce me to their product. I told him that with IB and their PortfolioAnalyst, I had everything I needed to get a good overview.
And then, while writing this article, I had to admit that his tool would have actually helped me a lot… except that their price of 24USD/month is really expensive for just an annual checkpoint…
I could also get into Excel but that’s a lot of platforms to reconcile, not to mention the potential miscalculations.
Anyway, for now, I’m sticking with the status quo.
How have your investment portfolios performed since their inceptions?
In case you haven’t started investing yet, the first best time for that was yesterday. And the second best time is today! I recommend these two links to get you started:
[1] When available in the reports provided by my different platforms, I prefer “Money Weighted Return” (MWR) rather than “Time Weighted Return” (TWR).
As well explained on the website Starlight Capital:
Last February, I presented the Daubasses (paid) newsletter offering ideas for “value investing”.
I have been personally following their strategy since June 2019, and I have learned a lot from them. In addition to investment leads, I have gained financial knowledge that is easy to understand because it is presented in a jargon-free and very transparent way.
To date, my “value investing” portfolio amounts to about CHF 30'000 invested in about 30 different companies.
I almost have a preference for value investing rather than ETFs, because I have a much greater sense of control with it. Indeed, I understand the company and its accounts. I understand that I buy it when no investor wants it on the stock market. And I understand that I sometimes sell it more than twice as much when investors wake up and see what the Daubasses team had seen — in the accounts, not in the coffee grounds! — months or years beforehand.
Nevertheless, I remain cautious. For the moment, I am waiting to see how this part of my portfolio will perform over the long term (another 5-7 years) before investing more into it.
In the meantime, I continue to educate myself. And in view of the many questions I received about the Daubasses team, I thought I would invite them for a small informal interview on the blog, just between us.
MP: Hey there! First of all, can you introduce yourselves because in the end we don’t see you often. How many of you are in this “Team Daubasses”? Where do you come from?
Daubasses: Hi Marc. Thank you for welcoming us on your Swiss blog!
Who are the daubasses? This is a question we are often asked. It’s normal because we don’t put ourselves forward individually. What counts for us is to work with passion and to offer a quality service to our subscribers. It doesn’t matter who’s behind the keyboard. Originally, the blog was created in 2008 in Belgium by 3 Belgian friends and investors. Then a Frenchman joined the team. A few Belgians left and another Frenchman arrived. The team has moved, but the spirit and values have remained the same: transparency, independence and pedagogy. All this in a jovial atmosphere.
In short, the team is heterogeneous with different profiles. But this is not what we want to emphasize. Les daubasses is above all a team and a community, faithful and growing. Service before individuality. We don’t work to put our egos first.
MP: Additional question; are you like me, amateurs in the field of personal finance? Or do you have diplomas and everything?
D: Indeed, we are graduated (finance, accounting, etc.) at Master level. But this is not very important. Everybody knows people who are “educated” but incompetent in their fields. What counts is passion! Knowledgeable, passionate and serious amateurs have as much merit as professionals with a good reputation.
Beyond the diplomas, we have really learned on the job over the years, from our mistakes, our personal paths, our reading, our exchanges and our network. It is all this that we have been sharing with the maximum of pedagogy since 2008 with our subscribers. By the way, we invite your readers to read our 1'000 or so articles of an educational nature on our blog to learn more about the investment oriented towards the patrimonial discount.
MP note: don’t take the excuse that their blog is French only to skip their great resources. Deepl is your best ally for overcoming this small blocker.
With our Daubasses #2 portfolio, we are targeting an annualized performance of 15% over a period of 10-15 years.Les Daubasses
MP: I can already hear some readers asking themselves: “Oh, but you’re not Swiss!?! But then, does your advice apply to the Swiss? Or what?
D: We don’t give any advice, it is important to emphasize this.
As we like to repeat: “we say what we do, why we do it, but not what you should do”. In fact, what we provide to our subscribers is a great toolbox that saves time for both the novice and the stock enthusiast and allows them to read new analyses that they won’t find anywhere else.
Of course our work may be of interest to Swiss people. It seems that you have a rather advantageous taxation on capital gains on shares ;-)
Our hunting field is worldwide: Europe, North America, Asia, etc. All developed countries that ensure a minimum respect of property rights are potential hunting grounds for undervalued shares.
MP: Thank you for the warning (!), and the detailed and reassuring explanation :)
And by the way, it’s good that you’re talking about taxation! In Switzerland, we are indeed not taxed on capital gains. On the other hand, one can start to get taxed (by being qualified as a professional investor) if, for example, one starts buying and selling an asset within less than 6 months. Can you confirm me the average ownership of a Daubasses line usually (i.e. compared to during the last months of the COVID crisis where I already bought/sold 3x)?
D: Wow, 0% is excellent! One more reason to invest in stocks when you’re Swiss.
On average, we hold our shares for a little over 2 years. Well, it happens that we sell a line following a big increase only a few months after our purchase. In the case of a repurchase by a competitor or an investment fund. But is it really bad news to make a big gain in less than 6 months? :-)
In the case of a takeover bid on a company, it is always possible for example for the shareholder to keep his line a little longer and not to rush on the “Sell” button as soon as the bid is announced. To wait to realize your capital gain. Between the time of the announcement of the offer and then the actual sale to acquire it, long months can elapse.
MP: When I see the time I spend looking for my articles, I was wondering how you manage your process given the immensity of the job? What’s a week at the Daubasses team? How do you scan all the stock markets so you don’t miss any opportunities? What tools do you use to apply your in-depth analysis and sort through the markets?
D: We are craftsmen. Everything is handmade here ;-)
We systematically look at what is happening on all the stock markets of the capitalist countries with the help of a few computer tools to rough out, but afterwards there is no secret: we open the balance sheets of companies over several years to see what they have in their stomachs.
Investment leads can also come from the Daubasses forum, where subscribers suggest ideas that are well worth the detour. We can also look at the recurrent and massive share buybacks, the sharp declines in certain sectors because “old-fashioned”, etc.
Our main source of ideas comes from our network. It is made up of several thousand subscribers and former subscribers. After more than 12 years of service, we have contacts of informed amateurs but also investment professionals all over the world. Not all the ideas proposed are good to take, but sometimes we miss the obvious and it is a contact that will remind us of a stock.
We generally retain barely 5% of the ideas that are proposed to us. But this is more than enough for us. This network is an opportunity, and it is also what makes the difference!
With the Daubasses, you are never alone. We like to talk about “family”: passionate individual investors who support each other to improve their process, find new ideas and sometimes even avoid big mistakes.
MP: As a reminder for new readers, you had a “Daubasses #1” portfolio from 2008 to 2018. What was the annualized performance in % of this first “Made in Daubasses” portfolio?
D: 978.6% (x10.8) from November 26, 2008 to September 28, 2018, a life of 9 years and 308 days. We can therefore say in less than 10 years ;-) This gives an annualized return > 27%. More details here.
This is a real portfolio. All account statements are freely available on the site (for subscribers only). For us, transparency is an essential value.
MP: Let’s get to the uncomfortable questions.
Seeing the performance history of this “Daubasses #1” portfolio, some readers mention that if we remove the extraordinary performance of 2009, we come back to an average not as attractive as at first glance (if you can give us the annualized performance without 2009, that’s top). What do you think about that?
D: Why delete the 2009 performance?
Having just one excellent year between +200% and +300% per decade and then performing like the market over the other 9 years suits us very well.
The main thing is to be comfortable with your investment style. Beyond performance (which we hope will be as high as possible, of course), what matters is to be comfortable with your investments. To go to bed at night without stress, and to have a long-term vision. By buying tangible assets (cash, accounts receivable, inventory and real estate) at a high discount, we are comfortable and sleep soundly.
MP: In 2018, you decided to move to a new portfolio #2. Why did you decide to move to a new portfolio? Why didn’t you sell some positions to take new ones? Was it to “rig” the performance numbers a bit, because you felt that a crisis was coming, and that it could only help the marketing of your newsletter? (I said it was getting embarassing :D)
D: After 10 years of good and loyal service, we wanted to return the profits to all the owners of this portfolio which included our money, but also those of our relatives (family and friends). We started from 15'152.00 EUR on November 12, 2008 to reach more than 300'000 EUR at the end of 2018 (there were some contributions over the period). There are also many technical reasons mentioned in this article.
If our motivation is marketing, it’s stupid not to continue to present the Portfolio daubasses 2 included in the performance of the Portfolio daubasses 1! This would allow us to still show a very nice outperformance.
We suck at marketing: look at our blog, it’s old school (not to say “old-fashioned”…) and the title “Les Daubasses”. Sexy isn’t it? Do you think they talk about us in the big Swiss investment banks? :-)
MP: I continue with the devil’s advocate. The annualized performance of your Daubasses #2 portfolio between 2018 and 2020 is -2.19%, while an index such as “Lyxor MSCI World EUR - CAP” gives us 14.31%! Is it me or do I actually have better time to stay quietly invested in ETFs, and save the amount of your newsletter in the end?!
D: Perfectly! We think that buying ETFs is a great idea for investors who are not passionate, who don’t have the time, etc. It’s certainly the best “yield/energy” ratio. What annoys us more is that the ETF investor does not really master the underlyings. It is more a way to buy a trend on a market (geographical or sectoral).
-2.19% is not the annualized performance, but the total performance of Portfolio daubasses 2, the “model” portfolio. Well, OK, it doesn’t wear its name very well in view of the current performance (laughs). But it’s one tool among others. Subscribers often do better than us because they select in our work only what they are interested in. Few actually (rightly or wrongly) blindly replicate all our buying and selling operations. And fortunately! As they often say: experience it for yourself. Take some ideas from us if you like them or not according to your appetence, your profile, your investment strategy, etc.
As for the pure performance, we’ll talk about it again in 10 years? We are serene with the current assets in our portfolio. At the last checkpoint, we have a weighted average potential on all our lines of +200% and an average price-to-book ratio of 0.44x vs. 3.63x for the S&P 500 and 1.45x for the Stoxx Europe Small-Cap 200.
Finally, the Daubasses, it’s also the PEA Nuggets. And here we have outperformed every year since the creation of this portfolio dedicated to European stocks:
MP: Other readers of the MP blog were talking about betting on value investing ETFs that allow you to diversify even more, with less monitoring (i.e. following your newsletter to the letter) to do. What do you think about it? And by the way, are there any value investing ETFs that are worth it, with frugal fees (like <0.4%)?
D: Why not. It’s supermarket versus grocery store. There are those who want to spend as little time as possible on their investments and those who want to know and control what they put in their stock portfolio.
We have no ETFs to recommend because we are not interested in this market.
MP: Let’s say that a reader decides to subscribe to your newsletter because he finds (like me) that your process is simple, humble, careful, diversified, and focused on the long term. Do you advise him to follow your portfolio movements to the letter, while checking the reports you provide himself by self-educating through your articles and forum? Or would you suggest an alternative path?
D: Back to our previous answer: we don’t give any advice! Sorry to repeat it but it is important for us. An investor subscribes to us to look for a plus, to bring a missing piece to his investor’s briefcase. We don’t provide the whole in one. We accompany subscribers, we answer their questions, we publish thought-provoking articles related to investment and financial analysis, but we don’t take them by the hand. They are autonomous in their investment decision.
The subscriber picks up from us what seems to make sense for him in his overall investment strategy. Among the dozens of companies analyzed every year, some will be more appreciated than others (sector, geographical area, quality of management, strong accounts, etc.). It is then up to the subscriber to dig into the figures or not, according to what emerges from the analysis and then possibly invest a few euros (or a few Swiss francs). There is no rule, each subscriber takes what he wants from us.
With the Newsletter, our educational articles, the investment leads proposed in addition to the companies in the portfolios and, since last year, the private forum with currently more than 1'400 members, there is plenty to do!
MP: Since we’re talking about your forum. Happy birthday to it by the way! What are the lessons learned after 1 year of existence? A few stats to share such as the number of users, the number of nuggets proposed by the community, the number of messages posted?
D: Thank you! The first candle has just been blown out.
Since its launch on November 11, 2019, there are 1'424 registered members, 4'224 messages and 351 topics created.
Out of these 347 topics, 21 have been made public (everyone can consult them). Do not hesitate to have a look at them to make your own opinion: public part of the Daubasses forum.
For us, this forum is a culmination. Of course, it’s not the most technical thing at the moment. But it allows exchanges with subscribers and also directly between subscribers. In this age of social media where instantaneity is of the utmost importance, the structure of the forum is the guarantee of messages written in a qualitative and non-invasive way (we take care of it). In the long term, it is thus easy to find a subject, a company or specific information. It is collective intelligence: the knowledge of some benefits everyone. It is almost limitless!
The other advantage of the forum is that we quickly add to it all the information published concerning the companies in our portfolios (Daubasses and PEA nuggets). Thus the subscriber has access to all the information, commented by us, rather quickly instead of waiting for the monthly Newsletter as was the case before. We try to give our subscribers as many means as possible, as part of our approach, so that they can make their own investment decisions with the maximum of turnkey solutions.
There are also investment ideas related to insider purchases and commodity stocks with special situations (for example with abundant, not to say “excessive”, cash flow). This is still a vast subject, we’ll talk about it another time.
MP: Without any commitment, I say that I aim for 5-8% with my ETF portfolio. Without any guarantee whatsoever 1, what annualized performance do you aim for with your Daubasses #2 portfolio over a period of 10-15 years? 8-10%? 10-15%? 15-20%? More?
D: 15% per year. It’s not going well at the moment. This means that the Daubasses #2 portfolio will have to wake up seriously! :-)
Investing in the stock market is a marathon, not a sprint.
MP: By the way, if I follow you to the letter because I don’t have the time to do all the research you’re doing, how can I be sure that you’re not going to close store in 3-5 years, and that I might lose a lot of money?
D: There is indeed no guarantee on the paper. The only one we have is to be several people and passionate. This is the best guarantee. We have a job that is also our hobby. Why stop it?
And well… Losing “a lot”, that’s the amount of the subscription? 119€ TTC/year?
MP: Same if you propose a new portfolio #3, and drop the #2. How do I know when to sell what?
D: It seems unlikely that we would want to sell Portfolio daubasses 2. It is young, the amount invested is modest and it has great potential. But anyway, let’s play the game.
If we decide to sell all our lines, it is certainly because we feel that the potential is too low and that it is then preferable to become 100% cash again (really unlikely given the bargains we are finding at the moment…). Let us imagine that it is the case nevertheless… OK.
It would then be possible to continue to exchange with us and the other subscribers about these stocks we gave up, with in the topic dedicated to each stock on the forum.
MP: If a new reader on the blog wants to see what you concretely publish in your paid newsletter, is there a way to see somewhere one of your full reports for an acquisition or sale?
D: To get an idea, there is the public part of the forum (which includes the old monthly Letters from 2011 to 2013, the following years will follow soon). Ideally, you should read one of our recent analyses.
For example, here is our latest sale. It concerns the shares of the company McCarthy & Stone, a British developer of housing for “senior citizens” bought 40% below the value of its tangible equity last June. The outcome was favorable and fairly quick. The story can be found on the blog.
MP: Thank you again for your open-mindedness in your constructive answers. If some readers want to subscribe to your newsletter, is there a way to get an offer like in the beginning of 2020…!?
D: Thank you for these questions Marc. Good luck to you and your readers with value investing.
What we have agreed with the team is to offer your blog readers the following offer — reserved for new Daubasses members only: for any 1 year subscription purchased before Monday 30th November at 11:59pm, we offer 6 months (value of 59.50€) for free. That’s 18 months of subscription at the price of 12 months.
With this exceptional offer, we hope to meet soon many Swiss readers on the forum!
MP: Wow, thanks for this special offer on behalf of the Team MP, really!
D: Our pleasure :) See you soon. Les Daubasses.
To take advantage of the special offer of 6 months of free subscription to the paid newsletter of the Daubasses, here are the conditions:
If you have any questions for the Daubasses team, please know that I am planning a new interview with them in 2021. So if you have any specific question for them, you can write it down as a comment below (or via email) with the prefix “Question for the Daubasses:”. I’ll make sure you get an answer next year ;)
Please note that investing involves risk. Everyone (the Daubasses and myself) here speaks from their own experience, and nothing can be considered as financial advice. This article is to be considered for entertainment purposes only. Your investment decisions are your own responsibility. ↩︎
“Ah, but if you had asked me, I would have told you that Amex is accepted almost everywhere in Switzerland nowadays!” replied Mrs. MP.
I had just explained her that I had received a lot of feedback from readers on my last article on the best Swiss credit card for 2020 who couldn’t understand why I hadn’t included the Cashback American Express card from Swisscard in my selection.
Indeed, the latter allows you to get 1% cashback in Switzerland for each of your transactions (in cash moreover) — compared to my Cumulus Mastercard and its 0.33% cashback (which are paid in credits to be used in Migros stores).
For added frugality, when you go to Migros, you can pay with your Cashback American Express card AND show your Cumulus card to earn your Cumulus points (same at Coop by the way).
That’ll teach me not to talk about my personal finance geek stuff with Mrs. MP!
So, since I never say no to 150-300CHF more per year, I started an Amex experiment in Switzerland in order to make my own opinion on how this credit card was accepted (“only the stupid one doesn’t change his mind”, as they say!)
I took the opportunity to make screenshots of the order process, my first use of the Swisscard Cashback mobile app, as well as their web application.
Also, if you decide to order an Amex Cashback, here is a code that will allow us to earn CHF 40 each: “FC40XDREG”. Win-win the way I like it ;) (thank you in advance).
Before moving on to the tutorial, I put here a quick reminder of my criteria for choosing my credit cards in Switzerland:
First of all, click on this link to start ordering your Swisscard Cashback credit card.
As with many Swiss credit card companies, you can choose the pair of cards you want: Amex and Mastercard, or Amex and VISA.
Remember to check the “Online access cardservice” box so that you can download your invoices in PDF format via their website if necessary.
We have all our personal finances in common with Mrs. MP. So if we want to be able to use our credit card whenever we want while benefiting from the cashback every time, we each needed our Amex — free option too :)
If you also order a Swiss Cashback credit card from Swisscard, you can use the blog welcome code “FC40XDREG”, and we will receive CHF 40 each (thank you in advance):
UPDATE 20.08.2021: For several months now, Swisscard Cashback has been offering electronic signature and online identity verification. The whole process takes a maximum of 10 minutes, and then the application is transmitted. They indicate a time between 7 and 9 working days to receive the cards.
My onboarding was going great until I got to this stage. Proud to have filled out all the forms, you get to this point and then… you have to print… and send the form by mail…. WTF!
Seriously, in 2020, dear Cashback team, you could do much better with a digital signature and a 100% online process. Anyway.
Within two weeks, we received our four Cashback credit cards (1x Amex and 1x VISA for each of us).
New hike recommended by the MP family: the Hongrin lake in the Pre-Alps of the canton of Vaud
Here is the onboarding process screen by screen the first time you use the Cashback mobile application:
In addition to the mobile app, Swisscard also offers a web application for its Cashback credit cards. The functionalities are the same as the app (consultation of transactions and invoices).
The only difference, and not the least, is in the design. Beware, it stings the eyes:
It was the fear of the American Express rejection in Swiss stores that made me ignore this Cashback card in my 2020 Swiss credit card strategy.
So I have been conducting an experiment since last July where I list all the stores that refuse the Amex. And I will continue to keep this list up to date (if you see any online stores/shops that are not below, don’t hesitate to leave me a comment with this info).
List of Swiss stores and online shops that do not accept American Express (aka Amex):
For your information, Migros and Coop accept the Amex wherever we’ve been.
After realizing that Amex is accepted in many places in Switzerland in 2020, I decided to add the Cashback Amex credit card to my strategy.
Indeed, thanks to the 1% American Express cashback, I think we will be able to earn about 150-300CHF more each year without doing anything. I don’t refuse such money :)
Our new 2020 Swiss credit card strategy can be summed up like this:
And you, have you been using this strategy for a long time (because you listened to your spouse, not like me…) or do you have another one?
As mentioned at the beginning of the article, you can receive a welcome bonus of CHF 40 when you order your Swisscard Cashback Amex credit card. All you have to do is enter the code “FC40XDREG” during the registration process.
]]>Exactly like 2018, I’m a little nervous about doing such an article because it’s pretty much undermining my own beliefs about how frugal I think I am.
In any case, I am counting on you to challenge me where you have ideas for optimizations. Because in the end, it is also one of the goals of the blog for me to continuously improve.
Moreover, as long as your budget is not in auto-pilot mode with a savings rate in the 60-70% range, I recommend that you do the same!
If you’re new here, and you’re wondering how it’s possible to keep track of all your annual expenses in such detail, don’t look any further! The answer is called YNAB.
Enough blah blah, it’s “Pants down” time:
Category | 2019 amount (CHF) | 2018 amount (CHF) | Comments |
---|---|---|---|
Groceries | 13'971.15 | 13'184.76 | It’s quite a constant level at about CHF 800. But it would have been better if we had spent less… This category includes food, but also all the cleaning and beauty products. |
— | — | — | — |
Irregular expenses | 35'044.08 | 19'680.09 | Details below |
- Leisure/tourism gas | 1'757.40 | 1'535.48 | One week of unplanned vacation, and another one planned (but on top), and here are our expenses that take off… |
- Leisure/tourism tolls | 1'284.72 | 760.51 | I almost fainted when I read this figure, but in fact it’s normal because one of us had to take a training course that resulted in parking fees. This category contains motorway tolls and parking fees |
- Tourism | 1'425.4 | 1'024.71 | We had fun in tourism with different members of our family throughout the year. And it was worth every penny spent! |
- Restaurants and outings | 2'637.65 | 2'386.15 | Same as last year: we focus on good gastronomic restaurants, but not every week ;) This category also includes restaurants to thank people who have helped us in different areas |
- Presents | 1'017.16 | 1'439.12 | Either we ate less at a friend’s house (this category includes the flowers and other desserts we brought), or the tooth fairy had to come less, or a combo of the two :D |
- Furnishings | 1'211.41 | 2'446.01 | A few cookware renewals (necessary), decoration for different rooms (not necessary), and new dishes (not necessary:D). But we’re starting to feel at home here. The next expenses should only be things like washing machine or similar |
- Medical | 8'511.18 | 4'583.92 | And there is the explosion! The year 2019 was a very special year with the beginning of orthodontics for one of the MP children (a large part of which was reimbursed, but we still count it in the expenses because we had to get the cash out), as well as a health problem for one of us (everything is fine, nothing serious, don’t worry!) |
- Car expenses and repairs | 3'435.16 | 242.52 | 4x winter tires (great deal on Anibis, 20% used, for a price divided by 8!), but most of all, replacement of our hybrid battery on our Prius. But it’s all good, we set off again for at least 500'000kms ^^) |
- BCV fees | 17.01 | 13.50 | It’s over, we’ve closed everything at the BCV!!!! Now this category will disappear for 2020 thanks to our new free Swiss bank Zak |
- Investments fees | 1'876.70 | N/A | Stock exchange transactions, VIAC fees, foundation fees of our SCI in France, purchase newsletter daubasses.com |
- Clothes and shoes Mrs. MP | 573.69 | 562.84 | In addition to the “normal” purchases for Mrs. MP, part of the fee was for the renewal of ski equipment |
- Beauty and care Mrs. MP | 446.03 | 213.04 | Increase but there is a change with respect to investments in more sustainable beauty products that should be reflected in the long term (there are also other beauty products in the “Groceries” section that we have not categorized here because too much detail kills the detail :D) |
- Clothes and shoes Mr. MP | 161.75 | 63.52 | A new beanie that should last me if I don’t lose it like the old one, and new summer shoes that should also last 2-4 years |
- Freedom budget Mrs. MP | 1'204.10 | 1'356.43 | The idea for this category came to us from the founder of YNAB so that we would not have to justify certain small expenses to each other. For us it was CHF 100/month for Mrs. MP in 2019. We are almost on target. On the other hand, there has been a change in 2020 about this. An article is coming ;) |
- Lunch at work Mrs. MP | 771.55 | 295.20 | Rather bad score compared to 2018 which was quite frugal thanks to our savings method described here, but which is explained by particular professional needs that we will deduct from taxes ;) |
- Lunch at work Mr. MP | 663.54 | 671.20 | I thought I had invested even more than in 2018 in personal networking lunches (not paid for by my company), but apparently not :) |
- Books, electronics, software | 120.18 | 227.37 | Books are an investment, just like software (mainly blog related) |
- Professional education | 4'050.00 | 0.00 | Unplanned but mandatory training, which can be seen as an investment because, spoiler alert, it has already allowed us to increase one of our two salaries! |
- Miscellaneous | 2'292.96 | 1'858.57 | Movie rentals, Rendementlocatif.com subscription (which I could have put in the “Investment costs” category in fact), commissioning Sunrise internet abo, Netflix that you take and then cancel when you want to see a series, train tickets, criminal record extract, and other administrative documents |
— | — | — | — |
Planned expenses (except apartment) | 46'325.57 | 45'161.88 | Details below |
- Mobile and home internet abos | 1'346.40 | 1'398.20 | See our setup in this article |
- Gas and parking for work Mrs. MP | 1'828.98 | 812.94 | Living in the countryside has a cost :) Mrs. MP is transitioning to public transport, hence the higher costs (including a half-fare card) |
- Online computer backup service Mrs. MP | 36.00 | 36.00 | |
- Beauty and care Mrs. MP | 854.80 | 839.70 | This is in addition to the identical category above because this one is for what is expected, and the other one is for the unexpected |
- Electronics Mrs. MP | 0.00 | 1'648.00 | Beware, the devil hides in the details. Mrs. MP changed her phone ahead of time compared to our phone renewal strategy described here, but the costs are included in our phone bill. I’ll explain all the why and how in a future article (I know I’m running late…) |
- Public transport for work Mr. MP | 1'062.80 | 2'805.00 | The cost of living in the countryside, far from the job. No regrets so far! The big difference can be explained because the abo I had was not so profitable as taking my ticket every time. Math never lies ;) |
- Online computer backup service Mr. MP | 36.00 | 36.00 | |
- Server and domain names | 391.71 | 419.03 | Servers and domain names for blog, forum, and other custom projects. I’m going to remove that next year because I’m going to treat the whole MP project as a separate business |
- Electronics Mr. MP | 0.00 | 2'628.90 | Ditto Mrs. MP above, the devil is in the details because I also changed my phone |
- Clothes and shoes kids | 700.04 | 832.06 | Ah, the subject of the Swiss budget for children :) |
- School supplies and outings | 415.01 | 104.10 | Ski camps, as well as the famous class photos #memories |
- Extra-curricular activities and supplies | 2'257.13 | 2'028.22 | The respective activities of the toddlers, with the necessary supplies for each one |
- Kids’ hairdresser | 35.00 | 18.12 | |
- Health insurance HIA | 8'745.60 | 7'862.40 | Our basic insurance for the four of us at Assura, as recommended in this article |
- Supplementary health insurance LCA | 622.80 | 622.80 | Complementary for alternative medicine, and dental insurance for children (fortunately we took it for orthodontics as recommended by all the parents in our entourage) |
- Childcare | 6'353.35 | 4'506.90 | It went up because we needed more childcare during some vacations, and also because the meals are no longer via the canteen but included in this category |
- Children’s canteen | 0.00 | 441.16 | |
- Teleboy Plus + movie rental | 189.00 | 110.90 | Compromise with Mrs. MP not to buy a box nor a TV subscription usually more expensive (and we switched to the annual vs. monthly abo of Teleboy, to pay “only” CHF 7.50 instead of CHF 9.00 per month) |
- Auto insurance | 323.30 | 474.50 | We (again) changed our car insurance to save CHF 2'253 over ten years. All the details in this article |
- Vehicle technical inspection | 130.00 | 0.00 | We had to go twice to the inspection because we had a small problem during the first visit |
- Swiss motorway vignette | 20.00 | 40.00 | So much cheaper than tolls in Italy or France… and at half price this year thanks to my job :) |
- Car tax | 103.10 | 103.10 | The advantage of driving a car like ours |
- Private liability insurance | 193.70 | 193.70 | |
- ECA | 40.60 | 34.50 | |
- Billag | 365.00 | 451.10 | |
- Taxes | 20'275.25 | 18'333.55 | Includes a payment to regulate the year 2018, and it’s not going to go down given our salary increases and revenues from personal projects |
— | — | — | — |
Planned expenses — Apartment | 17'172.55 | 17'182.29 | Details below |
- Mortgage interests | 9'328.80 | 9'328.80 | |
- Maintenance and repairs | 393.60 | 327.96 | |
- Concierge | 416.60 | 1'148.04 | |
- Electricity | 749.15 | 871.25 | |
- Water | 152.15 | 327.96 | |
- Building insurances | 528.35 | 573.96 | |
- Maintenance abos | 543.20 | 410.04 | |
- Banking fees | 35.00 | 41.04 | If only we could go to Zak :) |
- Renovation fund | 454.00 | 492.00 | |
- PPE management fees | 694.35 | 754.44 | |
- Heating and hot water | 1'781.4 | 1'557.96 | |
- Purification and water taxes | 648.50 | 784.04 | |
- Garbage tax | 100.00 | 100.00 | |
- Property taxes | 464.80 | 464.80 | |
- Other one-time costs | 882.65 | 0.00 | Cooking plates, hail deductible: the joys of being a homeowner ;) |
— | — | — | — |
Planned expenses — Birthdays | 2'156.75 | 1'791.82 | Family and friends birthdays, and also children’s friends birthdays |
— | — | — | — |
Planned expenses — Christmas | 989.65 | 1'634.80 | Christmas gifts from family and friends |
— | — | — | — |
Holidays | 6'050.97 | 2'570.76 | As explained in this article, this item varies a lot each year because it serves as an adjustment variable to keep our savings rate within the 40-50% minimum. Last year was full of unexpected events, as well as winter sports, and the purchase of plane tickets for a trip in 2020 (cancelled because of COVID…)! |
— | — | — | |
TOTAL CHF | 121'710.72 | 101'758.90 | The 2019 objective was to be below CHF 100'000 in annual expenses. Well, we missed it :D Even scraping out the exceptional events (i.e. CHF 8'927.55 for professional training, health problems, and orthodontist), we ended up with CHF 112'783.17. And by removing 2/3 of our big vacations (i.e. CHF 4'033.98 less) if we had planned for cheaper ones, we still end up with CHF 108'749.19. |
The slap in the face…
The lesson I take away from this is that I want to define CHF 8'500 (i.e. 100kCHF over a year) as our maximum allowed expenses per month.
Since I have started publishing our savings rate each month again, it will be pretty easy to keep track of it.
And rather than playing the game of what we could not have spent here and there, I’m more interested in getting your feedback on the categories where I inspire you; and conversely, where you have ideas for drastic improvements compared to the current situation.
I’m looking forward to reading you in the comments below!
And else, how went your spendings in 2019?
PS: Until the end of 2019, I sorted my expenses according to the following YNAB categories:
The thing that bothered me about this categorization was that it didn’t give me the opportunity to compare myself with Swiss statistics and other bloggers who have more readable categories (including knowing how much children cost in Switzerland!)
So from the beginning of 2020, here are the budget categories I use:
If you are new to the blog, I recommend reading the article that introduced this series about my net worth.
Also, following questions from some readers, I would like to point out that the green or red figures below correspond to the relative evolution compared to the previous month, and not to the absolute amounts of the current month.
CASH FLOW AND SAVINGS (+CHF 3'737.53): Even if it remains an excuse, many expenses in September were exceptional (i.e. non-recurring) so that reassures me for the next few months.
As usual, let’s take a look at our unusual expenses first:
Short aside as many of you ask me: my book (in French and English) will be officially released on Tuesday, November 24, 2020, and will be available exclusively via my blog (not in bookstores, at least not for now).
The German version will arrive in January 2021.
Concerning unusual cash inflows (i.e. excluding our Swiss salaries):
STOCK MARKET INVESTMENTS (-CHF 888.19): A small correction of the stock market in September. Nothing to do with the slap in March with the crisis linked to the coronavirus.
Otherwise, no purchase (or sale) on the horizon because I keep all our current savings in cash in view of a potential real estate acquisition in France. I’ll tell you more once we know if we’re going ahead (or not), but for the moment we’re waiting to hear from our bank. We’re talking about a 600'000€ project…!
P2P INVESTMENTS (+CHF 0.00): No surprises on the Mintos side. I’ve stopped all investment, and I’m gradually getting my cash out. It’s not that I wouldn’t want to go faster, but the Mintos “Invest & Access” program doesn’t allow me to. Once the account is completely emptied, I will close it definitively and do a post-mortem article to explain in detail my motivations for not continuing in P2P investments.
CRYPTOCURRENCIES SPECULATION (-CHF 155.68): Once it goes up, once it comes down. As unpredictable as we thought. The day I’m at +1 million CHF, I’ll sell. In a century maybe…
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (n/a): Nothing to report because I make my lump sum payment at the beginning of the year (only Mrs MP is lucky enough to be at VIAC… my 3rd pillar being one of the guarantees for our mortgage), and my updated surrender value also comes at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 605.68): As Mrs. MP’s pillar 3a is invested at VIAC 100% in global equities, its value also varies according to the stock exchange (and not only according to the CHF 564 paid monthly). This means that this September, our portfolio has gained CHF 41.68 (= CHF 605.68 - 564.00).
SWISS LLC/GMBH/SÀRL (+CHF 0.00): As announced in a previous article, we finally opened our account (consignment one for the moment) for our Swiss LLC/GmbH/Sàrl. We will use this company to declare the income from the blog and other projects (coaching, book) and thus optimize our tax situation.
For your information, although I will detail it later, we chose to go with the Migros Bank which, at the time of writing, is the most frugal bank for corporates in Switzerland with its fees of CHF 3/month (no limit on the number of transactions).
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
REAL ESTATE INVESTMENT IN SWITZERLAND (n/a): As a reminder, the 30kCHF invested here is a participation in a Swiss real estate project (i.e. not in my own name). I am still considering getting 55% of annualized return.
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 720.35): The magic of real estate investment: the loan repays itself “on its own” thanks to the rents.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 384.69): Cash flow continues to be positive pending taxes.
In terms of financial independence, we are at 24% of our objective of CHF 2'156'000 with our net worth of CHF 522'727.20.
Which visually gives us this:
In the end, we finished with a savings rate of 32% for September 2020. We continue to move towards a very good vintage of more than 50% of savings rate for 2020. But we remain focused, because the second half of the year has just begun, and we still have half a year to continue optimizing our revenues and expenses to widen the gap between the two as much as possible (and above all to calm down a little bit with the restaurants and “exceptional” expenses :D).
And you, what was your net worth and savings rate in September?
PS 1: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 2: I’ve added a new “bonus” for the blog’s patrons. Since last month, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
]]>I was digging a little more: “But what does it depend on?”
“Well… it’s complicated, you know… you have to take into account a lot of things like taxes, purchase costs, and the cost of renting for the long term… in short, it depends and it’s not simple.”
Thanks for the evasive answer.
And I’m not talking to you about other situations such as:
In fact, none of them were able to give me a concrete answer. And that drove me crazy! For a Cartesian mind like me, I couldn’t believe that there wasn’t a calculator that could tell me whether it was better to buy an apartment in Switzerland (or a house), or to rent it.
The worst thing is that I only found the answer to this question after buying our own home.
In the end, the one who was right was my colleague.
The other opinions I received were only beliefs or assertions out of pure self-interest.
“But then MP, what does it depend on?!” can I hear you mumbling behind your screen.
Well, that depends on your personal situation; i.e., the cost of your current rent, the cost of what you would buy instead, and finally what you would do with the difference between these two expenses’ items.
Common thinking suggests that once you own your home, the “rent” you pay pays off your mortgage rather than going up in smoke every month. But what the common wisdom forgets is that there is a plethora of extra costs when you own your home:
Calculating two scenarios between tenant and landlord on this basis is a bit complex, but feasible.
Except that there is another variable to take into account: the opportunity cost. By being a homeowner, you will have equity to bring to obtain your mortgage (at least 20% of the total value of the property) as well as notary fees. This money, if you remain a tenant, could be invested (on the stock exchange for instance) and potentially earn you more than if you put it in stone.
So yes, the answer to “Should I buy or rent in Switzerland?” is definitely “It depends!”
I had to wait 6 years of blogging to find a definitive answer to this problem. Indeed, at the beginning of 2020, I got in touch with the founder of Moneyland.ch for an interview on his website about the FIRE (Financial Independence, Retire Early) movement. And while discussing, he told me that they had a very detailed and free (!) automatic calculator to know the answer to the famous question “Buy or rent in Switzerland?” while taking into account your personal situation.
So I suggest you that we take two concrete examples so that you understand the calculation method. Because in the end, it’s not that complicated.
That way, afterwards, you will be able to compute your own case, and make an informed choice.
Julia and Steven rent a 4.5-room apartment of 107 square meters in Olten with their two children. They pay CHF 2,015 per month in rent, including charges—which is not much in 2020, but they have been living in the same apartment for four years. They would like to buy a 4.5-room apartment in a residential area of Olten. They have found one which is listed at the price of CHF 770,000.
To find out whether it is better for them to continue renting or buying, they prepare all the data to be inserted in the Moneyland.ch form, starting with information about their potential purchase:
Our couple then continues to fill in the information concerning their current rental:
And finally, they still have to select the time frame for the evaluation. They choose to take 25 years because they know they want to stay in Olten at least until their children enter the workforce.
The result on Moneyland.ch is surprising compared to what Julia and Steven had heard before…
“Buy” option
“Rent” option
Conclusion of the Moneyland.ch calculator: for the evaluation period, renting is more favorable than buying for an amount of CHF 19'279.45.
By playing with the calculator, the couple also realizes that the more they increase the retention period of their property, the more interesting the rental becomes, for example:
On the other hand, under 24 years of retention, the “Buy” option is the most interesting:
As you will have understood, buying or renting in Switzerland depends on a lot of criteria to be taken into account. The most important and difficult to evaluate is the length of time you can stay in the same place.
For a “minimal” difference regarding the total amount invested, our couple prefers to buy because they will be able to have a property that suits them to start their family. Also, they do not wish to be at the mercy of their landlord who might decide one day to stop their lease.
Afterwards, we can also note that their example is biased (our case was the same), because their current rent corresponds to a less attractive property (less recent and less well located) than the one they would like to buy; so if they wanted to have the same type of property they want to buy, their rent would in fact be CHF 2'450/month (compared to CHF 2'015 currently), so the purchase could in fact become a potential opportunity?
If you are in a similar situation, think about comparing apples with apples as they say ;)
Barbara and Henri live in a 4.5-room apartment of 110 square meters in Nyon with their two children. They pay CHF 2'700 of rent per month, charges included. They are interested in a 4.5-room apartment in a popular residential area of Nyon which is priced at CHF 1'175'000.
Let’s see what their calculations show:
Result of the calculator: with their data, the purchase is more favorable than the rental for an amount of CHF 606'393.35
Indeed, the appreciation of the property will be greater than the gains they will make through their investment via the bank.
The first and most important thing to remember from this blogpost is that the math never lies. So yes, to the question “Buying or renting an apartment in Lausanne?”, the answer is “It depends.” But it depends on personal data that are easily found, that give you a clear and precise result.
The second most important element of this article is that, apart from the obvious variables such as the price of the property in Switzerland and the price of the Swiss rent, the most impacting variables in the decision “to buy or rent in Switzerland” are the length of time you will live in the same property, and your ability to earn a decent return on your stock market investments.
Afterwards, apart from the mathematical result, there is no single truth, because there are many other parameters. What if you don’t want to risk being dislodged from your rented apartment in Zurich by your current landlord in 10 years time? Or, what if you love to renovate old constructions and are frustrated by renting a house in Switzerland because you can’t do anything about it? Or what if you decide to move abroad in 8 years and don’t want to stay for 25 years in the same place as planned?
On the other hand, there is a golden rule: you must make your own simulations before making any important decision to rent or buy in Switzerland over the next 20-30 years, because the effects add up very quickly with such amounts — we are talking about dozens or even hundreds of thousands of CHF more in your pocket!
And of course, as a frugalist, the potential savings on both sides have to be invested properly, like Julia and Steven.
And you, did you buy or rent? What does the Moneyland.ch calculator say for your situation? Did you already know the result? Surprised? Or not?
P.S.: I am thinking of making a series based on this article, as there are so many different examples as there are readers. Don’t hesitate to send me all your data via email if you’re hesitating between buying or renting in Switzerland, so that we can make an article about it on the blog and get the opinion of the MP community.
[1] How do I calculate my marginal tax rate?
To obtain your marginal tax rate, simply go to the online tax calculator for your canton. Enter your personal details (including whether you are married, with or without children, etc.) and your current taxable income and then enter the amount of tax you have to pay according to the calculator. You repeat this via the online tax calculator for the direct federal tax portion.
Then repeat these two calculations with your new taxable income, for example, if your salary is increased by CHF 1'000.
Finally, calculate the rate using the following formula: (new tax - current tax) / (new taxable income - old taxable income) = marginal tax rate.
With a concrete example, this gives:
If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
Also, following questions from some readers, I would like to point out that the green or red figures below correspond to the relative evolution compared to the previous month, and not to the absolute amounts of the current month.
CASH FLOW AND SAVINGS (-CHF 14'116.83): Don’t get it wrong, negative cash flow doesn’t mean we’ve completely cracked up spending like crazy over the vacations. It simply represents a transfer of CHF 20'000 to our new Swiss LLC account :) (more info about this below).
As usual, let’s take a look at our unusual expenses first:
Concerning unusual cash inflows (i.e. excluding our Swiss salaries):
STOCK MARKET INVESTMENTS (+CHF 7'241.75): This incremental amount represents capital gains (unrealized, as nothing was sold) in one month. It’s nice to see when you do your accounting at the end of the month and discover this figure on Interactive Brokers :D
Otherwise, no purchase (or sale) on the horizon because I keep all our current savings in cash in view of a potential real estate acquisition in France. I’ll tell you more once we know if we’re going ahead (or not), but for the moment we’re waiting to hear from our bank. We’re talking about a 600'000€ project…!
P2P INVESTMENTS (-CHF 36.39): No surprises on the Mintos side. I’ve stopped all investment, and I’m gradually getting my cash out. It’s not that I wouldn’t want to go faster, but the Mintos “Invest & Access” program doesn’t allow me to. Once the account is completely emptied, I will close it definitively and do a post-mortem article to explain in detail my motivations for not continuing in P2P investments.
CRYPTOCURRENCIES SPECULATION (+CHF 278.41): Once it goes up, once it comes down. As unpredictable as we thought. The day I’m at +1 million CHF, I’ll sell. In a century maybe…
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (n/a): Nothing to report because I make my lump sum payment at the beginning of the year (only Mrs MP is lucky enough to be at VIAC… my 3rd pillar being one of the guarantees for our mortgage), and my updated surrender value also comes at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 340.87): As Mrs. MP’s pillar 3a is invested at VIAC 100% in global equities, its value also varies according to the stock market (and not only according to the CHF 564 paid monthly). This means that this August, our portfolio lost CHF 303.77.
SWISS LLC/GMBH/SÀRL (+CHF 20'000.00): As announced in a previous article, we finally opened our account (consignment one for the moment) for our Swiss LLC/GmbH/Sàrl. We will use this company to declare the income from the blog and other projects (coaching, book) and thus optimize our tax situation.
For your information, although I will detail it later, we chose to go with the Migros Bank which, at the time of writing, is the most frugal bank for corporates in Switzerland with its fees of CHF 3/month (no limit on the number of transactions).
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
REAL ESTATE INVESTMENT IN SWITZERLAND (n/a): As a reminder, the 30kCHF invested here is a participation in a Swiss real estate project (i.e. not in my own name). I am still considering getting 55% of annualized return.
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 719.13): The magic of real estate investment: the loan repays itself “on its own” thanks to the rents.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (-CHF 545.87): The cash flow was negative in August because we had to change a toilet faucet (less than CHF 50), and especially because I readjusted the amount we had in euros in CHF with the exchange rate of the day (difference of almost CHF 1'000…). To clarify this last point: I have an automatic transaction in YNAB for each rent, and it’s been since we got the building that I hadn’t adapted the EUR-CHF exchange rate, so the variations accumulate quickly.
In terms of financial independence, we are at 24% of our objective of CHF 2'156'000 with our net worth of CHF 517'367.77.
Which visually gives us this:
In the end, we finished with a savings rate of 34% for August 2020. We continue to move towards a very good vintage for 2020. But we remain focused because the second half of the year has just begun, and we still have half a year to continue optimizing our revenues and expenses to widen the gap between the two as much as possible.
And you, what was your net worth and savings rate in August?
PS 1: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 2: I’ve added a new “bonus” for the blog’s patrons. Since last month, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
]]>If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
Also, following questions from some readers, I would like to point out that the green or red figures below correspond to the relative evolution compared to the previous month, and not to the absolute amounts of the current month.
CASH FLOW AND SAVINGS (+CHF 15'045.13): We continued to do a fair amount of remote work in July with Mrs. MP because of the coronavirus. This allowed us to reduce our transportation costs. On the other hand, due to vacations and visits to friends/family, we spent more than usual in the “Gifts” category — with great pleasure when it is precisely to please others.
As usual, let’s take a look at our unusual expenses first:
Concerning unusual cash inflows (i.e. outside of our salaries):
STOCK MARKET INVESTMENTS (+CHF 2'758.48): All the lights were green in July. Both my Swiss shares and my international shares all saw their value increase between the beginning and the end of July.
I also bought 3x of VWRL via the DEGIRO brokerage account of the children (like every 2-3 months).
And I continued my value investments (via the Daubasses) by buying CHF 400 of a share at a discount on the… Japanese market again!
What’s more, I realized for the first time in my career as a value investor not one, but two capital gains. As you know, I am currently learning by following the very detailed explanations (as well as their purchases/sales) of the Daubasses 1. Their process is transparent and understandable, which made me choose them compared to other paid newsletters too “bullshit marketing”.
I redid the annualized return calculations of these two sales to be sure, and this is what it looks like (you already knew beforehand if you are a blog sponsor):
Be careful though: don’t rush on their newsletter after reading these two incredible performances. Indeed, you will note that the period of the coronavirus crisis was rather favorable to make sales. And it will not (well, I don’t know but I hope not) happen again so soon. So only go for it if you understand (really!) what you’re doing, and don’t follow what some guy on the world wide web is telling you.
P2P INVESTMENTS (-CHF 50.31): No surprises on the Mintos side. I’ve stopped all investment, and I’m gradually getting my cash out. It’s not that I wouldn’t want to go faster, but the Mintos “Invest & Access” program doesn’t allow me to. Once the account is completely emptied, I will close it definitively and do a post-mortem article to explain in detail my motivations for not continuing in P2P investments.
CRYPTOCURRENCIES SPECULATION (-CHF 14.67): Once it goes up, once it comes down. As unpredictable as we thought. The day I’m at +1 million CHF, I’ll sell. In a century maybe…
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (n/a): Nothing to report because I make my lump sum payment at the beginning of the year (only Mrs MP is lucky enough to be at VIAC… my 3rd pillar being one of the guarantees for our mortgage), and my updated surrender value also comes at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 2'488.60): As Mrs. MP’s Pillar 3a is invested via VIAC at 100% in global equities, the stock market performance also affected it with a nice capital increase for July (i.e. CHF 1'924.60 capital gain, the remaining CHF 564 being the one paid monthly into the 3rd pillar account).
If ever, VIAC recently announced an increase of its free management bonus up to CHF 5'000.
Therefore, I have a last invitation code “gCnmpVV” which will allow you to have free management on the first CHF 500 saved on your pension account (valid for life!) — leave a comment below if you use it, so that I know who to thank ;)
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
REAL ESTATE INVESTMENT IN SWITZERLAND (n/a): As a reminder, the 30kCHF invested here is a participation in a Swiss real estate project (i.e. not in my own name). I am still considering getting 55% of annualized return.
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 719.10): The magic of real estate investment: the loan repays itself “on its own” thanks to the rents.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 451.40): Cash flow continues to be positive pending taxes.
In terms of financial independence, we are at 23% of our objective of CHF 2'156'000 with our net worth of CHF 502'531.65.
Which visually gives us this:
In the end, we finished with a savings rate of 57% for July 2020. We continue to move towards a very good vintage for 2020. But we remain focused because the second half of the year has just begun, and we still have half a year to continue optimizing our revenues and expenses to widen the gap between the two as much as possible.
And you, what was your net worth and savings rate in July?
PS 1: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 2: I’ve added a new “bonus” for the blog’s patrons. Since last month, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
PS 3: as a patron or future patron of the blog, don’t hesitate to let me know what other bonuses you’d like to have.
PS 4: I’d like to take this opportunity to thank the five new patrons of the blog Pranav, Amaury, David, Sam and Kevin. A big thank you for your support!
The further I go, the more I feel that I have more control over my investments with the Daubasses than with my ETF investments. Indeed, thanks to the former, I understand exactly why and how to buy undervalued shares, which mathematically can only go up. And this is compared to following a world index with my ETFs where I am certainly more diversified (several thousand companies vs. 30 with the Daubasses), but where I have the impression of having no control.
That’s what’s going on in my mind at the moment.
But until further notice, I’m limiting myself to my 30kCHF of Daubasses (plus or minus a few reinforcements or resales) because Buffett himself indicates that for the lambda investor that I am, the best way to make a portfolio worthy of the name grow is to invest in a low-cost international ETF. And in view of the hindsight he has (several decades) compared to the Daubasses (a decade), I will remain cautious for now. ↩︎
But I couldn’t resist… because we’ve just passed the half-million CHF net worth mark!!! With patience, savings and determination, anything is possible in personal finance. I’m living proof if you still needed it ;)
And you want to know what’s the most beautiful thing in all this? Well, what made us pass this milestone was a bank transfer from one of my blog affiliate programs (Zak not to mention them). It gave me one more reason to not keep it to myself ;)
In any case, I would like to thank you, dear reader, for your support since my debut in 2014. When I think back, I might have had more low than high regarding motivation if I hadn’t had Team MP behind me. So this half million CHF is partly thanks to you.
I would like to take this opportunity to express my gratitude to all those who support this blog project by becoming a patron, but also to all those who have used my “MP codes” when they subscribed to a service that I use and love myself. Swiss franc after Swiss franc, it adds up pretty quickly.
And I can’t forget those who trusted me with the kickstarter of my book, my investment and personal finance coaching sessions, or my Swiss FIRE (Financial Independence, Retire Early) calculator pilot.
Thanks to all of you. Sincerely.
The most assiduous among you will certainly ask me in the comments below what surprise I have in store for Mrs. MP for this important milestone we have just reached? Well, we’ll keep the suspense until the end! If you want to know more, make sure you follow me on one of those platforms to get the info live by the end of August: LinkedIn, Twitter, or Facebook (psst, if you are a blog patron, you have access to the exclusive info via this Patreon URL ;))
The next stop with such a blogpost will be: the million CHF! It feels weird writing it, but we might as well start talking about it early so we can get used to it when we get there.
On that note, I’m going back to writing my book (between two bike rides in the forest) if I want it to come out before the end of 2020 as planned!
PS: I’d like to take this opportunity to thank the two new patrons of the blog Alain and Matteo. A big thank you for your support!
]]>If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
Also, following questions from some readers, I would like to point out that the green or red figures below correspond to the relative evolution compared to the previous month, and not to the absolute amounts of the current month.
CASH FLOW AND SAVINGS (+CHF 12'055.27): Deconfinement did not help with expenses such as childcare and transportation costs, and several weekends with family and friends. Nevertheless, these expenses were voluntary and calculated, so they were amply enjoyed.
As usual, let’s put our unusual expenses in the spotlight first:
Concerning unusual cash inflows (i.e. outside of our salaries):
STOCK MARKET INVESTMENTS (+CHF 2'833.58): It’s interesting to see how the stock market rallied fairly quickly after this COVID-19 crisis. Nevertheless, we remain cautious because I’m waiting to see how the world economy will react in early 2021 after a big infusion of cash in all countries. For my part, I am following the process I have set myself and investing all my savings in ETF VT at the moment as I still have too many Swiss stocks as well as bonds (via our Swiss 2nd and 3rd pillars).
Those who follow me closely will have noticed something suspicious since I did not buy large quantities of ETFs in June… well spotted buddy! Indeed, I am in the process of putting aside the CHF 20'000 needed to set up my LLC in Switzerland (see some details in this article). I think I’ll be able to do it in August (and thus meet my deadline!), and I’ll start my journey on the stock market again afterwards.
P2P INVESTMENTS (-CHF 126.81): No surprises on the Mintos side. I’ve stopped all investment, and I’m gradually getting my cash out. It’s not that I wouldn’t want to go faster, but the Mintos “Invest & Access” program doesn’t allow me to. Once the account is completely emptied, I will close it definitively and do a post-mortem article to explain in detail my motivations for not continuing in P2P investments.
CRYPTOCURRENCIES SPECULATION (+CHF 89.53): Once it goes up, once it comes down. As unpredictable as we thought. The day I’m at +1 million CHF, I’ll sell. In a century maybe…
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (n/a): Nothing to report because I make my lump sum payment at the beginning of the year (only Mrs MP is lucky enough to be at VIAC… my 3rd pillar being one of the guarantees for our mortgage), and my updated surrender value also comes at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 1'508.59): As in May, the month of June was salutary for our stock market investments via our 3rd pillar at VIAC with, in addition to the CHF 564 that we transfer each month, a nice capital gain of CHF 944.59 for the month of June alone.
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
REAL ESTATE INVESTMENT IN SWITZERLAND (n/a): As a reminder, the 30kCHF invested here is a participation in a Swiss real estate project (i.e. not in my own name). I am still considering getting 55% of annualized return. But, potentially, this whole story will take on a much larger scale than expected in terms of project size. We have an appointment with my potential future partner and a lawyer in August, so stay tuned, it should be moving (if we get going) by the end of August or September.
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 712.16): The magic of real estate investment: the loan repays itself “on its own” thanks to the rents.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 47.43): Cash flow continues to be positive pending taxes. I’m still waiting for my accesses to make my tax return online, but hey, we’re talking about the French government :D On the other hand, we had a change of tenant, which resulted in costs because we now delegate the entrances/exits to a real estate agency that takes us “only” 240€ for an outgoing inventory + one incoming. As for the rest, i.e. the management of the accounts and the small interventions to be managed, we take care of it ourselves.
In terms of financial independence, we are at 22% of our objective of CHF 2'156'000 with our net worth of CHF 480'178.87.
Which visually gives us this:
In the end, we finished with a savings rate of 57% for June 2020. We’re still heading towards a very good vintage for 2020 for the moment. But we remain focused because the first half of the year has just ended, and we still have six months left to continue optimizing our revenues and expenses to maximize the gap between the two. But clearly, the fairly constant new revenues from blog/coaching/book are starting to pay off, and I like that!
And you, what was your net worth and savings rate in June?
PS 1: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 2: I’ve added a new “bonus” for the blog’s patrons. Since last month, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
PS 3: as a patron or future patron of the blog, don’t hesitate to let me know what other bonuses you’d like to have.
PS 4: I’d like to take this opportunity to thank the two new patrons of the blog Bocherens and Ale. A big thank you for your support!
]]>But that meant canceling the old car insurance and taking out the new one. I had almost crossed the line, but by the time I talked to my insurer, he had conveniently found a way to increase my bonus. So, between that and my laziness, I didn’t apply what I was preaching… namely frugalism and constant optimization…
But fortunately, in September 2019, a reader pointed out to me that the new insurer I was looking at was even more advantageous than I thought… and he literally challenged me not to be complacent and to apply my own advice! A good kick in the a** is what I needed! And it’s also why I love my blog with the interactions it provides me. Because yes, I do need a booster shot once in a while!
Except that by the time I put an uppercut on my laziness for good, it was already October 2, 2019… and my Helvetia policy at the time stipulated that “the annual contractual deadline was 31.12 of each year and effectively cancellable 3 months in advance, so the next possibility of cancellation of my motor vehicle policy was December 31, 2020, so I had to notify them no later than September 30, 2020”…
So I played the stupid guy and wrote to my insurer, Helvetia, asking what the procedure for cancellation was. And that’s when he answered the quote from my contract in quotation marks above… but I hadn’t said my last word!
I replied that I was indeed two days late, but that since I was planning to switch to the Smile Direct car insurance that the Helvetia Group had recently acquired, I was finally remaining a client of their group.
And it worked. I was entitled to an “exceptional” favour and was able to terminate my Helvetia car insurance contract on 31.12.2019 and switch to Smile Direct as of 01.01.2020. Phew!
In the end, for the same insurance cover (and the same level of guarantee since it is the same group behind it!), our new contract enabled us to go from an annual bill of CHF 474.50 at Helvetia to CHF 323.30 at Smile Direct.
Results: CHF 151.20 of savings per year. In other words, it’s as if in 10 years’ time someone would come to me and say: “Oh by the way, you had a good idea for changing car insurance 10 years ago. Thanks to the fact that you invested those savings and the magic of compound interest, here’s CHF 2'253 for you!”
Knowing that it only cost me an e-mail cancellation to Helvetia + a simple and quick form to fill in (all online!) at Smile Direct, I don’t know about you, but I’m a taker in such case!
Smile Direct is a bit like the Zak or Neon of car insurance (and not only! — because they offer all the other “standard” insurances). I make this analogy because, although Smile Direct exists since 1994 (!) with at the time a revolutionary concept of selling insurance by phone, they have been able to go digital since 1999 during the internet boom by drastically simplifying all the administrative steps necessary to take out a Swiss car insurance.
Proof of this is: I did everything from the comfort of my bed on my iPhone one evening last October! And apart from the insurance certificate that I received by mail to put in our car, all the rest of the paperwork was simply sent to us by email. Welcome to 2020!
Fast forward to 2014 when Smile Direct has been taken over by the Helvetia Group. And from what I’ve seen, the latter is using Smile Direct to meet the demand of minimalist and efficient people like you and me, people who don’t want jibber-jabber and useless paperwork. Not an idiotic acquisition I find from Helvetia.
Just like the kick in the butt I took a year ago, I plan to do the same with you with this article :)
Initially, I wasn’t planning to publish this blogpost until September, since uno, that would have forced you to act and not postpone the change until the next day since the deadline was imminent, and secondly, because I do have a book to finish by the end of August!
But plans are made to be changed, as they say.
At the beginning of July, Neon announced that they were becoming the first Swiss “bancassurance” provider. This means that you can take out your insurance directly via your Neon bank account, thanks to a partnership with… Smile Direct!
And to celebrate the launch, here’s what Neon offers if you take out your Smile Direct insurance via the procedure below:
Bonuses are paid in cash (!) into your Neon account as soon as you have paid your first invoice at Smile Direct.
And these bonuses are in addition to the fact that Smile Direct is the cheapest Swiss car insurance according to my numerous Bonus.ch simulations with different vehicles ;)
I could have waited until September for this article as planned, but the introductory offer seems to be limited in time (until the end of the summer, or at best until the end of the year).
In order to get your bonus cash, you have to subscribe to Smile Direct through this web link in German, or this one in French.
And if you want to be nice and support the blog (without changing anything to your bonus or your new cheap car insurance premium), Neon agreed to share a small part of their reward with the blog.
In order to track this properly, they asked me that after filling out the form above, you send me an email to let me know what insurance you have taken out (car, motorcycle, household, or a combination of these). And that’s it!
PS: and while you’re at it, if you haven’t yet changed that non-frugal car you own, it might be time to get started!!! That’s why I’ve compiled a list of the best frugal cars used by various FIRE bloggers around the world.
]]>In addition to his “standard” job, Mathieu has managed to earn an extra CHF 1'000 per month for almost a year now.
Let’s see what you can learn from his experience in order to generate some additional income in Switzerland yourself too.
Hi Mathieu! First of all, let me welcome you and thank you for agreeing to take part in this interview. Can you introduce yourself in a couple of sentences: demographics, single or family, location?
Hey, MP. Thanks for the invitation! It feels weird to be featured on your blog, but it’s pretty cool :)
To answer your question, my name is Mathieu, I’m 33 years old, I’m married and I have 2 kids.
I’m self-employed in the construction industry. My job is to coordinate people on construction sites, manage costs, and develop / accompany people in real estate operations.
We are a small structure so we mainly stay on projects of villas, small rental buildings, and co-owned buildings (PPE in French) up to 6-8 units. We are active throughout the canton of Vaud.
Thanks for the intro. So then, explain to us: your side gig, what does it consist of?
So in fact, for quite some time now I’ve wanted to develop sources of income other than those from my main activity, in order to diversify my income but also to see other horizons.
I have had different opportunities, including one that came via LinkedIn: a person contacted me with the wish to improve his skills in the field of construction management. To give courses… why not! I hadn’t thought about it before.
I thought for a few days about how I could approach it, and then I accepted.
We agreed on a trial session to see if everyone could benefit from it, and it worked out well.
Since then we’ve been seeing each other once a week. Even during the current period (i.e. COVID-19 pandemic) when human relations are reduced to the strict minimum, we continue via videoconference!
We work by discussing problems and how to solve them. It’s a different approach than theoretical courses, because we are directly involved in the concrete stuff, and it gives a very interesting dimension to the exchanges we have.
Interesting how that “fell on you”. Can you tell us how this contact knew you from LinkedIn (i.e. how you were connected to him)? Or, if you weren’t connected to him, why did he choose you and not someone else? Was it through a recommendation from a person in common?
The person contacted me on LinkedIn after having gone around many people doing the same job. He made his choice based on the answers he received but also on the background of the different people. Many answered negatively or did not even answer his request. In the positive answers, I was one of those who were quite close to Lausanne and he liked my background. We did our first test session on a Saturday morning, the feeling was immediately there, and we both found it to our advantage. Since then, the adventure has continued.
Excellent. You can congratulate this person for taking his destiny into his own hands and improving on his own, that’s really great! I’m not going to surprise you with my next question, since we’re here to talk about money (!): how many Swiss francs do you make per month since you started?
With this activity, I finish the month ends well. It varies according to the hours, but generally between CHF 900 and 1'100/month.
Wow, nice! Congratulations! Can you describe at what point in your life you got the idea? And how did it come to you? And why (need more cash, need a change of scenery for the job, other)?
I accepted this activity due to the “discovery” side of it. Even if at the beginning I wanted to change a little bit from the construction field, the “educational” side took over and took me to heart.
In the end I am very happy about it; it is the human relationship that really counts. I have the impression of being useful to this person and the progress is visible. This is my main source of motivation.
Then comes the financial aspect, because it is a significant income that allows me to inject the money earned into other investments to benefit from a leverage effect.
But then, tell us how you got started, step by step from the idea to the first time, and especially in addition to your existing job?
I embarked on this activity by pure chance and without calculations. The initiator of the contact and the job offer was the person who approached me on Linkedin.
Being busy, my only limit was not to interfere with my family life. During the week, the days are already very full and it is difficult to reconcile family and professional life. I didn’t want to create even more constraints during the week.
So we agreed to work on Saturday mornings. This is well accepted by the family, and it allows us to finish mid-morning so as not to overlap too much with the weekend either.
I see you’re an early bird like me :) Also, can you explain us concretely if you have prepared a course material, if you have looked on the net for how to do coaching, or that kind of things? Because I find it interesting to understand how one can prepare for such an opportunity.
In terms of setting up the courses, I am fortunate to now have experience thanks to my job. We’re moving forward step by step with sessions divided into two parts.
The first part is in the form of a question-and-answer session about his current concerns and the problems he faces on his work sites. The goal is to provide answers in the form of avenues to explore in order to try to resolve complicated situations. But also to make him attentive on the points that can be critical in order to avoid bad situations.
The second part of the sessions is more focused on theory, with the learning of good methodologies, but also new knowledge. For this I was lucky during my studies to have been very attentive and to have kept all my course materials. I sort through them and use them as inspiration to create a logical program in the order of things over several sessions.
Another very pragmatic question: how did you choose the place for these sessions, and how could you book it on a weekend (i.e. was it easy or not, and how much did it cost you)?
That’s a good question. To carry out these sessions, I was looking for a quiet place, easily available, not expensive because that was my “student” who had to bear the cost of the room… At the beginning, I thought of rooms that are blooming everywhere at the moment in the co-working spaces. But after thinking about it, it was too many constraints for us, because the price and availability of the rooms were too random.
I went to the Novotel in Bussigny; they have a great space on the ground floor where I had already done some work sessions with clients over a drink. The environment seemed calm and practical for many reasons (availability because it’s always open, access because it’s close to a motorway exit, unbeatable price, and pleasant place). It costs us a few coffees and breakfast formulas, and we are really well installed to work. Up to 4-5 people is manageable. Beyond that we would have to do things differently.
Just out of curiosity, have you raised your rates since you started?
No, the rates have remained the same and will not change. I think it needs to be fair for everyone.
And in the future, what’s your next step with this personal project?
It opened my eyes to other skills that can be developed over time without necessarily realizing it.
You shouldn’t be afraid to test it, you should go for it and not hesitate.
I’m going to continue this activity and why not try to develop it. There are a lot of subjects to talk about… it’s a vast world!
I’d also like to dive more into the training aspect to give workshops for people who are not in the construction industry but who want to acquire a property or invest in real estate in Switzerland. I’m thinking about it!
Excellent! Keep me informed, I would be able to pass on the information via my newsletter because it might interest some people! And thanks again to you for agreeing to be the first one in this interview series.
Mathieu’s last answer contains an important point that I would like to highlight: “It opened my eyes to other skills that can be developed over time without necessarily realizing it.”
While developing more and more my blog, I came across the motto of one of my favorite companies: “Teach everything you know”. The idea is that even if you’re not in the building industry like Mathieu, you must have some experience. Your experience. Whether it’s cooking, horseback riding, computers, decorating, or plumbing. Whatever the field, there must be one in which you have more knowledge than someone else.
If you’re really serious about making more money than your current salary, here’s what you need to do:
Feel free to ask Mathieu questions in the comments below, I will notify him as soon as there are any for him to answer.
Finally, if you too are interested in participating in this series of “How to make extra money on top of my salary through a side hustle in Switzerland?”, then you can contact me via the following email: contact [at] mustachianpost.com
]]>“Hey Frugalisto, do you really think our beloved MP will accept your offer to have four Swiss bank cards in his wallet?!”
“For sure! Do I need to remind you, dear Minimalismo, that the MP brain we’re responsible for always leans towards the side with the most cashback and the least fees?!”
“I’ll give you this point Frugalisto, but be a little serious for once! Four cards! I’m sure his minimalist side will take over and I’m gonna beat you this time!”
“What do you bet?”
“A year’s worth of cashback from the Cumulus Mastercard of MP!”
“Deal :) See you at the end of the article. Get your Swiss credit card ready, bro!”
The above dialogue took place in my brain when I read that Revolut announced new fees as early as August 12, 2020, and then Neon announced a new partnership with Wise, formerly TransferWise at the end of June, and that Zak explained in early July its willingness to compete with Neon on fees for payments abroad.
I wasn’t planning to write again an article about credit card comparison in Switzerland in 2020, but only to update the one of 2019 explaining that I kept the same strategy:
It was not counting on COVID-19, which pushed Revolut into its financial retrenchment, since they make a major part of their cash flow through people who travel. Except, because of COVID, people don’t travel anymore. As a result, Revolut has to find solutions to remain (become?) profitable.
Revolut has therefore announced that from 12.08.2020, free foreign exchange transactions will be capped at CHF 1'250 per month, instead of around CHF 6'000 per month previously.
For someone who stays in Switzerland all year round, and just orders from time to time in USD or EUR on the internet, it’s not going to make much difference. But for us, the MP family, who are often in Europe for holidays or real estate business (not to mention our travels across the Atlantic), it’s a big difference. Clearly, we risk to exceeding the foreign currency transaction limit of CHF 1'250 at least once or twice a year.
This is a problem because above this limit, Revolut adds an additional fee of 0.5% of the transaction amount.
Our friends at Monito.com (comparison site for international money transfer services, made in Switzerland please, in Lausanne moreover) sums up the situation well with this infographic that speaks for itself when you spend more than CHF 1'250 in foreign currency:
In addition to these fee changes at Revolut came the partnership between Neon and Wise, formerly TransferWise, and the elimination of foreign transaction fees at Zak.
As a result, I had to update my Swiss credit card strategy for 2020.
For a long time, I hesitated between two Swiss credit card strategies: the frugal strategy or the minimalist strategy.
Before introducing them to you, I quickly remind you my criteria for choosing a credit card as a Swiss Mustachian. Because some new readers are perhaps not yet clear. In 6 points, the best Swiss credit card for me should:
As a reminder, I am optimizing my Swiss credit card strategy because, compared to any average Swiss who has a credit card from one of these “big banks”, it allows me to save on annual fees (around CHF 100-150/year), on foreign currency transaction fees and on exchange rate markup (around CHF 400/year for us who have a lot of them!). And I’m not even talking about the CHF 200-300/year that I earn extra in cashback. So the impact of my strategy is at its highest point CHF 850/year more in my pocket, i.e. CHF 12'574 per decade.
So let’s see which two Swiss credit card strategies I recommend.
From 12.08.2020, the date on which Revolut will introduce its new fees, the optimal strategy for earning maximum cashback in CHF and paying the lowest bank fees is:
To illustrate what it looks like on each platform, here are some concrete screenshots:
Top-up in CHF of my Revolut card from my Cumulus Mastercard (N.B. these top-ups don’t generate any more cashback on the Cumulus side, so use your Cumulus Mastercard credit card for your CHF expenses, and not your Revolut):
One wallet per currency on my Revolut account:
The company Wise, formerly TransferWise has therefore made its entry into the ranking of the best Swiss credit cards.
This latter is well known to Swiss Mustachians because before Revolut offered a Swiss IBAN, people used Wise, formerly TransferWise (which offers a Swiss IBAN) to top up their Revolut account at a lower cost compared to an expensive direct transfer between a Swiss bank and Revolut’s foreign IBAN.
Here is a video explaining the Wise, formerly TransferWise service:
The question you may be asking yourself is why don’t I use Zak or Neon instead of Revolut and Wise, formerly TransferWise to have less cards to manage?
As you can see on the graph, there is no discussion about using Revolut up to CHF 1'250, but the question does arise for any amount above that.
The answer lies in the exchange rate used by Wise, formerly TransferWise, Zak, and Neon. Because the devil is in the details: each one uses its own exchange rate.
Wise, formerly TransferWise uses the real time exchange rate like the one you find on Google when you search for the EUR-CHF exchange rate for example. And they add to this a small fee that is transparently displayed on their app and site. So it’s like trading live on your Interactive Brokers account.
As for Zak and Neon, they use a once-a-day exchange rate that is on average a bit higher than the live exchange rate (to cover the risk of a huge fluctuation between two days):
To give you a very concrete example that proves that Wise, formerly TransferWise is the best option, I simulated a payment of 100 euros and here is the result in CHF:
As you can see, Wise, formerly TransferWise is the cheapest since it follows the live exchange rate, followed by the Mastercard exchange rate used by Neon, and then the Cornèr Bank exchange rate used by Zak.
Let us now turn to the minimalist Swiss credit card strategy in 2020.
If your Minimalismo brain side is stronger than your Frugalisto side, then you would definitely prefer to have only one Swiss credit card in your wallet instead of four (or even zero with Zak’s virtual card), even if you have to lose between CHF 200 and CHF 300 in cashback per year and pay an exchange rate a bit higher than necessary (knowing that Neon seems more advantageous than Zak according to my tests).
Your solution will be to choose either the virtual Visa prepaid card of Zak or the Mastercard of the mobile bank Neon depending on which Swiss bank you have chosen (see my complete analysis of these two banks here).
Indeed, in both cases:
(Reminder for new readers: I have negotiated respectively CHF 25 (Zak) and CHF 10 (Neon) of welcome cash if you follow my procedure for the opening of your account at these neobanks).
Be careful, though, before you let Minimalismo convince you. Because you have to make a conscious choice with this minimalist strategy:
A short note also on the fact that Neon offers a service for sending money abroad in other currencies based on Wise, formerly TransferWise. It’s very convenient for the minimalist you are, but you should know that they add a 0.4% “convenience fee” (and they are right because it’s very convenient and they don’t hide it at all compared to other financial institutions, but it’s not Mustachian enough for me).
The best credit card strategy in Switzerland for a Mustachian is therefore clear: the frugal strategy wins out in 2020.
“Hey Minimalismo, where are you going? Come back here, you owe me CHF 300! I told you I’d get MP’s brain on my side!”
If you still don’t have all the accounts and credit cards listed in my strategy, then you can use the links below which will allow the blog to earn a small commission without it making any difference to you (you’ll even earn a few CHF depending on the current offers). Thank you in advance for this.
And you, what Swiss credit card strategy do you use in 2020? (don’t hesitate to tell me via the comments below if I miscalculated something too!).
1. Bank Cler Zak Maestro card
2. Cumulus Mastercard credit card
(make sure you follow the link above if you want to get the associated Cumulus points bonus, and once on the form don’t change page otherwise their system seems quite capricious… :))
3. Revolut card
4. Wise, formerly TransferWise multi-currency debit card
]]>I’ve been having too many things in parallel with the blog and my 3 other “MP Projects” for a few months now (more on that in a second). So, like at the time with the complete translation of the blog in French, I took a step back the last two weekends to admit that I couldn’t do everything and that I had to prioritize. I went through some pages of one of my favorite books “The One Thing” (especially lesson number 4), which helped me to know how I was going to return to a more Zen and sustainable mode in the long term.
The reason I’m telling you all this is so you don’t panic when you see less activity on the blog until September. Because that’s what’s going to happen, and it’s going to be completely normal. No, I wouldn’t have died nor would I have caught COVID (at least I hope not ^^!).
So in concrete terms, expect:
“OK cool MP, you’re gonna be less there, so be it. But then what are you going to do with all that free time?! The beach in Thailand? The Grand Tour of Switzerland?! Or did you have something more studious in mind when you said ‘MP Projects’?”
Ah, if only! I dream of the Grand Tour of Switzerland! But it won’t be this summer. And even less the beach in Thailand…
This summer will be much more studious indeed. Because although the blog is my most exciting project, it should not add to my stress, but on the contrary remain fun. So I said to myself: “Pause your baby, and focus all your attention on these three projects this summer, and when you get back to school you can go back to the daily routine you love that is blogging.”
So without further ado, and no big surprise for the first one, these are the three projects that will be my One Thing for the next two to three months.
Initially, I decided to start writing my book “Free by 40, in Switzerland” for two major reasons: the first is selfish and is nothing other than my passion for writing, and the second is the altruism that motivates me to make everyone live more freely and frugally as much for their well-being as for the world around them.
I started writing the first pages last January with the goal of completing a first draft in the fall, and to continue with proofreading, editing, and publication by the end of the year. At a rate of 3-4 hours a week at the beginning, then 7-8 hours more recently, I could see the titanic work it represented. So, as I would like to aim for a publication by the end of the year or at the very beginning of 2021 at the latest, I will make my book my first “One Thing” this summer.
Currently, as the supporters of my “kickstarter” know, I have finished writing chapter 5 in French, and am currently on chapter 6. The English translation is following its course with chapter 3, which was sent to the English-speaking early bird supporters. For the moment, the demand was too low for German for me to pay for a translation for the v1, but once everything is finalized, it is clear that the book will come out in the three languages of the blog, namely French, English, and German.
Anyway, I don’t regret to have embarked on this parallel adventure to the blog because one of the supporters of the project — hi JC! — who paid more than the standard price of a book has already benefited from a crazy ROI — 2'100%!!!! — with CHF 931.35 in savings. Per year! That’s CHF 12'881 in his pocket every decade to come :) Just for that alone, it was worth it!
So that’s it, my goal #1 for this summer: to finish v1 of the book by Monday August 31, 2020 at the latest.
That’s the big news to me. It’s a dream I thought was reserved for others who know how to generate enough cash to make it worthwhile to start a company. Well, I’m breaking through that glass ceiling, and I’ve decided to be one of “the others”.
For those of you with whom I haven’t yet discussed it via email or on Patreon, the story is that my blog hobby (also including coaching and book) will bring me more than CHF 2'300 in 2020. And who says more than that, says that everything above that amount has to be declared to the taxman to not be considered as illegal employment. After having evaluated the option of the sole proprietorships and the limited liability company, the latter won for legal and tax reasons. The result will be a great series of articles on how setting up a company in Switzerland works, which legal form to choose between a sole proprietorship and a limited liability company, and many other subtleties.
But before I can talk about it, I have to go through the paperwork to find out what I’m talking about, including:
Oh, yeah, and one more thing. You may ask, “But why hasn’t he started his business yet if he knows he’s already exceeded the legal limit of CHF 2'300?!”, and that’s a good question. The answer is quite simple: until last May, I thought I was gonna go the sole proprietorship way to keep it simple. But I learned a lot of things that made me change my mind. Nevertheless, to set up a LLC in Switzerland, you need to bring in CHF 20'000 as initial capital — which you can withdraw quickly afterwards to cover expenses, but then you still have to have them ready at some point. And since I invest all our savings monthly, especially with the last March stock market sales, well, I simply didn’t have them. Or rather, I had them but they were our reserve in case of a hard blow or for the next bills to come. That’s it, now you know the whole story :)
Objective #2 for this summer: to create my company in Switzerland by Monday 31.08.2020!
If [the 4% rule (aka 25x your annual expenses method) to calculate your FIRE (Financial Independence, Retire Early) amount](https://www.mustachianpost.com/blog/how-to-calculate-early-retirement-fire-aka-financial-independence/) is too imprecise for you because it is based on approximations and relies too much on US data, then there are two of us!
This is what pushed me to have my Swiss FIRE planning detailed and certified by a professional financial advisor in 2015, taking into account our Swiss specificities such as taxes, the pension system in Switzerland (LPP, pillar 3a, etc.), my mortgage, and many other things.
And so that’s how I arrived at my exact FIRE target amount of CHF 2'156'000, as well as the precise date on which I could retire early in Switzerland.
So I’ve been working in parallel with the blog for 5 years to find a solution allowing me to offer this product myself to the blog’s readers. But at a cost at least divided by two or even three. And all certified by someone with a financial planner’s Federal Diploma of Higher Education.
As I don’t have the video presentation yet, I explain the process below:
In order to stay reasonable with my schedule (and to enjoy our family holidays as much as possible), I set myself the following objective #3: to test the pilot project from A-Z in real conditions with an interested reader so that he receives his certified Swiss FIRE planning before Monday 31.08.2020.
In addition to writing this blogpost so you don’t worry about me (gosh, that guy who think he’s the center of the world!), my goal is also to commit to you so you’ll ping me if you see me writing a lot of blogposts while the task list below doesn’t move forward :)
So, in case you’re bored this summer on the beach of Lake Zürich, Neuchâtel, the Quatres-Cantons, or Lake Geneva, I’ve prepared my summer checklist that I’ll keep up to date as I go along. Don’t thank me, it’s a gift :D
✅ Introduction
✅ Chapitre 1: Arrêter de travailler à 40 ans en Suisse
✅ Chapitre 2: Faire face aux rabat-joies
✅ Chapitre 3: Crée ta future vie
✅ Chapitre 4: Économiser sur les petites choses
✅ Chapitre 5: Les économies impactantes
✅ Chapitre 6: Le club des trois
✅ Chapitre 7: Accrois tes revenus le plus possible
✅ Chapitre 8: Investir, ou comment les billets copulent
✅ Chapitre 9: Fais travailler l’argent de ta retraite aussi
✅ Chapitre 10: Prépare ta vie après la retraite
✅ Conclusion
☐ Appendix — Trucs utiles
And the same goes for the English translation:
✅ Introduction
✅ Chapter 1: Stop to work by 40 in Switzerland
✅ Chapter 2: Coping with naysayers
✅ Chapter 3: Create your future life
✅ Chapter 4: Save on the small things
✅ Chapter 5: Impactful savings
✅ Chapter 6: The Big Three
✅ Chapter 7: Earn the more you can
✅ Chapter 8: Invest, or how money notes have sex
✅ Chapter 9: Put your retirement money at work too
✅ Chapter 10: Prepare your post-work life
✅ Conclusion
☐ Appendix — Useful stuff
✅ Find the cheapest Swiss bank for the capital deposit account (i.e. account for founding a company) to store the CHF 20'000 until signature at the notary’s office
✅ Find the cheapest Swiss bank for businesses (potentially different from the one in the point above)
✅ To have the CHF 20'000 of initial capital necessary to create a limited liability company + the CHF 2'000 of notary and Swiss commercial register fees
✅ Send the CHF 20'000 to the consignment bank account
✅ Signature of the incorporation deed of the LLC at the notary’s office
✅ Deposit the deed in the Swiss Commercial Register
✅ Have the CHF 20'000 transferred from the consignment account to the chosen business bank account, then request the closure of the consignment account for company setup
✅ Send the detailed presentation email of the first “By MP” product to a dozen of long-time readers and blog patrons
✅ See if a reader expresses interest
☐ Get all his information
☐ Start the process
☐ Send the FIRE planning result (and have a little videoconference to see if he has the same smile on his face as me in 2015 in front of so much Swiss precision)
On that note, all I have to do now is wish you a great summer and take care of you and your family. We talk to each other via email and/or comments from time to time, and we’ll meet up in September at the latest with new blogposts.
And you, do you have a busy summer or a relaxed one ahead?
PS: with the success that my book “kickstarter” had this spring, I reopened 5 places for each tier (15 places in total). If you are interested, just write me with the subject “MP book kickstarter” in order that your message gets prioritized in my mailbox. First come, first served!
]]>If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
Also, following questions from some readers, I would like to point out that the green or red figures below correspond to the relative evolution compared to the previous month, and not to the absolute amounts of the current month.
CASH FLOW AND SAVINGS (+CHF 3'349.50): As in April, coronavirus containment has reduced our expenses for childcare and activities, as well as for professional transportation costs. Long live remote, I say!
Regarding unusual expenses:
Regarding the cash flow:
STOCK MARKET INVESTMENTS (+CHF 9'593.30): It’s always nice to see that number go up. As the patrons of the blog knew it live: we bought back over CHF 4'000 of VT ETFs at the beginning of the month when it was still below USD 70 (and no I didn’t specifically time the market, it’s just that I had the cash flow in the bank). And I also bought a few shares of Berkshire Hathaway (class B) on a “value investing” basis knowing that the price I paid for them was cheaper than the price Warren Buffet paid at the end of 2019 when he bought them in spades. Let’s be clear, it was more for the fun of having a piece of Berkshire than for diversification or long term capital gain (although I believe in it).
I hope that you’re holding your ground and following your IPS to the letter by continuing to invest regularly, even in these times of high fluctuation, and that you don’t try to get in/out by playing smart!
P2P INVESTMENTS (-CHF 195.93): As explained in detail in this article from last March, I’m getting my P2P beads out. My Iban Wallet account is closed until I’m sure it’s not a Ponzi scheme. And concerning Mintos which I also stop, I think they listened too much to Alain Berset because their so-called “Invest & Access” account seems to follow the precept of COVID-19: “You have to act as fast as possible, but as slowly as necessary.” At the time of writing, I still have 200€ blocked to withdraw.
CRYPTOCURRENCIES SPECULATION (-CHF 46.74): “It comes and goes” as the song says. For my part, I’m still keeping a record of my crytpocurrencies experiment in case it goes up one or two million in ten years. One can always dream ^^
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (n/a): Nothing to report because I make my lump sum payment at the beginning of the year (only Mrs MP is lucky enough to be at VIAC… my 3rd pillar being one of the guarantees for our mortgage), and my updated surrender value also comes at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 3'000.34): As announced in April, this is the post-COVID effect with almost CHF 2'500 in capital gains on top of the CHF 568 paid each month.
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
REAL ESTATE INVESTMENT IN SWITZERLAND (n/a): As a reminder, the 30kCHF invested here is a participation in a Swiss real estate project (i.e. not in my own name). I am still considering getting 55% of annualized return. But, potentially, this whole story will take on a much larger scale than expected in terms of project size. I will know more over the summer, but it will only be positive if it happens!
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 698.58): The magic of real estate investment: the loan repays itself “on its own” thanks to the rents.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 543.00): Cash flow continues to be positive pending taxes. I’m still waiting for my accesses to make my tax return online, but hey, we’re talking about the French government :D
In terms of financial independence, we are at 21% of our objective of CHF 2'156'000 with our net worth of CHF 462'104.07.
Which visually gives us this:
In the end, we finished with a savings rate of 57% for May 2020. We’re still heading towards a very good vintage for 2020 for the moment. But it’s only the first half of the year. So we’re staying focused and we’re optimizing our income and expenses to maximize the gap between the two.
And you, what was your net worth and savings rate in May?
PS 1: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 2: I’ve added a new “bonus” for the blog’s patrons. Since last month, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
]]>After reading the story of Sébastien and his family, I thought that if for some reason the blog had to stop, it would be OK. All that time would have been worth it. Because my articles would have had the desired effect of bringing real value to at least one reader.
I hence let you discover how Sébastien went from a dangerous debt situation to being able to project himself in 15 years with one million CHF in his bank account!
Sébastien: So, my life before Mustachian Post was that of a carefree young man who had no conscience about money. My parents were always hard workers, children of peasants and workers, they struggled to have a better life. When they became owners of a small apartment in France at the age of 30, they knew how to manage their capital and take advantage of opportunities to become, today, owners of a beautiful house in Switzerland.
The other side of the coin is that they have done everything to ensure that their children lack nothing and enjoy everything. Before I turned 15, I had already spent a week in New York, two weeks in the Caribbean, not counting trips to London, and all over France and Spain. So I got used to a certain lifestyle.
As a result, I was spending so much money without counting that I could have opened a dinosaur park, and I was already in debt before I had my own apartment. Becoming a homeowner was downright impossible in my mind.
Not to mention the fact that I never negotiated my salary. I always settled for the union minimum, as long as it paid for my living expenses…
Then I became independent. First rent, insurance, first motorbike, insurance, first car, I started to pay attention to a minimum to pay these new charges. But without ever making any savings. Money literally burned my fingers. So much so that the money my parents left me “in inheritance” disappeared within a year.
I spent nearly CHF 35'000 in two years… probably close to CHF 100'000 in a decade.
And then I met my wife. At first, I wanted to impress her, so it didn’t help. Then we moved in together. Redecorating, adding furniture and so on.
Then she got pregnant. A bed for the baby, a changing table, a stroller, a crib, bottles and pacifiers (today, I’d have a lot to talk about when it comes to savings when one become parents in Switzerland!). We moved to a bigger apartment. Baby has arrived. We got married right away. In the beginning, with two salaries, we managed it easily.
Then my wife stopped working to take care of our child. At the same time, I was burning out at work and ended up quitting. That’s about where the trouble started. It was mid-2018.
I barely had a salary in advance on my account, which bravely withstood two months with the help of unemployment benefits. Then the credit cards ran out. It was when we found ourselves having to ration pasta to buy the baby’s milk that I started to open my eyes.
After I got a job, we spent almost six months cleaning up the negative balance in my current account. For another eight months, we didn’t manage to have more than CHF 1'000 available. We were able to have our future health insurance premiums frozen, and obtained a payment arrangement for the others.
I started to make an Excel spreadsheet of our earnings and expenses, first by month, then by week. By December 2019, the situation seemed to be stable again.
It was when we found ourselves having to ration pasta to buy the baby’s milk that I started to open my eyes.Sébastien
But our expenses were still much too high, so my first reflex was… to make more money! Makes sense. So I started looking for tips on the internet… “Get rich on YouTube”… “Make 5'000€ per hour”… After going through the scams, I ended up falling into more serious areas, like trading and the stock market. After having done my homework in this area, I was ready to take the plunge. So I asked myself which broker to choose in Switzerland.
I came across your blog “Mustachian Post” when I asked Google this question.
First of all, I was a bit disappointed to find only tips on how to spend less… when I wanted to earn more. And then, from article to article, I started to understand.
I saw how much my irrational attachment to a mobile provider was costing me, just because 25 years ago the competition wasn’t at its best. I calculated how much I could have saved by comparing insurances. I discovered the “hidden” costs of my postal account and my credit cards.
It was a revelation!
I went back to my Excel spreadsheet and went through everything, point by point. And I searched, compared, studied for each expense category.
By the way, let’s talk about figures in concrete terms with our new situation today.
I used to pay CHF 160 for mobile and Internet at Swisscom. For Mrs., it was CHF 60 for her mobile phone at Swisscom too (the under 30s are lucky…).
We have cancelled the Internet and stopped the mobile subscription of Mrs. so that she can switch to a Salt offer (CHF 35 savings per month). I took Internet at Sunrise (I did try the 4G modem trick, but it was totally unstable and a speed worthy of the first 56K modems). This saved us CHF 25 per month on top of that. When my mobile contract expires, I’ll switch to Salt, to pay CHF 60 maximum (CHF 20 extra savings, and even more if there’s an offer at that time).
As far as shopping is concerned, we used to go grocery shopping almost every other day, we always had pre-cooked meals, pizza and ready-to-eat salads. Nowadays, we are much more careful with our daily expenses by making our own food. And we only go grocery shopping once a week now, which forces us to anticipate and organize ourselves. Result: savings of CHF 500 per month!
We have also discovered that our situation entitles us to various social benefits, in particular to reduce health insurance premiums. Even though it took 6 months to materialize, it offers us CHF 300 in additional savings per month.
As I write these lines (end of May 2020), I have totally changed my vision of money, spending and saving. We still have about CHF 10'000 of loans to repay, but it is already planned to have everything settled by December of this year. And I’m impressed myself that I’m capable of such a thing.
So I’ve extended my Excel spreadsheet until next year, to see how we’d manage without these constraints. Without earning more, just by being careful, I’m projecting a savings rate of 25% per month. If we manage this money properly, and with my wife going back to work in 5-6 years, we could have saved half a million in just 10 years! And the million less than 5 years later!
And now we’re even dreaming about buying or even building our own house, to raise our children in.
MP: Wow, your story is amazing, Sébastien. But I think we need to dig into this: “I’d have a lot to talk about when it comes to savings when one become parents in Switzerland!” Because there are a lot of future parents among the Team MP readers, so if they can also use your experience on this particular point, it would be a shame to deprive them of it :)
Sébastien: The world of childcare, especially when it’s the first child, is a wonderful world full of doubts, questions, anxieties and improvisations. This mixture of the unknown and very strong emotions is a real trap that some major brands willingly exploit.
We did our first shopping in two shops specialising in early childhood (Bébé 2000 and Orchestra, not to mention them), where absolutely everything you need to look after a baby is literally thrown in your face. So we came out with a changing table, two cradles (a modular one that also makes a crib, and another that hangs next to the parents’ bed), a top-of-the-range stroller, special blankets for babies, bottles and teats of all sizes, games and play mats to line the living room…
Much later, we realized that half of what we had bought was never used. In the other half, a good part of it was perfectly optional (the bottle warmer while we have a microwave…). And finally, the rest could have been bought second hand without any problem, or even elsewhere to make it much cheaper. For example, our stroller, which cost us CHF 1'200… whereas you can get one of the same size and with the same options for less than CHF 300 at Galaxus. The quality may be less good, I don’t know, but even if we bought it 3 times, it would still be cheaper.
Fortunately, we managed to avoid a few pitfalls, such as the Nestlé machine that promised bottles ultra-easy to make… for CHF 2 per capsule. Moreover, this machine was withdrawn from sale 6 months later.
In short, even when it’s for your own child, you have to take the time to ask yourself if you really need it and if you can’t find cheaper elsewhere.
MP: It reminds me a lot of the birth of our first MP kid… Thanks for sharing!
I have another question: do you think that “hitting rock bottom” is going to ensure that you’ll never have money problems again? Or did you put in place some special safeguards in place for that?
Sébastien: Hitting rock bottom made us realize that it’s extremely easy to sink. An illness, an accident, unpredictable unforeseen events can happen at any time and turn everything upside down. We have decided to put in place two safeguards for the moment:
Starting next year, I’ll be able to set up our savings plan more concretely. I already have a VIAC account open, and I’ll add an account at DEGIRO, with a target of 20% minimum savings per month at the beginning.
MP: Congratulations on those safeguards. I think they’re clearly going to help you keep your financial boat afloat in the long run.
Finally, one last question for the ego: what would your life be like today if you had never discovered the blog?
Sébastien: Being optimistic, I tell myself that I would have gotten out of it anyway, but later, more slowly. If I’m honest, I think I could have gone on surviving from paycheck to paycheck for a long time, spending every extra penny every month…
MP: Thank you, Sébastien, for your testimony. I’m sure it will help a part of the blog’s readers to see how to get out of debts, as well as prevent another part of the readers from falling into this infernal spiral you’ve been going through. I wish you all the best on your way to the million CHF!
If you too are interested in sharing your inspirational journey with Team MP members, please email me at contact [at] mustachianpost.com
Note: many thanks to the 6 new patrons Soc, KP, Gordan, Sebastian, Daniel, and Jorge for their blog sponsorship via Patreon. It makes me so happy, sincerely.
]]>As you know, building wealth to [become FIRE (Financial Independence, Retire Early)](https://www.mustachianpost.com/blog/how-to-calculate-early-retirement-fire-aka-financial-independence/) requires widening the moat between income and expenses to increase your savings rate as much as possible.
This is where frugalism comes into play to help you save as much as possible by constantly optimizing your expenses.
That’s why I talk about it so much on this blog.
But a moat has two sides.
On the one hand there are expenses, and on the other hand there is income. And I’ve been neglecting the latter a bit until today.
The reason?
I was afraid that earning more money would make me less attentive to our expenses, and therefore that these would increase over time… But I think that my frugal muscle is now strong enough after six years of FIRE adventure not to be fooled by lifestyle inflation.
Because as much as cutting expenses is one of the best ways to achieve financial independence early on, it has its limits. Because you can’t spend less than, say, CHF 0. On the other hand, the income you can earn has no limits.
That’s why I’ve decided to start this new series which aims to explore all possible and unimaginable side jobs to make ends meet.
Everybody has opportunities to earn extra income. Everybody. Even you who’s reading those lines. Just grab them. Think about it, there’s got to be a few things you can do better than any other human being on this earth. And it’s among those things that an entrepreneur like you needs to find his niche where you can bring value to these people, and get paid for it.
So I interviewed readers who have taken the step of having a side gig or a second job in order to earn an additional income at the end of each month.
My goal is simple: to break that glass ceiling that prevents you from starting a side job. And this, by inspiring you through concrete cases of Swiss entrepreneurs, who are members of the Team MP, just like you.
So we’re going to talk about money without taboos. About cash. About how to make money. And this in all transparency so that you can use it as inspiration for you to start a side business too.
When I say “in full transparency”, I’m obviously referring to the figures. But I’m also (and above all) talking about how to find such opportunities, and the time that such an ancillary income takes. And since we’re on a blog, you’ll also be able to ask all your additional questions via the comments in “zero taboo” mode!
So, if you’re wondering how to get rich, then you’ve come to the right place. But you’re going to have to do something about it, and it’s not going to be easy! You are a Mustachian after all, aren’t you? Because it’s worth it.
The proof is mathematical.
If tomorrow you start earning CHF 1'000/month extra and invest it at a 7% return over the next ten years, then you will end up with CHF 177'408 more savings in a decade’s time. And the thing about incidental income is that once you get a taste for it and realize that you can generate it, then nothing can stop you.
And believe me, if any of the blog’s readers managed to do it, then I don’t see why you couldn’t. There’s no reason at all.
If you are already one of those who have found a way to earn money through a second job in addition to your current job, then I am interested in interviewing you in this series of articles. Whether it’s a home-based job, an online job, a crazy job, a job that earns you CHF 100, or one that earns you CHF 10'000 more per month, I’ll take anything as long as you share all the details with the members of the Team MP. Please contact me at contact [at] mustachianpost.com
Then you’ve come to the right blog :)
My personal goal is to stop working at 40 in Switzerland to become financially independent.
What you’ll read below applies equally well if you want to stop working for money at age 30 or 52.
But let’s start at the beginning.
In 2013, I was looking for a way to save money so that we could buy our home in Switzerland with Mrs. MP. Looking on the World Wide Web, I saw that the first step would be to create a budget.
As a geek, I looked for a digital budgeting tool that I could access from my smartphone and laptop. That’s how I discovered YNAB (aka “You Need A Budget”) which brought us from CHF 50'000 to CHF 450'000 of net worth in 6 years.
I spent several evenings on the YNAB forum to find out how to save as much as possible through all the possible and unimaginable budget tips.
In the course of my peregrinations, I came across a member of the forum who said:
“Cool your real estate project. I, on the other hand, am trying to save up to retire at 35.”
“Uh, sorry?!” was my first reaction.
As I was talking with him, he told me about the FIRE (Financial Independence, Retire Early) movement.
It was a turning point in my life. So much so that since 2013, becoming FIRE is my main life goal.
The main idea is that you save a lot via a Mustachian lifestyle. You then invest all this cash in the stock market or real estate. And once you reach the amount you need, you live on the returns of your investments for the rest of your life.
Tempting, isn’t it?
If you’re like me back then, i.e. you’re hooked by the idea to stop having to work for money, the missing piece of the puzzle is:
“But how do I figure out how much money I need to be financially independent? And what about calculating my early retirement date?! Can you tell me MP, please!”
Luckily, people even smarter than me (that’s to say their level! :D) have been working on the subject.
Professors of finance at Trinity University (San Antonio, Texas, USA) have analyzed the subject of the withdrawal rate in someone’s wealth during retirement in their Trinity Study.
This study was popularized with the FIRE movement, and is more commonly known as the “4% Rule” (from its real name “Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable “, by Philip L. Cooley, Carl M. Hubbard and Daniel T. Walz in 1998).
In summary, this Trinity Study explains that, statistically, your wealth invested in the stock market will remain untouched — thanks to the stock market’s steady growth — if you use only 4% of its returns each year to support yourself.
Please note that the Trinity Study only talks about your invested assets. It does not take into account any income from any Swiss AHV/IV/LPP pension system that you may receive in the future.
The idea is that all your invested wealth will earn you 6-8% annually. You subtract from that the inflation of 2-3%, and you live with the remaining 3-4% returns.
If you take my example:
If like me you are not a fan of reverse percentage calculations, let’s make a little rule of three (aka cross product) so that you can calculate the amount of money you need for your own financial independence.
As we saw above, if you consume 4% of your invested wealth, it will remain untouched according to the Trinity study.
In order to be able to calculate your FIRE amount, we just have to do the following calculation (I’ll use my example):
FIRE numbers | Percentage |
---|---|
? | 100 |
86'240 | 4 |
A simple cross product tells us that to get the value of 100% of our investments, all we have to do is :
? = 86'240 * 100/4
that is: ? = 86'240 x 25
and so: ? = 2'156'000
The 25x method means that to calculate the amount of invested cash you need to be financially independent, all you have to do is :
FIRE amount = Annual expenses x 25
By the time I had this formula, my goal of financial independence became much more concrete. I finally had a target figure to reach in order to become FIRE.
The next question that came to me was: “In how many years will I be able to reach this amount?!”
In the FIRE community, there is a well-known FIRE calculator: the Networthify calculator.
This latter allows you to enter the following information:
Then click on “Crunch the numbers” and the magic of the calculator will tell you in how many years you can retire early :) You can then play with the numbers to see what impact more savings would have on the number of years you have left to work for money.
Let’s take two concrete examples:
This gives us the following table:
Starting from the same starting point in terms of income and net worth, the two families do not end up at the same point of arrival… :
That 18-year difference is huge, especially when you think it’s mostly due to little optimizations that create that gap.
Once you have understood the mechanism of the FIRE calculation using the 4% rule and the 25x annual expenses method, you understand the interest of calculating your savings rate each month. And work on increasing it continuously if you want to achieve financial independence as soon as possible.
To motivate yourself, I advise you to print this table “Number of years until retirement/Savings rate” and hang it somewhere you won’t be able to miss it:
Savings rate | Years until retirement |
---|---|
0% | 90 |
2% | 84.7 |
4% | 70.4 |
6% | 62 |
8% | 56 |
10% | 51.4 |
12% | 47.5 |
14% | 44.3 |
16% | 41.5 |
18% | 39 |
20% | 36.7 |
22% | 34.7 |
24% | 32.8 |
26% | 31.1 |
28% | 29.5 |
30% | 28 |
32% | 26.6 |
34% | 25.2 |
36% | 24 |
38% | 22.8 |
40% | 21.6 |
42% | 20.6 |
44% | 19.5 |
46% | 18.5 |
48% | 17.5 |
50% | 16.6 |
52% | 15.7 |
54% | 14.9 |
56% | 14 |
58% | 13.2 |
60% | 12.4 |
62% | 11.7 |
64% | 10.9 |
66% | 10.2 |
68% | 9.5 |
70% | 8.8 |
72% | 8.1 |
74% | 7.5 |
76% | 6.8 |
78% | 6.2 |
80% | 5.6 |
82% | 5 |
84% | 4.4 |
86% | 3.8 |
88% | 3.2 |
90% | 2.7 |
92% | 2.1 |
94% | 1.6 |
96% | 1 |
98% | 0.5 |
100% | 0 |
I find this FIRE table very inspiring. It makes you realize that you are the one who has your future in your hands. Every expense you decide to optimize or not to make has a direct impact on your savings rate, and therefore on how many years you have left to work for money.
I can already hear the Internet naysayers and trolls screming: “Hey but no MP, the 4% rule doesn’t work! No way! Blah, blah, blah, blah, blah…”
My answer?
“Yes, I know, but, no, you’re wrong!”
Yes, I know that the 4% rule of the “Trinity Study” was made almost twenty years ago, with 30 years of retirement as the basis for calculation, and not 50-60 years of years spent in retirement as is envisaged in the FIRE community.
As my blogging buddy The Poor Swiss recently calculated in his article (see here), it would be wiser to take 3.5% of your total invested wealth as the amount to count on for your annual expenses (i.e. transforming the annual expenses multiplier from x25 to x28.5).
Another very reputable colleague in our Swiss FIRE community is the Canadian Ben Félix. In his latest video on the 4% rule of the FIRE movement, he mentions Vanguard’s paper which recommends a more pragmatic approach. Namely to adapt the spending percentage of the total portfolio between 2.5% and 5% depending on how the market is doing. This is done in order to prevent the value of the portfolio from falling.
When I answer “No, you’re wrong!” to naysayers, my argument is this:
The 4% rule to calculate your FIRE date is a good rough estimation.
What I advise is not to get too lost in micro-calculations to the nearest tenth of a percent. And rather to put this energy into building up your frugality muscle, and finding ways to increase your income regularly.
To find out how much CHF you need to become a FIRE, simply multiply your annual expenses by 25.
Then, you can calculate in how many years you can early retire by inserting your figures in the Networthify FIRE calculator.
In order not to draw only inspiration from this article, I suggest the following exercise to take action:
If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
CASH FLOW AND SAVINGS (-CHF 17'072.37): COVID-19 has helped significantly in limiting unforeseen expenses. This was at least a benefit :)
There were, however, some unusual cash outflows:
As far as income is concerned, apart from our two salaries and the blog affiliation, we had a good month of April again thanks to:
STOCK MARKET INVESTMENTS (+CHF 18'048.49): The low point of the coronavirus crisis seems to be behind us. The markets have rebounded and so have our net worth. I have continued to buy VT ETFs (as I am finally assured that we are OK with the US-Switzerland estate tax treaty) as well as value investments with many big discounts especially (and still) in Japan (reminder: all the info is disclosed for the sponsors of the blog).
I don’t talk much about investor psychology on the blog, and wrongly so. I will correct that soon. In the meantime, this coronavirus stock market crash will have been the first I’ve experienced with more than CHF 150'000 invested in the stock market. We went down to CHF 103'000 at the bottom of the fall. And, proudly, I can tell you that it didn’t make me feel hot or cold (maybe it will be different the day I’m about to take early retirement). I didn’t sell anything. On the contrary, as planned, I took advantage of the opportunity to enjoy the sale period. And it didn’t stop me from sleeping once — except for wondering if I should wait a day or two in case the market goes down again ;)
I’m interested to know how you reacted, and how much you invested, so don’t hesitate to leave a comment with that information.
P2P INVESTMENTS (-CHF 512.97): As stated in my March net worth update article, I’m stopping all P2P investments. I have closed my Iban Wallet account, and I’m getting my cash out of Mintos gradually (as fast as I can, but the “Invest & Access” program is not as instantaneous as its name suggests…).
CRYPTOCURRENCIES SPECULATION (-CHF 55.89): If you want something volatile and unpredictable then go for the cryptocurrencies :D
For my part, I’m still keeping a record of my crytpocurrencies experiment in case it goes up one or two million in ten years. One can always dream ^^
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 1'325.00): We received Mrs. MP’s pension situation and surprise, there was CHF 1'000 more because my estimates following her last salary change were conservative :)
MP’S 3RD PILLAR (n/a): Nothing to report because I make my lump sum payment at the beginning of the year (only Mrs MP is lucky enough to be at VIAC… my 3rd pillar being one of the guarantees for our mortgage), and my updated surrender value also comes at the beginning of the year.
MRS’ MP 3RD PILLAR (-CHF 3'570.56): As I enter the VIAC infos at the beginning of the month in YNAB (i.e. beginning of April for this article), we can still see the COVID-19 effect on our favorite 3a. But that’s okay, we continued to pay the CHF 568 as usual.
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
REAL ESTATE INVESTMENT IN SWITZERLAND (+CHF 30'000): This is the communicating vessel of our cash flow. As I have already mentioned on the blog, I am involved in a real estate project in Switzerland which is very interesting. I’m waiting for it to be finished before I can fully document it.
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 701.05): The magic of real estate investment: the loan repays itself “on its own” thanks to the rents.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (-CHF 67.65): Little problem with the water heater that we had to replace in one of the apartments. Nothing bad, especially since it’s part of our annual maintenance budget for the moment.
In terms of financial independence, we are at 21% of our objective of CHF 2'156'000 with our net worth of CHF 444'206.97.
Which visually gives us this:
In the end, we finished with a savings rate of 75% for April 2020. We’re sticking with a very good 2020 vintage for the moment. But it’s only the first half of the year. So we’re staying focused and we’re optimizing our income and expenses to maximize the gap between the two.
And you, what was your net worth and savings rate in April?
PS 1: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 2: I’ve added a new “bonus” for the blog’s patrons. Since last month, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
PS 3: I’d like to take this opportunity to thank the new patron of the blog linlin. A big thank you for your support!
]]>Their objectives are different, but the way to achieve them remains the same: budgeting in order to save money.
But the problem they often tell me is that knowing how to manage money is not a skill that everybody has. Moreover, my budgeting method with You Need A Budget (aka YNAB) is not for everyone because you have to enter each transaction manually (or via import), which is too time consuming for some readers. Which I can understand. We’re not all budget geeks.
But there are other methods that are simpler and quicker, but just as effective.
As my answer to these emails is often the same, I thought I’d make an article to help newcomers to the blog about the types of budget that exist.
After reading many articles and forums on the subject, I came to the conclusion that there are four main categories of how to make a budget.
Olivia is 29 years old. She wants to take a sabbatical for her 32nd birthday in order to fulfill her dream of exploring Asia for a year in backpack mode. All her readings on how to achieve happiness in life have shown her that you don’t fully enjoy a country when you go on holiday for 15 days. Because you try to see everything in a frenzy that is more tiring than restful.
Her objective is to test the “slow travel” way in order to immerse herself in these cultures so different from the West.
By doing her calculations, she saw that she would have to reach 50% savings rate from today on to achieve her goal.
But Olivia doesn’t imagine having to enter each of her transactions by hand into a budget. She’s already tried, but it’s not for her. She gave up after two weeks… She’s willing to make every possible concession to her spending to get to that 50% savings rate, but she wants to keep her budget management as simple as possible.
After two months of testing my monthly budget solution, she can’t believe it. It works!
The simplest solutions are often the most effective.
She has therefore adopted the “self-taxation budgeting method”.
From now on, any income that came into her account was split in half. 50% of the tax went directly to her savings account which she couldn’t easily access (i.e. she had to find her login and password, and that alone discouraged her from dipping into it). And she could use the other 50% as she saw fit.
Of course, she had some difficult endings at the beginning, but her life goal motivated her to eat pasta for several days. And as the months went by, she implemented two additional tactics:
As you can see, Olivia no longer needs to enter her transactions on via this budget method. All she has to do is to be disciplined when she receives her salary (and any extra income) by splitting it in half.
And if she needs to know where she’s at in terms of spending, she just has to look at what she spent during the week compared to what she had planned. The amount left over is what she can spend. No more, no less.
An important point I made to Olivia when I introduced her to this method: you must obviously inform your bank that you do not want an overdraft authorization. Otherwise you risk getting into a debt spiral and this is not an option for us on this blog.
This precept of paying yourself first, via this self-taxation, can be used as a budgeting method in itself. But it is also a basic precept that combines very well with the three other methods that we will see later on.
Also, this method of personal budgeting can work for any life goal. All you have to do is adjust the percentage of self-taxation on any income that comes into your account, as well as to which account you transfer it (i.e. if your goal is financial independence then you will prefer to send your savings to an investment account rather than a Swiss savings account…).
On the other hand, if you have a personality that likes tangible stuff, then move on to the next budgeting method #2.
Philippe lives in Thalwil, on the periphery of Zurich. He is 42 years old, divorced, and father of two grown-up girls who will soon enter adolescence ;)
He has always had a hard time managing his money. His biggest problem with the family budget? It may sound silly, but he hates anything digital like e-banking or mobile apps from banks. He likes the concrete. He wants to be able to see his cash so he can count how much he has left over for the month. And don’t talk to him about Excel budget files, it gives him hives!
When he contacted me, it was a bit hard for me to help him because I’m rather his opposite… but it reminded me of a US blog I had read several years ago. The author explained that the budgeting method that had worked for her was based on a cash envelope system!
The principle is very simple again. When you receive your income, you withdraw (literally) all your monthly allowance in cash at the ATM. Then you divide this into as many envelopes as you have budget categories (e.g. groceries, public transport, outings, etc.).
And when your friends call you on the 15th of the month, you can quickly take a look at your “Outings” envelope and see if you can afford it or not. And if you really don’t want to miss that evening for CHF 10, you always have the option of consciously deciding to take CHF 10 out of your “Groceries” envelope, and you know you’ll have to be more careful in this category that month.
Some aficionados of this method even go as far as having four groups of envelopes containing each all the categories of expenses in order to reproduce the system used by Olivia in the previous example, i.e. having a weekly allowance rather than a monthly one.
The big advantage of this method is that it is not virtual. If the envelope is empty, well, it’s empty! And no temptation to use your Maestro card because your entire account is already empty since you have withdrawn all your cash.
Although pragmatic, this cash envelopes system has a big disadvantage in today’s world: how to pay by card on the internet or in places where they don’t accept cash (festivals or other)?
One idea might be to go and deposit cash back into your account so that you can use your card. It’s impractical, but potentially interesting from a frugal point of view because it can save you a lot of impulse spending. But I understand that it may not be suitable for everyone… hence, the following method.
Antonio, a reader of the blog, uses the spreadsheet budgeting method (Microsoft Excel, Google Spreadsheet, or any other similar tool) to compensate for the impracticality of the cash envelope system.
Because, let’s face it, he’s a bit of a geek when it comes to the budget. But he has two conditions (besides it being digital) to choose his method of managing his money: first, he doesn’t want to pay for a budget planner app, and second, he wants the flexibility to play with his personal finance data without restrictions.
That’s why he chose a spreadsheet budget.
There are a plethora of online Excel budget templates available, but he preferred to create his own in order to really make it his own.
His system is basic, yet effective.
He creates an Excel monthly budget table in a tab for the current month. Then, when the next month comes up, he duplicates the previous month and deletes all the amounts to start from scratch.
This month’s tab looks like this:
This method requires more discipline because all transactions must be entered. An alternative is to pay everything with your card and to do your personal accounting every weekend by entering all the transactions.
If you’re the type of person who doesn’t like to do spreadsheets from your smartphone (because you have to zoom in, aim for the right cell, zoom out, etc.), then this system can be restrictive because you have to have access to your computer before you know where you stand with your budget. Not very practical when you’re in the middle of IKEA and your significant other has a crush on a new sofa…
This method of budgeting software is the most advanced, but not necessarily the most complex.
Entrepreneurs have also realized that it’s not practical to navigate a spreadsheet from a smartphone. And that’s not to mention the notorious miscalculation that hurts when you see that at the end of the month you’re actually in the red zone… :
What the hell is this mess?! Why are we overdrawn on our e-banking? Argh darling, I did put a — instead of a + in this column of the spreadsheet… we’re going to have to eat rice next month…"
Since the advent of the internet and smartphones, we’ve seen a plethora of budget apps come up. Their big advantage is that they can be used and consulted from a computer as well as from a smartphone. All data is always up to date and synchronized. This also facilitates budgeting as a couple when everything is in common.
Some softwares even allow you to directly connect your bank accounts so you don’t have to enter your transactions manually (not often the case in Switzerland, but it’s coming!).. And if your bank doesn’t offer this, you can often use the alternative of downloading the data and importing them all at once.
On my side, I have been using and recommending the software YNAB since 2013 and I am not about to change it. It made me go from 50kCHF up to 450kCHF of net worth in less than 6 years. I appreciate it for its ease of use and especially because it allows me to have a global view in one place of all my accounts, mortgages, and other investments. And the little extra that changes everything, it has an accompanying methodology that has taken more than one out of debt, or out of the “paycheck to paycheck” lifestyle.
What’s more, YNAB offers a mobile app, an iPad app, and a web-accessible version. And all these versions are always in sync with each other. It’s great for budgeting as a couple.
If it’s this last budgeting software option that tempts you, I advise you to browse the Team MP forum where readers share their feedback (including free budget applications other than YNAB). Don’t hesitate to test several of them before choosing your final budget solution. Especially since these services, when you need to pay for them, often offer demo versions or free trial periods.
In order to help you choose the best way to create a budget for your own situation, I prepared you a table comparing the different types of budget:
Budgeting method | Complexity | Time it takes ? | Global wealth overview | Budget history |
---|---|---|---|---|
1. Self-taxation | Simple | 1h/month | ⛔ | ⛔ |
2. Cash envelopes system | Simple | 1h/month | ⛔ | ⛔ |
3. Spreadsheet budgeting | Complete | 1h/week | ✅ | ☑️ |
4. Budget app | Complete | 1h/week | ✅ | ✅ |
(☑️ It’s fastidious to create a system that saves each transaction via a spreadsheet budget)
There’s got to be a budgeting method that’s right for you. From the easy budget to the complete one, there is one for every type of person.
I’m personally in the last category of the geek who wants to have a complete view without any mistakes, hence my choice of YNAB.
But as I often say, the ultimate goal is to find the budgeting way that suits you and allows you to control your money. And the only valid way is:
I’m the kind of person who likes to put into practice what I read, rather than “only” getting inspired, without taking action.
So, I suggest the following exercise:
It’s your turn!
P.S. #1: Don’t hesitate to tell me if there’s a big category of type of budget missing
P.S. #2: if you’re a budget pro and you have budgeting tips and tricks to share with someone new to the subject, feel free to do so via the comments below
P.S. #3: I’d like to take this opportunity to thank the three new patrons of the blog Jean-Claude, Dino, and Andrey. A big thank you for your support!
]]>The question to which I still had no clear answer (until this article and the confirmation of an internationally renowned professional tax advisor) was: how does the US estate tax work in the event of death for a Swiss citizen?
Before exploring this topic, let’s lay the groundwork for our case study:
By default, if you own US assets as a foreigner and then die, your heirs are charged 40% US estate tax on anything over USD 60'000.
By default, I would therefore inherit only CHF 74'400 of ETF VT. The reason for this is : CHF 60'000 tax-exempt by default + 60% of (84'000 - 60'000) = CHF 74'400.
Except that, the United States and Switzerland signed an estate tax treaty in 1951 to avoid double taxation. And that’s high-level legal talk :D
Following my analysis, my conclusion was that yes, our situation as presented above would allow me to not be taxed at 40% on anything over 60kUSD of US assets (but with another limit).
Instead, I would take advantage of the USA-CH estate tax treaty by being exempt from US estate tax up to 7% (i.e. my percentage of US assets out of my total assets) of USD 11.58 million (exemption allowed on estate tax for a US citizen in 2020).
Concretely, from my understanding, I will therefore be exempt from any inheritance tax on Mrs. MP’s US assets up to USD 810'600 (= 7% of USD 11.58 million).
I came to this conclusion by dissecting in detail each line of the Convention between the Swiss Confederation and the United States of America for the Avoidance of Double Taxation with Respect to Taxes on Estates and Inheritances:
“In imposing the tax in the case of a decedent who at the time of death was not a citizen of the United States and was not domiciled therein,”
That’s consistent with Mrs. MP, who is not a U.S. citizen, nor does she live there. We’re good.
“but who was at the time of his death a citizen of or domiciled in Switzerland,”
It’s okay, it still matches Mrs. MP.
“the United States shall”
First doubt: why “shall” allow? Why not “have to” or “must”, or simply “allow”?
“allow a specific exemption which would be allowable under its law if the decedent had been domiciled in the United States”
Reading this calmly on a Sunday afternoon, I understand that you get the same treatment as a US citizen with this sentence. That is, we’re taxed the same way he is when it comes to an estate.
in an amount not less than the proportion thereof which the value of the total property (both movable and immovable) subjected to its tax bears to the value of the total property (both movable and immovable) which would have been subjected to its tax if the decedent had been domiciled in the United States.
Seriously, would an example have been too much to ask?
So basically it says that you are exempt from inheritance tax just like a US citizen, but only up to the percentage of what you own in US property (the famous 7% calculation above).
Let’s continue the intellectual (not to be more vulgar) gymnastics:
“If a tax is imposed in Switzerland by reason of movable property being situated within the territorial jurisdiction of the tax authority (and not by reason of the decedent’s domicile therein or by reason of the decedent’s Swiss citizenship)”
Again, I had to take the time to read line by line.
I translate this sentence as “If you have some CH-based assets (we don’t care about your citizenship, we talk only about where are located your “movable assets”).”
“in the case of an estate of a decedent who at the time of his death was a citizen of or domiciled in the United States,”
It’s not our case. So we don’t care about that sentence, and the next one, for that matter.
“the tax authority in Switzerland shall allow a specific exemption which would be allowable under its law if the decedent had been domiciled within its territorial jurisdiction in an amount not less than the proportion thereof which the value of the total property (both movable and immovable) subjected to its tax bears to the value of the total property (both movable and immovable) which would have been subjected to its tax if the decedent had been domiciled within its territorial jurisdiction.”
So my conclusion as a non-specialist in international tax law is that I could let myself go by buying as many VT ETFs as I want. In any case much more than the default limit of 60'000 USD.
Except that until this article that you are reading, for fear of my incompetence in international taxation, I had always restricted myself to 60'000 USD of VT ETF maximum, and had fallen back on his European cousin VWRL for anything over that amount (see details here). Because a 40% tax rate, that hurts!
While doing my Google searches on this subject of estate tax on US assets as a non-US person, I also came across this great article which summarizes the fact that the law should be revised because there are cases that are not covered because it’s no longer 1951…
We agree :) And if they could simplify the lawyer’s jargon by the way, that would be great!
The authors of this economic paper are Marnin Michaels and Jackie Hess. I contacted them to see if they would be willing to answer a few questions for an article and…they agreed! It’s with Marnin (cf. his LinkedIn profile) that the discussion continued.
First of all, I would like to thank him for his time that he made available to the Team MP for free, because it’s his job usually! So thank you Marnin.
MP: Marnin, do you confirm my case analysis above?
Marnin: Yes I confirm your analysis.
The US-Swiss Estate Tax Treaty is very old. It does not follow the new norm which is to exempt US shares from estate tax like the German and French treaty do. Rather, it’s the old formula system : US Assets/World Wide Assets * US exemption.
In the old days, the US was the only country to take this position. We now see more and more countries, like the UK trying to take similar positions.
MP: Thanks a lot Marnin for your confirmation. In the event Mrs. MP died, then I (aka Mr. MP) would need to claim this exemption by filling a 706NA US form. And that’s it. Is that correct?
Marnin: Yes, the US form 706-NA and a US form 8833 would be required to take the position.
MP: It seems very clear to me. One last question: many members of Team MP have the situation where they are not Swiss but expat. Does that change a lot?
Marin: The answers you gave concern Swiss residents, irrespective as to nationality.
MP: Perfect! I think we finally have our answer confirmed by a professional. Thank you again for your time Marnin.
Marnin: With pleasure.
Following this discussion with Marnin, I’ve decided to go all the way again with the VT ETF :)
I’m going to keep our VWRL positions to see how they evolve in comparison.
If you’re at DEGIRO (rather than Interactive Brokers aka IB), then you only have access to the VWRL ETF because of the latest regulations. On the other hand at IB you still have access to the ETF VT to this day.
If you are not a Swiss resident, then you need to see if your country has a treaty with the United States.
While doing my tax peregrinations, I came across this fantastic table from bogleheads.org (one of my favorites websites) which lists its ETF domiciliation recommendations by country of residence. Just great!
And you who read these lines, are you investing in US positions? Or only European positions? And why?
]]>I hope you get inspiration from his journey.
1000000CHF: I was born to poverty in the late 80s in communist Poland. This is not an unusual statement because most people who were born at this time in Poland were living in poverty. Communism was bankrupting and the situation was so bad that communists voluntary gave power to the democratic opposition in a contract that guaranteed party officials that nobody will go to jail for communist crimes.
Economic transformation that followed in the 90s was very tough. Most factories bankrupted and were closed. New companies were opened but the process of adaptation was slow. Inflation was very high and unemployment even higher. A lot of people had to change their profession or even go abroad to make a living. My dad had to go as well.
When the government applied some special measures to combat inflation, my dad’s salary was lower than the monthly rent. That meant that every month we’re living from borrowed money. The choice was either moving back to slams were I was born and my parents lived before the 90s or going abroad to earn and save. This made a huge impact on my dad’s psyche — he was ultra frugal all his life. My dad worked as a painter of wooden houses for 2 years in Sweden. In the meantime, the economic situation in Poland has stabilized. Incomes started growing, inflation was normal, unemployment was still high, but not in Warsaw. Big cities were enclaves of prosperity in a sea of misery. My mother did some additional training and she managed to get a good job as an accountant in Warsaw. From that time we’ve become part of Poland’s new middle class.
Most of my childhood memories relate to these times. We were a financially average family. Neither poor nor rich. By Western standards that would be still poor, but by Polish standards it was okay. My parents slowly accumulated their wealth year after year, and because they didn’t know how to invest (and besides, even if they knew, investing in stocks was crazy expensive and run by actively managed funds in big banks — it’s still often 3.5% TER), so they built a house instead. It took many years and they finished just when I was going to study at the university in another city (by the way, I was the second person in my extended family who went to university and none of my neighborhood friends got into a university).
I started studying computer science in one of the poorest Polish cities, in one of the worst public universities. At that time marvelous luck happened to me that changed my life forever. I met my future wife. She fixed me in so many ways I can’t even explain. First, her love cured me of mild depression that I was suffering from my entire childhood and adolescence. Second, she made me stop drinking and smoking. Third, she motivated me to study. After a year of computer science, I decided to take another major in parallel — business management. The university level was not very high (especially on English-held majors that I took). I became an average student and eventually finished these two majors with decent grades.
During those years I was getting a monthly bank transfer from my parents for rent and living. I was terrible at managing it. Often, I’d overspend on stupid stuff (like fast food) and then I had to borrow money to pay the rent or buy food. Or I would call my parents and figure out some silly excuse to ask for more money. This happened all the time, almost every month. It took me so many years to change my spending habits, it’s incredible.
After I graduated I moved to Warsaw and started working while finishing my IT master’s degree in weekend studies at an expensive private university. My first salary negotiation was a joke. I was so stressed that I asked for any money. So obviously they gave me the lowest possible salary (CHF 500). After two or three years I realized I was screwed over and decided to negotiate a raise. It didn’t work very well, so I decide to change jobs — I more than doubled my salary. Since then I’m changing jobs at least every two years. I still believe it’s the easiest way to get the best salary raise possible.
After a year, another opportunity opened. I was visiting a friend in Geneva who was working at CERN as a physicist. He suggested that I should apply there as System Engineer as they had tons of servers to manage and there were open short-term job positions practically every year. I decided to give it a shot and landed in CERN Control Center — managing the servers that run among many others Large Hadron Collider. At CERN I was getting 4kCHF net a month and it was an enormous amount of money for me. I was saving about +1kCHF a month.
From CERN, I moved to Zug to work for a FinTech bank and later on I continued working in the FinTech industry in Zurich. In Zug, I doubled my CERN salary — when I first heard about Swiss salaries from a recruiter I couldn’t believe it. And I thought I was earning tons of money already at CERN…
That’s around this time that I learned about the MP blog while researching 3rd pillars options.
I got hooked.
And since then I started saving 50% of my salary (~4kCHF a month). It was in the same period that my son was born, but because I was so disciplined (should I say “obsessed” ^^) with saving, it didn’t change anything in my financial situation. Additionally, because I had two dependents, Zug canton lowered my income tax rate to 2%, which was lower than the family allowance (CHF 300). So basically, I was getting the taxes paid.
After a few years, I again changed job to work in the same field and industry in Zürich, and I switched to 80% while keeping the same salary. In the meantime, my wife started working and our son began to attend kindergarten. We then chilled a little bit more with savings and our savings rate dropped to 40% (that’s still ~4kCHF of our combined salaries).
MP: Wow, kinda inspiring for the first story of our series! Thanks for sharing your life so openly with us 1000000CHF.
But let’s step back a little bit. Could you detail a bit more what was your financial mindset and life before stumbling upon Mustachianism and FIRE (Financial Independence, Retire Early) on the MP blog?
1000000CHF: Well, I used to spend everything I earned. The change in my behavior was initiated when I opened a savings account where I automatically transferred part of my salary every month around 2011 (when I started my first serious job).
Back then my net worth was still null. After 4 years we managed to accumulate with my wife about 40kPLN (~10kCHF) and decided to focus on saving for a mortgage downpayment.
In 2015, I moved from Warsaw to a small town in France next to Geneva, and I started working as a contractor at CERN (earning 4kCHF net). This allowed us to pump up our savings. I was living in France for a year in the crappiest apartment I could find (it wasn’t a problem for me at the time, as I only slept there). I wasn’t living frugally but still managed to save a bit.
In May 2016, I moved from France to Zug and my savings were equal to 188kPLN (~47kCHF). In Zug, I’ve got an even better salary (8.5kCHF per month gross) and I was lucky to find a cheap apartment (1.5kCHF per month).
Zug, a famous tax haven, also gave me an incredibly low tax rate — as far as I remember ~2.5% (which dropped to 2% after my son was born). Over another year, I managed to accumulate 280kPLN (~70kCHF). At this point, we were close to buying a small apartment outside of Warsaw for cash. We decided to stay in Switzerland a bit longer and save up for a better apartment (and closer to Warsaw). That would require at least another 100kPLN (~25kCHF).
For quite a long time I was thinking about investing but I just couldn’t find any reliable source of information in Polish. In Poland, the investing offers are very limited and knowledge about investing is even more limited. So I was basically sticking to time-deposits. In Switzerland, I learned about 3rd pillar and I realized that I needed to start investing for my retirement.
I went to my bank (UBS) and asked for an offer.
I decided to google a bit to compare it with other banks. This is how I discovered “Mustachian Post” and the mustachian’s philosophy.
MP: Gosh so actually I should thank UBS for doing a bad job :D
So, tell us what happened afterwards, and how your Mustache started to grow.
1000000CHF: Well, I quickly learned that UBS 3rd pillar was (and still is!) a f*cking joke, and opened a 3rd pillar account at LUKB (there was no VIAC at the time).
The second step was to get serious about saving and investing. I started budgeting fanatically and opened a Cornèrtrader account and started investing in iShares Core MSCI World UCITS ETF (SWDA) ETF listed on SIX in USD. Thanks to @hedgehog I realized that Cornèrtrader (aka CT) rates for currency exchange are nonsense and I switched to VT ETF at Interactive Brokers. Since then I’ve added KBA ETF to cover China domestic market and I continue to invest in these two funds. Later on, I switched from LUKB to VIAC and I closed CT as they introduced new fees.
Mustachianism also accelerated my passion for learning finance.
Since then I’ve read dozens of books (my favourites being: “A Random Walk Down Wall Street” by Burton Malkiel and “A Wealth of Common Sense” by Ben Carlson) and started following and reading hundreds of blogs about FIRE, personal finance, and investing (my favourites: “The Shockingly Simple Math Behind Early Retirement” by MMM and “Stock series” by J. L. Collins).
And I stay the course — as Saint of Wall Street, John C. Bogle, has taught us.
I think the best way to illustrate the changes before/after discovering your blog is to show how my savings rates changed during the year 2017:
In other words, your blog made me rethink my lifestyle and in effect doubled my monthly savings.
MP: Wow! If I need a boost of motivation to keep up with the blog at some point, this list above is the first thing I’m gonna get to!
In other words, your blog made me rethink my lifestyle and, in effect, doubled my monthly savings.1000000CHF
1000000CHF: When I told you that you impacted my life, it was no joke bro! Actually, if I didn’t stumble upon your blog, I’d have stick to the UBS crappy 3rd pillar and slowly saved up (~20-25%) for my apartment in Warsaw. What would I do after that? Who knows, maybe I’d learn about traditional investing options (like buying an apartment for rent) after that. It’s hard to say — but one thing is sure, I’d save much less than I could, and I’d continue to be scared and uninformed about stock market investing.
MP: And so, what are your next steps? FIRE? Remaining in Switzerland for the rest of your life, or going back to Varsaw?
1000000CHF: We’re not sure about this yet. At this point, we want to continue saving and investing until my son will approach school years (that’s still 4 years to go). After that, we will have to decide whether we want to stay in Switzerland for the next 15+ years or go back to Poland, as we don’t want to move back in the middle of my son’s education and his teenage years. I’ve personally experienced how growing up can be dramatically difficult and that stability in these difficult years pays off.
It also depends on how well we will integrate with Switzerland. I’m personally very happy with my job and I enjoy spending time with my Swiss friends but my wife is just at the beginning of her journey — she’s currently working at a terrible place (due to government bureaucratic obstacles to immigrants with medical degrees), and she hasn’t made any Swiss friends even though she’s fluent in German and a very open-minded person. If her situation won’t change, we will move back sooner rather than later.
We’ll definitely FIRE outside of Switzerland — mostly due to prohibitively high costs of living. Most likely in Poland — as my wife would like to return to Warsaw in the future, but I hope I’ll manage to convince her to at least spend the autumn and winter months somewhere in the Mediterranean region. At this point, our kids should be grown-ups and we will “work” for fun and social connection, not for money anymore.
That idea keeps me going and motivates me to continue saving and investing.
MP: Thanks again 1000000CHF for sharing your journey, and I hope your future will be as bright as what you achieved so far!
If you too are interested in sharing your inspirational journey with Team MP members, please email me at contact [at] mustachianpost.com
]]>If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
CASH FLOW AND SAVINGS (+CHF 10'481.06): It was a pretty typical month in terms of expenses, and a good month in terms of cash flow.
Regarding non-ordinary expenses:
Otherwise in terms of income, apart from our two salaries and the blog affiliation, we had a good month of March:
STOCK MARKET INVESTMENTS (-CHF 17'950.30): Unsurprisingly, the stock market continues its freefall due to the coronavirus crisis. We had already started this bear market in February, but now we’ve been there for real.
I took the opportunity to buy many value investments on sale, mainly in Japan where stocks are being slaughtered … Unfortunately (or fortunately?), I was limited with funds to bring in because I was committed to my famous real estate project at a rate of return of 55% so I had to keep these savings in reserve.
Anyway, I didn’t sell anything, like I planned. I simply continued to buy even more than usual (see my passive stock market strategy as a Swiss investor). This proves to me that I can get through a stock market crash without cracking. Now I’m just waiting to see what happens next — i.e. how long it will take to recover ;)
P2P INVESTMENTS (-CHF 27.18): I have decided to call a halt to these alternative P2P investments.
Iban Wallet
Iban Wallet is not a serious business in my opinion. They’ve been saying loud and clear that they’re going to put more information about who’s behind this company on their site for months, but nothing comes. I can’t figure out their strategy (unless it’s a big scam).
Anyway, I don’t have a kopeck with them anymore. And I removed all my affiliate links because I don’t want to have anything to do with them.
Mintos
I know I owe you a detailed report of why I got out after I dug, it’s still planned.
In the meantime I’m testing the cash out of my 1'000€ from the “Invest & Access” program. And what can I say… it’s more like “Invest very quickly & Access very slowly”. Basically, I started to cash out my 1'000€ at the end of March, and 1.5 weeks later I only had 15% in cash. And so far, one month after clicking on “Cash out”, I could only withdraw half of my euros. So yes we can access them, but it takes time.
The fact that I still have a few hundred CHF invested allows me to see how P2P reacts to the crisis, and I will document this in a future article.
But for me it’s over with P2P.
And it’s the same as for Iban Wallet, no more Mintos affiliate links on this blog.
CRYPTOCURRENCIES SPECULATION (n/a): I re-installed my dual authentication app a few weeks ago and lost my Coinbase info in the process (I got in touch with support and everything is back to normal today). So, no update this month (but don’t worry, it’s still moving in an unpredictable way, as planned :D).
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (-CHF 5'321.06): The second slap after the coronavirus… my damn 3a linked to an insurance policy (due to our mortgage) is still fluctuating “strangely”. The explanation being known: we pay the death and disability insurance during the first years of contribution. So here I am, resigning to telling myself what my insurer advises me: “Mr. MP, think of it as part of your rent, since this 3a serves as a guarantee and a future pay off of your mortgage.”
MRS’ MP 3RD PILLAR (-CHF 1'350.26): And here comes the third slap, this one predictable too with this COVID-19 crisis that brought down the stock market.
We’ll only recover stronger, as they say!
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 699.39): The magic of real estate investment: the loan repays itself “on its own” thanks to the rents.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 858.90): Cash flow continues to be positive pending taxes. I’m still waiting for my accesses to make my tax return online, but hey, we’re talking about the French government :D
In terms of financial independence, we are at 19% of our objective of CHF 2'156'000 with our net worth of CHF 414'809.02.
Which visually gives us this:
In the end, we finished with a savings rate of 67% for March 2020. So apart from the stock market, we’re on a pretty good track right now. We control what we can control (i.e. our expenses and income) and let the rest do its thing (i.e. the stock market).
And you, what was your net worth and savings rate in March?
PS 1: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 2: I’ve added a new “bonus” for the blog’s patrons. Since last month, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
PS 3: I’d like to take this opportunity to thank the three new patrons of the blog Georgi, Zik, and Titus. A big thank you for your support !
]]>In 2020, the two best free Swiss online banks remain Zak and Neon. My opinion hasn’t changed since last year. However, my use has. And a third bank has emerged as an alternative candidate.
If you want to open a free Swiss account with them, I still have the 2020 promo bonus codes at the end of the article for the MP Team members :)
For the new Mustachians among you, I remind you that the average Swiss person spends CHF 300 in bank fees per year for his household.
By choosing a free Swiss bank that is just as reliable and secure, you can therefore afford to have CHF 300 more to invest annually, which represents an accumulation of assets of CHF 4'440 in 10 years. And all this just to make the unique effort of changing financial service provider.
“Where do I sign?!” was my reaction the first time I did my calculations.
Now that we’ve talked about the why, let’s move on to the expectations I have in terms of banking services.
I have explained in detail my expectations in terms of services from a Swiss bank in my detailed review of 2019. These are still valid in 2020.
In summary:
One of the questions I regularly receive by email is the following: “But, MP, which is the best Swiss bank you’re ultimately advising me to choose between the two?!”
Unfortunately, personal finance is as the name suggests “personal” and depends on your needs and preferences.
To help you make your choice, here’s a comparison chart between Zak and Neon:
Criteria | Zak | Neon |
---|---|---|
Free | ✅ | ✅ |
Online and mobile | ✅ | ✅ |
Secure | ✅ | ✅ |
Free bank transfers in Switzerland | ✅ | ✅ |
Free bank transfers in the Euro zone (via SEPA) | ✅ | ✅ |
Free Maestro debit card | ✅ | 🚫 (Maestro not available) |
Free ATM withdrawals | ✅ (at Cler ATMs) |
✅ (2x/month, any Swiss ATM) |
Free cash deposit at ATMs | ✅ | 🚫(paying via postal deposit slip) |
ISR payment via scan | ✅ | ✅ |
eBill support | 🚫 (comes mid-2020) |
✅ |
Accessible physically | ✅ | 🚫 |
Download of account statements in PDF format | ✅ | ✅ |
Live push notifications | ✅ | ☑️ (via SMS) |
As you can see, if you can’t do without a Maestro debit card, or a bank with physical offices, or being able to deposit cash for free, then Zak is the best solution.
On the other hand, if you can’t do without eBill (it will come at Zak between the 3rd and 4th quarter of 2020), then Neon can be a good alternative (if you don’t need the above mentioned points of course).
For my part, I choose Zak again in 2020 as my main Swiss bank.
The reasons remain the same as last year, with an additional one :
I’ve become aware of several things with all the recent events: when things are going well, digital is pretty cool; but when things start to go sour, then you think you wish you had a plan B.
The first reminder was when the Zak app was unavailable for a few hours last year. Luckily that hasn’t happened since.
The second wake-up call was in the last few weeks with COVID-19: our friends at DEGIRO saw the account requests explode. So since March 25th, they have set up a waiting list that is only getting bigger because they favour the security and stability of their platform rather than accepting everyone. Nevertheless, some readers have not yet been able to open their account (if this is your case, I remind you of my advice if you want to enjoy stock market sales: open a Cornèrtrader account temporarily, then transfer all your securities to DEGIRO once the situation has returned to normal).
I have other examples in mind that confirm that when things are going well it’s cool, but when things go badly it’s often too late to have a plan B.
That’s why I decided to make Neon my secondary bank — even if it’s not as minimalist as I would like.
“Uh OK. But what does that mean concretely, MP?”
Nothing very complicated, don’t worry. Basically it’s just that now our main account (i.e. where we receive our salaries and with which we make our usual payments) is at Zak’s. And on top of that, we have a Swiss bank account opened at Neon with a small cash reserve in case there is a problem with Zak (unavailability of the app or other).
Of course, as a personal finance blogger, this will also allow me to continue to make a comparison of Swiss online banks and keep me informed of what’s new with each of the solutions.
Also, if Zak doesn’t offer eBill this summer, I might try to set it up on Neon and then transfer my eBills to Zak afterwards to see how it goes.
As usual, I’ll document all this on the blog!
Talking to readers (hi Judith!), there is a third Swiss bank that made its entry in my “Best of 2020”: Raiffeisen.
Indeed, the Raiffeisen offers a very interesting loyalty program MemberPlus with more than 500 free museums, the same for Swiss castles, discounts on train tickets and other discounts on events.
What’s more, this offer is interesting because it’s free of charge for the Raiffeisen customer, but also for three accompanying children.
To take advantage of the offer, you need:
Aside from the few hundred CHF that are locked, it is clear that their offer of museums and castles is worthwhile, especially for a family, as the CHF 40 is quickly paid back.
I give you a summary below:
Criteria | Raiffeisen (shareholder account) |
---|---|
Free | 🚫 (CHF 200 to CHF 500 to become shareholder) |
Online and mobile | ✅ |
Secure | ✅ |
Free bank transfers in Switzerland | ✅ |
Free bank transfers in the Euro zone (via SEPA) | 🚫 (CHF 1/transfer) |
Free Maestro debit card | 🚫 (CHF 40/year) |
Free ATM withdrawals | ✅ (at Raiffeisen ATMs) |
Free cash deposit at ATMs | ✅ |
ISR payment via scan | ✅ (via a second mobile app…) |
eBill support | ✅ |
Accessible physically | ✅ |
Download of account statements in PDF format | ✅ |
Live push notifications | ☑️ (via email) |
For my part, as I explained to Judith in the blog comments, I don’t want to be forced to consume something to make my bank “become free”. Moreover, and potentially wrongly so, we don’t visit so many museums and castles in Switzerland. But that might change in the future with the MP kids growing up.
So for the time being, no Raiffeisen for the MP family, but I wanted to mention it because it can be an interesting alternative for families who already spend a lot on cultural outings.
I was again able to negotiate the following 2020 welcome bonus codes for Team MP members:
As a reminder, I’ve created a detailed tutorial on how to create a Zak and Neon account with screenshots in this blog post.
Summary of my 2020 ranking of the best free Swiss banks :
Ranking | Swiss bank |
---|---|
🥇 | Zak |
🥈 | Neon |
🥉 | Raiffeisen |
Zak if for you if you want the security of an old Swiss bank (established in 1927), to deposit cash at the ATM, to have a Maestro card, and all that for free.
What’s more, if you couple it with my Swiss credit card system with cashback, it becomes the most frugal setup possible because you have a free Swiss card optimized for each use: a Maestro for local shopping, a free Cumulus MasterCard for a maximum of cashback (several hundred CHF per year), and a free Revolut for spending in foreign currencies.
(Note for couples: with this credit card system, it allows you to have one card per person, because neither Zak nor Neon offer joint accounts or have multiple cards linked to the same account — for now).
Neon is your solution if you care more about minimalism than maximizing cashback. Indeed, their MasterCard allows you to pay in Switzerland of course, but also abroad with no additional fees (exactly as with Revolut — congratulations to Neon for this feature released at the beginning of the year!). So you only need one card instead of three.
I must admit that I’m lurking at this solution for several months, but the advantages of Zak mentioned above coupled with a maximization of cashback via the Cumulus MasterCard make me keep my initial choice for the moment.
The other option if you are already a cultural addict to Swiss museums and castles is the Raiffeisen.
Finally, as these banking solutions are free of charge, I recommend that you have a secondary Swiss bank in case one of them is not accessible.
And you, which free Swiss bank did you choose to save more than 4kCHF in 10 years?
Note: if you choose to open an account with Zak or Neon, I will receive the same amount of compensation as your welcome gift — without you paying anything extra, of course. It helps finance part of the costs and the time I spend writing the blog. Thank you in advance!
As I’ve explained many times before, please know that I only share services and tools that I personally use in real life. I recommend them in the hope that they will be as valuable to you as they are to me.
Starting with one of the most important variables of the FIRE movement for any true Mustachian: the savings rate.
As with all elements of personal finance, Switzerland comes with its own set of specifics on how to calculate your savings rate.
So here’s the magic formula:
Savings rate = ((Income - Expenses) / Income ) x 100
Or in other words:
Savings rate = Savings / Income x 100
Personal finance being what it is, i.e. personal, there are different opinions on what to include and what to exclude when calculating your savings rate.
After many iterations and discussions with the members of the Team MP, I think I have arrived at a formula that is the most used in our Swiss FIRE (Financial Independence, Retire Early) community.
“Income” category
I include:
And I exclude:
**“Expenses” category **
I include:
And I exclude:
If you’re new to the blog, you might wonder why we have fun calculating the savings rate. Are we just math nerds?
Nothing like that!
We love the savings rate in the FIRE community because it’s a magic number. It’s the one that predicts (in a scientifically proven way) how many years are left before you can retire early:
Savings rate | Years until retirement |
---|---|
0% | 90 |
10% | 51.4 |
20% | 36.7 |
30% | 28 |
40% | 21.6 |
50% | 16.6 |
60% | 12.4 |
70% | 8.8 |
80% | 5.6 |
90% | 2.7 |
100% | 0 |
I detail the math and economic reasoning behind this table in this article.
So that’s why we’re all getting crazy in the Team MP to increase this savings rate to the maximum!
And you, how do you calculate your savings rate as a Swiss?
PS: a big thank you to the new patron @Célien for your blog sponsorship via Patreon. I am very grateful.
]]>The reader’s message often begins with an explanation of what his life was like before he fell into the Swiss Mustachian / FIRE movement: living from paycheck to paycheck, spending without really counting, a few difficult end of months, even debts. Often without a budget. And frequently without any knowledge of personal finance or the stock market.
My favourite part then follows: the change of mindset after reading the blog and the forum with all the financial optimizations that come with it. The most remarkable ones are the ones that go from “In debt” to “Investor”. Respect.
Even I, who spends my time writing about personal finance, was able to get financial change ideas. Like when this reader challenged me about my car insurance which was still too expensive and could be optimized by switching to Smile Direct. Which I did. It saved me an additional CHF 151.20 a year.
Reflecting on all these inspiring exchanges with the members of the Team MP, I told myself that I couldn’t keep it all for me. That I should share them on the blog so that you too could draw inspiration for your own life.
So I wrote to each of these readers to get their permission to publish our exchanges. I would like to thank those who have already responded positively, because your decision could change lives (at least financially speaking).
So here it is, this new series of articles called “Your Story” is officially launched. I will update this page with every new article published.
If you too are interested in sharing your inspirational journey with Team MP members, please email me at contact [at] mustachianpost.com
Until mid-2014, I used to go to the hairdresser like everyone else. About once every six weeks, eight times a year. Prices vary from canton to canton, but on average, a man’s haircut is worth CHF 40 (with or without shampoo, depending on where you live…).
After many easy optimizations, because they were only administrative (change of internet provider or health insurance for example), I decided to tackle something harder than a few clicks.
Because even if CHF 40 is not much, as some people say — and what’s more, to be pampered for half an hour, it’s still CHF that go away.
Especially when you calculate that over a year, that’s CHF 320 that are far away.
And I’m not talking about what you lose in savings over 10 years with compound interest. We’re talking about a four-digit number. CHF 4'740 to be exact (with an annual interest rate of 7%).
So I challenged myself to cut my own hair.
First blocking point when you decide to go for a DIY haircut, you don’t want to play it Jean-Louis David’s style (I don’t know any other name that speaks to everyone, sorry :D) with the school scissors of one of your children!
So I went looking for a man’s hair clipper. Little precision, I’ve never been and will never go to the barber even if it would make me even more hipster! I shave myself, so my hair clipper was also supposed to replace and serve as a beard trimmer. You don’t do things by halves when you’re frugal!
I went through a few comparison sites and Amazon to see the ratings of the best brands and all converged on the Babyliss brand which had (and still has) a good value for money. This confirmed what Mrs. MP had told me about her own experience with such “beauty products”.
You can say thank you to YNAB for this one, because I had noted the exact model when I bought it : Babyliss E960E beard/hair trimmer for CHF 81.84 :)
This precise model does not exist anymore but there are two which replace it:
If I had to choose today, I would go for the cheapest E951E model on Amazon Germany because it suits my needs.
The advantage of these two models is that they work as well on battery as on AC adapter so it’s convenient.
If you want to save yourself hours on comparators like I did, then you will make a good investment by choosing this brand.
It’s like a fashion blog over there!
Joking aside, it’s quite reassuring to have this kind of mini-tutorial because you ask yourself a lot of questions the first time you put this thing on your skull :D
One of the prerequisites I read is that you have to do this on dry hair, and go slowly, always tilting the hair clipper the same way to avoid irregularities.
I cut my hair following these four steps:
In case you’re not 100% reassured by my tutorial, you can search on Youtube there are plenty. You just have to start once and then you can’t go back, because it’s so handy (I cut my hair on sunday evenings — no problem with opening hours!) and frugal.
Ah, yes, that’s true. So, let’s be honest, I haven’t convinced Mrs. MP to let me cut her hair yet.
Nevertheless, that doesn’t stop you from trying it yourself. Because I know some frugal blogger friends who have dared to take the plunge and do it themselves. Respect!
If you’re more like Mrs. MP, you should know that she’s not lacking in frugality because she does two things that you can learn from:
As we always say in the Team MP: “Your life. Your rules of the game.”
And you, do you cut your hair at home or do you let CHF 4'740 fly away?!
PS: a big thank you to the two new patrons @Laurent and @Chris for their blog sponsorship via Patreon. I am very grateful.
PS 2 : congrats to @Cocinellezen (FR section: CHF 2’158/year) and @betube (EN section: CHF 110/year) for having won the Challenge March 2020
]]>If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
CASH FLOW AND SAVINGS (+CHF 7'759.22): We had an unexpected little dinner date with Mrs. MP, without the kids. We don’t get to do that very often, but it was really cool, honestly. In fact, I think it’s because it’s exceptional and not the norm that it gave us so much pleasure. It was worth every penny :)
On top of that, we spent more than usual on the following items:
Concering incomes, we have a small salary news but I’m saving it for a dedicated article that I’m just postponing, but it’s coming.
Otherwise, private coaching has taken off quite a bit. So this blog project as a whole allows us to increase our savings rate. It’s a pleasure, and I’d like to take this opportunity to thank you dear reader, who trusts me, and who uses the affiliate links for the services that interest you. And also, a huge thank you if you are one of those who support me financially with Patreon, as well as with my book project (I’m at the end of chapter 2, so it’s going slowly but surely — and the feedback is very encouraging!).
STOCK MARKET INVESTMENTS (-CHF 10'247.19): February witnessed the beginning of the globalization of the coronavirus crisis. Crisis that brought with it the much heralded stock market crash. This -10kCHF is only the beginning of a nice fall of my portfolio but I don’t say more.
As written in my investment strategy, I do not sell in case of crisis. On the contrary, I buy more as it’s sale time! I have strengthened two value investment positions. Unfortunately (or fortunately because in the end I may come back at an even better time), as announced in the 3rd edition of my journal, I plan to invest in a real estate project again. This means that I have to wait a few more weeks before I can invest back in the stock market…
P2P INVESTMENTS (+CHF 9.26): I’m currently hesitating to close all my P2P accounts (Iban Wallet and Mintos), or to leave them open with almost nothing on them to keep a foot in and see the evolution over a period of several years.
Iban Wallet
I have removed all my affiliate links because I no longer believe in this platform. I’ll even go so far as to say that I think Iban Wallet is a scam.
After several emails with the “Head of Communication” where I clearly explained to her that my readers and I had doubts about the stability and authenticity of the Iban Wallet company, and even that it was a scam, her only two answers were :
As I write the lines above, I’ve just decided myself and withdrew my last 25€. One less account to follow in YNAB :) It’s a pity because the simplicity of the product was really tempting.
Mintos
As explained at length in this article, my Mintos experiment was quickly limited to 1% of my portfolio. Then last week, I lowered this limit to the 1'000€ initially invested.
When starting into this P2P world, I stayed in the circle of sites that confirmed my desires and points of view. Except that when I came out of it two or three weeks ago by googling “why P2P loans are bad”, I saw another reality.
There are many reasons and I will write a dedicated article. But in summary: the “Invest and Access” strategy is too risky compared to the potential gain; the structure of companies and holdings is very dubious behind the great brand that is Mintos; the ethics of some loan companies on the platform is very borderline (to be confirmed); and as a consequence I faced a greater complexity (more time needed vs. only a few clicks) than expected to arrive at a P2P strategy that fits my acceptance level.
I removed all the affiliate links in the previous articles because I don’t want you to follow a path that I myself no longer explore, or that I will close soon.
CRYPTOCURRENCIES SPECULATION (-CHF 44.26): From a financial point of view, I’m happy to have a few more cryptos to see how it behaves during a crisis. We’ll draw some conclusions once we get past the coronavirus. In the meantime, nothing transcendental happened in February.
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (+CHF 1'128.49): I received the surrender value of my pillar 3a that I had underestimated, so that’s for a small adjustment in the positive.
MRS’ MP 3RD PILLAR (+CHF 402.48): The market was also down for Mrs. MP’s 97% shares in her 3a. The positive result can be explained by the fact that CHF 568/month is paid in, but as the market fell, the remaining was of only CHF 402.48.
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 702.90): The loan continues to be repaid through rentals. And on top of that, the building has been full since the beginning of the year, so everything is running smoothly on this side.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 213.85): Cash flow continues to be positive. I am excited to know how much tax we will pay in France and Switzerland in order to make my calculations of the returns for 2019.
In terms of financial independence, we are at 20% of our objective of CHF 2'156'000 with our net worth of CHF 426'463.42.
Which visually gives us this:
In the end, we finished with a savings rate of 56% for February 2020. So we continue our good momentum in 2020 by staying above the 40-50% minimum!
And you, how much net worth and savings rate were you at in February?
PS 1: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS 2: I’ve added a new “bonus” for the blog’s patrons. Since this week, I publish a live notification of my buy/sell on the stock market and other investments (translated into three languages like the blog — i.e. EN, DE, and FR). Just to be clear, I follow a rather passive investment methodology with ETFs disclosed on my blog, so you won’t learn anything transcendental. But if it can motivate you to invest regularly and in a disciplined way, then I will have succeeded in my wager.
PS 3: if you are currently in the process of taking early retirement (i.e. it’s in a few months, or you just passed it), then I would be interested in interviewing you on the blog, to see what’s awaiting me in a few years with all the questions that one can ask himself during such a period. My email: contact [at] mustachianpost.com.
]]>As I answer each time the same thing to these emails, I told myself that I was going to make it an article to which I could redirect future requests.
I also specify here that I am not going to go into details about what is the stock market, shares, etc. I’m saving that for my Swiss Investor Program which is now available:
Also, just so I don’t look like a financial advisor (reminder: read the “Disclaimer” section at the bottom of the page), I’m going to pretend that I’m starting to invest myself today, and that I’m writing to that famous MP. At worst, I will file a complaint against myself :P
Hi MP,
I’ve been reading your blog and other resources on the net for several months now in order to begin investing on the stock exchange. I’m going to start with CHF 10'000 and then I’ll put a monthly amount between CHF 500 and CHF 1'500 depending on the period.
What would you do if you started today, but with all the knowledge you’ve acquired since 2014?
Thank you for your time,
Marc Pittet
My answer to such emails is a list of questions to make sure that the person has the same mindset as me, as well as a similar investor profile:
“Yes to all your questions!” Marc Pittet answered me.
If you too, dear reader, answer “Yes!” to all these questions, then you can continue your reading because my long-term investment method may suit you.
If you have answered “No” to any question, then I recommend that you do not continue reading as you may take more risks with your savings than you are able to bear.
The strategy recommendation to today’s “Marc Pittet” would be a portfolio of index ETFs. This means passive fund management, to pay the least amount of fees, and more importantly because historically it beats 75%+ of actively managed funds.
In particular, I would recommend myself a portfolio with three ETFs, “Boglehead” style:
I consider my 2nd pillar as a “bond” (because it is more or less secure, at least more than shares normally) as part of my net assets. So historically I have never invested in bonds at the moment.
If you’re in your early twenties and you don’t have any money on your BVG, I would say that it’s not a big deal and would recommend you to put everything in shares because you can afford to be more aggressive during your 20-30ies (remember, this is just the opinion of a guy on the internet!).
Concretely, that means I would invest my CHF 10'000 like this:
The question that often comes next, regardless of the type of market (rising or falling), is:
“Hey but MP, the market’s gonna crash, I hear it everywhere, it can’t go up like that for much longer. What would you do if you were me?” Marc Pittet wrote to me in 2017.
Or again:
“Hey MP, I told you, it’s 2020, and the famous coronavirus stock market crash is here, I’m hesitate to get in now. Or wait a little longer to enter when it’s at the bottom of the hole? What would you do?”
My answer is always the same whether we’re in a bull market in 2019, or a coronavirus crash in 2020 (or subprime mortgages crisis in 2008-2009, or the dotcom bubble crash in 2000-2001): you can’t predict the future. So you can’t beat the market. So your most precious ally is time. So, start now! And don’t get out.
That’s the best way to be successful in the stock market in the long run, and all the empirical financial studies prove it.
Now, you’re gonna have to trust me until my epic guide for the beginner swiss investor comes out.
In the meantime, the answer to your question is that everything you’ve listed is:
Regarding the strategy of dividing the amount into three index funds, yes I would do the same regardless of the amount to invest.
As for whether to put all at once or not, there are several schools. Some advise to spread the investment over several months so as not to get in at the worst moment and smooth the whole thing out. Others say that in the long run it doesn’t make much difference.
If I had CHF 100'000 to invest today, I think I would follow the “rule” of 10% over 10 months. This is to avoid procrastinating too much about when the crisis or bull market will end.
“I saw that Swissquote had a great advertising these days, they seem to rock! Would you choose that too?”, Marc Pittet asked me.
Ah, marketing bullsh**…
To make a long story short, my online broker recommandation to date is very simple (all the details to come in an upcoming “Best of Online Broker 2020 for a Swiss investor”):
What are you waiting for to get started?
I received this feedback many times after publishing this article. That’s why I decided to create my first (paid) online program.
It’s for you if you’re a complete beginner who wants to start investing in the stock market. And above all, by understanding 100% what you are doing!
All information about this 100% Swiss program made by a Swiss can be found here:
PS: If you are a seasoned investor, don’t hesitate to explain via the comments’ section below the investment strategy you’d share with those around you (family, friends, etc.) as I just did. I’m sure we all have a lot to learn from each other.
PS bis: for financial compliance reasons, please note that investing involves risk of loss.
]]>Below is a table of contents of what you will find in this edition:
I was talking about it in the last edition of this journal, and the decision is made this time: I will write my book about financial independence in Switzerland. Or should I say, I’m writing it!
For now, I’ve finished the table of contents (a bit revised), the introduction, and chapter 1, and now I’m finishing the second chapter. It seems quite simple to write like that, following the book’s table of contents. But in fact, as I expected, it’s quite an exercise to have to orchestrate all the elements so that they make sense together. It’s a good exercise in any case, which allows me to structure my thoughts.
Related to that, I’m meeting with an editor this Wednesday morning who is potentially interested in my project. To be continued!
As some of you know, I decided to undertake this project in a special way by “crowdfunding” it. That is to say that readers of the blog support the idea financially (with the aim for me to get as much time off as possible), in exchange for bonuses:
It’s only possible for French speakers because I’ll translate the book, but only at the end of the writing process… but there’s Deepl.com for the most daring — as Max, who wants to perfect his French with this :D!
If you want to be part of it, don’t hesitate to send me an email.
I decided to limit the number of people to 10 at the beginning to keep the rhythm of the exchanges sustainable, and to my great surprise we reached them in less than 4 hours…
As a result, I have a waiting list that is growing, and I will see to accept more people in the coming weeks/months.
Mrs. MP keeps surprising me.
Whether it’s because of her frugality, which I still discovered aspects of in the interview for the anthropological book that the MP family will be part of.
But also by the fact that she has embarked on zero waste. To be clear, we don’t become granolas/hippies (or do we?). It all started with a discussion with a family member who decided to craft his own laundry with natural ingredients only, and therefore without packaging and all. I don’t know why it came up at that point, but Mrs. MP picked up on it and got into it. As cool and interesting as I think it is, I must admit I’ve never prioritized it higher than my blog and personal finance. So it makes me really happy that she manages this part. Because in terms of health, we now have a detergent without chemical components that washes just as well.
One thing leading to another, she then made our own deodorant. A revelation for me in terms of efficiency. And I’m not even talking in terms of health. Or budget because I haven’t done the math yet. I plan to dedicate an article with a tutorial because it’s such a big deal!
The latest DIY to date is our yoghurts. All homemade too now. Delicious, and much healthier. Budget-wise, same as the deodorant, not yet taken the time. I’m still wondering if the ecological level (incl. the 5 hours of cooking at 40 degrees) is really better than the industrial one — although my instinct tells me that yes, considering the transport, the industrialization, and the plastic thrown away in the end. An article will come as well I think.
The next item on Mrs. MP’s list: toothpaste!
And just in case the ecological police are passing by: we’re far from perfect, and we’re taking it step by step, little by little. So at worst, be constructive in your comments by pointing out where we can improve.
We still had one vacant apartment from last October. Then, at the beginning of the year, our real estate agency that manages our entrances and exits called me to tell me that they had a file that seemed OK! It was done in a few days, so our rental building in France is now full again. A priori, we should be at the break-even point, or even above it. We are waiting for the final tax decision to be fixed.
By the way, there are several things that I can confirm to you concerning taxes when you have a property in France as a Swiss citizen/resident:
Taxes in France (non-resident taxation)
Taxes in Switzerland
At the end of last year, I explained to you that rental real estate investing was cool, but that it took a lot of time and energy. In my opinion, either you focus 100% on it for your investments or you put it aside.
I’d rather be behind my screen than on the phone with building contractors and tenants, so I said, “No more real estate, I’m focusing on anything that can be done in a few clicks like my ETF investments, in value, or P2P loans (read carefully the important note in the beginning of the P2P article).”
Except that…
At the beginning of the year, I sympathized with a reader who is in real estate in the canton of Vaud. We met several times and he ended up offering me an investment opportunity…in real estate of course.
It’s different from buying a simple property. But in terms of return, we go to a higher level: 55%. I told him that I thought it was too good to be true. But apparently the rules of the game in real estate construction are different than in the stock market. So I did my due diligence (excerpt from the lawsuits, requests to my network) and knowing in addition that we will do everything by the rules via a notary, I am almost reassured. We’ll test the collaboration on a small amount to start with, and we’ll see what happens afterwards.
Once the operation will be completed during the course of this year, I will be less mysterious and give you all the details ;)
The big disadvantage is of course that it’s right when I could have bought stuff on sale on the stock market…
I voluntarily maintain anonymity on this blog because money is not a subject that everyone likes to talk about. And unfortunately, it still gives rise to too many misunderstandings or jealousies. And we don’t want to affect our existing relationships (family and friends) with it.
As I told you, we (Mrs. MP and myself) were interviewed by an anthropologist for her future book on different movements including frugalism. We don’t talk about financial independence every day because it was my dream in the beginning and I took her on board. But for a long time she thought it was a utopia, and had (and still has) trouble projecting herself. As a result, talking about it with this author made a lot of things more concrete.
Including the question: “But nobody in your circle knows about it then? Your family? Your friends? What are you going to tell them when you turn 40 and go on a road trip for 6-9 months per year?”
Mrs. MP would have no problem to claim that we’ve been working and saving up for it. As for me, I’m more on the reserve because I have fears (founded or not, you’ll tell me) of the following kind: “Hey, buddy, I’m really screwed this month. Since you’ve got a lot of cash saved up, could you help me out and I’ll pay you back in a few months?”. Or: “Hey MP, there’s XYZ’s wife who absolutely has to go abroad for work, and it would really help them if you could watch their kids in the mornings for a couple of weeks? Don’t you think you could delay your trip to Canada? You’re going to be there for four months anyway, so it’s not a week or two that’s going to make a difference.”
Do you feel the unhealthy blackmail in these situations…? do you see yourself replying “No, you’re sweet, but I have a life to live too.”?
Just so we’re clear, I have a social side. I don’t have an issue about helping out with nothing coming back. But I want it to be chosen and not imposed. I don’t want them to end up likening us to “At worst you can call the MPs when you need them, because in any case they’re under no obligation!”
But then we come back to the question: “What are you gonna tell your friends and family when you pull the plug?”
By reflecting upon it, I think I’ll say I’m doing financial consulting/coaching and I can work from anywhere (which will be partly true because I like to do it once in a while, like 1-2 hours. Per month :D). This solves the problem of “How do you pay your bills?”. We’ve still got a few years to talk about it with Mrs. MP to refine and align our exit strategy from the hamster wheel, but hey, it reassures me to have some kind of idea of how we’ll manage it.
But clearly, apart from some very (very) close friends and you dear reader (some of whom are becoming friendly relations too), nobody will be aware that we’re “financially independent”.
Ah, and another question that Corinne from TTC (TV show on RTS) and also the anthropologist asked us: “And concerning your social status, won’t you mind not having a career title like manager or director, or being able to say that you’re working in such a big company with all these ‘advantages’?”
We’re fully agreeing on this one with Mrs. MP. We don’t give a damn! Especially since we’ll be more proud to say that we do remote consulting, and that this way we can live from where we want when we want.
My MP Kid #2 asked me just yesterday at breakfast: “But, Dad, why are you doing stuff on your computer every morning when I get up at 6am? Is it for work?”
I was surprised it was coming from #2, and not from the older one. And I was especially caught off guard.
I told them that it wasn’t work, that I took advantage of getting up early to read some stuff for myself, and other things. And all this before going to work so I prioritized my passions before the job.
That’s enough of an answer for now… until when!
Because the eldest, who knows how to read, regularly looks over my shoulder and says to me: “Ah, what’s with the LEGO guy?! And who’s this Marc Pittet Daddy?”
I dodge for the moment by saying it’s a cool website that I like to read :)
Likewise, and that was yesterday: “Daddy, how much money do you have in your account? And how much do you make?!”
As much for the blog, as our respective salaries, as our net worth, and as our FIRE goal by 40 in Switzerland, we agreed with Mrs. MP that we didn’t want to impose on them to have to keep such a secret for them at their age. We’re thinking of talking to them about all this between the ages of 15 and 20, when they’re mature enough to understand why we don’t want to talk about it publicly.
In the meantime, that doesn’t stop us from giving them a frugal education in money management and spending. In our opinion, this is the most important wealth we can offer them as an inheritance. In fact, unlike money that can be used up to the point of exhaustion, education is a gift that lasts a lifetime.
We’re switching topic entirely, with this introspective question that has come up twice in the last few weeks: “does the blog smells too much monetization, and is losing its essence?
I bring it up here because it’s affecting me. My goal is not to justify myself for being right and/or to silence the remarks. On the contrary, it’s to open and continue the discussion via the comments so that this blog and forum remain as qualitative as possible in the long run.
I’d rather take a slap in the face now than see you leave the Team MP tomorrow.
Let’s talk about the two examples in concrete terms:
I am going to respond to these two points precisely to present my point of view to you. But before doing so, I would like to clarify several basics:
Let’s go back to the two concrete examples now:
To end this paragraph, I reiterate what I said on the forum: my goal is not to do fingerpointing at Strabor or Sjess. On the contrary, I want us to be as hard/critical as possible on the basic problem, while not implying anything personal. By the way, don’t hesitate to tag me in such discussions on the forum or to write to me in private (via email or comments).
Also, I consider myself to be just another member of the Team MP that we are. And not the president or the guru of this latter. So I’m counting on you to challenge me like you did this time.
And finally, the question for you, dear reader, who may only be discovering this topic now: what do you think about it? Are you starting not to like the blog anymore due to monetization? Or because of anything else? If so then let’s talk about it openly and constructively :)
I’ve been getting worried emails asking me if I’d start selling everything before it all goes down on the stock market? Some of you have gone as far as thinking about withdrawing cash and completely reviewing your choices of brokers and financial institutions to prepare for the worst.
I am therefore clarifying my point of view here so that I can point future requests to it.
Firstly, my investment strategy remains the same, i.e. to invest regularly without giving in to panic. On top of that, I advise you to do it with a smile, thinking that it’s a bit like a sale period because you’re buying for less than it was worth a few weeks ago.
Nevertheless, I don’t recommend that you start borrowing money to invest more as it’s a sale. That would be market timing because you have no idea (and me neither!) if the market isn’t going to be even more screwed up than what we’ve been going through the last few days. So invest what you would usually invest, and go back to your real life activities :)
As for the rest, apart from washing your hands well and following the other recommendations of the FOPH, I see no reason to panic. We’re not talking about the half of the planet that’s going to die tomorrow, so let’s put things into perspective. And no, don’t go and withdraw all your cash from the bank for fear of seeing all the ATMs close the day after tomorrow, that would be irrational in my opinion at the moment.
I have had the pleasure of doing several (paid, let’s call a spade a spade) coaching sessions to help some of the blog’s readers to get started with their investments and YNAB budget.
I take great pleasure when I see a person click. And it also allows me to continually develop my knowledge of personal finance and investment.
Although most of my knowledge is available in my articles, there is always a psychological step to take from theory to action. And as we both know, when it comes to money, time is your ally, so the longer you wait, the more you lose opportunities to enrich yourself.
These sessions reminded me of how important re-insurance and coaching are to get started in any apprenticeship. I tend to forget this but it was also key for me in 2013-2014 when I started my adventure towards financial independence.
That’s why I decided to continue offering these sessions (1-2 per month for the moment). In terms of format, it will now be possible to have :
If you are interested, you can contact me by email (contact [at] mustachianpost.com).
And you, what’s new as we get into spring (uh, did we already have a winter by the way)?!
]]>If you think bigger and succeed in eliminating CHF 100 of monthly expenses, then we are talking about CHF 15'400 more in 10 years.
It’s crazy when you think about it, because you don’t even notice these kinds of minor changes in your daily life. It’s just the recurrence of costs that makes it multiply month after month, year after year.
Let me give you a concrete example:
Since we invest the savings we make (assuming a rate of return of 7%), we will be richer by CHF 53'826 in 10 years. The proof is in the table below:
Year | Savings in CHF | With compound interests |
---|---|---|
1 | 3'640 | 3'895 (= 3'640 + 7% de 3'640) |
2 | 7'535 (= 3'895 + 3'640) | 8'063 (= 7'535 + 7%) |
3 | 11'703 | 12'523 |
4 | 16'163 | 17'295 |
5 | 20'935 | 22'401 |
6 | 26'041 | 27'864 |
7 | 31'504 | 33'710 |
8 | 37'350 | 39'965 |
9 | 43'605 | 46'658 |
10 | 50'298 | 53'819 |
And that’s without mentioning bringing our lunches to work but I agree with you that it takes more effort. But insurance and mobile, nada. We still drive the same safe way, and we still make the same phone calls.
Just to give you the initial impetus to start your new frugal life, I challenge you. It’s gonna go something like this:
1. Before 22.03.2020
Announce in this forum topic the expense you’re thinking of cutting — but have never taken the time to deal with — and the amount you think you’ll save per month.
2. Before 31.03.2020 midnight
In case your change can only be made at the end of the year (I’m thinking of insurance in particular), that doesn’t prevent you from announcing your cancellation before 31.03.2020, and subscribing to your new service in advance. Too bad if you thought you could use that as an excuse :D
If you want it to be more fun, and especially if you want to be sure you’ll succeed, I also recommend that you talk about it to your spouse, a relative or a close friend. Just doing this will make the challenge more tangible, and you will feel more “obligated” to do it.
Are you ready? Then we’ll see each other on the forum during the next two weeks!
Note: I have already completed my part of the challenge by changing (again) my car insurance. I’ll explain all this in the forum in order to participate in the challenge as well.
]]>It seems that I have been victim of the worst disease an investor can have: the boredom of passive investing.
I will explain all my learning about P2P in a future article but I wanted to add two more warnings to this article:
Since I started on the blog, I had a strategy of investing only in ETFs. My goal with this portfolio was (and still is) to generate between 6-8% return over the long term (i.e. 10-15+ years).
Except my 40th birthday is coming up. By that date, we’ll have to have reached our net worth target of CHF 2'156'000 to be financially independent.
So in addition to looking for other sources of income (like with this personal blog project), I spent 2019 exploring investment options that could bring in more than 8-10%.
We have already discussed the two options that have complemented my investment strategy, namely rental property and value investing.
The third option I tested at the end of 2019 is the investment in peer-to-peer loans (also commonly called P2P loans).
Except that when you start in this world of P2P lending, you face two things: a huge amount of blogs that swear by it but mostly by the juicy affiliate commissions, and a few well-done sites that you have to find after many Google searches…
So, as usual, I’ll share with you a short summary of why I chose Mintos (affiliate link let’s be clear, but because I trust this platform and invest my own cash in it).
In case you don’t know anything about the world of P2P loans and all the platforms that have been created around it over the last few years, here’s the one-paragraph overview.
On the one hand you have companies lending money to individuals, and on the other hand you have investors like you and me who want to make our savings grow. In the middle you have companies like Mintos that connect those loan companies with investors.
On average, these platforms offer returns between 10-20% depending on the degree of risk taken.
Do such returns seem too good to be true? Think again because it’s actually quite simple. Imagine that someone borrows 1'000€ for one month and has to pay back 1'050€ the following month. Not so shocking isn’t it? And yet, that’s 60% annualized interest rate! No wonder these loan originators are OK to leave us a few crumbs with these 10-20% expected returns.
Until now, I did not invest in it because of the ethical side of it because on the other side of the lending companies, you find people who make consumer and car loans for the most. But when I dug a little deeper, I realized that yes, there were a lot of them, but there were also other loans available, for example in agriculture, for small businesses, or in real estate.
I let you judge for yourself where the cursor of your values lies.
Also, remember that if your cash is sleeping in your bank account, the bank does not do any better by using your cash to offer car loans, consumer loans and mortgages as well.
On Mintos, you have three ways to invest your money:
For my part, in order to get my feet wet without thinking about it for hours, I have for the moment invested 1'000€ via the ‘Invest & Access’ strategy. This is the method that I explain below.
When I’m going to invest by filtering loans with the “Auto Invest” method, I’ll tell you about the different things to watch out for.
But for now, there is an important concept to understand: the “buyback guarantee”.
I will only invest in loans with this “buyback guarantee”.
What it means in concrete terms: if the loan is more than 60 days late, then the loan company will buy it back from me and pay me back the outstanding principal and accrued interest.
All the platforms I’ve seen so far offer this filter and have many loans with this guarantee.
The goal, as you will have understood, is to minimize the risk of losing money as an investor.
Mintos is at the time of writing “only” available in English, German, Spanish, Dutch, Czech, Latvian, Polish, Russian and Czech. As a result, many French-speaking readers who are not comfortable with these languages have asked me for a good old Mintos tutorial to be sure to invest correctly and not click on a wrong button :)
First step: open a Mintos account. To do so, go to the Mintos website.
Also, remember to have your passport or ID card with you for identity verification.
Next, follow these screenshots:
The following screens show you the identity verification process to finalize the opening of your Mintos account:
Now that your Mintos account is open, and your identity has been verified, it’s time to get down to business.
To start with Mintos, I chose to go with €1'000 to test the platform for a few months before injecting cash back into it.
Knowing that you and I live in Switzerland, we speak in CHF. And we don’t want to lose out on exchange fees.
My summary process for transferring funds in CHF to your Mintos account in EUR is: from my Swiss online bank Zak or via my Cumulus MasterCard, I send the CHF to my Revolut account. Then I use the Revolut exchange function to convert my CHF into EUR with the best CHF-EUR exchange rate. And finally, I make a bank transfer from Revolut to Mintos.
And here’s what it looks like with screenshots.
First the step on Mintos where you will look for the transfer information:
I put below the summary of the steps to make a money deposit on Mintos, as explained by them:
And then we make the transfer via Revolut. I’ll skip the Zak to Revolut transfer step because I’ve already described it in other articles such as this one in step 3).
Once you have completed these steps on Revolut, all you have to do is wait for this email from Mintos:
Now that your cash has arrived on Mintos, all we have to do is invest it. As mentioned above, I started with the Mintos “Invest & Access” program where you invest literally in one click. And your loans are very diversified and all have the famous “Buyback Guarantee”.
So go back to the site Mintos.com and follow these last steps:
I must remind you two important notes about these P2P investments and Mintos:
Here are in two points what I plan to do with P2P and Mintos:
I signed a special partnership with Mintos for the members of the MP Team. If you use the link below to open your account, we will both benefit from a bonus cashback of 1% of your average daily balance which is paid in 3 instalments during the first 90 days (I thank you in advance). The best is to explain it with a concrete example:
Imagine your name is Sara and you use my Team MP’s special link to start investing in P2P loans via Mintos. After 30 days, your average balance invested over this period is 3'500 euros. Mintos will then credit 1% of 3'500 euros (35 euros) to your investor account, and another 35 euros to my Mintos MP account. After 60 and 90 days, Mintos will review the average invested balance and, if it increases, they will credit your investor account and mine accordingly.
And you, have you ever dared to take the step of investing in P2P? Or is it “I’ll never do so in my life” because it’s too risky?
PS: just as I was finishing this article, Mintos announced the release of their mobile application which, for the moment, only allows you to check your portfolio. You’ll find the download links for the Mintos app on the Apple App Store and Google PlayStore at the end of this article.
]]>By talking with some of you, I realized that not everyone is aware of the many tax deductions they may be entitled to. Hence this article presenting what I have deducted for my taxes in 2019. It’s based on the tax laws of the canton of Vaud, but I thought it might help you to dig deeper into the subject even if you live in another canton.
Deductions Mr. and Mrs. MP | Amount in CHF | Comments |
---|---|---|
Public transport | -4'980 | To be calculated pro rata to your work rate. |
Meals away from home | -5'160 | To be calculated pro rata to your work rate. And that’s why it’s worth bringing lunch to work, because you also earn tax money. |
Other professional expenses (flat-rate + actual amount) | -8'454 | Here we used the basic flat-rate deduction, but also combined with the actual costs (laptops, telephone) have been added. We also added an amount for clothes and shoes after recommendation of a trustee… we’ll see if it passes or not. |
Expenses for occasional employment Ms MP (flat-rate) | -800 | Mrs. MP had a side-job for some time, but her actual costs did not exceed the flat-rate amount, so the flat-rate deduction was chosen. |
Development and training costs (professional reorientation) (actual amount) | -4'050 | One of us had to do a professional reorientation course. Only actual amount deduction possible here. |
Deduction for securities (flat rate) | -298 | Again a flat-rate deduction because I didn’t pay as much through my discount online brokers Interactive Brokers and DEGIRO. |
Child Care Expense Deduction (actual amount) | -5'941 | It goes downhill from year to year as the kids get older and go to school more. |
Medical expenses (mainly dental and health concerns 2019) | -4'799 | Usually we don’t go over the minimum to deduct but in 2019 it was the case (we could well do without it for 2020, by the way). |
Social housing deduction / Net annual rent | -586 | So this is the newest addition this year that I didn’t know about. As a landlord in Switzerland, you can deduct the “rent” you pay in the form of mortgage interests. It’s all explained in their documentation, but generally you’re doing better by putting the amount of your annual mortgage interests and they adjust it downwards if necessary. |
Property maintenance and administration costs (Switzerland) | -6'659 | Actual deductions as home owner in Switzerland. |
Building maintenance and administration costs (France) | -4'859 | We also have to declare our French rental building in Switzerland, and the deductions that go with it. There were a lot of them in 2019 with all the one-time fees (i.e. bank processing fees - although I’m not sure if this will pass as in France. We’ll see). |
Mr. and Mrs. MP’s 3rd pillars | -13'594 | Thanks @TuxRock who pointed out that I forgot to mention our 3rd pillars (it’s so obvious to me that I skipped…). We put the maximum deductible level 3a ceiling in 2020, i.e. CHF 6'826, for Mrs MP’s at VIAC, and CHF 6'768 for mine as it is sub-optimal because it is with an insurer linked to our mortgage. |
So the two big new things for me this year were this deduction from the rent as a landlord and the addition of staff in business expenses with clothes and shoes.
For the rent deduction, it’s deliberately not filled in automatically by the tax authorities because a lot of people say “Nothing to do, I’m a landlord now so I don’t have any rent.”
As far as business expenses are concerned, we will see what these authorities tell us.
Also, I have deliberately not indicated automatic deductions such as for children or for married couples because it is done automatically according to your situation.
Two questions for you that you can answer in the comments section below:
Addendum 1
Thanks to Jani, who gave me two more tips on taxes:
As a reminder, Zak limits the amount of payment orders (i.e. transfers and standing orders from e-banking in the app) to CHF 5'000 per day, and CHF 10'000 per week. They explain this for security reasons because Zak is used a lot by young people.
Note for the Zak team if you read the blog: in 2020 you should nevertheless be able to define your own limits (even if it means proving your income) via the app directly…
Before I explain how to override this Zak limit, I wanted to point out that you have to spend a lot to reach these limits. Personally, it only happened to me at the beginning of the year when I had to pay all the annual bills (car insurance, car tax, mortgage interest, and 3rd pillar).
And since then, I’ve never needed to reuse the technique explained below. So even if it’s a bit annoying, it’s not going to make me go back to another classic Swiss bank with unnecessary fees.
I specify that the method is completely legal and planned by Zak ;)
So let’s imagine the case where you have to make a payment of more than CHF 10'000. And it’s the same thing if your payment is CHF 700 but you have already spent CHF 9'500 the same day (not very frugal by the way!).
In Zak’s app, it looks like this:
The first part of the technique consists in clicking on “OK” in the last screen above so that your bank transfer request is taken into account.
The second part of the technique continues with the next three screens (I used my 3rd pillar payment transaction for the following screenshots because I forgot to do them for the example with the CHF 10'454.49 above):
As described on the screenshots, you just need to call Zak’s support to ask them to release your transfer. They will ask you a few questions to verify your identity, then ask you which transaction(s) you want to release (I put “s” because you can ask to release more than one directly).
On average it took me about a minute each time.
Then, you can reload the list of transactions in the Zak app directly while you are on the phone and as soon as the operator has released the payment it is visible automatically.
And you, do you have a problem with this Zak’s security restriction?
PS: By the way, I got rid of my BCV account! What a nice thumb of nose following the unfair techniques used by my ex-bank advisor in order to get us to sign a mortgage with them during our real estate purchase!
PS 2: So, I’m now using Zak as my main bank. Top of the line so far. Please note that they have offered me to continue our collaboration in 2020, which entitles you to a welcome bonus of CHF 25 if you use the code Y06JPR when you register. And the blog will be entitled to the same bonus — win-win :).
PS 3: and just in case you’re new to the blog, I only recommend what I use. So, if I change my Swiss online bank, you’ll be the first to know (i.e. I won’t hide it from you to keep making money on your back).
Note: many thanks to the 4 new patrons @Kevin, @Elfriede, @Jocelyn, and @Krzysztof for their blog sponsorship via Patreon. It makes me so happy, sincerely.
]]>“But concretely Marc, how many people like you want to be financially independent in Switzerland?”
I have tried to extrapolate my newsletter subscribers and Google Analytics data to at least provide them with some Fermi estimates. Nevertheless, I’m curious to know the reality. So I’ve created the form below to see what’s going on.
I’m voluntarily asking for your email so I don’t get false votes, which would make the poll invalid. As with everything else, your data will remain anonymous and I won’t do anything with the emails’ list.
So the question is “FIRE goal, or rather there to create options for you future self?”.
And the two possible answers are:
Now it’s up to you:
And here are the live results:
PS: If you’re a media or an other blogger, feel free to use this data. The only thing I’m asking is that you mention mustachianpost.com as the source.
]]>If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
CASH FLOW AND SAVINGS (-CHF 4'212.76): At the beginning of the year and in July we always have these big outflows of money with the mortgage interests to pay for the semester. And on top of that in January all the other bills that we pay annually such as private life insurance, waste taxes, and also the filling of my pillar 3a.
Otherwise, outside the usual expenses:
In terms of income, we were able to count on our respective 13th salaries. And as far as the blog is concerned, revenues were rather low due to the fact that the companies I recommend pay their December and January commissions late because of the end of the year I guess (February will be even better).
Nevertheless there was a special event for this personal project which is my blog: I did my first paid “Start investing” coaching session. It feels very weird to be paid for something outside of a “normal” job. It’s very rewarding.
Anyway, thank you Arthur for your trust. I’m really happy with this first try because before the end of our 3 hours, Arthur dared to take the step and submitted his first stock market order to buy the VWRL ETF!!
In his own words:
It was for me a very interesting exchange, we saw a lot of things and you were able to answer all my questions and expectations. I was able to learn how to choose my ETFs and this allowed me to start at the end of the session with a first investment on DEGIRO. I also appreciated the fact that I was able to check my budget with you and to shed light on a few points such as the formula to compute my savings rate, to allocate my investment according to my risk profile and to see where I could still do optimization.Arthur, reader of the MP blog.
STOCK MARKET INVESTMENTS (+CHF 3'949.68): This positive figure mainly corresponds to my purchases in value investing in order to reach the target of 30 companies in my portfolio.
In terms of the overall value of our stock portfolio, the markets were rather bearish at the end of January 2020 (but they have already recovered by the time I wrote these lines in February).
P2P INVESTMENTS (+CHF 4.08): In view of recent developments in the P2P world, namely the fact that Envestio and Kuetzal were apparently scams, I play it cautiously in this category.
Iban Wallet
I only keep 25€ with them to see what happens. But as long as their Head of Communication doesn’t communicate publicly and transparently about the who/what/how of this company, I won’t add a penny there. Nor will I put an affiliate link to their platform. So let’s see how it goes.
Mintos
On the other hand, I’m still satisfied with my Mintos choice (I only have 1'000€ there with their Auto-Invest program for the moment, but I’ll pour more into it in the coming months). I still expect a return of about 10% with this investment.
I’m preparing a full article about how to open an account and get started with them.
CRYPTOCURRENCIES SPECULATION (+CHF 264.47): After several months of losses, the cryptos seem to be waking up. I’m really looking forward to see if in 10 years I’ll be a millionaire thanks to them (or not!).
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (+CHF 6'768.00): There it is, another payment transferred into my suboptimal pillar 3a. Only Mrs. MP is lucky enough to be at VIAC, mine being one of the pledges for our mortgage. I’m still waiting to find out my cash surrender value to see how much we financed the insurance part of it.
MRS’ MP 3RD PILLAR (+CHF 556.33): The market was also down for Ms. MP’s 97% 3a shares. The result is positive as we pour in CHF 568/month, but as the market fell, only CHF 556.33 remains on the differential between December 2019 and January 2020.
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 708.46): The loan continues to be repaid from the rents that come in each month. And good news: we found our tenant for the last empty apartment, so the building is fully rented again!
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 536.89): The cash flow remains positive but as explained in previous articles, I wait to be happy until we have paid French taxes.
In terms of financial independence, we are at 20% of our objective of CHF 2'156'000 with our net worth of CHF 425'583.62.
Which visually gives us this:
Discouraged? Me? Why? On the contrary, it motivates me. I think it’s a great goal to have to be creative to find that CHF 570'000!
In the end, we finished with a savings rate of 48% for January 2020. This allows us to start the year within our target range of 40-50% :)
And you, how much net worth and savings rate were you at in this first month of the year?
PS: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
]]>For those of you who have no idea what I’m talking about, the 2nd pillar (also called LPP/BVG meaning in English “Swiss Federal Law on Occupational Benefits”) is part of the three-pillar pension system in Switzerland:
As you can imagine, the subject of whether I would take out my BVG as an annuity or as a lump sum seems so far away to me that I haven’t given it any thought yet. Especially since by the time I turn 65, I think a lot will have changed.
Nevertheless, I’ve had several readers emails telling me that they’re well over 40, but that they would still take a dose of advice from the Team MP :)
This is the case of François.
Here is the email I received from François at the end of last year:
Hi MP,
So my biggest challenge will be to maintain my assets of CHF 800'000 (including BVG capital), without drawing on them. I will stop working in March 2021 at the age of 60 (I am currently 59), and the aim is to make my current cash and the amount of my future pension fund grow. All this in order to keep my fortune at CHF 800'00, and to live off the interest. At the age of 65, I will also receive my AHV/AVS pension, i.e. CHF 2'000 per month.
Here’s my BVG figures (forecast for March 2021):
As for my strategy, I have several options:
Option 1: BVG pension
If I take a monthly pension, it will amount to CHF 25'018 per year, or CHF 2'084.85 per month.
Option 2: Withdrawal of the entire 2nd pillar capital
At the age I wish to retire, I could withdraw CHF 515'846 (before tax from the 2nd pillar lump-sum payment). The tax will depend on the canton, but for me it will be Valais/Wallis.
Option 3: Mix of capital and BVG pension
Multiple variants here are possible with the amount of capital withdrawn. A variant is half capital and half annuity, i.e.:
At the moment I prefer the option of taking the entire capital, with the choice of various investments at a minimum of 10%, investing CHF 400'000 (the remaining of the CHF 515'846 will be kept in cash), which represents an income of CHF 3'333 per month, which is CHF 1'248.15 more than the annuity. Currently it is quite easy to invest between 14 and 18%, with all the risks that go with it.
I already have 2 apartments in Thailand under hotel management (10% return), stocks, bonds, and investments in P2P loans (currently 12-18% return). And, as these lines are being written, a questioning about the security of P2P platforms is in order, and this following the various scams in the Baltic countries (I have just lost CHF 9'000 between Envestio and Kuetzal).
When I told you I would invest my CHF 400'000, I’m thinking of choosing 10 P2P platforms to diversify, and possibly the purchase of an additional apartment in Asia.
What do you think about that MP? What would you do if you were me?
My first reaction: “Phew, I’m not the one who has to make this decision because I don’t know what the hell I’d be doing!”
Then my rational brain took over: “Okay, let’s do some calculations, and only base our thinking on math. Let’s let this emotional brain freak out on its own ;)”
So I went on to ask the following questions:
François’ answer:
Concerning my various investments and my cash, I have CHF 130'000.
The yields of the 2 apartments in Thailand are about CHF 2'000 per month, CHF 1'000 since December 2018 for one apartment and CHF 1'000 since September 2019 for the other.
I’ve put three variations below (with my address in Switzerland) which are obviously not fixed:
Variant 1 — Very frugal — CHF 3'450.67/month
Living in Asia and without a car (with 1 trip to Switzerland per year).
Variant 2 — Frugal — CHF 3'906.42/month
Living six months in my bus in Switzerland, and six months in Asia (rent in Asia).
Variant 3 — Affluent — CHF 5'956.42/month
With my bus, an apartment in Switzerland, and traveling a lot.
OK, so now it becomes clearer ;)
Let’s test the 3 hypotheses of BVG pension, withdrawal of the entire BVG capital, and mix of pension and capital.
Option A: BVG monthly pension
Monthly income | Amount |
---|---|
Asia Real estate returns | 2'000.00 |
2% return on current 130kCHF | 216.66 |
BVG monthly pension | 2'084.85 |
Total | 4'301.51 |
I am deliberately very conservative with his current fortune, given the possible rates in 2020 for bonds.
With this option, François could live between frugality and a comfortable life from 60 to 65 years of age. After the age of 65, he would receive an additional CHF 2'000/month in AHV/AVS. This would put him in his “Affluent” category for the rest of his life.
A piece of advice for him nevertheless remains to take into account the cost of an EMS which, according to the RTS in 2016 cost no less than CHF 8'700/month on average…
Option B: Withdrawal of the entire capital
Monthly income | Amount |
---|---|
Asia Real estate returns | 2'000.00 |
2% return on current 130kCHF | 216.66 |
2% return on 480kCHF capital | 800.00 |
Total | 3'016.66 |
I have taken into account a BVG capital of CHF 480'000 in order to take into account the taxation of the 2nd pillar capital payment.
In a very conservative world (2% return is really very little), this option B would not even allow François to live with his “very frugal” variant of life.
Option C: Mix of BVG/LPP pension and capital withdrawal
Monthly income | Amount |
---|---|
Asia Real estate returns | 2'000.00 |
2% return on current 130kCHF | 216.66 |
2% return on 240kCHF capital | 400.00 |
BVG/LPP pension | 1'042.38 |
Total | 3'659.04 |
In this last option, François can hope (still with very conservative calculations) to live out his early retirement frugally, and then at the age of 65 move up to the “Affluent” category.
In order to have a different point of view on these conservative tables, I will now calculate the same 3 options but with average annual returns of 5% to be a little more realistic, as well as 8% in case he can still invest in rental real estate in Asia:
François retirement options (excluding AHV) | 2% yield | 5% yield | 8% yield |
---|---|---|---|
Option A : BVG monthly annuity | 4'301.51 | 4'626.51 | 4'951.51 |
Option B : full withdrawal of capital | 3'016.66 | 4'541.66 | 6'066.66 |
Option C : mix of pension and BVG capital | 3'659.04 | 4'584.04 | 5'509.04 |
And to get the full picture, here’s what it would look like for François’ retirement after his 65th birthday, including his AHV pension of CHF 2'000/month:
François retirement options (including AHV) | 2% yield | 5% yield | 8% yield |
---|---|---|---|
Option A : BVG monthly annuity | 6'301.51 | 6'626.51 | 6'951.51 |
Option B : full withdrawal of capital | 5'016.66 | 6'541.66 | 8'066.66 |
Option C : mix of pension and BVG capital | 5'659.04 | 6'584.04 | 7'509.04 |
If I was very risk-averse, I would go directly to the BVG pension to ensure a frugal and comfortable early retirement. And enjoy a retirement after age 65 without worrying about financial returns.
But not being (yet!) that scared, I think I would ultimately hesitate between withdrawing the entire Pillar 2 capital (option B) and a mix of pension and BVG capital (option C).
If I know that I can trust my knowledge of bonds and real estate investment (i.e. what to choose as a bond or as an investment property and that it doesn’t put too much extra workload on me), I would go for option B (full principal withdrawal).
If, on the other hand, I prefer more security and don’t want to worry about my rental returns once I retire, then I would opt for Option C (mix of pension and BVG capital).
It was really interesting to put myself in the shoes of François because it makes me see what’s ahead of me.
It’s easy for me right now to pretend that it’s all easy and put all my cash into equity ETFs, value investment, and real estate investment, because I’m in a phase of wealth accumulation, and not wealth consumption as it’s the case for François.
So what I get out of it is that I need to further improve my knowledge of bond yields (article currently being written) and rental real estate. And this is so that I don’t panic at the idea of generating at least 5% with my portfolio when I pass the 40 year mark…
Another thing I knew in theory but see here applied is that leading a basic frugal life can only help you in retirement. Typically, François can afford to consider retiring 5 years before the legal retirement age.
And the last point I asked François: does your BVG conversion rate drop over the years once you retire? He replied that it does not. So once you start collecting your pension (if you choose this option), it remains constant for the rest of your life.
And you, what would you do if you were in François’ situation? Would you be rather conservative and take all your BVG as an annuity to ensure you have a basis for retirement, or on the contrary, 100% in capital?
Note: many thanks to the 3 new patrons @Fabrice, @Simon, and @Cédric for their blog sponsorship via Patreon. That’s it, we’ve reached the first objective of securing the hosting part of the blog and forum. I find it hard to realize it honestly. Thank you!
]]>While discussing investments with several readers last year, I realized that my cash was working for an expected return of 6-8% over the long short term with my ETFs, compared to their investments in value which were returning between 10-20%.
So I started googling to try to find more info on the web, but all the sites and blogs I found were either too clickbait or too superficial. So I stayed with my investments in ETFs and real estate for a good part of 2019…
All this until I spoke with two members of the Team MP who recommended me a book and a reference value investing blog respectively.
But before I tell you the details of my journey, let’s start at the beginning.
Until mid-2019, my strategy was to invest in the stock market via ETFs. As a reminder, an ETF is an “Exchange-Traded Fund”. In other words, it’s a fund that you can buy on the stock exchange, just like a normal share.
For stock market beginners: a fund allows you to answer the following problem: “I want to buy stocks from all over the world to be highly diversified, but I don’t want to buy them one by one.” So when you buy a share of this fund, you automatically own shares in each of the companies the fund invests in.
One of the criticisms of this approach is that we do not know too much about the thousands of companies in which we invest.
But we do know (well, we do hope) from historical data, confirmed by Mr. Warren Buffet himself, that it is an approach that will beat an actively managed portfolio in 75% of cases (i.e. portfolios built by financial advisors who try to beat market indices).
As you can see, it’s a very passive type of investing, and that was my goal. Because in the end I only spent 30 minutes per quarter re-injecting my savings into 3 ETFs (see my article on how to build a Bogleheads portfolio with only 3 ETFs for more information).
With this kind of ETF portfolio, I want to achieve 6-8% return over the long term (i.e. 10-15+ years).
Value investing is an investment strategy that involves selecting stocks that appear to be trading at a lower price than their intrinsic value (also called book value).
Compared to a portfolio of ETFs, which often includes thousands of companies, a value portfolio consists of approximately 30 companies.
The purpose is twofold:
Value investing is an investment strategy that involves selecting stocks that appear to be trading at less than their intrinsic value.
Imagine that the Tesla brand (the manufacturer of electric cars) is unstable, and that its flagship model the Tesla Model S has an Argus value defined by Eurotax Switzerland (representing the stock market in our example) that varies between CHF 5'000 and CHF 60'000 depending on the daily mood of buyers and sellers.
You who know about batteries and large touch screens for electric cars, you have knowledge that even if the Tesla brand were to close tomorrow, you could resell all the spare parts of this model for CHF 50'000. That’s the intrinsic value, which is completely uncorrelated to the market price or to what the brand does (like burning cash by sending rockets with cars in them :)).
Then, in case your estimate of CHF 50'000 is too optimistic, you take a safety margin (one of the key principles coming from Benjamin Graham, founding father of value investing) of 30%, i.e. you agree to buy this vehicle when it is at CHF 35'000 (= 50'000 - (30% x 50'000)). The goal is that you don’t make a loss if you ever screwed up in your calculations for the resale of spare parts. In the worst case you should be able to sell everything for CHF 35'000.
And then, Wednesday morning when you arrive at work, a colleague says: “God, Tesla are really not doing good… even my neighbour offered me his Tesla Model S this morning for CHF 30'000 because he’s afraid it’s not worth anything when he wants to change it in 3 months…”
What would you do?
Personally, I take the neighbor’s phone number and tell him that I buy his car that night with cash.
And to finish the story: 7 months later, the market having returned more rational, I see that the Tesla Model S on AutoScout24 sells for around CHF 50'000. So I put an ad, and the next day it’s sold.
As a result, in 7 months, I realize a gain of almost 43%.
Does that sound too good to be true? I was thinking too that it couldn’t be. But it is, thanks (or because?) to people’s irrationality and emotionality, supply and demand actually generate such price variations on the stock market.
The summary of my value investing experience in one sentence: I read a book that allowed me to understand the basics of value investing, and then I focused on a website that has a paid newsletter in order to take action while being accompanied.
Thanks again to you @Andrew for getting me on the right track by advising me to read the book “Rule #1” by Phil Town.
This book is very practical. It’s a sort of A-Z value investing guide for finding “value” companies to invest in.
And the cool thing is that all the economic jargon is illustrated very simply via an example of a lemonade stand that Phil takes throughout the book whenever there is a complex financial concept to explain.
In addition to this book, there are two books that are a bit like the bible of value investing because written by Benjamin Graham himself, namely The Intelligent Investor and Security Analysis.
To have started (and not finished because boring) reading “The Intelligent Investor”, I can only recommend you the Phil Town book to get a good overview of what value investing is all about. And then move on to Benjamin Graham’s if you want to delve deeper into the subject.
If I had to summarize this book “Rule One Investing” in a few key points, I’d explain it to you as follow:
The last principle of the list, the “margin of safety”, is a key element also put forward by Warren Buffet in his famous expression :
Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1. Warren Buffet
To answer the question you’re asking yourself, “But then MP, I read a book, I apply it to the letter, and boom, I get 10-20% return?!”
My answer: “Yes and no.” (the kind of answer I hate myself!)
Yes, because I applied the method myself by choosing a company matching all the criteria (which I then followed without buying to test the process). This company was therefore offered by Mr. Market at US$200 back in 2019. And on the day I write this article, Mr. Market woke up (i.e. the stockbrokers investing like at the casino) and now values it at US$315… So we are talking of a return of about 57.5%!
And another yes because Phil even offers a paid service to do all the calculations in his book automatically: ruleoneinvesting.com.
The other part of my answer is: no because the method given by Phil Town proposes to follow market movements and buy and sell very regularly to satisfy Warren Buffet’s rule of never losing money. And in my case above, I would have sold and bought back the shares one or even several dozens of times until today.
The problem I see with that is related to the tax situation in Switzerland. As a reminder, you are not taxed on capital gains as a private investor. On the other hand, there is a criterion that makes the taxes consider you as a professional investor who does not play with the Phil Town method: the holding period of a security must be a minimum of 6 months.
So I didn’t get into value investing through this book. For one, because I was afraid of being taxed on capital gains, and two, because I felt the need to be more accompanied at the beginning.
Following this book, I remembered that Julianek (our moderator of the MP forum) had talked about net-net investments. So we discussed a lot, and he even gave me a very detailed introduction to the subject which complemented Phil Town’s book (thanks again @Julianek!).
He also mentioned to me a site that he used to follow in the past (when he started like me) and that he always considered as one of the most reliable (and understandable by the “normal people”) resources: Daubasses.com. Sort of a “Value investing for beginners” guide.
One point that I clarify from the outset: the website is only in French, but that’s not a problem. If you’re really serious and want to value invest, I recommend you the translation tool Deepl (available as a desktop application too) which is 100x better than Google Translate (I use it for all my professional needs and for the blog too).
To prove it to you, here is an example of translation of the Daubasses website from French to English and from French to German.
Les Daubasses is the perfect website for any value investing beginner. Rational, humble, jargon-free, established since 2008, and above all with returns that many bankers and financial advisers are jealous about. The gem in terms of pragmatic and down-to-earth investments! MP
The two sections to read first are : The Philosophy of the Daubasses and the the guided tour of the Daubasses’ blog.
I recommend them to every member of the Team MP who writes to me asking where to start with value investing.
Their website Daubasses.com was launched in 2008, just before the last stock market crash. And their no.1 value investment portfolio nevertheless achieved an annualized return of 27.3% compared to the MSCI World benchmark, which made “only” 11.9% over the same decade (2008-2018).
Once I read all this, I was as convinced as I was with the book “Rule One Investing” because it’s rational.
Except I always had this fear of going in it alone.
And that’s when the Daubasses came to my rescue with their paid newsletter. At first I said to myself: “119€ a year, really? I’m trying to eliminate as much investment fees as possible, I’m not gonna spend more than a hundred bucks a year to figure out what and when to buy/sell.”
Except that a month later, I still hadn’t started investing in “value” stocks…
So I subscribed to their newsletter for a year. And I never have regretted this investment.
It’s great to have the buy and sell alerts so I don’t have to hustle the market every morning. And it’s also great to have a real portfolio (they invest themselves in what they stand for) of 30 “value” companies.
But most of all, what’s great is the educational, jargon-free financial side of each of their monthly newsletters where they explain their value investing formula step by step. I’m learning tons and feel more and more confident about buying my own daubasses (i.e. not part of the newsletter’s reference portfolio) in the coming months.
As usual, I’ll let you make up your own mind by reading the two sections of their site mentioned above which are like a value investing crash course.
In addition to assiduously following all the content published by the Daubasses team (there are four of them behind this project), I’ve contacted them by email to find out more about who they are and co.
And I also took the opportunity to negotiate something for you. And it’s exclusively for members of the MP Team!
This Daubasses.com promotion consists of 3 free months in addition to the 12 months for which you subscribe. So you save 30€ if you decide to go for it :)
This offer is only valid until 29.02.2020.
The rules of the Daubasses.com special offer work like this:
I’m going to see in 2020 how these value investments look. But in principle, I’m aiming for an equity portfolio split 50-50 between ETFs and value stocks.
Since June last year I have invested around CHF 16'000 in 18 different companies (many of them in Japan) for a return so far of +5.69% (the return on this portfolio no. 2 of the Daubasses that I have been following since mid-2019 is +12% since they launched it in October 2018).
But the most important thing is the potential of the portfolio, i.e. how much we would earn if the market valued all our companies correctly (i.e. at their intrinsic value). And to date the portfolio no. 2 of the Daubasses is at a weighted average potential of +171.6%.
In any case, I plan to document my new portfolio strategy in a future article this winter still.
And you, are you already into value investing? If so, what resources are you using?
Note: many thanks to the 3 new patrons @Coralie, @Andrei, and @Oogie for their blog sponsorship via Patreon. We’re getting close to hit the first goal to secure the hosting part of both the blog and the forum, I’m so thankful.
]]>That’s why I created this ranking of personal finance bloggers by savings rate (aka. #BSRI) so I’d never run out of inspiration.
Without further ado, here is the final ranking of the 2019 vintage of the #BSRI!
<h3>Badass Savers Gold (≥ 55%)</h3>
<li><a href="https://radicalfire.com/tag/monthly-report/" target="_blank">Radical FIRE</a> | 67% (Netherlands, Single)</li>
<li><a href="https://forever20somethinglawyer.wordpress.com/2019/12/09/net-worth-update-7-december-2019-we-bought-a-house/" target="_blank">Forever 20 something lawyer</a> | 65.26% (Philippines, Couple)</li>
<li><a href="https://soulfulfinance.com/index.php/2019/08/19/savings-rate-history/" target="_blank">Soulful Finance</a> | 64% (Hungary, Single)</li>
<li><a href="https://lekkerlevenmetminder.nl" target="_blank">Lekker Leven Met Minder</a> | 60% (Netherlands, Couple)</li>
<li><a href="http://www.hippiesdelandrover.com/" target="_blank">Hippies de Land Rover</a> | 59.2% (Switzerland, Family)</li>
<li><a href="https://road-to-fire.com/articles/" target="_blank">Road to FIRE</a> | 56.15% (Switzerland, Couple)</li>
<h3>Badass Savers Silver (≥ 40%)</h3>
<li><a href="https://frugalisten.de/tag/bericht/" target="_blank">Frugalisten</a> | 53.45% (Germany, Family)</li>
<li><a href="https://thepoorswiss.com/savings-rate/" target="_blank">The Poor Swiss</a> | 50.69% (Switzerland, Couple)</li>
<li><a href="https://firetheboss.eu/personal-finance/looking-back-at-2019/" target="_blank">Fire The Boss</a> | 48.9% (Netherlands, Single)</li>
<li><a href="https://financiallyfree.eu/savings-rate/" target="_blank">Financially Free</a> | 48.76% (Denmark, Family)</li>
<li><a href="http://quietlysaving.co.uk" target="_blank">Quietly Saving</a> | 46.3% (United Kingdom, Single)</li>
<li><a href="https://cheesyfinance.nl/2020/01/02/2019-was-the-hottest-year-on-record/" target="_blank">Cheesy Finance</a> | 43.1% (Netherlands, Family)</li>
<li><a href="https://www.veelvoorminder.nl/2019/12/27/tromroffel-de-eindstand-van-de-2019-veelvoorminder-doelen/" target="_blank">Veel Voor Minder</a> | 41% (Netherlands, Family)</li>
<li><a href="https://myinvestment.blog/investment-portfolio/" target="_blank">MyInvestment.Blog</a> | 40.49% (Denmark, Couple)</li>
<h3>Badass Savers Bronze (< 40%)</h3>
<li><a href="https://fondue.blog/savings-rate/" target="_blank">Mr. Cheese</a> | 26% (Switzerland, Family)</li>
<li><a href="https://www.mustachianpost.com/blog/net-worth-and-savings-rate-update-december-2019/" target="_blank">Mustachian Post</a> | 23.3% (Switzerland, Family)</li>
<li><a href="https://niettot71.nl/tag/nettowaarde/" target="_blank">Niet Tot 71</a> | 19.33% (Netherlands, Family)</li>
<li><a href="https://budget365.wordpress.com/2020/01/04/2019-saving-rate/" target="_blank">Budget365</a> | 17.9% (Czech Republic, Couple)</li>
And here are the long-awaited badges that each blogger can use to share their prowess on their blog or any other media.
*Source file Platinum badge: HD / LD* *Source file Gold badge: HD / LD* *Source file Silver badge: HD / LD* *Source file Bronze badge: HD / LD*I am counting on you to spread the word about this #BSRI ranking so that there will be even more participants in 2019!
And you, dear reader, what was your savings rate for 2019?
]]>Even if I believed it hard, you would have told me at the time that I would still be writing an article at 06:36am in the morning in 2020, I don’t know if I would have believed you ;)
Anyway: “Happy birthday dear blog!”
As I do every year, I would like to take this opportunity to look back over the past year and see what’s in store for the coming year.
And as Shane from the blog Farnam Street says so well in his annual letters to readers (whose style I will copy shamelessly), what I care about most is you dear reader. You trust me with much more than your clicks on my affiliate links (don’t stop please :D) : your time. And it is therefore my duty to offer you the best return on investment to get the best value out of this time that you don’t spend doing anything else.
When you’re a blogger, there’s one metric that says a lot about the quality of your articles: the number of subscribers to your newsletter.
The reason? If you start spamming people, or decrease in quality, people will unsubscribe.
Another metric coupled with the number of subscribers, and which is even more important, is the email opening rate. Because you can have 10'000 subscribers to your newsletter, if only 10 open your emails, and the rest delete them or mark them as spam, we can’t say that you’ve succeeded with your bet…
The MP blog newsletter has grown to 1'974 subscribers at the end of 2019, compared to 1'061 at the end of 2018. This gives us a growth of about 86%.
What pleases me the most is that the opening rate of these emails is 56.33%. Which is huge compared to the industry average of 15.93%. My minimum goal is to be above 50%, and ideally above 60%.
In terms of the number of effective readers, this year we reached 1'112 people (1'974 * 0.5633). This represents a growth of about 82% compared to 2018 with 612 effective readers (1'061 * 0.55).
All this is cool for my blog, you’ll tell me, but what’s the point, and who does it serves else besides me concretely?
My answer: it’s only positive stuff for the Swiss people because the FIRE (Financial Independence, Retire Early) and frugalist movement is becoming more and more known by everybody.
By extrapolation, we can say that people are becoming more financially literate, and therefore less stressed, and therefore happier in the end.
By the way, if you are also interested in receiving each new article automatically in your email box, then just register below:
In terms of traffic, the blog continues to grow with an increase of 112% in terms of visitors, and 120% in terms of page views.
I published 28 articles in 2019 (compared to 21 in 2018). I don’t take growth into account for this number because quality is more important to me than quantity.
The blogposts that were liked the most in 2019 are :
Another interesting number to look at is the number of interactions (all languages combined) we had on the blog. We went to 1'159 comments in 2019, a 218% growth compared to 2018 and its 365 comments. Quite impressive I must say!
Historically, I only blogged in English because it was in this language that the FIRE community communicated (mainly in the US).
In order to develop the movement in Switzerland, I started by translating the entire blog into French (my mother tongue) in 2017.
In 2019, I took a new step to cover the whole German-speaking part of Switzerland by translating the whole blog into German.
I will stop there for this year even though I had some requests for Italian and Portuguese. It’s not so much because of the cost it generates in terms of translations but rather in terms of time because one more language easily implies 1/5 more time.
As I told you earlier, the subject of frugalism and FIRE in Switzerland is becoming more and more important in our country.
We have seen it again in 2019, notably with interviews and mentions in the following media: NZZ, Le Monde, and the blog of the Migros Bank.
I’m not doing this blog for celebrity, but it’s nice to see that the topic of financial independence is becoming accessible to more people.
What I like about the blog is that if you cheat with people or just spam them with products or offers, then you see your income decline very quickly.
There is a direct correlation between the value you add to your readers, and the profits you can make from your personal project. No middlemen, no two-year sales cycle or anything like that.
As a result, seeing +134% in profits between 2018 and 2019 tells me that I’m heading in the right direction and that my articles are bringing you something. And that makes me happy.
2018 | 2019 | |
---|---|---|
Revenues | 4'671.05 | 18'374.37 |
Expenses | 415.38 | 8'413.92 |
Profits | 4'255.67 | 9'960.45 |
And on top of the profits, what makes me even happier is when I get emails like this:
All this to say a big thank you for sharing! You’re changing lives, isn’t that fantastic! A reader of the blog
Related to profit is the subject of ethics. In other words, how not to fall into the “make cash at all costs with the blog”, and end up losing readers one by one.
Because let’s be clear, I’m the first to unsubscribe from a blog if I start to see that opinions become biased by money.
So this subject is particularly close to my heart and it can be seen applied with things like:
In case you’re new to the blog, the whole Team MP community meets in our forum.
Here are some statistics from 2018, 2019, and since its inception in 2016:
2018 | 2019 | Since 2016 | |
---|---|---|---|
Users | 210 | 344 | 828 |
Created posts | 5.2k | 6.9k | 15.1k |
Unique Visits | 15.6k | 30.1k | 54.6k |
Pageviews | 691k | 1.1M | 2.2M |
My special thanks goes to Julianek and Bojack, our two moderators, for their involvement without which the forum would not be as qualitative. Thank you!
And I thank you, dear reader, for making this community live and be useful to every newcomer to the Team MP.
As a reminder, the Team MP is all of us: the readers of the blog, those who participate in the forum, myself. In short, all the Mustachians and frugalists in Switzerland who participate in what this blog is today and will be tomorrow.
And the core Team MP, well, it’s the people behind the blog. It’s funny because I’ve had messages at the end of last year saying “Happy New Year to the whole team” as if we were 15 people :D
Anyway, in addition to Julianek and Bojack who moderate the forum, there is also Miiila who is the official German-speaking translator of the blog since the beginning of 2019 already.
And then there’s me, Marc aka MP, who does everything else :)
And…that’s all actually :)
I take advantage of this retrospective to thank all the patrons of the blog via Patreon : Adrian, Alberto, Brian, Coralie (so touched by your story and the reason for your patronage), Cédric, Patrik, PK, Roddy, Timo, and Valentin.
I’ve already talked a lot about future projects in a previous article so I’m not going to cut and paste.
If you’re new, here’s the list and I’ll let you click on the link above for details:
I have another concrete project in mind following your numerous requests, but that will have to be prioritized because I only have 24 hours in a day like everyone else:
And else, well, it’s going to be mostly about continuing to share all my journey to try to inspire you as much as possible.
On this subject, 2020 will be a year of consolidation for a lot of things, including our portfolio, which has grown significantly (real estate, value investing, and P2P). I plan to talk about this in more detail this quarter.
On that note, I’m going to blow out my candles and open a good bottle of wine (well, tonight, because it’s a bit early :D).
Thanks again for being a reader of the blog for 6 years already (or becoming one). Because clearly, without you, I would have stopped at the end of the first year.
]]>If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
CASH FLOW AND SAVINGS (+CHF 7'386.66): December means Christmas presents. But looking at our YNAB budget, it looks like we spent less this year compared to 2018 (to be confirmed when we expose ourselves like last year). On the other hand, we spent more on car trips to visit various family members during the holidays.
We’re also in the middle of dental expenses for the kids, but these will be reimbursed for the most part next month.
Concerning the other categories of unexpected expenses, Mrs. MP and I had more fun (hairdresser, “Famille Zéro Déchet, Ze Guide” book — thanks again Julien for the recommendation!) but without exaggerating too much either.
Otherwise, it was a fairly common month for the rest with daycare expenses, semi-annual payment for the children’s extra-curricular activities, usual and planned expenses for our apartment with a year-end payment to regularize the accounts, as well as payment of the property tax.
Then, the blog continues to bring a revenue stream that is always pleasant to have. On the other hand, December was rather a month of re-investment in the business with the subscription to my new email service for readers (see the explanation in this article) and other tools to improve the blog.
STOCK MARKET INVESTMENTS (+CHF 2'078.34): The stock market continued to climb in December. And we were able to benefit from the dividends of the last quarter. The year 2019 will have once again proved that one should not try to time the market (i.e. try to invest at the best time to get the best returns) because if I had followed this logic, I would have stopped investing at the end of 2017 when the financial crisis began to be announced. And I would have missed a 2019 with 25%+ returns (VWRL ETF for example)…
P2P INVESTMENTS (-CHF 2'901.04): It is in this investment category that there was the most movement in December.
Iban Wallet
After opening my Iban Wallet account a few weeks ago (and earning my daily interest as planned), I got stressed for my 3'750€ there by re-reading the reviews on Trustpilot.
“Is Iban Wallet a scam?” I asked myself.
Rather than panic, I decided to withdraw my money to close the loop and see if everything was going well.
Result:
Since then, I have been in contact with their Head of Communication (Sigrid Arteaga).
What I take away from our first exchanges is :
I am continuing my investigations, and I will publish an article detailing my opinion about Iban Wallet later this quarter.
Mintos
I finally took the time to invest in P2P with the most reputable platform in this field: Mintos.
To make it simple, I started with their “Invest & Access” program which looks pretty much like Iban Wallet since I simply created my account, transferred money, and clicked on a button to invest my 1'000€ (I’m preparing a detailed article that should be released this January).
The expected return with this automated investment program is about 10%.
My next step with Mintos is to create a personalized portfolio for myself (excluding car and consumer loans).
Last reminder: I target a maximum of 5-10% P2P in my overall investment portfolio.
CRYPTOCURRENCIES SPECULATION (-CHF 232.20): The crypto-currencies are going down. How many beers you want to bet that it’s going up in January? And down in February :D?
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (n/a): Nothing to report because I make my lump sum payment at the beginning of the year (only Mrs MP is lucky enough to be at VIAC…my 3rd pillar being one of the guarantees for our mortgage), and my updated surrender value also comes at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 1'198.91): We made our final payment to reach the CHF 6'826 deductible from Swiss taxes (maximum amount for 3rd pillar 2019 and also for 2020 by the way). On top of that, the bull market allowed us to make a capital gain of almost CHF 600 (if you’re interested, I have an article about VIAC which is the service we use for Mrs. MP’s pillar 3a).
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no speculation on the price of our rental property. We will wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 716.90): The loan continues to be repaid from the rents that come in each month. One of the apartments is still empty but we are still on track regarding the “Rental Vacation” reserve that we calculated in our yield forecast.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (-CHF 1'013.67): The repayment of overpayments of rent announced in my last report in November was in fact recorded in December. Add to that the payment of the Non-Owner-Occupied insurance (billed annually), and all this explains why we are in the negative this month. As expected :)
In terms of financial independence, we are at 19% of our objective of CHF 2'156'000 with our net worth of CHF 416'053.42.
In the end, each expense adds up and we ended up with a savings rate of 34% for December 2019.
And our average savings rate in 2019 amounts to 23.3%. This is much lower than our acceptable minimum of 40%. But (here we go again with the excuses), if we take out the very exceptional expenses of our purchase of an investment property and others related to our professional life, then we fall back to 36.8%. Which reassures me already a little about our frugal capacities :)
And you, how much net worth and savings rate were you at by the end of December 2019?
PS: if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
PS2: I usually answer with a maximum delay of 1 week to all emails and blog comments. But since the TTC TV show about frugalism on the RTS, I’m struggling to manage the load :)
So be patient, I’ll answer as always to every message I get. I should be back to normal in 2-4 weeks, I think.
When I launched my blog in 2014, I had to choose a comment system (the section at the end of each article) in order to be able to debate and open a dialogue with you, dear reader.
At the time, the most popular system among bloggers was a tool called Disqus. Easy to use, included anti-spam, no ads, and free. The decision was quickly made.
Until this year, I didn’t follow their evolution too much because everything worked as usual. Except they started wanting to put ads but I was able to disable the option. Again everything was tip top and I didn’t follow their service more than that.
But last September, while I was editing a draft article, I found that my page was loading really slowly. I had already noticed the phenomenon but I had put the blame on my internet connection. So I took the time to look at what was slowing down the page for so long and then, surprise, it was Disqus!
A Google search later, I learn the following three things:
So I did some more research and saw that I wasn’t the only one wondering what I was going to do to replace Disqus on the blog.
After scouring the forums and other in-depth reviews of the commenting tools out there, I came up with a top 2: Commento.io or Discourse (if you ever know of another great tool that I wouldn’t have seen, please let me know).
And that’s where I’d like to hear from you as a reader who is a regular user of comments.
As a reminder, in case you’ve never posted a comment so far (boooh!), here’s what Disqus looks like:
Then here are the advantages and disadvantages of each of the blog commenting tools that I evaluate:
Commento.io
Discourse
I also put below screenshots of the two solutions in action:
I really have a hard time deciding because both solutions have advantages that I like. So I thought I’d ask you for your opinion before I made a decision.
Do you vote for Commento or Discourse? (you can vote by putting a comment below, if possible with the why, but not obliged ;))
Note: I wanted to thank you as a member of the Team MP because thanks to you and the other readers, the Google friend has referenced the blog well. And then Corinne Portier, one of the TTC journalists contacted me to do a report on RTS. You can watch it by clicking on this link.
]]>As I told you in a previous article, we decided with Mrs. MP to change online broker for the money we’re putting aside for the kids (well, I decided, and she trusts me financially, so it’s agreed :D).
The reason is simple: we were at Cornèrtrader but they decided to introduce new quarterly inactivity fees (CHF 35/quarter). And since we were investing every 6 months, we were going to pay a big amount of fees.
We could have gone to the best online broker Interactive Brokers as I recommend to everyone, but as we are far from having CHF 100'000 set aside for the children, we would also have a fee of CHF 10/month there.
As a result, our choice fell on DEGIRO. The big advantage is that there are no account management or other fees. And above all, we will be able to invest monthly the CHF 100 that we put aside because they have a list of free ETFs (free as in commission-free) including our favorite the VWRL ETF :)
So here are the steps we followed to switch of online broker.
Note: whether you choose DEGIRO or any other broker, I advise you to open your account first as it may take some time for it to be activated.
I’m following my own advice ;)
Since this part was a whole chapter in itself, I created a DEGIRO account opening tutorial.
I’ll be waiting for you on this page as you go through all the steps.
Before diving into the subject, I thought I would transfer my securities from Cornèrtrader to DEGIRO if it wasn’t too expensive. But I did the math:
In comparison, I also looked at how much it would cost me to resell everything at Cornèrtrader, and to buy back VWRL for the amount of the sale at DEGIRO.
UPDATE 06.01.2020 : Thanks to the reader Chris who told me that I forgot to take into account the exchange fees for the automatic conversion on DEGIRO from CHF to EUR (0.1% of the transaction amount). This makes a total fee of about CHF 45 for the solution I have chosen instead of CHF 35.51. I will survive with this extra cost, although it is important to note for the sake of transparency.
The difference being small, I could have chosen one of the two options without any problems. But I liked the idea of not wasting time with Cornèrtrader’s support for a securities’ transfer (even if out of curiosity I would have liked to see how it went), so I chose the cheaper option: resell everything on Cornèrtrader, and buy everything back on DEGIRO.
Here’s how it went in screenshots:
And that’s it! In my case, the sale took place a few minutes after I placed the order. That’s the advantage of having a liquid ETF that buys/sells very regularly every day on the financial markets.
Then you need to ask the Cornèrtrader support team by email (or you can call them) to transfer your cash from their place to your bank, and then close your account right afterwards.
As you can read in the email below:
So I wrote and sent my mail to Cornèrtrader (I can give you the text by email if you are not inspired :D).
A few days after they received my letter, they called us to verify that this was what we wanted, and also to ask us why we wanted to close our account. In one sense it’s painful, but in another sense it shows their serious level of security.
This step is optional as you can ask Cornèrtrader (or your current online broker) to transfer funds directly to your DEGIRO broker account.
On my side, I wanted to test the limits of Zak: being able to transfer only CHF 5'000 per day, and CHF 10'000 over 7 days.
Spoiler: in fact you can actually initiate a transfer over CHF 5'000 or even CHF 10'000 in one go from the Zak mobile application, it’s just that the transfer is “Awaiting validation from Zak’s support team” until you call them by phone to tell them that it’s you who initiated the transfer (it’s a security measure, as it’s a Swiss online bank rather aimed at young people who don’t do this kind of transaction every day).
And frankly, it’s working out great. You call, you say you want to validate a wire transfer you just made from your Zak mobile app, they ask you a few security questions, and then it’s unlocked. Without exaggerating, I think the call lasted less than two minutes! :)
The hard part is over! Now all you have to do is wait until your cash arrives on DEGIRO, which usually takes a day or two.
When the time comes, you’ll receive an email like this:
As I have a complete DEGIRO tutorial dedicated to it, I will put this section there for future reference. So you can go to this page to know how to buy your VWRL ETF on DEGIRO.
In the end, it wasn’t that complicated to make this transfer from Cornèrtrader to DEGIRO.
I’m interested to know how things are going with brokers other than Cornèrtrader, so if you have closed your Swissquote or PostFinance account, let us know your experience via the comments below.
Note: thanks to the new patron @Timo for his blog sponsorship via Patreon.
]]>But well, you still have to have fun in life, especially when you are lucky enough to have such beautiful mountains close to home.
And frugal doesn’t mean depriving yourself of everything either!
So I thought I’d share with you some tips and tricks for enjoying the snow season: from cheap family-friendly Swiss ski resorts to second-hand equipment.
In exchange, I count on you to share your good tips with me afterwards ;)
When you’re on your own, ski equipment (and any other winter sport) already costs quite a bit. So when you’re in a relationship, moreover with children, it only gets worse.
Once we were the four of us who practiced winter sports, we asked around us for some tips to pay less for the children’s ski equipment as they grow up and have to change almost every year!
And then, what a good surprise when our nany of the time tells us about a second hand ski shop in Concise: Skid’Oc.
To make it short: instead of either renting skis+boots for CHF 100-150 per child per season from Ochsner, or even worse, buying new equipment for at least CHF 200 per child per season, Skid’Oc offers you ski and ski boot sets for around CHF 40-50 for children. And the best part is that they buy them back from you one or two years later when your child has grown up. It’s really worth a look.
The other trick where you buy and sell almost lossless is to watch on Anibis or Facebook — Moms or such groups are the best for that!
For example, last year, we bought for our second one: CHF 25 for skis, CHF 15 for boots, and CHF 5 for helmet. In parallel, we sold his old skis for CHF 30 on Facebook :)
In French-speaking Switzerland, the Cossonay swap is one of the best known because it is very well organized, and therefore with quality equipment. One year, we found for our first one a complete equipment (ski + boots + poles + helmet) for CHF 37. Unbeatable!
This swap takes place twice a year. You can find all the information on their “Troc de Coss” Facebook page.
A little pro advice: go there right from the opening if you want to have the chance to find what you want!
I will not teach the experts anything about this subject, but if you are one of those who are starting to take an interest in winter sports, know that there are huge price differences between the different ski resorts in Switzerland and at the borders.
Two concrete comparative examples:
1/ Full day at Verbier vs. Villars
2/ Full day at Villars vs. French Jura border station such as Métabief
And personally, I find family ski resorts more cosy and less touristy than larger ones like Zermatt or Verbier.
I don’t know by far all the stations so if you have other good tips, share them via the comments below.
On our side, we almost never go to winter sports for the whole day. First of all, because the toddlers are still too tired too quickly. And second, because it costs a lot!
If we compare the prices of the stations listed above for a full day versus a half day for an adult, it gives this:
You will tell me that it’s not much of a difference, but if you go between 5-10 times a season, with a family of 4, the difference is quickly growing!
In the same vein as taking your “tupps” to work, you’ll save even more if you take your picnic in the backpack instead of eating at ski resort restaurants.
And besides, I think it’s so cool to eat in the middle of trees rather than in a crowded restaurant where it’s so hot inside :)
The other alternative if you are lucky enough to live close to the mountains like us is to combine this good plan with the previous one: you eat before going skiing for the afternoon. Or vice versa, you leave early in the morning and come back to eat cosily at home.
Quick calculation :
It’s a “Ask the readers” article, so the goal is not to produce a 3'000 words’ blogpost ;)
So I let you share with us now your best and cheapest tips for winter sports in Switzerland (ski/snowboard/snowshoes/etc.) in the comments section below!
]]>Anyway, don’t worry, you’ll be able to satisfy your voyeuristic side once again in 2019 :D
If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
CASH FLOW AND SAVINGS (+CHF 900.26): Thankfully, the blog is starting to bring a steady flow of income as we took plane tickets for a big trip in 2020! This allows us to remain in positive cash flow in November. Other than that, it was a pretty standard month. We just bought some new Christmas decorations (I didn’t even try too hard to dissuade Mrs. MP for once ^^). Ah, and even if it’s only CHF 3.50/month, we had to pay these fees to BCV now that we transferred (almost) all our assets and salary payments to Zak. But by the end of January 2020, it should be over since we will close all our accounts with them!
STOCK MARKET INVESTMENTS (+CHF 7'816.44): The market has gone up like crazy, even though everyone has been announcing a stock market crash for months… Anyway, we take advantage of it, and we keep some cash reserves to be able to enjoy the sales when the day comes.
P2P INVESTMENTS (+CHF 3.67): As I told you in my last journal issue, I have been testing for several weeks a way to make sure that any cash I have is generating at least 2.5%. For this, I use the Iban Wallet P2P platform. I still have some reserves, so if you want to experiment too, it’s at your own risk. I will give you some news during the first quarter of 2020 with a detailed article.
If you ever open an account with them, you can use the code RMARIEUETZ which will give us 25€ each if you credit your account with at least 1'000€ (the blog thanks you very much!) (UPDATE: code no longer valid after 31.12.2019, but the link of the blog is - thanks in advance!)
COINBASE SPECULATION (+CHF 62.21): The crypto-currencies are going up. It’s really the most random thing that exists :)
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Filling Mrs. MP’s second pillar as usual.
MP’S 3RD PILLAR (n/a): Nothing to report because I make my one-time payment at the beginning of the year, and my 3rd pillar cash value is also updated at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 1'769.85): In addition to the CHF 564 we set aside each month to reach the deductible maximum (CHF 6'826 in 2019), our money has worked well while we were occupied with daily business. All this thanks to the fact that our 3a is 97% invested in equities at VIAC :)
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still do not repay anything as mortgage rates are so low, and we have not made a revaluation of our property so we do not speculate with its value (i.e. we keep the amount of our initial 20% down payment that we had to pay when we bought our home).
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no price speculation. We’ll wait until we want to resell it to get an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 725.45): The loan continues to be repaid with the rents we receive each month. Nice :) We still have an empty apartment but we prefer to wait for the right tenant rather than take the first one and then have problems.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 494.41): We had to pay back overpayments from a former tenant who forgot to cancel his automatic transfer… and the worst thing is that I had to warn him so he would realize it… Not all of us are geeks of numbers and personal finance apparently ^^
In terms of financial independence, we are at 19% of our objective of CHF 2'156'000 with our net worth of CHF 407'864.47.
So it’s official, we’ve passed the 400kCHF mark, and we’ll soon pass the 20% mark of our objective ;)
Next stop: half a million!
On the one hand, I am disappointed because we are below 40% (the minimum acceptable according to me) with a savings rate of 37% in November 2019. But on the other hand, when I see the few thousand francs we had to take out for our big trip, and that even with that we’re at 37%, I think it’s not that bad actually!
And you, how much net worth and savings rate are you at by the end of November 2019?
Note: I would like to thank the Patrons of the MP blog who have been supporting it for several months with their contributions. A huge thank you to @Adrian, @Brian, @Cédric, @Alberto, @Patrik, @PK, @Roddy, and @Valentin!
PS : if you also want to have access to bonuses such as the screenshot revealing the amount of each of my assets (I post it every month when this net worth update’s article is published online), then you just have to become a patron of the blog via Patreon.
]]>In this edition, we will talk about ambitious projects (including my book, an online course, and coaching), media interviews, ethics, and portfolio strategy. Nothing less!
Grab a cup of coffee/tea, and let’s go.
I noticed that my blog productivity had increased after the start of the school year. I think more bearable temperatures, and also more evenings spent at home rather than on the shores of Lake Geneva or Neuchâtel (which involved waking up later).
All this to say that I will put less pressure on myself for the blog from June to August, and on the contrary take advantage of the other months to dedicate all the time to it when I am not with the children or outside ;)
I wrote less during the first half of December because I spent almost two weeks migrating my mailing list tool to be ready for 2020 (for the geeks among you, I went from MailChimp to ConvertKit1).
My goal with this change is to avoid as much as possible the spam effect for each of the blog’s readers, including you. For example, as you received last quarter, I created a lot of content for my Interactive Brokers and DEGIRO “Epic Guides”. The new tool I have chosen will make it easier for me to categorize who needs it, and who doesn’t really care because he/she has been investing in the stock market for a long time.
My ultimate goal is that every email you receive from me brings you value. So please, if you see one too many emails, reply to me rather than unsubscribe so that I can optimize the think. It’ll help me a lot!
The blog is starting to bring in much more cash than I dared to imagine a few months ago (spoiler: we are approaching CHF 16'000 for 2019).
I’m starting to dream of taking several months of sabbatical leave to get it off the ground even more and who knows, potentially making it my full-time livelihood — but according to my own schedule: D.
If it turns out that you too have gone from being an employee to an entrepreneur (ideally as a blogger) when you had a well-established situation with children and everything, then I would be interested in talking to you :)
I am pleased to see that the mainstream media is taking an increasing interest in frugalism/FIRE (Financial Independence, Retire Early)/Mustachianism because the more we will be, the happier the people will be, and the better off the Earth will be too.
Below are the recent and upcoming interviews about the blog:
At the beginning of the month, my friend Matthias from the Financial Imagineer blog shared with me a good plan allowing me to watch the documentary “Playing with FIRE” (which you could enjoy too if you are subscribed to my newsletter).
I had various feedbacks, including one from a reader who told me “If one reads your blog, they don’t learn anything new.”. I agree that it is more for newcomers to the FIRE movement.
But I still learned an important lesson for the blog.
At many moments during the documentary, I told Mrs. MP: “Hey look, darling, that’s exactly you!” or “Ahah so true, it reminds me of the beginnings with the doubts I had…”
This made me notice that on the blog I share all our good plans, financial successes, and other inspiring articles. On the other hand, I have touched very little on moments of doubt. And God knows if there were many! So this documentary made me aware of this and to use this second episode of the “MP Journal” series to talk about it. And it’s going to start today with the section “And ethics in all this?” below ;)
In fact, as I reflected on the rest of this article, the documentary allowed me to learn a second lesson. And it’s about my book project.
Before watching the documentary “Playing with FIRE”, I was thinking of telling you that I was definitely dropping my book project on “How to become financially free by 40, in Switzerland”.
But the documentary changed my mind. So if you are not registered yet but are very interested, then go here. If we exceed the 1'000 subscribers, it will help me to take the leap and make drastic decisions to move forward.
I can already hear you asking me: “But MP, why did the documentary change your mind?”
To which I answer you that people like you and me wanting to change the world must share their visions with as many people as possible because the more frugal we are, the better the world will be with less consumption and innovative companies that customers will ask for (I plan to write more about this in the coming weeks).
The documentary reminded me that even if I’ve been blogging about frugalism/FIRE/Mustachianism in Switzerland for 6 years, we (aka Team MP) remain precursors of the movement and that it is far from being a dominant state of mind even today.
Potentially, until I reach the 1'000 subscribers, I will draft the chapters and send them to the registered people on the page to collect feedback. I’m still hesitating.
But in any case I’m not putting the project in the closet yet ;)
I have received several requests for details on the acquisition of our investment property in France because some of you also want to achieve returns of 15%+.
I am setting up an online course explaining how I acquired my first building in France in 70 days. We’ll start from “I don’t know where to start as I don’t know anything about it” to “That’s it, I signed at the notary’s office and in 10 years I’ll have 60k€ more in my account, thanks MP!!!”
There is only one seat left for the first quarter of 2020 because it will be quite interactive while we work out the details depending on the feedback. The price will be CHF 1'000. With this, you will have my whole process described that you can use as many times as you want (and not just for one building).
Important point: the course will be based entirely on the French system via an SCI, because it is this latter that I know.
If you are really motivated and serious (there is work to be done!) about investing in real estate in France, then you can register via the form below (as said, only 1 seat left for the first round):
Your biggest concern right now is to overcome the administrative paralysis to start investing somewhere?
Then know that you are not alone! I’ve been there, and other readers are currently at the same point :)
I already have a private session in January-February where I will sit 3-4 hours next to one of the readers on a Saturday morning. He will be able to ask me all the questions about my investment processes, portfolio choices, budget and banking system, etc. We will also open his brokerage account together and buy his first ETF.
Same as for the online course above, I only offer one additional seat for the first quarter of 2020 (because I still have a full-time job, and children, and a wife too ^^). In terms of location, I limit myself to French-speaking Switzerland for the time being. The price is CHF 300 for the morning, and I bring the croissants if you offer the coffee :D
If you feel concerned and really want to get started with investing in 2020 (once you register, no more choice, you’ll have to take the leap!), then you can register below:
Many of you have written to me in recent weeks to find out where I stood regarding my investments and portfolio because my dedicated page only talks about ETFs but I keep talking about value investing and also P2P loans.
To summarize the situation for everyone, here is the situation:
With this in mind, I would like to reach a portfolio in 2020 with:
And over the next few years, depending on how I evolve in value investing and depending on the returns, I may be more into value investing than in ETFs.
Don’t worry, I still recommend ETFs if you are looking to buy regularly (once a month/quarter for 15min max) and forget about it the rest of the time. On the other hand, if you are like me and like investing more and more, then the other options can be more interesting in terms of performance — but more time-consuming!
As I was saying, investments are above all opportunities ;)
3 weeks ago, we received an email from a person of the network that we activated a lot at the beginning of the year to find our first property and… it could be that we acquire a second property. We will compute the yield via Horiz.io (formerly rendementlocatif.com) as usual. More news on this subject in early 2020.
We even had a 3rd building in sight, but when I announced to the seller that we would only pay 30k€ maximum after my calculations on Horiz.io (formerly rendementlocatif.com) instead of the 185k€ requested, the man almost had a syncope! So we passed our turn.
It’s decided, I’m going to add P2P loans to my portfolio. I want to exclude everything that is car or consumption loan to stay a bit aligned with my financial guiding principles.
I chose to go with Mintos.
I will write a series of articles on the subject, starting from the basics, i.e. I didn’t know anything about it until 4-5 weeks ago, until my first investments.
Thanks again to all the readers who shared their experience with me following this article.
While analyzing the different existing P2P loan platforms, I came across Iban Wallet.
This solution led me to think that I could store all my cash flow there instead of letting it sleep at the bank for 0% return. Basically, it would work this way: we receive our salaries, we make all payments on the 2nd or 3rd of the month, we keep CHF 1'000 of security cushion, and we transfer all the rest (which we do not invest because we need it in the next 1-2 months for large invoices or planned expenses) to Iban Wallet. Then we take it off at the end of the month to pay for everything we need. And so on and so forth.
If you don’t know Iban Wallet : it’s a company that offers a system a little different from the platforms where you can choose P2P loans because there you transfer cash, and automatically it’s invested for a minimum return of 2.5%. And this on a daily basis. And you can take out the cash whenever you want with the interest earned. A bit like a savings account (at the time eh!) except that you don’t have to wait until the end of the year to see the interest coming in (I also saw that Mintos offers a similar system with the “Invest & Access” system but I have not yet looked at the conditions in detail).
“What about ethics in all this MP? Because they’re consumer and car loans, right?”
I agree. But if you think about it further: what do banks do with the money you leave in your account before you use it to pay your taxes or any other planned expenses? Well, they use it for consumer credit or mortgages! And what do you get in return: negative interests :D
I am in the testing phase of this system and I have some reservations about Iban Wallet’s seriousness (i.e. difficult to access support so what if a problem occurs once). I still transferred 3'610€ and I have to say that it’s pretty cool to see my cash working for me, even at 2.5%.
I’ll write an in-depth article when I’ve decided whether or not to continue with this.
If you like to experiment, you can use the Iban Wallet code of the blog RMARIEUETZ which will give us 25€ each if you credit your account with at least 1'000€ (UPDATE: code no longer valid after 31.12.2019, but the link of the blog is - thanks in advance!).
A quick tour of where we stand before my next more in-depth articles:
Watching the documentary “Playing with FIRE” made me re-discuss the subject of our financial independence (and no, Ms. MP is not of the type to like to talk about it every minute like me :D).
I told her that I thought we were increasingly in the same frugal state of mind. I even caught her saying “No, but come on, they make a little more money (salary or unexpected income), and here they go, big shopping time the following weekend…I can’t get it!”
I then explained to her how the protagonist of the documentary went through moral highs and lows.
And I went on to ask her how she felt right now about our goal of stopping working at 40.
Her answer: “I’m frustrated”, in a rather serious tone.
Argh. “The discussion will be fun,” I thought… “What’s she going to tell me…”
She continued: “The objective in itself is not the problem, but it is my ‘Freedom’ budget category of CHF 100 that is the issue. I have one dinner with friends in the month, and I have nothing left after that…”
So I ask her, with great caution: “By staying within reason, and assuming that we have extra margin in 2020 in terms of salaries, what do you think would be the right amount for your ‘Freedom’ budget category to avoid feeling this frustration? (because until 40 years old, it’s gonna be long and that’s not the point either!) But really, think realistically, like not CHF 1'000 a month eh ^^”
Her answer: “CHF 300 I think”.
Hmmm… 3x more. But at the same time it’s not 30x more…
We stopped the discussion there. But in parallel, I just calculated and that gives us about 35kCHF less in 10 years. So basically, about 6 months of extra work, for 10 years less frustration.
I will discuss this with Ms. MP tonight and will keep you informed in the next journal series’ article ;)
My biggest fear is that CHF 300 will not be sufficient anymore again in 1 year, and CHF 500 will be the new rule. But I will also explain this point to her to see her reaction.
If you have an opinion on the subject, I wanna hear about it!
I’ve been thinking a lot lately about being aligned with myself between my ethics and my investments.
Because when I hate Facebook on the one hand, I own a good part of it through my favorite VT ETF…
I’m not falling into anti-capitalism and questioning our rental building either… but we have to admit that being frugal and wanting to achieve financial independence is something very paradoxical. In a way, we want to stop working so we can do things we like more, and for my part, things that impact the world (which I’m already trying to do through this blog). But on the other hand, to achieve this objective, we make full use of the capitalist model.
I have read and watched several topics on this topic, and my opinion is by no means set in stone. But at the moment, I tend to think that through the blog I preach the good word of frugality. If it works a bit, readers like you will buy and consume more consciously. And as a result, companies will have to adapt their offer and become more innovative to meet (in my opinion) a better way of consuming. And the stock market (including index ETFs) will follow the winning companies as they do well.
I think I understood that the debate “Investor or consumer, who is most responsible for the evolution of our society?” was always a little intense so if you have a clear opinion, do not hesitate to share it below, but be constructive please ;)
In any case, the point remains that by being frugal, I consume less, so I save more. I could do nothing and leave my money to the bankers who would invest themselves for their own profits. I prefer to do it myself and take the profits in my pocket, to do what I want with them (like making donations or paying my own salary to blog even more).
It’s nevertheless still an excuse because it’s selfish as a point of view. Because anything I don’t consume, I could also invest it directly in ESG funds (abbreviation of “Environment, Society and Governance”). But when I see that in the top 10 positions of the “Vanguard ESG International Stock (VSGX)” ETF there are Nestlé, Alibaba, and Roche, I think I have better time to stay on a normal low-cost ETF and use returns to satisfy my own sense of ethics…
Then there are also donations or social entrepreneurship in which I could put 100% of my wealth.
But I’m not at that level (it’s not for nothing that ethics is complicated, it’s so personal) either.
So for the moment, I’m staying on “standard” investments and living with this paradox while trying to “change the world” as much as possible through my own consumption and through the articles on this blog. And when I have exceeded CHF 2.156 million, I will surely adapt my model to share my wealth even more.
As you can see, I’m far from stopping with the blog :) I have the impression that it’s a new start (as often in November/December, who knows why). I have to be careful not to promise too much, but at the same time I will especially follow the concrete opportunities that come along. No hassle, it shouldn’t become a job either :D
And you, what’s up? Are you already retired? Or are you demoralizing with the end-of-year bills you didn’t see coming?
Note: I have updated my Resources page with the tools I use daily to increase my wealth. Feel free to visit it, and tell me if you use any other tools that might be useful to me!
I had come across this service several times and every time I read “email marketing tool”, my brain raised a big red flag with an alert like “Bullshit marketing”, “American blabla”, etc. In addition, I often saw the name of it in web links inside US blog newsletters that I follow, and I thought to myself, “Here you go with people who track you to resell your data or advertise you…”
But in fact, at least for ConvertKit, it’s a really good tool, with the goal that each email brings value to readers. Once I started testing it, I immediately saw that a former blogger created it! ↩︎
If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
CASH FLOW AND SAVINGS (+CHF 8'095.84): It was a rather frugal month and, above all, quite huge in terms of cash flow. We’ve had several medical expenses reimbursed.
At the same time, the blog is becoming more and more profitable on its side, with many payments that arrived in October. I would like to take this opportunity to thank you because each reader participates by using this or that tool that I recommend after having tested it and labelled it “Team MP approved!”
STOCK MARKET INVESTMENTS (+CHF 1'828.84): The market was somewhat bullish in October. This, combined with dividends helps to boost our net worth.
COINBASE SPECULATION (-CHF 154.77): Crypto-currencies continue to drop in value, slowly but surely…
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 352.20): Mrs. MP finally has the final version of her 2nd pillar with a higher amount than before!
MP’S 3RD PILLAR (n/a): Nothing to report because I make my one-time payment at the beginning of the year, and my 3rd pillar cash value is also updated at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 515.18): Compared to our ETFs, those of VIAC underperformed by a few tens of CHF. Nothing very dramatic. As a reminder, the 3rd pillar we use is 97% invested in equities.
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still don’t reimburse until mortgage rates are so low, and we haven’t revalued our property so we don’t speculate on its value (i.e. we keep the purchase value).
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no price speculation. We’ll wait until we want to resell it to get an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 726.26): The loan continues to be repaid slowly but surely. It’s quite a beautiful thing this real estate investment! We had tenants’ turnover with two apartments, one of which is still not rented. But we had planned a little rental vacancy in our yield calculations, and for the moment we are still in the 15% range :)
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 53.51): We had to refund the deposits of the outgoing tenants, withholding fees because they were not 100% clean during the checkout.
In terms of financial independence, we are at 18% of our objective of CHF 2'156'000 with our net worth of CHF 395'137.13.
Anyway, it looks like we get closer and closer to CHF 400'000 :D Are you betting on next month or December? Or 2020?
We return finally to a reasonable category, namely the “Badass Savers Gold”, with a savings rate of 56% for October 2019!
And you, how much net worth and savings rate are you at by the end of October 2019?
PS: if you are a patron of the blog, you should have received the screenshot revealing the amount of each of my assets via Patreon.
]]>As I explained in my last article (incl. a complete checklist), I was looking forward to eBill being supported on Zak to complete my switch.
Zak being very transparent on their public roadmap, we could see there that the eBill feature would be ready by the end of 2019. Except that recently (thanks @Flo for letting me know!), Zak moved the eBill in its “backlog” (aka its list of features to be developed in the future). Bummer! But I don’t blame them because they might also not have been transparent and only tell us when it was really ready. Personally, I prefer transparency!
The potential good news is that when I looked at their Trello board this morning, I could see that they were working hard on the eBill thingy, and that they aim to release it early 2020:
On my side, I made the decision to migrate everything to Zak right now because it is becoming tedious to manage two bank accounts.
I am therefore cancelling all my eBill registrations on BCV (taking care to note them in a reminder for January 2020 in the hope that it will be available on Zak by then).
What will happen is that I will receive these invoices again via email (or postmail…), but it’s fine as it’s for a few months.
I will write a dedicated article with a picture of the beer I will be drinking on the day I have the confirmation of the closure of our BCV account :D
And you, what are you doing? Are you waiting until eBill is available to switch to Zak or not?
Note: as a reminder, you are entitled to CHF 25 of welcome cash by using the code “Y06JPR” when you register on Zak via their mobile app.
]]>We’re in the process of switching from Cornèrtrader to DEGIRO.
This article was supposed to be a detailed tutorial on how to make the transfer. But it takes longer than expected on the Cornèrtrader side because we have to send them a postal mail (welcome in 2019!) to transfer all our cash and close our account.
So I had started writing the tutorial. And the first part on opening a DEGIRO account being finished (and especially quite long), I decided to extract it and make an “Epic Guide” out of it as I did for Interactive Brokers.
And I will post the article about the transfer from Cornèrtrader to DEGIRO later this year.
So, if it seems complicated to you to open an investment account at DEGIRO, here is the tutorial that will take you step by step from the first click until the final “Hooray!”:
Tutorial to open a DEGIRO account
As usual, if you see any error or unclear point, leave me a message in the comments below.
Unrelated note: I would have loved to have found my own blog at 20 to get off on the right foot and not waste 10 years of savings on useless stuff to impress others… So I’m looking for a way to better target students. So if you are one (apprenticeship, EPFL, UNIL, ETHZ, or any other school or university in Switzerland), could you tell me where you could find this kind of blog? Via a WhatsApp group with friends? Via a sticker in anarchist-mode on the benches of the Uni? Through a school newspaper (does that still exist ^^)? Other? Thank you in advance for your feedback!
]]>When I left the family nest, my mobile phone abo was one of the first things I had to pay for out of my own pocket. And at the time I got screwed by choosing one between CHF 75 and CHF 100 per month just for the mobile subscription (and Mrs MP was rather around CHF 125). In addition to that, there was the famous Bluewin Internet subscription and TV, which was also around CHF 100.
In total, we paid about CHF 325/month for telecoms. That is CHF 3'900 per year!
Then, becoming mustachian and frugal over the years, we learned how to hack the system.
If you follow us since the beginning, you know that we tried to switch to Orange with a 4G router modem in order to pay only CHF 100/month for our home internet and mobile unlimited subscription in Switzerland, but that it only worked halfway and that we were finally at CHF 105/month by combining Orange and M-Budget.
Then 2 years later, thanks go to QoQa and Sunrise who allowed us to move to CHF 110/month with home internet and unlimited mobile subscriptions (in Switzerland and also abroad). And this is always thanks to the hack of the 4G router modem where we put our 2nd free SIM card in order to have Internet throughout the house.
It was really a cool setup, and hacking the system had something to do with it :) (Matrix anyone?!)
Except that after more than two years in the countryside, we faced the following issues:
For me it was working OKayish, although on some days when I worked from home, I thought, just like Mrs. MP, that we needed to find a more stable connection solution.
Then last March, we see the QoQa/Sunrise offer for the Internet at home (200 Mbit/s or 1 Gbit/s, depending on where you live) for only CHF 29/month.
So I talk about it around me and I learn many things:
Given the recurring and painful problems due to our rural life, we decided to subscribe.
Our Swiss setup for home internet and mobile subscription now looks like this:
The proof in pictures:
If you are lucky enough to have a top-notch 4G network at home, don’t hesitate to test the setup with a 4G router modem for 1-2 weeks, because you could only have to pay CHF 42/month, and save even more!
For the record, the last two routers I tested and that I recommend to my friends from now on are:
I think you can find even cheaper if you stay in Switzerland and only call in within it. I haven’t done much research but if you have some good tips to share with other readers, don’t hesitate to put a comment in the section below!
One thing I can give you on my side is to follow the blog scal.ch which shares all the latest telecom news in Switzerland.
If on the other hand you want to have the same setup as me, I recommend you to first put a reminder on December 9, 2019 hoping that QoQa renews its offer with Sunrise for the mobile subscription. And then to put a second reminder in January to look at the QoQa offers until the end of April in order to get the Sunrise’s home internet subscription (but make sure to delete their app afterwards to not be tempted by their other offers :) #frugal).
In any case, let me know what setup you have for home internet and mobile subscription?
]]>Instead of brainstorming alone, here’s the question of the day: should I invest in P2P lending?
Whether you answer “Yes absolutely” or “No, not at all”, what interests me is:
I look forward to hearing from you in the comments below!
]]>If you are new to the blog, I recommend reading the article that introduced this series about my net worth (including my lucky number, as well as the rules of the game).
CASH FLOW AND SAVINGS (+CHF 538.84): Still not the most frugal month… We had scheduled mini-vacations with the Monday of the “Federal Day of Thanksgiving, Repentance and Prayer”, but which (even if planned) increased expenses. Not to mention several medical bills for the children, all of whom arrived in September… And who says back-to-school says extracurricular activities and therefore pay for them. But apart from that, a pretty standard month. I am happy to get back on our daily routine, with more freshness, because I couldn’t take it anymore this summer!
It should also be noted that the blog brings in more and more passive income, but also costs quite a bit with German translation and hosting. I am currently considering setting up a limited liability company (or even a SA/AG?) in order to, first comply with the law, and second to potentially optimize tax aspects. If you work in the fiduciary domain, I’ll take any advice I can get!
STOCK MARKET INVESTMENTS (+CHF 618.92): We took advantage of a bull market and the dividends from our favourite ETF VT, which put us back into the positive.
COINBASE SPECULATION (-CHF 148.61): The crypto-currencies are still in free fall. But well, it was the purpose of the experiment to see what it would look like in the long term.
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 200.34): Finally we are back in correct figures! September is transitional so we are not yet at the maximum amount that Ms. MP will receive from October on. I am looking forward to it :)
MP’S 3RD PILLAR (n/a): Nothing to report because I make my one-time payment at the beginning of the year, and my 3rd pillar cash value is also updated at the beginning of the year.
MRS’ MP 3RD PILLAR (+CHF 484.86): Mrs. MP’s 3rd pillar at VIAC has experienced a small decrease of less than CHF 100 in the shares in which we invest (as we pay CHF 564 each month). Moreover, the amount deductible from taxes in 2019 is CHF 6'826 so if you don’t want to forget to fill it in as much as possible, you can do as I do and put a calendar reminder in December to make an additional transfer ;)
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Following the announcement by the WIR bank of a negative rate mortgage (thanks ilvalesco!), I had fun writing to my financial institution to find out how much it would cost in penalty fees to terminate our mortgage. Usually I would not have done so because we are talking about several tens of thousands of francs. But given the situation and the difference in rates, I still want to make sure that we don’t miss something :)
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no price speculation. We’ll wait until we want to resell it to get an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 718.96): The loan is still being well repaid thanks to a building that is 100% full of tenants in September. There have been some changes since then but I will explain all this to you in October :)
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 1'574.26): It felt like Christmas :) We had the closure of our temporary account with the notary with the repayment of the balance of our account. It’s nice because it cost us less than we expected in expenses in the end! And on top of that, one of the tenants had a late rent that we received in September too.
In terms of financial independence, we are at 18% of our objective of CHF 2'156'000 with our net worth of CHF 383'117.22.
We remain at an unsatisfactory level (because below our minimum of 40%) with a savings rate of 33% for September 2019.
It could be worse, but it could be much better too!
And you, how much are your net worth and savings rate at the end of September 2019?
PS: if you are a patron of the blog, you should have received the screenshot revealing the amount of each of my assets via Patreon.
]]>If you too are wondering what are the steps to switch bank in Switzerland, then we are in the same boat. To make your life easier, I wrote them all down and turned them into a handy checklist :)
Personally, before writing this article, I had the following concerns:
If you have not already done so, then you can open a Zak account (or Neon if you prefer). Small bonus for Team MP members : you earn CHF 25 in cash if you enter the special code “Y06JPR” during the opening process (that I have documented entirely in this article).
Rather than putting too much talk, I prefer to write everything you need to think about in a clear checklist mode. And if you have any questions, please contact me via the comments below or via email.
During the first month:
Once you’re sure your salary is getting to Zak (in case your employer takes a long time to make the change):
If it can save you an omission or a reminder of payment, I have put below my concrete examples:
I hope I haven’t forgotten anything else I’ll add it as an update to the article.
Do you see anything missing?
]]>The discussion goes on like this: “No, I’m not cheap, I’m frugal (or frugalist if you prefer)! It has nothing to do with it!”
And then comes the following question: “Frugal? What does that mean? Is this another new invention to sound smart?”
And here we go again for an explanation that becomes repetitive by dint of telling the whole story. So I thought it would be nice to have an article on the blog to explain my point of view once and for all.
As I like to say, frugalism is the minimalism of personal finance.
For those who would come across the term “minimalism” for the first time, I usually summarize it as : a deliberately simple way of life where each possession adds true value.
When I say true value, I’m not talking about the new iPhone that will look old to you in a month. On the other hand, I’m talking about your Toyota Prius with hundreds of thousands of kilometres on the odometer and which takes you every time from point A to point B without ever breaking down.
I’m not talking about your n-th handbag either, whereas you always use the same one in the end… (this reminds me of a discussion with Mrs. MP :D)
On the other hand, I am talking about this Roost plastic thingy costing more than CHF 80 which dramatically improves my health with all this time spent on my laptop.
So here is my definition of frugalism:
Frugalism is about spending money only on goods that bring true value to your life.
So the next time you’re called cheap, you now know where to send the person back!
Because no, you are not cheap, you are just more at peace with yourself and aligned with your true values. Rather than the person who criticizes you while they need to drive in a big new leased car to prove who they are.
As I often say: “spending less makes you happier” because it allows you to refocus on the essential things in life. Just like minimalism with objects, that brings you zenitude and fullness.
Once the definition is assimilated by the person you are talking to, the question that comes straight behind often looks like this: “But what’s the point of having money if you don’t want to spend it? You just want to be rich, right?”
Your answer: “Well, first to be happier, and then, it’s to retire 20-35 years before the legal age of course! Financial independence, early retirement, stopping to work without ever having to worry about money again, you know, all that stuff!”
Spending less makes you happier. Marc Pittet aka MP (mustachianpost.com)
Because yes, as you have been immersed in this world for several months or even years, you tend to forget that not everyone is (yet!) part of the MP Team…
Follows the endless negative discussion of “It’s not possible to retire so young, otherwise it would be known, etc.” But this is for another article describing what financial independence is and how to explain it to the general public :)
And you, dear member of the Team MP, what is your definition of frugalism?
Sidenote: several of you pointed out to me that the German, French, and Italian sections of the MP forum were not very visible at the bottom of the page. That is now fixed. I give you the direct links here again: https://forum.mustachianpost.com/c/der-schweizerdeutsch-kaffee, https://forum.mustachianpost.com/c/cafe-francophone, and https://forum.mustachianpost.com/c/caffe-italiano. Feel free to join the discussion there if you’re more fluent in your mother tongue. This is your space so don’t hesitate to share your questions about your ETF portfolio, your budget, your optimizations, or any other topic where you need help or external advice.
]]>As a reminder, at that time, we had a YNAB “joint account” budget for all household expenses, and one budget per person for our personal expenses.
The disadvantage of this system for me was that it didn’t sufficiently align us with the objective of financial independence. I didn’t see myself (let alone today) retiring at age 40 while Ms. MP would work 10 more years. Because solo holidays can be fun once, but all the time for 10 years? No thanks!
I still remember when I explained to a colleague that we were pretty well set regarding accounting, with a joint account for common expenses, and the rest managed separately for the feeling of autonomy and freedom that it brings.
As I was earning a little more, I admit that I was also afraid of losing control of my finances by being “aggrieved” because I would no longer see who was spending whose money.
I was wrong. My fear was wrong.
My colleague replied that they had put everything together at the level of money, accounts and budgets. It allowed them to discuss their common objectives, and it also greatly simplified monitoring their finances rather than everyone counting their own little pennies, not to mention the endless transfers to the joint account and other joys of having 23 bank accounts…
By writing these lines, I realize that it was this discussion that triggered our move to the next level regarding our couple budget.
The more I thought about it, the more I thought that this path to financial independence should be something that we share deeply, knowing that we would live it together.
I became more and more convinced that we did have to follow the path shown by my colleague, by having a single common vision, a single unique common account, and above all a single common YNAB budget.
It scared me because I knew it would inevitably lead to discussions, friction, and other fun stuff of any project handled by more than one person.
But in the end, it was the only way if I wanted to fully share this dream of financial independence with Mrs. MP.
I understood my fears well. And I thought that once I talked to Ms. MP about the idea, the hard part would be done and then it would just be about setting it up and discussing the how.
Except that Mrs. MP put both feet on the wall when I told her about having everything in common!
And that, I hadn’t seen it coming at all.
So, what to do?
Giving up and remaining alone with my goal of financial independence? No way, that would be not knowing me well :D
I took this challenge as a professional project and started to put my arguments on paper. And I made slides! Yes, slides, a Keynote, a PowerPoint, you read it well.
Rather than explaining them to you, it’s better to actually show them to you!
Click on the above image or on this link to download the entire presentationMrs. MP’s first reaction? A categorical “No”.
Her main reason was the lack of autonomy and freedom.
With my logical mindset, I dug a little deeper using the “5 Whys” methode in order to understand the real cause of her refusal.
We finally arrived at the source, with two concrete fears, discovered after four exchanges of emails the day after my “presentation”:
This method of finding the real source of a problem is very effective because I thought of everything but that! Like because she would feel controlled, scared, or that the “Freedom” budget was too limited. None of that!
As for being able to offer gifts, I suggested that she could have a specific YNAB category for planned and unexpected gifts, and that an amount would be budgeted each month.
The second, more critical point concerned her fear that I would see my gifts in advance, as well as their amounts.
Here is what I said to Mrs. MP: “For me frankly it’s the last thing that matters to me, whether you put CHF 10 or CHF 300 I don’t care. If it is the surprise side that worries you, I promise to play along and not look in detail at the beneficiary of the transaction. Another solution is to keep your Cumulus MasterCard and use it only for this type of purchase. That way, it solves the problem that I could see on the credit card bill. 1
We rediscussed about it again that evening, and I suggested the following:
“We try for three months, and if it’s horrible for you, we go back to the way it was before. I commit to it.”
Two years later, when she came home from work one night, she said to me: “I don’t understand, my colleagues are all thinking about how they’re going to pay for their Christmas presents and they’re probably going to have to use all of their thirteenth salary… while we have zero headache because all the money is there and planned and I know exactly what we have for each of our relatives.”
As you will have understood, we never went back!
In this journey, what was key for Mrs. MP to agree to have a single common budget for our couple was that I focused on her problems first, rather than bringing in and forcing the YNAB solution.
No more financial worries at the end of the month? Know exactly what she can spend on birthday and Christmas gifts? Maintain flexibility with a “Freedom” budget for her own purchases?
To all these questions, her answer was a big “Yes”! YNAB being only the tool to make these things happen.
And there is also another important element that has helped her a lot to get past it: that I commit myself to go back after 3 months of testing. So we didn’t close our personal accounts right away. Even if I would have been reluctant, I would have really done it. But I knew how much it would change her life, so I was pretty confident.
Being the geek of numbers at home, the advantage of this system is that Mrs. MP is not obliged to use YNAB entirely. Even not at all in fact. So I’m the one who’s responsible for entering all the information.
This is often one of the concerns that readers report to me: “How do I get my partner to use YNAB as well?
My answer: “Put everything in common and you won’t have any more problems with forgotten transactions or abandoned budget!”
It is clear that this strategy has helped us a lot to keep going over the long term until today.
As a reminder, our bank setup:
After having passed this great milestone, the hardest part still had to be done. And it consisted of two main problems: uno, that Mrs. MP accepts the idea that it was mathematically possible to take such an early retirement. And secondly, that she join me on this boat to sail together towards this common goal.
We’ll talk about it in the next chapter!
A little survey in the meantime: you are rather 1/ separate accounts and budgets, 2/ a common account and budget, but with each one its own other account and budget, or 3/ like us, all in common?
And above all, explain us why! (in the comments section below)
In the end, to date, Mrs. MP has never used her personal Cumulus MasterCard because I avoid asking her questions if there are unknown transactions in Revolut a few days/week before my birthday or Christmas. ↩︎
If you are new to the blog, I recommend reading the article that introduced this series on my net worth.
CASH FLOW AND SAVINGS (+CHF 3'284.61): We replenish the funds with more cash flow through dental reimbursements. However, we have had other unexpected health expenses so we are still not at the maximum of our capacities. And that’s not to mention the extra taxes for 2018 because our salaries have increased again last year — rich problem as they say:D
STOCK MARKET INVESTMENTS (-CHF 116.35): The market was quite volatile this summer with a slight decline of around a hundred Swiss francs after a strong recovery in the first half of 2019. We remain patient, and we continue to invest according to our strategy: to date we have put the ETFs on hold (we currently have about 120kCHF into them) and we started with value investing until the amounts are identical — well in the end it remains equity investment.
COINBASE SPECULATION (-CHF 133.03): Another setback this month. Personally I don’t try to understand nor to follow the crypto-currency news.
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 35.92): Last month it’s this low. Looking forward to September :D
MP’S 3RD PILLAR (n/a): Nothing to report because I make my one-time payment at the beginning of the year, and my 3rd pillar cash value is also updated at the beginning of the year or on request.
MRS’ MP 3RD PILLAR (+CHF 678.09): Mrs. MP’s 3rd pillar at VIAC continues to grow. As a reminder, we pay CHF 564 per month, to fill it up to a maximum of CHF 6'768 deductible from taxes (oops, no, it’s CHF 6'826 in 2019, I have to change our automatic transfer!) so the rest of this month’s increase comes from the growth effects of the stock market.
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing to report, we still don’t reimburse until mortgage rates are so low, and we haven’t revalued our property so we don’t speculate on its value (i.e. we keep the purchase value).
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no price speculation. We’ll wait until we want to resell it to get an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 717.02): The loan still gets reimbursed well thanks to a building that is 100% full of tenants. Readers have asked me about this category and as explained, the fact that we are positive in this category is because the rents allow us to repay the loan — i.e. cash in our pocket.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 496.34): As explained for our mortgage loan, I am not excited about this positive cash flow until the French taxes have taken their share.
Slowly but surely, our net worth equals CHF 378'526.80 at the end of August. In terms of financial independence, we are at 18% of our target of CHF 2'156'000. Patience, mother of all virtues!
As I was doing it at the time, I will add our savings rate to a section of this series of net worth updates.
After having been in the negative twice this year (because of — or thanks? - to the purchase of our rental building in France), we are finally back in acceptable figures with a savings rate of 36% for August 2019. Still below our minimum target of 40%, but we’re getting closer!
What about you? How did your summer end? Expensive holidays in French Polynesia or the USA? Or frugal ones here in Switzerland?
PS: if you are a patron of the blog, you should have received the screenshot revealing the amount of each of my assets via Patreon.
]]>I can already hear you say:
“But MP, I thought your favorite online broker was Interactive Brokers, and that you had more than CHF 100'000 in assets with them? Was it a fake news or what?”
Don’t worry, I haven’t lied to you :)
All of our securities with Ms. MP are indeed at our favorite broker Interactive Brokers. However, when our toddlers were born, we decided to put money aside for them to use it when they get 20+ years old for useful things (studies, language travel, etc.)
And so, instead of letting this cash rotten at BCV and their crazy positive interest rates, we decided to invest this money.
In order to separate everything, and also for me to test another online broker that I recommend (well, recommended), I had opened an account at the time at Cornèrtrader which was more advantageous than IB for a portfolio below CHF 100'000.
Last July 29th, I received an email from them indicating that they were introducing new account inactivity fees amounting to CHF 35 per quarter:
“But MP, if you supposedly invest every quarter, why do you have a problem with these new fees? They don’t apply to your case, do they?”
I see you’re perceptive today :)
The thing is that we set aside smaller amounts for our children, so we invest less regularly in the stock market to avoid paying too many fees (aka minimum CHF 20 to buy an ETF on the Swiss stock market).
Currently, we’re paying commissions of CHF 20 (+ Swiss stamp duty) to purchase the ETF “Vanguard FTSE All-World UCITS” (code name VWRL) from Cornèrtrader. We’re doing about one transaction per year.
With the new Cornèrtrader inactivity fee system, we should either go to a minimum of 4x transactions costing CHF 20 each = CHF 80/year of transaction fees, or if we keep the same purchase rate (i.e. 1 transaction per year), we would end up with 3x CHF 35 (inactivity fees) + CHF 20 (transaction fees to buy the ETF VWRL once a year) = CHF 125 of fees in total…
If you have been following the blog for some time, you probably know that mathematically, the online broker with the lowest fees for a Swiss investor is DEGIRO. You also know that I had some concerns about it because it was a newcomer on the market at the end of 2016, and that sometimes they would change their conditions without giving their customers too much advance notice. Nevertheless, in 2019, they are still alive and increasingly present in Switzerland, and apparently the confidence index of the people I talk to seems to be quite high.
Concretely, with DEGIRO as an online broker for the money we invest for our children, our fees would be much lower:
The result is clear: DEGIRO wins.
Before I move on, I thought I would ask you the following questions because I saw on the forum that a lot of readers use DEGIRO :
Or was it for fear of not being as frugal as I think I am?
Anyway, I decided to fill the gap. Because even if the figures I have obtained do not please me, it remains the reality.
I am counting on you to challenge me where you have ideas for optimizations. Because in the end it is also one of the goals of the blog for me to improve.
On your side, as long as your entire budget is not in auto-pilot mode with a savings rate in the 60-70% range, I recommend you do the same!
If you are new here and you wonder how it’s possible to know all your annual expenses with so much detail, don’t look any further! The answer is called YNAB.
Without further ado, here are the annual expenses of the Swiss family of 4 people who hide behind this blog:
Category | 2018 amount in CHF | Comments |
---|---|---|
Groceries | 13'184.76 | Includes food but also everything that is home care and beauty products |
— | — | — |
Irregular expenses | 19'680.09 | Details below |
- Leisure/tourism gas | 1'535.48 | Ouch, almost two full tanks of gas a month… The disadvantage of having friends and family scattered all over Europe |
- Leisure/tourism tolls | 760.51 | Includes motorway tolls, car parks, and also a parking fine in Lausanne… |
- Tourism | 1'024.71 | Ski/snowboard outings, concerts, baths |
- Restaurants and outings | 2'386.15 | We like good gourmet restaurants, so more quality than quantity. This category also includes outings (including a rather expensive bachelorette party) |
- Presents | 1'439.12 | This includes flowers and other items when we go to friends and family, Mother’s Day gifts, birthdays, weddings, etc. And also when the tooth fairy comes visit us :D |
- Ameublements | 2'446.01 | A big cool DIY furniture project, a new router, mosquito nets (the only essential thing on this list), a new desk, and a garden furniture set |
- Medical | 4'583.92 | Quite a few appointments for the children and also for us (costs go up quickly, but always less than paying for a lower health insurance deductible :)) |
- Car expenses and repairs | 242.52 | 2x summer tires |
- BCV fees | 13.50 | I look forward to the CHF 0 here thanks to Zak |
- Clothes and shoes Mrs. MP | 562.84 | This amount includes CHF 157 for work clothes |
- Beauty and care Mrs. MP | 213.04 | Hairdresser and beauty products (there are also other beauty products in the “Groceries” section that we have not categorized here because too many details kill the details :D) |
- Clothes and shoes Mr. MP | 63.52 | This is perhaps the category I am most proud of :) I’m more of a one-time buyer of clothes/shoes, but they last me 5-10 years! |
- Freedom budget Mrs. MP | 1'356.43 | The idea for this category came to us from the founder of YNAB, so that we didn’t have to justify some small expenses to each other. For us it is CHF 100/month for Mrs MP. We’re almost in the target. |
- Lunch at work Mrs. MP | 295.20 | Nice score for Mrs. MP, who follows quite frugally our savings method described here |
- Lunch at work Mr. MP | 671.20 | The only “valid” excuse I find is that some of these lunches are a professional investment to build and maintain business relationships |
- Books, electronics, software | 227.37 | Books are an investment, as are software related to the blog mainly |
- Miscellaneous | 1'858.57 | Passports, air mattresses, fines (which I misclassified I see now), photos, and other non-categorized things |
— | — | — |
Planned expenses (except apartment) | 45'161.88 | Details below |
- Mobile and home internet abos | 1'398.20 | Cf. our setup in this article |
- Gas and parking for work Mrs. MP | 812.94 | Living in the countryside has a cost :) |
- Online computer backup service Mrs. MP | 36.00 | |
- Beauty and care Mrs. MP | 839.70 | This comes in addition to the same category above because this one is for what is expected, and the other for what is unexpected |
- Electronics Mrs. MP | 1'648.00 | iPhone battery replacement (we took advantage of Apple’s special program with this very low price) AND Mac laptop change (and yes, preview announcement, we adapted our laptop renewal strategy, I’ll explain everything in a future article) |
- Public transport for work Mr. MP | 2'805.00 | The cost of living in the countryside, far from work. No regrets so far! |
- Online computer backup service Mr. MP | 36.00 | |
- Server and domain names | 419.03 | Servers and domain names for blogs, forums, and other pet projects |
- Electronics Mr. MP | 2'628.90 | iPhone battery replacement (same as Mrs. MP) AND Mac laptop change for me too |
- Clothes and shoes kids | 832.06 | Ah, the topic of the Swiss budget for children :) |
- School supplies and outings | 104.10 | It also includes the famous class photo #memories |
- Extra-curricular activities and supplies | 2'028.22 | The respective activities of the kids, with the necessary supplies for each |
- Kids’ hairdresser | 18.12 | |
- Health insurance HIA | 7'862.40 | Our basic insurance for the 4 of us at Assura, as recommended in this article |
- Supplementary health insurance LCA | 622.80 | Supplementary for alternative medicine and dental insurance for children |
- Childcare | 4'506.90 | It’s going down slowly but surely with the fact that they’re more and more in school :) |
- Children’s canteen | 441.16 | |
- Teleboy Plus + movie rental | 110.90 | Compromise with Mrss MP not to buy a box or TV subscription that is usually more expensive |
- Auto insurance | 474.50 | |
- Vehicle technical inspection | 0.00 | We put cash aside but it’s every two years that we need to pay for it |
- Swiss motorway vignette | 40.00 | So much cheaper than tolls in Italy or France… |
- Car tax | 103.10 | The advantage of driving a car like ours |
- Private liability insurance | 193.70 | |
- ECA | 34.50 | |
- Billag | 451.10 | |
- Taxes | 18'333.55 | Includes a payment to regulate the 2017 year |
— | — | — |
Planned expenses — Apartment | 17'182.29 | Details below |
- Mortgage interests | 9'328.80 | |
- Maintenance and repairs | 327.96 | |
- Concierge | 1'148.04 | |
- Electricity | 871.25 | |
- Water | 327.96 | |
- Building insurances | 573.96 | |
- Maintenance abos | 410.04 | |
- Banking fees | 41.04 | If only we could move it to Zak :) |
- Renovation fund | 492.00 | |
- PPE management fees | 754.44 | |
- Heating and hot water | 1'557.96 | |
- Purification and water taxes | 784.04 | |
- Garbage tax | 100.00 | |
- Property taxes | 464.80 | |
— | — | — |
Planned expenses — Birthdays | 2'344.32 | Family and friends birthdays, and also children’s friend birthdays (this position only represents CHF 25/month…) — we went a bit over-budget last year. UPDATE 03.10.2019 : thank you Claire for the comment that makes me realize that we are in fact at CHF 1'791.82 of real expenses because there are gifts for which we have been reimbursed and that I have misclassified. |
— | — | — |
Planned expenses — Christmas | 1'634.80 | Christmas gifts for family and friends. UPDATE 03.10.2019 : idem, thank you Claire for the comment that makes me realize that we are in fact at CHF 1'408.80 of real expenses because there are gifts for which we have been reimbursed and that I have misclassified. |
— | — | — |
Holidays | 2'570.76 | As explained in this article, this item varies greatly each year because it serves as an adjustment variable to stick to our 40% savings rate minimum target |
— | — | — |
TOTAL CHF | 101'758.90 | First reaction: delete this blogpost. Second reaction: find excuses like our early renewal of laptops… Third reaction: accept and use it as a source of motivation to do better next year! |
For a personal finance blogger, I feel a little ashamed to publish this after almost 6 years of existence… I realize that making decisions based on our monthly savings rate is one thing, but keeping an eye over the months on our annual expenses will only help us make better decisions to achieve financial independence even earlier. We’re always smarter afterwards, as they say…
Anyway, rather than playing the game of what we could not have spent here and there, I’m more interested in having your feedbacks on the categories where I inspire you; and conversely, where you have ideas for drastic improvements compared to now.
I look forward to reading from you in the comments’ section below!
PS #1: as I still like to set objectives, an easy thing to do would be to be below 100kCHF of expenses in 2019 as we will not buy new laptops this year. We’ll talk about it in six months :)
PS #2 : the patrons of the blog already know it, but in case you don’t read the Swiss German newspapers, I had the chance to be interviewed by the NZZ in a article about the FIRE (Financial Independence, Retire Early) movement and frugalism in Switzerland. It’s great because it will help the blog break through in the Swiss German region and inspire even more people to live frugally to focus on the real important things in life (vs. consumerism and materialism) — even if the counter-argument part of the article highlights financial advisors saying that it is not possible in order defend their livelihoods… Anyway, feel free to share the article around if you have friends or family who only speak this language :)
]]>It’s the net worth that we need to reach by 2030 in order to never have to work again. Ever.
I find it cool to introduce this new net worth update blogposts’ series so that this blog is a bit more transparent, which will make me more accountable to you. It’ll only help me stay on track. And on your side, well, it allows you to satisfy your voyeuristic side ;)
By the way, if you want to see all the articles in this category, you can use this specific link: mustachianpost.com/categories/net-worth/.
All figures below are in CHF (potentially converted from their base currency at the current exchange rate).
In terms of assets, the only thing I don’t take into account is our good old Toyota Prius because uno, it’s worth about CHF 3'000-3'500 max (insignificant amount compared to our total net assets), and secondly, I see cars as a gulf of financial depreciation so clearly, no, it’s not an asset for me.
Finally, if you’re wondering how I can calculate all my net worth without spending hours every month, it’s actually quite simple:
CASH FLOW AND SAVINGS (-CHF 4'046.94): I take into account what I owe on my credit card in this category. But clearly we’re running out of cash flow right now. We will restore the situation over the next few months with dental reimbursements (long live the children :D) and future salary increases to come (shush, I didn’t tell you anything!)
STOCK MARKET INVESTMENTS (+CHF 7'932.77): The market is still growing and my first investments in value are already showing positive signs (don’t think it works like that because it normally takes at least 2-3 years to see such effects). Ditto, I updated the value of the few shares I have in my company (new value comes in July) and it is still on the rise.
COINBASE SPECULATION (-CHF 40.66): After a good rise in the last few months, we’re in bear mode now. Good speculation as we don’t like it on this blog, limited to this first and last investment of 1'100€.
MP’S 2ND PILLAR (+CHF 602.85): Filling my second pillar as usual.
MRS.’ MP 2ND PILLAR (+CHF 35.92): It’s not huge but it’s normal because there’s a change of job in the air right now, and this point should increase in the next quarter :)
MP’S 3RD PILLAR (+CHF 3'888.45): I explained you in my last journal article how much I hated my pillar 3a compared to my wife’s pillar 3a at VIAC where everything is ultra-transparent. Well, I managed to get a little more transparency with mine thanks to…. a screenshot. I’m trying to get the factsheets up to date on the certificates to try to find out more about what has happened in terms of performance over the past few years.
In any case, it’s a good news because my cash value (which I had via the screenshot, which I had to ask for because well, too much transparency could hurt them :)) has gone up by almost +4kCHF. I’m at that point now, being happy for +4kCHF vs. my 6.5kCHF paid…
MRS’ MP 3RD PILLAR (+CHF 921.69): Oh, here we go, let’s talk about something I’m more pleased about. My wife’s 3rd pillar at VIAC (see my full article on this subject) follows its way by taking advantage of the bull market. As a reminder, we pay CHF 564 per month, to fill it up to a maximum of CHF 6'768 deductible from taxes (oops, no, it’s CHF 6'826 in fact in 2019, I have to change our automatic transfer!) so that makes about CHF 350 of increase in market value.
APARTMENT AND MORTGAGE IN SWITZERLAND (n/a): Nothing special about that. Until I have done an evaluation by a market professional, I do not play with this value. And regarding mortgage level, no repayment in sight for the moment because as we are at an insurance company (FINMA directives different than for financial institutions…), we can only repay our second mortgage tranche at the legal retirement age (65 years ^^). We’ll see what we do until then.
RENTAL BUILDING IN FRANCE (n/a): Same as for our apartment in Switzerland, no price speculation. We’ll wait until we want to sell it to make an evaluation.
MORTGAGE LOAN IN FRANCE (+CHF 727.45): A very French thing is this willingness to repay the loans (compared to us in Switzerland at least). In any case, from a financial point of view, we can’t hide it: it’s very cool to see your capital increase thanks to the rents that are paid. On the other hand, I don’t get excited too much yet until we have passed the first and second year of ownership because French taxes will come in, but if everything goes as planned (thanks to my favorite tool Horiz.io (formerly rendementlocatif.com) for that), we should reach the break-even point right away thanks to the new 2019 French legislation which taxes “only” at a rate of 20% (instead of 30% until then) when the rental income perceived in France by a foreign resident is below 27'519€.
SCI (SOCIÉTÉ CIVILE IMMOBILIÈRE, REAL ESTATE INVESTMENT COMPANY IN ENGLISH) IN FRANCE (+CHF 273.87): As explained for our mortgage loan, I don’t get too excited about this positive cash flow (I sketch a slight smile at most) until the French taxes have taken their share of money. But at least we’re not in the negative :)
That’s it for July! With CHF 372'961.45, we are gently approaching the CHF 400'000 level.
Compared to our financial independence target of CHF 2'156'000, we are currently 17% of the way.
I’ll see if I can keep up with the monthly rhythm of this publication, but I like it so far.
I advise you to do the same because it allows you to step back once a month, which helps you make decisions on budget issues in order to stay on track on your way to financial independence!
And by the way, how was last month for you? Big variations or the usual routine?
PS: if you are a patron of the blog, you should have received the screenshot revealing the amount of each of my assets via Patreon.
]]>So today I’m starting with this first “Diary” type article. We’ll see if the format holds up over time, and if I feel comfortable being so transparent with myself :)
These last few months have been quite tumultuous in terms of health (nothing serious I reassure you) with ups and downs that have prevented me from writing 1 hour a day in order to keep a certain regularity of publication on the blog.
On the other hand, these little worries have allowed me to take a step back on how good it is when everything is going well. It is an eternal ritornello that one becomes acutely aware of when one experiences death, illness, or anything else that is not pleasant.
I mentioned it quickly in my article about getting up at 5am but if you too are looking for a way to get your head out of the daily routine and realize how lucky you are to live (hopefully healthy), simply, then I can only recommend the Calm meditation app. I use the Daily Calm feature (a 10min session automatically proposed every morning) and it really allows me to take a step back and be more zen in order to enjoy the present moment.
As far as investment is concerned, since the beginning of the year, I have had around 110-120kCHF invested into ETF (60kCHF in VT and the rest in VWRL because I have still not clarified this USA-CH double taxation treaty in the event of succession in case Ms MP or I disappear overnight) (UPDATE 17.05.2020: It’s now clarified. The US-Swiss estate tax treaty covers our case. All information in this dedicated article).
In terms of performance, it’s becoming interesting because we’re starting to have historical data. For your information, the figures below correspond to the weighted return on capital (you will find an explanation of the two main methods of calculating the return here) which concretely represents our personal returns with all our deposits made at the time they were made:
Before 2015-2016
Our portfolio strategy was different at that time, and since it was on Swissquote, I didn’t take the time to look at the performance details.
2016: 0%
0% because we only had cash — CHF 10'000 in our account at Interactive Brokers aka IB since we were finalizing our apartment purchase in Switzerland (main residence) at the time.
2017 : 14.98%
2018 : -12.24%
2019 (from January up until today) : 14.39%
Since inception (2016 to date) : 13.43%
Annualized since inception : 4.69%
To calculate the annualized yield, I use this online calculator (they also explain the mathematical formula).
We are far from the desired 7-8% but it’s only been 3 years and I’m here for the long term!
With all this you might wonder:
“But why didn’t you reinvest some cash since the beginning of 2019? Are you afraid of the crash that’s been announced for almost two years? Are you trying to predict the market?”
Well, not at all :) If I had had extra cash, I would have clearly invested it in VWRL.
But we needed funds to pay the bank and notary fees for our first multi-family rental building.
Which brings us to the next point :)
Finally, we completed our acquisition of a multi-family rental building at the end of May.
I must admit that it’s quite cool to see the rents coming in, which directly repay the mortgage, and which itself creates capital for us. According to our calculations via the great tool from Horiz.io (formerly rendementlocatif.com) (it is the best I have found, and I only use this one as soon as I have to value a property), we should get by with about 50'000€ after resale tax in 10 years (rather conservative calculation).
As far as tenants are concerned, we already have one that leaves at the end of the summer, but this was to be expected because they generally stay about 1-3 years. And I see this as a good opportunity to test the whole tenant research process. As with the purchase, I’ll document that for you too, I promise!
I am beginning to realize the workload it takes (currently sustainable) to manage it remotely with a family member. I will give you more details in the complete guide I am preparing for you.
As for my recommendation of VIAC, I’m still extremely satisfied or even jealous because it is Mrs MP’s who is there. As a reminder, 97% of our investment is in equities (the maximum).
Also, good news for desktop (vs. mobile) lovers: VIAC launched its web version last May. I give you below a snapshot of our performance from their new tool:
And for the record, I asked Peter Daniel (co-founder and CEO of VIAC) if they were planning to add the value of annualized return to the app. His answer: “Those numbers are currently only available in the reporting we are about to produce next week as of the 30.06. But we already thought about adding those numbers in a drilldown on the performance on the webversion. Currently all our funding moves into the 2. pillar solution, so I can’t tell if this will be done within the next weeks.”
The good news is that I received the VIAC report as of 30.06 and we have had a nice 5.91% annualized return since the beginning.
The worst news comes from my 3rd pillar opened when I bought our apartment.
As every year they update the surrender value on January 1st. According to my advisor’s explanations at the time, a large part of my annual CHF 6'768 (which rose to CHF 6'826 in 2019) could be invested in equities, although their fees are exorbitant and their structured products incomprehensible…
The oldest readers probably still remember how much I hate the 3rd pillar tied to a life insurance. In our case, we had to take out death benefit insurance to obtain the mortgage from this institution. But I thought I understood everything well this time and that it would be different — i.e. we would build part of our capital from day 1, and not only X years after financing the risk part.
I won’t go through all the mathematical details, but basically it’s another big, incomprehensible piece of crap. Even internally they have hired a “specialist” to explain the underlying structured products to their clients — and even the latter only informs me with jargon (blah, blah, blah!) so that we get lost.
Let me tell you that I sent a very harsh email in March to this company to tell them that I was looking forward to reaching the end of my contract (another 7 years!) to terminate everything, even if it meant losing money.
My advice if you want to buy your home: choose the independence between your mortgage and your 3rd pillar even if the bank (never again an insurance for me!) offers you a higher rate. Because in my case, even with the lowest rate at the time, I will lose out with all the risk capital I have to finance through my pillar 3a. Capital that therefore does not work at all for me during this time.
In short, I have now swallowed the pill and told myself that it is a good way to relearn that you don’t buy what you don’t understand (i.e. each line of the contract). And even less when it comes from an insurance company!
It hurt me to admit it, and even more so to write it here on the blog, but well, that’s the reality.
On the main residence side, we are really the happiest people in the world with our acquisition — that’s at least that! Both in terms of location in the countryside, as well as the apartment itself. After more than 3 years, no major construction problems (it can still come:)), and all materials seem to want to keep up with the times.
I repeat this to everyone who asks me for advice on a purchase: one of the most important points apart from the financing is the builder. Choose him as if you were going to marry him. He must be upright and honest if you don’t want to have to call lawyers in the future. We were very lucky to buy in a small condominium ownership construction, which means that it was only local craftsmen who worked on the site (vs. the huge sites with huge companies that are very difficult to reach once the site is completed).
In terms of market valuation, I regularly look at what is happening and prices increase slowly but surely. This confirms the statements of several local people that our region has been free of any real estate bubble for several decades (unlike the Lausanne area, for example).
Let’s agree, I’m not counting our apartment as an investment. That is, in YNAB I only record the purchase value (minus the mortgage) to arrive at our net worth, because as long as we have not sold it, any other value would only be speculation.
I almost forgot about this experiment with cryptocurrencies started in December 2017. At the time, I had transferred 1'000€ (CHF 1'100) to Coinbase to buy some Bitcoin, Ethereum, and Litecoin.
Regarding volatility, I haven’t found better so far: D
Our portfolio rose to CHF 2'700 in December 2017, only to fall back to abysses close to CHF 300 a year later. And to date we are back on the rise with a portfolio value of CHF 1'243.78 to date!
So in terms of cryptocurrency strategy, I keep the same as at the end of 2017: these CHF 1'000 are cool to have fun as at the casino but I will not add a dime to it. On the other hand, I keep them on the long term just to see the evolution (and you never know, maybe become a millionaire!)
I am currently thinking about adapting our stock market investment strategy in order to significantly increase our returns.
As a reminder for newcomers:
In recent weeks, I have become increasingly interested in value investing, popularized by the famous Benjamin Graham and adopted by Warren Buffett and many others.
The yields we are talking about in this field are around 15-25%.
Although real estate is more predictable with rents and tangible (and yet it’s not sure), investing in value has the advantage of being dependent only on your own brain, a computer, and having time at home from your couch. Compared to real estate where one has to handle contractors, real estate companies, tenants, etc.
These are clearly two strategies that take time and energy, but not in the same way. And if I have to be honest with myself (it’s my journal after all!), I admit that I’m more attracted to the geek side than to the human and project management side (I’m having enough fun at work and with the blog on that level).
In short, rather than going around in circles about where to invest my time, I jumped into value investing with some first steps.
I started by reading Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! by Phil Town following a reader’s recommendation (thanks again!)
Then I had a lot of discussions with other members of the community to try to get a 360° view of this field.
My current reading is a bit of the Bible in this area: The Intelligent Investor by Benjamin Graham. My goal is to understand where the movement started from.
And I went even further by starting a portfolio dedicated to value investing to be really immersed and to be forced to understand the ins and outs. So far I’m quite convinced but I’m waiting to learn more before making a decision.
To summarize, my current tendency is to keep what I have invested in ETFs as is (i.e. the 120kCHF in VT and VWRL).
The same goes for keeping our first rental building to assess how it is going.
And as for the rest, unless we have a very, very big opportunity in terms of pricing for the new rental building we’ve been looking at for several weeks, then I think we’re going to go all-in with value investing in terms of our savings (and the time I’m going to spend diving into it). And it will really have to be big as for the real estate potential building because with the crash that’s announced (sale time!), I will really need all the cash available! (for newcomers, for us Mustachians investors, it’s a godsend when the market falls apart because it means you can buy shares at a discount price :)).
Regarding our Swiss bank account and credit card system, I have re-evaluated everything in recent months.
About the bank, the idea is to gradually move from BCV to Zak (all the information about why and how are in this article, including welcome discount codes up to CHF 50).
I will give us the option of keeping BCV until the end of 2019 in case Zak is too slow or too buggy (like their mobile app in recent days for example…). Because after some usage, BCV’s app is far better than Zak or Neon. But the desire to say bye-bye to BCV (just like my mortgage insurance) is too strong! The follow-up will be in the next episode :)
On the other hand, my new credit card setup is the Eldorado. The combo Cumulus-MasterCard and Revolut satisfy me as never before. Both for the Cumulus bonus cashback, as well as for obtaining the interbank exchange rate with Revolut.
If you are interested, you can read all the details of my choice in this article (including CHF 50 of welcome cash for MasterCard, and free shipping for the Revolut card).
And as some people have asked me, yes, we still use YNAB heavily even if I talk less about it than I should, looking at how a fanboy I am. I plan to make a complete guide of it soon.
Big news: the German translation of the blog is completely finished! I will finally be able to refocus all my efforts on creating blogposts rather than translating. I was so looking forward to it because it was getting long!
Some of you have asked me when the Italian version will be available, but the percentage of potential visitors is currently too small compared to the workload it represents. Maybe next year ;)
In any case, if you have friends/family who prefer to read in German, you can gladly share the URL with them: https://www.mustachianpost.com/de/.
There has also been a lot of movement around my book idea in recent months.
More than 200 of you have registered to receive information as soon as it is released. That’s great! My objective to start the finalization/publication process remains, however, to reach a minimum of 1'000 people so that it is worth it. If you know people who are potentially interested, idem, don’t hesitate to share with them the dedicated page to register.
The other news is that a publisher has shown interest in publishing me! On the one hand, it’s great because once you become an author, journalists are much more open to writing articles about you according to blogger friends who have published their own book through a publisher. But on the other hand, it would mean being dependent on the will of a publisher, and also going from 60-70% of income in my pocket to 1-2%…
I hesitate.
But for the moment my focus is mainly on the blog and my future investment strategy. So, story to be continued!
Concerning our objective of being financially independent in Switzerland by 40 (i.e. “to stop working definitively” for new readers), it is a little mixed.
I am still very motivated to find solutions to reach the CHF 75'000 we are short of each year, for example through real estate and also through my new hobby of value investing.
But I also see that things are going too slowly to reach our 40 years old goal. I know that compound interest is starting to accelerate the process as we move forward over the years, but for now it seems a long way off. And time flies by quickly. That’s why I want to determine in the next few weeks if we’re going to go all in with rental real estate or with value investing to really immerse myself in it and get back on the path to financial freedom :)
After that, we still have the option of living abroad, but uno, we really like our life in Switzerland a lot, and secondly, it depends on a lot of parameters such as where our children will be later, how our respective parents will be, our desires of the moment, etc…
In short, a lot of intermittent motivation with moments of doubt in recent weeks…
Ah and last but not least, as several of you have asked me by email: our current net worth target level to be able to stop working at 40 (45?) is between 1.25MCHF and 2MCHF depending on the parameters we use. Now that we have more data on the last few years thanks to YNAB, I really need more time to calculate our expenses in detail by excluding those of children (another todo !)
One thing that I’m sure about is that we keep maximizing our income as much as possible, saving as much as possible, and optimizing the returns on our investments as much as possible!
Because in the end, that’s what counts and will help us to stop our respective jobs :)
We were kindly approaching CHF 400'000 (it feels strange to write this!) of net worth but we went down just over CHF 360'000 because of my 3a pillar (-14.5kCHF that I thought I had aside, but in fact not…), as well as bank and notary fees for our rental building acquisition in France (-18kCHF). For this last point, the advantage is that it is an investment compared to my 3rd pillar which looks more like a chasm these days…
Depending on the bonuses at work and whether we have tenants continuously with our investment property, I think we will pass the CHF 400'000 mark at the end of the year, or early next year. I look forward to it!
As you may have noticed, only change is constant. But that’s what I feel that’s what makes the journey towards our financial independence (I dream of my ideal schedule often in recent days !) so exciting!
On the other hand, it also implies that for you, dear reader, it is more difficult to follow. That is why I will try to be more regular about my portfolio updates and other investment strategies. But as time is limited in the same way for everyone, keep writing to me by email if you have any questions about something that I wouldn’t have covered enough.
And what about you? How do you feel these days? Do you have a clear vision of your path to the day when you will write your resignation letter with a mega smile on your face? Or are you also having questioning right now?
]]>It has been more than 4 years since we optimized the frugality of our bank account and credit card system in Switzerland.
At the time, we switched from the expensive Credit Suisse (for both bank and credit card fees) to the BCV combined with the Cumulus-Mastercard.
Things have evolved quite quickly in recent years in terms of digitalization and cost reduction.
That’s why we took another frugal step last month by separating our bank from our credit card system in order to be the most optimal possible financially speaking.
For those who didn’t follow, we switched to a system combining a Revolut credit card with the Cumulus-Mastercard. I explain all the details and the reasons of the why and how in this article (including discount codes for each card).
I would admit that, as a minimalist at heart, I found our system suitable and uncomplicated with our BCV Direct Formula.
We have a private account and a Maestro card which are free when we have more than CHF 10'000 on our account, otherwise it’s CHF 3.50/month (it was CHF 3 not so long ago).
In recent years, we have had to pay this amount 2-3 times a year because we were below CHF 10'000 after making a large transfer to Interactive Brokers to make our money work for us (vs. BCV using it in our place and making cash with it).
But last Wednesday, a reader (hello Raphael, and thank you!) contacted me to find out which bank I would choose in 2019. He also told me about the new Neon online bank that I hadn’t heard of.
So I reviewed again what’s best available in terms of Swiss (online) bank as of 2019. And meanwhile, I found you two promotional offers (the codes are in the middle and at the end of the article in case you wonder :))
But first of all, let me define what I expect from a Swiss bank in 2019:
Let me know via the comments if you see any other key criteria as a Swiss Mustachian.
Since 2018, we are lucky (for such a small country) to have access to two 100% free mobile Swiss banks.
The first to enter the market was Zak, which is an offer from Bank Cler (formerly Bank Coop).
The other solution arrived this year is the 100% mobile Swiss bank Neon.
As I find that BCV has questionable practices according to its services (reminder for new readers about the story for my mortgage), and that in addition they oblige me to keep CHF 10'000 on my checking account to enjoy zero fees otherwise it is CHF 3.50/month of fees, I have decided to do a full test of Zak and Neon in order to close my BCV account permanently. Na!
I have prepared screenshots for you from all the steps of the account creation to the first use of the account (including a special MP promo code to receive welcome cash when opening an account).
As Zak was the first Swiss mobile bank on the market, I treat it first.
Let’s see how she passes the test of the frugal and Mustachian Swiss bank:
I also asked Zak’s communication department for the account closure rate because I hadn’t found it on their website. Brigitte replied that it was free. Good answer :)
If you want to open an account at Zak, you can use my special code for blog readers: “Y06JPR”. With this, you’ll be entitled to a CHF 25 welcome cash!
And as usual, here are the screenshots from creating the account to using the app. I’m learning German these days, so the captures are in that language. But you will find the subtitles in English by clicking on the images to display the captions.
If you have any questions about Zak, don’t hesitate to ask me via comments or email. There is also a ton of detailed information in the FAQ on the Zak website directly, or also in their factsheet available in German, French, and Italian.
UPDATE 10.07.2019
As the reader Ioana Vacaru mentioned: the account is not enabled until you receive the confirmation from Bank Cler. Only then, the section to enter your promo code appears. And once entered, you don’t see the section anymore.
A few days after opening the account, I received my Maestro and MasterCard from Zak. As usual with Swiss banks, I received my two PIN codes in a separate letter the next day.
As a strong user of YNAB, I like to be able to mark my transactions as checked in my different e-bankings to know what I have entered or not.
With the Zak app, I created a “YNAB” pot with which I can tag all my transactions once I have entered them into YNAB.
In video it looks like that:
Neon arrived on the market last summer. The app competes directly with Zak.
However, it is different because it’s an independent startup that build the product. In terms of banking infrastructure, they rely on an existing bank in Aargau — the Hypothekarbank Lenzburg — which has understood the potential to open up to the world of tomorrow by supporting startup projects such as Neon.
Let’s see how this neo-bank passes the test of the frugal and Mustachian Swiss bank:
I asked for the account closure fee, and Patric confirmed that it was free.
I would also like to add a point concerning Neon’s communication. I love how they take on the “FUCK YOU” against the rest of the existing Swiss banking system. It feels really good!
Do you want an example?
It’s worth it for the fun to go check the other pictures. It’s right here if you look for it :D
If you think Neon Bank is more appropriate for your needs, then I have negotiated with their management team a welcome gift only for MP readers: CHF 30 of welcome cash for you by entering the code “mustachian” during the registration process (otherwise it doesn’t work). It is valid until 17.07.2019. The CHF 30 will be credited to you as soon as you have transferred at least CHF 1 to your Neon account.
UPDATE 31.12.2019
The code “mustachian” is still valid until 31.12.2020, and it allows you to earn CHF 10 of welcome cash.
Same as for Zak, I prepared screenshots from the creation of my Neon account to my first use of the app. As I chose French at the beginning of the process (to have the contracts in my native language), all the captures are in French because the app takes the set language. But I added captions in English that you can read my clicking on each picture.
Also, if you have any questions about Neon, send them to me by email or directly via comments. I will answer it as soon as possible. They also have a very detailed (and very useful!) FAQ and factsheet.
The Post Office in Aargau seems to take longer to deliver the mail because I still haven’t received my Mastercard but it should come soon :)
As with Zak, Neon offers a tag system to group transactions together. The only drawback is that with Neon’s solution, you don’t see the name of the tag in the list of transactions (you have to enter the detailed view of the transaction for that). So it’s not very easy to see at a glance if you’re up to date with the transactions entered into YNAB.
Patric (Chief Product Officer at Neon) sent me a short video explaining the process (because I haven’t yet received my first transfer to Neon because of the long weekend of Pentecost…):
In 2019, the two best banks in Switzerland are for me Zak and Neon. I have compared again my current situation with all private account banking offers on Moneyland and the result is clear.
As for the MP family, we decided to make Zak our main bank for two reasons:
On our side, we will transfer my salary to Zak and our recurring transfers. And we will leave Mrs. MP’s salary at the BCV until the end of 2019 in order to continue to pay certain invoices via eBill. This way, it will allow us to test how BCV’s automatic transfer of eBills to Zak works.
UPDATE 22.10.2019
Here is our complete checklist to switch from your current Swiss bank to Zak.
In any case, I am happy to say “Bye bye” (not to say anything else, as Neon Bank does so well :D) for good to BCV (even if their app and e-banking are not so bad)! This is mainly due to how they acted with us during our mortgage search, and also because of their regularly rising costs.
In any case, your choice will be the right one whether you take Zak or Neon as your bank in Switzerland.
As a reminder, if you want to benefit from the special MP welcome-cash offer proposed by each bank:
And you, which bank are you at? Do you have any fees? Are you thinking of switching to Zak or Neon? (even if not, I’m interested to know why!)
Note: if you choose to open an account with Zak or Neon, I will receive the same amount of compensation as your welcome-cash amount — without you paying anything more of course. It helps finance some of the costs and time I spend writing the blog.
As usual, know that I only share the services and tools that I personally use in real life. I recommend them in the hope that they will bring you as much value as they do with me.
Addendum 1
Good point from Diana who asked me whether the apps are in English or solely in the three Swiss languages. The answer is that only Neon is in English. I thought it worth an addendum :)
We’ve been using the same credit card for five years.
At the time, I noticed that travel hacking didn’t work in Switzerland, so I went back to the credit card with the lowest fees, and offering the most cashback.
This credit card is the Cumulus-Mastercard 1.
I do not review all existing credit cards here because they are all less advantageous except the Coop Supercard credit card if you shop there (see Moneyland for more infos).
The first big advantage of the Cumulus-Mastercard is that it is free. Zero CHF of fees per year. And we can have several of them linked to the same account (our case with Mrs. MP), and this, too, for free.
In addition to that, Migros offers a cashback program:
Then, these points are translated into cashback at a 1% rate. So for 500 points, it gives you CHF 5 that you can spend in any Migros Group store: Migros supermarkets, Migros specialty markets (melectronics, SportXX, Outdoor by SportXX, Do it + Garden, Micasa, Interio) and their online stores, Migros partners, VOI and Bio Alnatura supermarkets as well as Migros restaurants and takeaways.
The last advantage not to be forgotten is the travel insurance which reimburses up to CHF 50'000 per person per event (all details in this document in French, or that one in German).
It is only valid if you pay at least 51% of the trip with the Cumulus-Mastercard.
Despite this offer, which is by far the best in Switzerland compared to those of the usual banks, this credit card is still subject to the “Mastercard law” which requires you to pay a 1.5% fee on any transaction made abroad or in a foreign currency!
And that’s not to mention the inflated exchange rate used by Cembra (the bank that provides the Cumulus credit card), which makes you end around 2% in total fees!
I am not even talking about the 3.75% withdrawal fee at the ATMs in Switzerland or abroad (with a minimum of CHF 5 and CHF 10 respectively…).
I enclose their fees’ summary in this PDF file in French, or that one in German.
In addition to being expensive, it is also painful on the budget level because you have the information of the price actually paid on a deferred basis.
Before the end of last year, you had to wait for the monthly invoice or log on to your Cembra e-banking several days after the transaction. For a few months now, they have had a mobile app that makes it easier to track information in YNAB rather than going on your laptop in Cembra’s not user-friendly interface.
As Mrs MP forgot to enter a transaction in YNAB sometimes, I even came to the point of activating the SMS option at CHF 4 (!) to be alerted of each expense and have a YNAB that reflects reality in real time…
Several of you have asked me for my opinion on Revolut. I was only moderately interested beforehand because they didn’t offer an IBAN in CHF, which meant that we had to pay a fee to top up the account (their system is similar to prepay).
Except that this changed in December 2018, and Revolut has finally made an IBAN in CHF available to its Swiss customers!
So I seriously wondered if it was worth changing. The main point was to know if I was consuming that much in foreign currency and abroad, and to compare the gain via Revolut compared to Cumulus’ cashback program.
I took the Cembra invoices of my Cumulus-Mastercard over the past 12 months and counted the total spent in foreign currency: CHF 16'792. This made me about CHF 251.88 of transaction costs (at 1.5%), not taking into account the exchange rate inflated to the max by Cembra.
Over the same period, I had won CHF 220 in Cumulus cashback. And this is true in total, not only for spending abroad.
Because if we only take expenses abroad, it makes us only CHF 55.40 of cashback (CHF 16'792 x 0.0033, because CHF 3 spent outside of Migros gives 1 Cumulus point which is worth CHF 0.01, so 1/3 * CHF 0.01 = 0.0033).
The decision was quickly made. We opened a Revolut account!
If you also want to open one, you can click on the image below and you will get your card for free (instead of CHF 6.99).
Rather than a series of screenshots, I found you a video showing the complete process of creating a Revolut account in less than 60 seconds:
Personally, I did this from my bed on a Friday night at 10:30pm once I had finished my calculations. It changes from the appointment at the bank on Monday morning that makes you lose half a day of work!
The first major advantage is about the purchases abroad or in foreign currency. First of all, there are no fees. And secondly, the exchange rate applied is the interbank rate (i.e. the rate at which banks exchange money, which is the lowest available on the market) without any extra cost if you pay during the week. If you pay on weekends when the stock markets are closed, then there is a 0.5% surcharge applied by Revolut to protect them from fluctuations.
You will find the detailed information in Revolut’s FAQ.
Two concrete examples where I asked the merchant to divide the bill in two:
I let you compute with your usage, but for me the winner is Revolut!
On the other hand, the alternative to the 0.5% weekend fee is to change cash in the week in the currency in which you are going to spend. It works as if you had as many wallets as currencies on your Revolut account. That’s a great concept!
In addition you can set up automatic actions like for example “Change me 1'000€ if the exchange rate drops below 1€ = CHF 1.10”.
The second advantage is the instant notification on your mobile phone (via the Revolut mobile app). And when I say instantaneous, it means that often I get it in advance compared to the payment terminal that still writes “Payment in progress”!
It’s really cool for three reasons:
The third advantage is the top-up of your Revolut card. I have read in a lot of places that it takes a while via an IBAN transfer with your bank (from several hours to 1-2 days). On my side, the only thing I tested was the top-up via my Cumulus-Mastercard credit card.
For one thing, it’s free. And two, it’s instantaneous again. And I can use the cash on my Revolut in the second that follows.
Anecdote: Mrs. MP was supposed to make a substantial payment last week. She’s texting me. I launch the app, top up CHF 2'000 in less than 10 seconds. I’m telling her it’s okay. Her reaction: “Huh? Already?!”
The fourth advantage is that I can benefit from the cashback of my Cumulus-Mastercard when I use it to top up my Revolut. So it’s the best of both worlds!
And I was about to forget the fifth advantage: you can withdraw money for free up to 200€/month at any ATM worldwide!
So far, the disadvantages I have found with Revolut are:
To make it short:
And you, which credit card do you use in Switzerland and abroad?!
Note: for those who follow well, you will have noticed the new Swisscard Cashback credit card which seems advantageous at first sight because it offers a 1% cashback with Amex. The problem is precisely that 1/ the Amex is not accepted everywhere in Switzerland, and 2/ that we cannot make a Revolut top-up with an Amex… bummer!
And their VISA/Mastercard only gets you 0.2% cashback compared to 0.33% with the Cumulus-Mastercard.
This affiliation link allows us to earn CHF 15 each! ↩︎
Since we bought our home, I’ve been trying to go regularly to our forest to run or have a bike ride. But every year, as winter approached, I went there less and less due to the rain, dark coming at 5pm, the snow, the cold. Excuses, more excuses, you will tell me. But that doesn’t change the fact that I wasn’t going anymore.
And you know how it goes: you miss once, then a second time, and the cycle is broken…
Christmas is coming and you are getting 3-4kgs fatter which you will have a hard time losing again by the summer.
So I was looking for another solution that would allow me to stay in shape over the long term, that would take little time, and that would be feasible wherever I went (like even on vacation with my in-laws!)
At the end of last year, I came across this article from the Human Performance Institute in Orlando (Florida) which already dates from 2013.
It scientifically proves that 7 minutes of physical training per day decreases waist and hip circumference, as well as fat mass.
The group that trained during the study did this exercise for 6 months. On average, the researchers noted a loss of 4cm of waist and hip circumference, as well as -1.8kgs of fat mass.
According to my Mustachian guiding principle of efficiency, I was hooked by the concept! The exercise program has been specifically designed to be practiced everywhere (I tested it in a hotel during a business trip, and at my in-laws’ as well ^^) and to work the whole body in a harmonious way.
And all this in only 7 minutes.
So I downloaded the free “7 Minute Workout: Fitness App” (there are plenty of them).
At the end of last year, I set myself the objective of doing the “Classic” program at least once a week.
Seeing that it relieved my lower back pain (thanks dear days spent in front of a laptop), I have increased the rhythm to 4-5 times a week since the beginning of the year.
The two secrets of the fact that I can maintain this motivation are:
Here is what I managed to reach in terms of consistency over the last 6 months:
And regarding results:
If we compare it with someone who goes to the gym for 1 hour a week, I end up doing only about 30-40 minutes of sport.
On the other hand, the advantage is that I can do this wherever I want, even when I’m on holiday (I’ve already told you about my mother-in-law?! :D), and also when I’m on a business trip.
In the long term, I therefore have less chance of abandoning or breaking the cycle, so it is an advantage (for me at least).
And if we add to that the “Money” factor, then I am definitely convinced.
By maintaining this rhythm over the next 10 years, I will be 14,000 richer by 2029. Not so bad for 7 minutes of personal investment a day!
And that’s not to mention the diseases and osteo sessions less!
I have finally found a combined life and health insurance offer, at CHF 0 :)
And you, how do you manage workout/sport training? Do you see your body as your most important asset?
Note: my osteopath advised me to practice exercises for upper and lower back flexibility (yoga type) in addition to such muscle strengthening. If you know of an app/blog/Youtube channel, please let me know!
]]>The next step was the transition to a small piece of software that we still use today. Just so you know, thanks to it, our wealth went from CHF 50'000 to CHF 380'000+ in 5 years!
I fell in love with the concept of financial independence in 2013. Every morning while waiting for public transport in Yverdon, with a smile on my face, I imagined myself watching people get on the bus or train for a new 9-5 ride. As for me, I stayed on the platform until the commuters left. Then, I went for a walk on the shores of Lake Neuchâtel the rest of the morning to fully enjoy my financial freedom.
My daydream stopped when the bus driver asked me for my ticket…
In order to make this dream a reality, the first thing we had to do was to have visibility on our money.
After searching the web looking for the perfect solution, I came across YNAB (aka “You Need A Budget”). We never went back.
The first step I took was to create a budget for our common finances. The goal was simple: never have any more surprises with invoices. YNAB allowed us to achieve this objective since all invoices were planned (including annual ones) and money was set aside each month to pay them. The software even allows you to change plans along the way when an expense is unexpected thanks to a system where you can transfer money between categories. Really great!
In parallel with this common budget, I had created another YNAB budget for my own finances in order to start saving for my dream of financial independence.
I see this transition as if we had gone from a company without accounting to one with an accounting department. It seems inconceivable to any entrepreneur who reads these lines, but in the end it all comes down to the same thing. If you’re in deficit in your personal life, it becomes the same mess when you go bankrupt with a business.
One of the key points of YNAB is that you have to enter each transaction (they have a great mobile and web app for that).
At first, Mrs. MP was a little very reluctant to have to enter each expense by hand.
In a way I can understand it because it’s not really something fun. Nevertheless, I still find it good because it allows us to consciously realize what we spend rather than just draw a credit card and not think about the fact there is really cash getting out of our fortune…
Side info: there is a feature to automatically import transactions from your bank. The YNAB team regularly adds new financial institutions, but at the time of writing, the option is still not available in Switzerland, but it will soon be available.
Nevertheless, as with any friction in life, it is quite easy to overcome it if you have a sufficiently motivating objective :) It’s one of my secrets if you want to convince your half!
In our case, what convinced Mrs. MP to play the game was our common goal to buy our apartment in Switzerland.
You can cite us as an example, and mention that we were able to buy our apartment a year in advance thanks to YNAB!
At the time, we had a separate YNAB budget for:
As my SO did not envisage that financial independence was something possible, she wasn’t regular with the use of her own YNAB (it took 2 years for that, but it’s for the next chapter of this series).
I must also be completely transparent: this transition to YNAB did not happen overnight. Like we didn’t install the software and then boom, no more stormy discussions all at once.
On the contrary, there have been new tensions about being “limited” by a budget. But the advantage of this application was to provide us upstream with the reason why we shouldn’t make this or that expense.
An example: Mrs MP who proposes a movie night at the end of the month; we check YNAB who tells us that we no longer have cash because we have the quarterly electricity bill that will arrive the following month.
As you will have understood, the key was (and still is) to be informed before the expenses were made. And avoid the “Oh damn, I forgot we had this invoice… and here I am again in trouble this month…”
In summary, from 2013 to 2015, our common finances have improved significantly with more and more savings thanks to all the optimizations we have made, and less and less bad surprises.
But at that time I had the impression that we were not giving ourselves every chance to achieve this objective of financial independence. It was mainly because we still had half-separated finances.
As a result, it wasn’t ideal to support such a common life project. Because no, I don’t imagine being financially independent on my own as that would mean that if I want to do 1 month of roadtrip in South America, I would do it alone. Inconceivable with my vision of the couple.
So I undertook the project to put all of our money into a single YNAB family budget. Easy on paper, much more complicated in practice when you are in a relationship. I will give you all the keys that allowed me to do this in the next article in this series.
Note 1: Would you be interested in a YNAB tutorial “Made by MP”? I had some requests for advice via email, but if there is really a lot of interest, I could imagine doing a small series. Let me know through the comments.
Note 2: I’m finishing reading “Sapiens : A Brief History of Humankind”. I’ve been hearing good things about it for a long time. And I can confirm, it’s a masterpiece! If you are interested in better understanding where our current world comes from (e.g. the origins of capitalism), and being more open-minded in general, then this book is for you. I’ll prepare a little review as usual.
So I contacted my IB Switzerland advisor and asked her several questions (in bold):
MP: With my IB account located in the UK, and the Brexit thingy, should I worry about my assets/money? Are there some impacts I should be aware of?
The account as such is not located in the UK. Indeed, our US entity (Interactive Brokers LLC) is the carrying broker of client assets globally. You’ll find here an overview of locations with whom we have accounts on behalf of our clients. Those central depositaries and other banks are located in the US or outside the US.
Also, cells “A46-55” indicate the banks in Europe which we use for cash deposits for our European clients.
A hard Brexit outcome will therefore not affect our clients who who have opened the account with IB UK.
European clients have been contracting with IBUK til date. Since everyone is expecting a hard Brexit, we have took care of contingency arrangements (aka B plans) in the meantime. We have set up an entity in Luxembourg. Once we know the exact outcome in March, I can image that new European clients will contract with IB EU / Luxembourg in future.
MP: So all my assets (aka ETFs) are held by Interactive Brokers LLC in the US, right?
Correct.
MP: And what about the small amount of cash I have at the moment. When I do the transfer, it’s to Citibank. Isn’t this located in the UK?
Depends which currency you send. Citi UK is our payment agent for CHF and GBP wires. EUR are send to Citi in Frankfurt while USD are sent to Citi in New York. We don’tforesee any issues with Citibank UK. Otherwise we have contingency arrangements in place thanks to our longstanding relationships with numerous other counterparts.
So, yes, if you send CHF, they go to Citibank in the UK. Clients should not be worried about the cash amounts held with our various banks. After all, they also have the cash protection of up to USD 2.75 mio if a client has that much with us.
MP: And now that we’re in March, do you know something new about Brexit impact on IB?
No Brexit impact expected. We are doing everything to have IB Luxembourg up and running by ends of March. Besides, if there is a Hard Brexit, it’s not that IBUK would loose all European passporting licenses from day one. There is a transition period granted by most EU countries (France, Germany etc) of moving clients who currently are under UK over to Luxembourg. We will be prepared for it.
I looked for more information about this transition period, and it exists also for Switzerland. It runs until the end of 2020, and is possibly renewable if Switzerland and the United Kingdom so wish.
Also, the European Securities and Markets Authority issued a press release last month to explain that if no deal Brexit is found with UK, then they signed a gentlemen agreement (they call this officially a “Memoranda of Understanding”) to still allow infos to flow between countries so that business can keep going on while contingency plans are put in place.
My plan is quite simple: I will continue my little journey by transferring CHF each quarter to Interactive Brokers, and by buying ETFs right afterwards.
Then, without any worries, I’ll go and serve myself a nice cup of tea while watching my cash work for me on my IB mobile application:
And in the end, this Brexit doesn’t change much for me because I never have any cash in reserve at IB UK because as soon as it’s on my Citibank UK account, I buy ETFs with it.
Also, I have enough confidence in IB to inform its customers if there is a need to transfer one’s account from the United Kingdom to Luxembourg.
When you think about it, doing a Brexit overnight would impact negatively everyone: the United Kingdom, the countries doing business with them, the businesses themselves, and the citizens. No one has an interest in breaking all the agreements without finding others that would prevent the United Kingdom from being isolated from the rest of the world.
And you, what is your strategy with Interactive Brokers? You stay with them or change for another (such as Cornèrtrader or DEGIRO)?
]]>Basically it gives something like that:
The problem I have been facing for the past few months is that if we want to retire in Switzerland (currently very likely option), we have a shortfall of CHF 75'000 per year (confirmed by an independent financial advisor with whom we had fun on Excel).
At first, I thought it would settled by itself in the long term between my increases, bonuses, and other compound interest. Except that math doesn’t lie. And deluding oneself is not an option for me.
Nevertheless, I didn’t give up. Even if an amount of CHF 75'000 more per year may seem insurmountable, it is only additional Swiss francs to be earned. All you have to do is find the strategy and implement it. You remember my motto: “Life is just a game, and it’s up to you to define its rules.”
All last year, I tested different solutions:
I started researching rental real estate last December.
In parallel, I also contacted a reader who started investing in rental properties several years ago: Mr. G.
We first met in a restaurant on the shores of Lake Geneva just before Christmas. It allowed me to understand the ins and outs in much less time than all my readings would have done (thanks again to you!!!). We talked about real estate investments on the Swiss side but also on the French side.
I caught the virus after seeing 15-20% net after-tax return, taking into account amortization (i.e. the repayment of the loan through rents, which upon resale of the property, will be repaid money that will come directly into our pocket :D).
So we actively started looking for a property on both sides of the border, because that’s what will allow us to stay in the course to retire at age 40.
Things followed quite quickly from the beginning of January: setting up alerts on real estate search engines, visiting several investment properties (on the French side), selecting one in particular, meetings with the bank, purchase proposal, which got accepted…
And boom!
We signed for our first multi-family rental building this morning! The internal rate of return if we sell in 10 years will be 15%!
I’ll prepare a detailed series of the entire process for you. As with the purchase of our home in Switzerland, it is enough to deconstruct each step, and in the end it is quite simple.
And you dear reader, have you already started your adventure in rental real estate? If so, what type of property, in what country, and with what return?
]]>That’s why I created this ranking of personal finance bloggers by savings rate (aka. #BSRI) so I’d never run out of inspiration.
Without further ado, here is the final ranking of the 2018 vintage of the #BSRI!
<h3>Badass Savers Gold (≥ 55%)</h3>
<li><a href="http://frugalisten.de/tag/bericht/" target="_blank">Frugalisten</a> | 67.8% (Germany, Single)</li>
<li><a href="http://www.lekkerlevenmetminder.nl" target="_blank">Lekker Leven Met Minder</a> | 64% (Netherlands, Couple)</li>
<li><a href="http://retireby50.me/" target="_blank">RetireBy50</a> | 63.3% (Singapore, Single)</li>
<li><a href="https://www.financieelonafhankelijkblog.nl/" target="_blank">Financieel Onafhankelijk</a> | 62% (Netherlands, Couple)</li>
<li><a href="http://www.hippiesdelandrover.com/" target="_blank">Hippies de Land Rover</a> | 58.1% (Switzerland, Family)</li>
<li><a href="http://www.myfinancialshape.com/saving-rate/" target="_blank">Financial Shaper</a> | 58% (Liechtenstein, Family)</li>
<li><a href="https://financiallyfree.eu/savings-rate/" target="_blank">Financially Free</a> | 57.1% (Denmark, Family)</li>
<h3>Badass Savers Silver (≥ 40%)</h3>
<li><a href="https://cheesyfinance.nl/" target="_blank">Cheesy Finance</a> | 54.5% (Netherlands, Family)</li>
<li><a href="https://forever20somethinglawyer.wordpress.com/" target="_blank">20 Something Lawyer</a> | 53% (Philippines, Couple)</li>
<li>Piggy Banking | 51% (Germany, Family)</li>
<li><a href="https://road-to-fire.com/" target="_blank">Road to FIRE</a> | 49.3% (Switzerland, Single)</li>
<li><a href="https://fireme.nl/financien/" target="_blank">FireMe</a> | 48% (Netherlands, Family)</li>
<li><a href="https://niettot71.nl/tag/nettowaarde/" target="_blank">Niet tot 71</a> | 46.6% (Netherlands, Couple)</li>
<li><a href="http://quietlysaving.co.uk/" target="_blank">Quietly Saving</a> | 43.2% (United Kingdom, Single)</li>
<li><a href="https://www.mustachianpost.com/my-numbers-revealed/">Mustachian Post</a> | 42.7% (Switzerland, Family)</li>
<li>theFIREstarter | 42% (United Kingdom, Family)</li>
<li><a href="http://firetheboss.eu/category/monthly-overview/" target="_blank">Fire The Boss</a> | 40.7% (Netherlands, Single)</li>
<li><a href="https://myinvestment.blog/investment-portfolio/" target="_blank">Peter Michael</a> | 40% (Denmark, Couple)</li>
<h3>Badass Savers Bronze (< 40%)</h3>
<li><a href="https://thepoorswiss.com/savings-rate/" target="_blank">The Poor Swiss</a> | 39.9% (Switzerland, Single)</li>
<li><a href="https://budget365.wordpress.com/category/reports/" target="_blank">Budget365</a> | 38.5% (Ireland, Couple)</li>
<li><a href="http://www.sparkojote.ch" target="_blank">Sparkojote</a> | 35% (Switzerland, Couple)</li>
<li><a href="https://spaarolifantje.wordpress.com/sparen/" target="_blank">Spaarolifantje</a> | 29% (Netherlands, Couple)</li>
<li>Little Miss Fire | 21% (United Kingdom, Couple)</li>
<li>The Dividend Family Guy | -95% (USA, Family)</li>
And here are the long-awaited badges that each blogger can use to share their prowess on their blog or any other media.
*Source file Platinum badge: HD / LD* *Source file Gold badge: HD / LD* *Source file Silver badge: HD / LD* *Source file Bronze badge: HD / LD*I am counting on you to spread the word about this #BSRI ranking so that there will be even more participants in 2019!
And you, dear reader, what was your savings rate for 2018?
]]>I often thought that if we could cut even CHF 100 a month on this recurring expense, it would already be huge savings with compound interests. Something like CHF 17'749 more in our pocket in 10 years!
One of the mistakes I made (in my head) was to want to plan 1 month of groceries at once. The task seemed immeasurable and so I pushed back this todo.
But around January 3 this year, I talked to Mrs. MP about it again:
Me: “Would you be OK that I help you with grocery shopping and meals so we can eat more vegetables, and try to optimize expenses in the process?”
Mrs. MP : “Yes, but you’re nice with your ideas, but if we do so, will you really help me? Because I doubt a little bit how long it’s going to last… 1 weekend? 1 week? And I’ll be in charge alone again at the end of the holidays?”
Despite her fears, we went for it. And this time seems to be the right one because I’ve been holding on for over a month and a half. The habit is established!
Until the end of last year, we were preparing the list of groceries beforehand, but without having in mind the menu for each meal of the week. This meant that we often ended up with surpluses. On top of that, laziness made us eat less well on some days when we didn’t want to cook.
I see a lot of similarities with a budget. In the sense that shopping for groceries also needs to be planned!
Unfortunately, I do not have the details of what we spent in previous years on food only. If we take into account everything that goes into the grocery shopping list, we are at an average of CHF 1'088 per month. But that’s not counting the exceptions for going out to dinner, the times we invited people, the holidays, and the days when we didn’t prepare food for lunch at work.
It doesn’t matter! This does not prevent us from wanting 1/ to eat more healthily (i.e. especially more vegetables), and 2/ more frugally.
I voluntarily set a realistic goal for us, so that we would not give up after a week of testing.
If we succeed, it will mean monthly food expenses of up to:
CHF 3 x 3 meals x 30.5 days x 3 people (2 adults + 2 half servings per child) = CHF 823.50/month
This represents at least CHF 100 of monthly savings according to my estimate, i.e. CHF 17'749 more cash in 10 years. And all this to eat better. That is, more vegetables and homemade dishes, and less industrial dishes.
I point out that we regularly shop for groceries on the other side of the border (France). Hence, prices of the menus below could be biased and useless for many readers who do not live close enough to a border to be able to enjoy it.
So I decided to list all our recipes with all the grocery shopping done on LeShop.ch (this is Migros’ e-commerce site, for those who don’t know). For each dish, I put the names of the ingredients as they appear on their website :)
Here is a week of menus for less than CHF 3 per meal:
Recipe: sauté the onions and vegetables together. At the same time, cook the meat. Then simmer it all together in the same wok.
Ingredients :
Recipe: put everything in a bowl.
Ingredients :
Recipe: roll each endive in a slice of ham. Drizzle with cream. Then spread the cheese on top and put in the oven.
Ingredients :
Recipe: heat the spinach, then add the omelette mixture and stir until cooked.
Ingredients :
Recipe: cook the chicken. Then put the meat with the other ingredients in tortillas.
Ingredients :
Recipe : an example here.
Ingredients :
Recipe : see this website.
Ingredients :
Recipe : put everything in a bowl.
Ingredients :
Recipe for 4 people : see this site.
Ingredients :
Recipe: Put the ham and cheese in the panini bread. Use a waffle iron or similar to compress the panini until cooked.
Ingredients :
Recipe (for 4 people) : see this website.
Ingredients :
Recipe (for 4 people): spread the pizza dough. Spread the tomato sauce over the whole dough. Put ham everywhere. Top with grated cheese. Put in the oven for baking.
Ingredients :
Recipe (for 4 people) : see this site.
Ingredients :
Recipe (for 4 people): cook the soup. Cut the bread into croutons that you can toast in the oven. Serve it all.
Ingredients :
Per week : CHF 61.31.
Per day : CHF 8.76.
Per meal : CHF 2.92.
Reported over a 30.5-day month : CHF 267.18.
For our family of 3 (2x adults and 2x half-portions for children), that would be CHF 801.54.
Objective met!
With these new menus, we eat better and we save CHF 121.96 per month, or CHF 21'650 in 10 years if we count on compound interest of an investment with a 7% return via one of the cheapest online brokers.
As mentioned above, we regularly jump across the border. According to my calculations with the same ingredients, we arrive at CHF 224.68 per month per person, or CHF 674.04 for us 4. This saves us CHF 129.33 per month in addition to the CHF 121.96 of the Migros list. On the next 10 years with compound interests, we earn CHF 22'950 in addition to the CHF 21'650 above.
According to the figures of the Swiss Federal Statistical Office, an average household of 2.2 people spends CHF 632 per month on food products. That is CHF 287 per person per month.
My first reaction when I saw it was: shame! My so-called frugal blog presents a month of Mustachian menu with only CHF 20 difference compared to a typical Swiss consumer…
So I delved into the Excel file above. Looking at the statistics more closely, I saw that they contain meals taken in restaurants, at the canteen at work, takeaways, and other outings with friends. And all this for an additional monthly amount of CHF 471.76 for 2.2 people, or CHF 214.44 more per person for a total of CHF 501.44 per person per month.
So in the end, if this average consumer ate 3 meals a day 7 days a week at home, he would spend much more than our week of frugal menus! I am reassured :)
If you are in the field of health and nutrition, we are interested with Mrs. MP to have your opinion on our week of frugal meals. Aren’t we too bad? Or completely off the mark on the balanced meal level?
2019 promises to be more frugal than ever for the MP family in terms of food.
But as I read your comments in response to my last article, I see that we can do even better.
If Ričardas, Tpn, MLTVB, Chris, Paolo, and Caroline read this article, I would be very grateful if they could share their most frugal meal ideas. Like 1 or 2 CHF per person (that’s my next goal)!
And you who reads my article, how much do you spend per meal on average? Feel free to share your ideas if you have ultra-frugal recipes in stock!
Note: for menu ideas, all this is just my experience sharing. I decline any responsibility in case of allergy or other consequences on your health, so be careful with yourself according to your situation!
]]>While waiting for the next blogpost dedicated to the topic, I wanted to ask you the following two questions, dear reader:
I look forward to reading all your reactions in the comments below:
]]>The book will explain how to build enough wealth to achieve this goal, like a recipe explaining all steps from A-Z.
It will take into account all Swiss specificities.
Zero jargon guaranteed!
You can find the first draft of the table of contents here: Financially free by 40, in Switzerland - the book.
What do you think? Please leave any comments, feedbacks, or questions below:
]]>I have a different feeling this year.
Of course I’m still surprised to write “5th anniversary” because it’s a great personal achievement.
But I feel more serene. I no longer doubt that we will achieve financial freedom. Mrs. MP and I are increasingly aligned on this subject, and that must certainly help. Same for the blog, it has become a habit to share my journey with you and I don’t think I’ll stop anytime soon.
Zenitude and fulfilment, that’s how I start 2019!
Before going back to last year’s retrospective, I’d like to take this opportunity to wish you a healthy and happy new year (otherwise your cash won’t be of much use) for 2019. May it be the year of early retirement for some, and accumulation of wealth for others!
2018 was quite intense in terms of exchanges and projects.
I started the year with a break. It allowed me to take a step back from the blog. I came out even more motivated to make it grow in different ways.
I have a very clear desire to make it a business, in the good sense of the word. I want to bring you even more value, and derive benefits in a win-win and sustainable way (i.e. by avoiding blinking ads everywhere).
The frugalism topic took off in Europe in 2018. About five years after the US, the media of the Old Continent discovered financial independence it seems…
The same goes for Switzerland where I had the chance to be interviewed and mentioned three times:
Compared to previous years, the blog has taken off in terms of visits as you can see on the graph below.
Similarly, the media interviews made it possible to introduce the Mustachian principles to many new Swiss readers. They subscribed to the newsletter so as not to miss any articles that would allow them to increase their wealth.
An interesting figure is the number of comments. In 2016, you posted 280 comments. In 2018, the blog reached 365 interactions. I feel that I need to be more attentive to your needs so that my articles will be even more useful to you. Or maybe you just find it too long to create a Disqus account?!
This metric is perhaps a little biased because it doesn’t include all the email exchanges I have with readers, nor the whole forum part.
By the way, since we are talking about the forum, here are some figures from our Swiss community since the launch of it at the end of 2016:
I’d like to take this opportunity to thank our moderator Julianek for all his help. And I also thank in advance our new moderator Bojack who joined the team at the beginning of this year.
This is a part that interests me particularly when I read other blogs because I like to know the profitability of such personal projects. There must be one or two curious readers like me, so below you can see how much the blog and forum cost and brought me in 2018:
I started tracking my time last November to be able to calculate an hourly wage in 2019. To give you a taste, in December 2018 only, I noted down 25 hours!
Do you think this paragraph is about bragging? So do I! But I think it makes the project much more serious to say that I now employ someone. It looks great, doesn’t it?
My ego aside, I decided at the end of last year to reinvest almost everything I’ve earned via the blog. I will explain why later in this article.
The blog and forum are now well smoothrunning. I can keep a regular pace with about two articles per month. On the financial side, everything is fine. We have been in autopilot mode since some time.
You may think that I’d enjoy it by feeling I’ve got enough of what we’ve accomplished over the past five years. But my entrepreneurial side couldn’t help but to generate dozens of other ideas…
Before I present my plans for 2019, I want to clarify one important thing: I see these new projects as a way to grow personally by doing things that have an impact. And not as an additional negative burden in my life. So you’re right, you have to know when you’ve enough of something without always wanting more. But this is not my case.
I also always have the idea of creating other passive income for us than my ETF investments. And if blogging can be an option, I want to seize it while I’m still relatively young and motivated. Especially since adding a source of income will only bring us closer to the day we’ll be financially independent and can both leave our jobs!
I discussed a lot with a reader at the end of last year. I thank him because he allowed me to understand a lot of things in terms of rental properties. And this both for Switzerland and abroad (France).
This is clearly less passive than making three clicks on Interactive Brokers or Cornèrtrader per quarter.
“Why bother with all the difficulties of a real estate purchase then?” you ask me.
The leverage effect.
“Uh, Marc, what does that banker’s term mean?”
Concretely, in real estate, this means that you generate money without initially putting it on the table. Imagine a building or apartment worth 150'000 euros, including renovation work. In France, you can borrow the full amount. And the goal is that the rents paid by the tenants fully cover the repayment of this mortgage, as well as all the charges and other taxes that this generates.
After 15-20 years, you end up with 150'000 euros more. Without having paid a cent.
It sounds pretty magical when you say it like that. But you’ve to understand that there is a lot of research work to do, then renovation work management (because it’s impossible to my knowledge to buy a brand new property and to be 100% auto-financed).
So it’s different from an ETF investment where you put for example 10kCHF and hope to get about 6-8% per year, meaning CHF 600-800). Because yes these 10kCHF work for you, but it’s money that’s invested in the stock market and can’t be used for anything else.
In general, I’ve a negative opinion on leverage because I picture stock market investors trying to make bets on companies they don’t know or understand, with money they don’t have.
I see the leverage effect differently in real estate because it’s much more tangible and understandable.
So that’s it, we decided with Mrs. MP: we want to acquire a rental property in 2019. Of course, I will document the whole process if we succeed in achieving this objective (the hardest part being to find the property).
I’ve been wanting to tackle this issue of food for a year now. Both in terms of what we eat and how much it costs us. Until then, I had deprioritized the subject because it’s a point that I’ve little control over, since it is mainly Mrs. MP who cooks. She also knows what we need in terms of grocery shopping.
But I’d an idea that kept coming back: to challenge us by preparing meals costing CHF 2.00/person, while eating fewer ready-made industrial dishes.
The conditions were all there at the beginning of this year at the end of the holidays. I’d time to look for healthy and cheap recipes. We also took the time to discuss with Ms. MP a strategy on how I’d get my hands dirty helping in the kitchen. And here we’re, preparing our own dishes (even more), and planning our grocery shopping a little more consciously.
I hope that this project will last longer than the usual New Year’s resolutions (although this was decided on January 3 ^^). I’ll in any case document this project as well.
I want to be even closer to the issues you have, dear readers. I hesitate to do a “Ask Me Anything” series with the most common questions from readers.
Or by taking 30 minutes a month or quarter on the phone with one of you to answer your questions, and then document them in a blogpost. If you have an opinion, don’t hesitate to let me know via the comments’ section below :)
Some have surely noticed that the link to change language is no longer in the menu at the top, but at the very bottom of the site. And that among English and French, we now find German !
I actually decided to translate the whole blog. Our Swiss German friends will finally be able to know all the keys to becoming financially independent. With all the Swiss specificities that this implies.
That’s why I needed to use an extra brain with a German translator who joined the MP team. I use the Fiverr service and I can only recommend it if you are looking for professional skills at affordable prices in the fields of design, digital marketing, writing and translation, video/animation, music, programming, and more.
I know a lot of other entrepreneurs who use it and I dreamed of using it to grow my own business one day. It’s done!
The translation has already started and should be completed by April. I’m looking forward to it!
If you’ve family or friends who only speak German, then you can now share your favorite articles with them!
Those who follow the blog know that I’m currently working on a book about financial independence in Switzerland. The project made good progress during the last quarter. I will publish an article with a preview before the end of January if all goes well. So don’t hesitate to subscribe to the newsletter if you don’t want to miss the news :)
Your comments, questions by email, participation in the forum, and support for the blog motivate me every day to get up between 5:30am and 6:30am to continue adding value to your life.
This year, I’d like to put even more emphasis on quality rather than quantity, always being closer to your problems.
2019 looks to be a good vintage for Mustachian Post. I look forward to continuing to discover ways to grow our cash stack together! And above all, to shorten this timeframe that separates us from the day when we’ll no longer need to get up to work :D
Thank you for still being here after 5 years. It means a lot to me.
]]>Today, we’ll talk about about my pre-teenager time. These years have only anchored my frugal principles even more deeply.
Every Friday after school, my mother would pick us up with my cousin and we’d go shopping for the following week. I remember it quite precisely because it announced 1 hour of game in the supermarket between hide-and-seek and tag play (we did it discreetly otherwise it was punishment ^^).
Apart from the fun, it implicitly sticked with me that one only goes to the supermarket once a week and not many times a week, risking else to be fooled even more by the gondola and their so-called “Deal of the Day”.
It’s so natural for me now that, coupled with an even more frugal mind, we decided with Mrs. MP to go further and only do our grocery shopping every two weeks. On the one hand, it allows us to avoid temptation, but also and above all to do other more interesting things than spending our lives in supermarkets.
Coming from a family of the countryside, I didn’t enter a McDonald’s until well after I was 13 years old. I’m not sure it’s THE solution because I was there quite a bit once I had my own home.
Nowadays, it’s still something very exceptional and I think it’s partly because I didn’t get into a routine where we bought all our meals in take-away mode.
The only takeaways my parents bought were pizzas that a truck sold next door to where my brother and I used to do our swimming lessons. Again, it was once every two weeks. The exception rather than the rule.
Every summer, we’d the chance to go on holiday. We always went to campsites in mobile homes (my mother was not so outdoorish as to sleep in tents!) in the South or West of France.
I remember that excitement of getting up at 2:00 in the morning as a kid, and not being able to sleep a wink because I feared to miss the first moment when we’d see the sea/ocean!
It must have accentuated my wake-up-early side.
In terms of food, we went to 3-4 restaurants only during the week, and the rest of the time it was my mother who prepared food.
But we never went to hotels. After we left home with my brothers and sisters, my parents enjoyed them but never before.
It’s perhaps on hotels and restaurants during holiday that I have the most difficulty convincing Mrs. MP. And yet she makes a lot of compromises with the many AirBnBs we take, and the meals we do ourselves and other picnics. And I must admit that when you spend 350 days looking for ideas and preparing meal two times a day, it’s always nice to have 15 days a year when it’s zero-cooking mode.
And about my flaws, it’s more the point of going abroad for holiday (i.e. across the Atlantic or the Indian Ocean) where I have trouble restricting myself. I like to discover new cultures and landscapes so much that I’ve a hard time staying in our area. Even if wrongly, because in nearby Europe alone there’s already a ton of things to see and do.
But still, I calmed down, and since we fell into frugalism, we only make our big trips once every three or four years (which is already huge!)
I don’t know if my parents never belonged to a sports club as adults because they weren’t used to it as children themselves. Or if it was because of lack of time with their company that was a sport (physically) in itself. Or maybe it’s because sport is something that can be accessed for free thanks to the nature that is available all around us.
Anyway, almost every Sunday between March and October, we’d go on a 15kms hike with family members or other friends. Personally, I really liked it because it was often in the forest and I was already attracted by this environment. But above all, I loved the fact that once a week we get a salami sandwich as well as candies or other tidbits that my mother used to surprise us with. I see it again with my own children but there is really no need for thousands of francs spent to make a kid happy! Salami, and candy :D
So in terms of frugality, it was great because we didn’t spend hundreds of francs to go to amusement parks or other outings like that. Nature, good food. With the advantage of keeping us healthy. And all of this for 0 CHF (except for petrol perhaps).
My parents think that sport is free, at least for them. Because as far as we were concerned, we’d always do one or two sports of our choice.
On the other hand, there was a rule.
If we started a sport, we’d to stick to it until the end of the year. It forced me to learn perseverance. Because clearly, when I was having my swimming classes, there’re several times at the of the day in December or January when I could’ve avoided with pleasure a 3km swim in 20-21 degrees water… but it forges you. And I don’t regret anything today. I’m grateful that my parents raised me like that.
At certain times in my life, it may have been to my disadvantage because I remained closed to other sports and other discoveries. But I was able to make the difference as I grew up, and now I can apply that principle where it makes sense, and stay open-minded about other things. Typically, with my financial independence goal, I can only thank my parents for having transmitted to me this principle of life that is perseverance. And in terms of openness, I’m much more likely not to finish a book nowadays if it doesn’t bring me value.
It was my father who introduced me to the concept of budgeting. Unfortunately, I no longer have a written record of my savings book but from memory, I was around 6 years old when he made me fill out my first line of savings.
He explained to me that I was in charge of knowing how much I’d in the bank when I entered each transaction in this little notebook — there was no ebanking at that time! And also that money didn’t fall out of the sky, and that it was better to save it to buy me something useful or that I really wanted, rather than spend it recklessly.
I can still picture myself at the desk in my room, entering line by line the money I received on my birthdays, at Christmas, or on other occasions. Month after month, year after year, I saw my fortune grow.
Just like today when I love the end of the year with the 13th salary and the bonuses that are coming, I was looking forward to this moment at the time because I was receiving by mail… the interests on my savings account (3-5% at that time)!
Nevertheless, I think that this economical side is also linked to my personality in addition to my education. Because my brother also received this budgeting intro but did not see it grow in the same way in the long term :)
It bothers me when I see big brands that only sell shitty stuff at very low costs (like Wish or Alibaba), that do not represent by far the reality of the market (if we take into account the cost of production in China, transportation, etc.) and that try to make people consume as much as possible by selling them junk.
Be careful, I’m not saying I’m against discount brands, quite the contrary. I’m talking about quality here.
And with this introspection, I realize that this principle also comes from my parents. They have always raised us by telling us that it was better to save a few more months to opt for a qualitative article, rather than always wanting everything right away and cheaper, but which would last less over time.
Two concrete examples in our current life:
As Juliet Schor said in her interview for the “Minimalism” documentary :
“We are too materialistic in the everyday sense of the word, and we are not at all materialistic enough in the true sense of the word. We need to be true materialists, like really care about the materiality of goods.”
I have to admit that my parents still surprise me today when I see how they educated me in this way…
At home, with both my parents and grandparents, it was normal as a child to help out, without any consideration or pocket money (I have never received allowance money in my life).
In the list of chores, we’d: mowing the lawn, helping to collect dead leaves, helping my grandfather with his garden, and many other things that aren’t fun but that forge you.
When we grow up in the family cocoon, all the rules by which we live seem to be the norm to us, and therefore applied everywhere else in the world. Very quickly with the socialization through school, I realized that not everyone lived according to this same “norm”. Some had money for every task, others never helped with chores. As a result, I obviously tried to fight back once or twice, but it didn’t work because my parents knew that they were teaching me these principles and values so that later on it wouldn’t all be about money but also about helping each other. And above all, it was important for them not to raise lazy people who do nothing all day and who want everything to fall into their mouths without moving a finger.
When I see where this benevolence and habit to “work” has led me, I assure you that I’m working hard to pass on these values to my children.
As I said, I’ve never had any allowance in my life. My parents bought me what I needed, and there’re birthday/Christmas gifts otherwise (as explained in the previous article). The only few times I was paid was by my grandparents for really hard and long chores (cleaning a henhouse for 2-3 hours, does that resonate with you?)
So, since I still wanted to buy toys or other video games for our computer, it made me creative.
Some examples that bring back so many memories as if it were yesterday:
This may all seem ridiculous and insignificant. But it cultivated my entrepreneurship and system D way of thinkg with the means I had at disposal at the time. And this state of mind is now more deeply rooted in me than ever before. It allows me to be more efficient in my job, but also in my other activities such as this blog.
After this analysis of my 8 to 13 years old period, I have a better understanding of these characteristics that make me who I’m today, namely:
As said in the previous blogpost of this series, everyone will have a different opinion on these life lessons. But if you like one or the other, then it gives you some ideas on how to instill that in your offspring education. I am a living proof that this is paying off in the long term!
The following part of the series will focus on my adolescence, between summer jobs and the first financial recklessness…
What did you learn from your 8 to 13 years old? And above all, what educational factors have influenced these learnings?
]]>Fast forward after a few years of common household. I finally got my first job with the salaries that went with it.
At that time, I was earning more than my SO. We’re newly married, and spent without really counting.
As we’re still sharing our expenses 50/50, Mrs. MP found herself with much less “Freedom” money (a budget category inspired by Jessie from YNAB with which everyone does what they want) than me.
We brought up the topic to decide of a common vision. Fortunately, we’ve always seen marriage as an alliance where equity is very important for the relationship to last in the long term.
So we decided to manage our budget by allocating each expense on a pro-rata basis to our salary so that none of us felt aggrieved about his/her savings.
In concrete terms, with a salary of CHF 6'000 for me, and CHF 4'000 for Mrs. MP (a total of CHF 10'000), I’d to pay 60% of any incoming invoice and Mrs. MP the remaining 40%.
In our relationship, I’m more the frugal one, and Mrs. MP is the “moderate” epicurean (by far not a compulsive spendthrift, fortunately!)
Before we used YNAB, Mrs. MP never had a budget. Or rather, she knew her monthly expenses, and regularly went on her e-banking to see how much she’d left and if she’d buy this or that.
This process had two main problems:
As a result, Mrs. MP regularly found herself at the end of the month doing back-of-the-envelope calculations to understand why she was overdrawn. Disbelief first, with a “But how is it possible that I still find myself in financial trouble…”.
Then finding the unexpected invoice with a “Oh yes, I forgot to account for last nightclub outing…”, and the red of the account suddenly became explainable.
This was followed by the “Damn I work like crazy and I can’t indulge myself”, as well as the financial forecasting to come back afloat the following month.
The problem was that money management was only done month by month, so these “surprises” were coming back one or two quarters later.
Being more frugal by nature (probably because of my education, which I describe in a dedicated series), I’ve helped Mrs. MP several times by lending her money.
It was a benevolent feeling, but it only solved the problem temporarily. Because in the end it was just adding debt to it.
We’d sometimes get to “Geez, I don’t know how I’m going to pay you back, I’m so in the red zone already…”
In addition to her self-esteem, it also affected our relationship.
Despite these ups and downs, we’ve always managed to stay afloat without major debts nor financial problems (all this was always around a few hundred CHF).
Regarding bank accounts, we switched to a joint account when we made made the move to pro rata. We also took the opportunity to reduce our bank fees by changing bank.
Each of us transferred our share to the joint account when we received our salary. This allowed us to set aside the necessary money for household expenses as a priority.
At the same time, we still had our personal accounts. It gave us a certain freedom (at least the illusion of it). But it also led to some situations that weren’t easy to manage because we lived a 100% common life at all levels, except financially.
An example: “Gosh, we didn’t plan this joint expenditure… we’ve to transfer money to the joint account… Ergh, you’re in the red zone this month? Don’t worry, we’re here to help each other. I’ll lend you some money. You can pay me back later. But you also have other unexpected personal expenses? Well OK it’s fine I’m gonna wait”.
This was followed by some hassling discussions “But how do you manage your budget?”
Then we found solutions. And compromises. The apprenticeship of money in a couple in summary :)
Another example: movie nights. Being closer to my budget (yeah, yeah, greedy if you want ^^), it was pretty regular that we’d small challenges like “Come on, let’s go to a restaurant afterwards, wouldn’t that be cool?”
As I’d the cash potentially, it was more difficult to say no compared to before where I didn’t have it.
It shows you the limit of the system of a pro-rata basis where, indeed, you keep your freedom, but it doesn’t lead to a common vision on the financial level in the couple.
After having passed this pro-rata and joint account milestone, we then moved on to a real budget. With the famous YNAB tool. It brought us a lot of transparency to understand where our difficulties came from at the end of each month, and also to better plan for unexpected expenses. I’ll explain all this in the next episode of this series.
If you’re in one of these phases now, or have already gone through it, I’d be interested to hear your feedback. And if you’re even more advanced than the MP couple, don’t hesitate to share your tips and tricks with us!
]]>I was discussing with David about a future MP project, and we ended up talking about his premium, and how he never really took time to challenge it (a bit like his Swiss bank account, but that’s another story!)
When I heard how much he was paying monthly compared to us, a family of four, I couldn’t help to tell him that he’d save a lot of cash!
I thought it would be worth to share our conversation as this could help many of our new readers.
MP: Hey David. So can you tell us a bit more about you, like how old you are, at which insurance are you attached to currently, how much do you pay for it, and for which coverage/franchise?
David: Hi Marc. I’m 27 years old. My current insurer is Sympany and I pay roughly 420.- for a 2500.- franchise. The basic health insurance costs 376.- and the rest is for additional services like glasses, free hospital choice and risk capital insurance.
MP: Interesting. Why do you have the additional services? Did you do the math, and it’s worth to pay more each month instead of saving the difference and covering your expenses by yourself?
David: Good question. I haven’t done a lot of research so far. My parents signed me up for this insurance when I was a kid and I just kept it because it was the easiest thing to do. Mostly because I earned enough money to support it and heard a lot of negative feedback from friends about cheaper alternatives.
The hospital and risk capital additions I kept because they seem like a nice to have in case something goes very wrong. Although I’m not sure what would happen if I cancel them. Especially with the risk capital insurance. I think that should already be covered by the 1st pillar.
The third addition is for alternative medicine. That’s the one I’d say is worth it. I have glasses and a desk job. Although I try to do movement and posture exercises during the day, I still get tense muscles and my eyesight worsens from time to time. So they cover some of the costs for new glasses and massages which helps a lot.
MP: OK so let us help you a bit there. Can you tell us your city ZIP code so that we can run some comparis.ch research? Also do you already have an accident insurance in case you’re self-employed?
David: Sure, I’m living in town near Basel :)
And yep I already have an accident insurance so no need to add it.
MP: OK so first thing first, the basic health insurance. I did some Comparis research and found out that for 2019, the cheapest insurance remains Assura. I use it myself for years now, and I’m satisfied with it.
For you who are 27 years old, and living in Basel, the price per month would be CHF 280.20.
I chose the Assura with CHF 2'500 deductible, and the PharMed option (family doctor) which implies that you always have to go to your family doctor first, except for gynaecology (not applicable for you, right :P), ophthalmology, or emergencies.
Your family doctor has to be on their list (which was the case for me): here for Swiss-German or there for french speaking people.
Also for drugstores, you gotta go to one of the list of Assura (in Swiss-German and in French).
You have to note that you need to pay everything from your own pocket first, and then send it to Assura for reimbursement. Which shouldn’t be a problem for a Mustachian!
These are some constraints I’m OK to live with.
If you would switch, you would save CHF 1'149.6 per year (12 x (CHF 376 - CHF 280.20)).
And if you invest this difference on the next 10 years, assuming a 6% stock market returns, you could save CHF 16'074.
This, by just sending two letters (one to Sympany before, and one to Assura) before end November.
David: Sweet. That sounds good. Although you might laugh but I already have the same constraints as you do. Not sure about the drug store one but it’s the same deal with the family doctor and paying out of my own pocket. Except I think for bigger stuff like surgeries. But not a 100% sure there.
I have to say it sounds good and I’ll definitely consider it.
My main issue is that Assura has kind of a bad reputation from what I’ve heard. Also the fact that you have to pay everything upfront by yourself (which I’m not quite sure I have to do as well for big stuff like surgeries) is a bit concerning if I ever get into this situation again. That can be easily 5-10k or more. If I can remember correctly the last one I had, Sympany payed it and I just had to cover the 2.5k deductible. But again, not 100% sure though. Even if I had the spare change if this would ever be the case, how long does it take them to pay me back and what if they decide not to?
MP: I actually dived into this “tiers garant” and “tiers payant” topic following your question.
The “Fédération Romande des Consommateurs” (aka FRC) has a detailed article explaining that, with Assura, you must pay in advance (i.e. tiers payant) for drugstores and certain alternative medicine practitioners. But for all what is doctor and hospital, it’s the insurance paying directly (tiers payant).
And the FRC states that with all insurances, they pay in advance for all what’s doctors and hospitals.
To me that’s a clear signal to switch, if you can manage to have the CHF 2'500 aside for the deductible :)
Side note about reimbursements, I honestly never cared about how long it takes because it was only for drugstore stuff and osteopath bills — amounts for which I expect Mustachians to have enough stash to cover. For both Assura (basic health insurance) and Groupe Mutuel (alternative medicine), I would say that the reimbursement came in approximately 1 or 2 months max after the consultation.
Regarding Assura, I heard the same negative feedbacks beforehand, but decided to give it a try nevertheless. I wouldn’t go back. Their e-system is great and very clear. Then for reimbursement, you still need to send them by post, and then they reimburse you. I just don’t see any rational reason to not choose them. But that’s based on my experience and point of view, as always.
David: Ok, thanks for the “tiers garant” / “tiers payant” topic. Didn’t know about that. Interesting.
You’re right. I’m not dependent on the reimbursements. So that shouldn’t be a problem. Especially with the newly obtained information about the different tiers, I feel much more confident to switch.
MP: Continuing with glasses. I myself stopped paying any insurance for this.
I kept my last glasses for 5-6 years, and saved the insurance amount (about CHF 144/year) to build a small fund myself. Even the optician was shocked that my glasses were in such a good shape except from the used part that hurt near my ears.
“That’s how Mustachians do it, dear Madam!”, I told the optician.
In case you need yearly renewal due to sight changes (don’t tell me you switch yearly only for having a new eyeglass frame!), then the cheapest alternative I could find so far seems to be KPT/CPT with CHF 10.90/month.
Please note that for KPT/CPT, the max amount they will reimburse you is CHF 200/year, so in the end that’s only CHF 69.30 (CHF 200 - CHF 10.90 x 12) they support you with yearly. And it’s the same for all other insurances — i.e. they all have a cap amount they reimburse per year (which is even lower for some).
David: I don’t really need it I guess. Although it’s already included in the alternative medicine insurance. I switched glasses (not the frame) quite frequently in the last few years, once a year maybe because of some issues. But I hadn’t any issues lately so definitely worth considering.
MP: Then, free choice of hospital. If what matters to you is the hospital choice (but you don’t care about private rooms and doctor choice there), then Groupe Mutuel offers you the best option at CHF 2.10 per month. I may be wrong, but looking at Switzerland hospitals’ quality, I wouldn’t care to have an hospital assigned (N.B. I never had to have a surgery like you did, so take my word carefully, and if you dear reader had to do so, let us know about your experience).
David: For hospital free choice, I had surgery twice so far and I think the hospital is assigned based on the doctor who does the surgery. I would have to check what the benefit of this insurance was in this case, if there was any.
MP: Let’s us know if you get more infos regarding the reality of this free hospital choice thingy.
You also talked about alternative medicine like osteopathy and kinesiology.
The cheapest alternative for 2019 is hard to find because for instance, with Visana (best result on Comparis.ch), it says CHF 4.80/month. But once you go to their website, you discover that such medicine must be prescribed, else it costs more.
Also, it seems you can’t take it alone as it needs to be part of a “package”.
In order to give you a concrete solution nevertheless, let’s look at my example. I have back pain sometimes too, and go four times a year at an osteopath practice. It costs me CHF 100 per consultation, and I’m reimbursed 70%. For this insurance at Groupe Mutuel, I pay CHF 9.90/m. The advantage is clear if we take the example of 4 times at an ostheopath: without insurance it’s CHF 400/y, and with insurance it’s CHF 238.80 (9.90.- x 12 + 4 x 30.-).
And within these CHF 9.90 are included the hospital choice (I totally forgot about it ^^).
David: Interesting. On my side, I currently pay CHF 16.30 for alternative medicine. Glasses are included in this one as well. I go to an ostheopath once or every other month which costs me 120.- per session and they pay me back 50%. Since when do you have the Groupe Mutuel insurance? I have the one for alternative medicine only since a few years and had some issues getting it at all. So my concern is that another insurer won’t take me because of recent surgery.
Interesting story: I phoned with a doctor regarding additional insurance for alternative medicine and he said with my age it’s almost impossible to get it. My parents should have signed me up when I was born for it. Otherwise the chance for getting signed up is very low.
MP: You may be right about alternative medicine. I only heard so far that it was mostly interesting to sign up kids on dental insurance, not alternative medicine.
I also know that such contract have generally 2 to 5 years of engagement… What I would advise you would be to simply check your contract end date, and then some months in advance, to call the new insurance (say Groupe Mutuel) and ask if they would back you up. This way you get a real answer and not guesses from your doctor or me!
I think it’s worth the try because you get only 50% back on your bills, for almost twice the premium I pay…
Finally, you mentioned a risk insurance. Can you tell me more about it?
David: Here you go: Sympany death and invalidity insurance. I have the one with the 10k death, 200k invalid one. But I pay “only” 14.50 for that.
MP: Interesting…on my side I decided to for sure not pay any life insurance, as:
As for invalidity, I prefer to do the following bets:
Again, all of this are personal choices, and I’m conscious and grateful that both of us are valid people.
OK, so all in all with glasses + free hospital choice + alternative medicine, you could pay only around CHF 22.9/month. That means again some CHF 44 of savings per month, meaning CHF 528/year. This would result in CHF 7'383 on 10 years if you invest the money and it brings a decent 6% yield.
Are you willing to investigate further for a switch with such computation?
David: Yes, that sounds good and I’ll do that. Thanks a lot for all the effort you put into this. I learned a lot and have definitely been inspired to switch and save some money.
To summarize David’s situation, he is now paying CHF 420/month. With some writing effort to send two letters before the end of November (one to cancel Sympany, one to subscribe to Assura and Groupe Mutuel for instance), he could end up only paying CHF 303.10 per month instead (given he can switch the alternative medicine insurance due to his historical back surgery).
That’s CHF 116.90 additional monthly savings, resulting in CHF 1402.80/year. If he dares to invest it on the next 10 years, this would result in a CHF 19'608 comfy stash!
Again, I stress the point that all these are very personal choices depending on your health situation. Please make sure to really dig into all points and contracts before following any of my or David private experiences.
Nevertheless, I hope it gives you hints on what to do for you, and also for your future children regarding health insurance choices in Switzerland.
What about you dear reader? How much do you pay monthly for you/your family? Which basic and complementary insurance do you have? Are you planning to make a switch and save cash in 2019?
]]>Looking at the history of my articles, I realized that I’d not often detailed the distribution of our net worth. So, I propose that we correct this and make a 2013-2018 comparison to see how all this has evolved, and above all, to show you that it’s possible to stash a consequent amount of cash, in only 5 years.
At the beginning of our adventure, nothing was optimized in terms of money.
I did some archaeology and this is what we started with:
Total Net Worth of the MP family in 2013 = CHF 53'792.40
Among these figures, my biggest mistake was this pillar 3a linked to a life insurance because it’s the worst thing that can happen in terms of yield. First, because these solutions are rarely invested in interesting investment funds, or if so, with exorbitant fees for us Mustachians. And secondly, because the “life insurance” part is expensive and above all useless for a Mustachian who is able to create his own safety cushion.
As some readers have pointed out to me, anyone starting out his professional life tends to fall into the trap if these insurers and their 3rd pillars linked to a life insurance, so I hope this article will help you avoid this it…
And here is what we are at after five years of frugal life, savings, and thoughtful investment:
Total Net Worth of the MP family in 2018 = CHF 358'952.23
We have managed to accumulate CHF 300,000 in 5 years. All this thanks to a frugal lifestyle that is more in line with what is important to our family.
The beauty of this thing is that you can achieve it too. You simply need to copy what we’ve done so far, and apply it to your situation. From today on.
The least optimized thing in all this is my 3rd pillar, which is partially invested in the stock market, but not at all optimal in terms of investment choices and costs. This is the compromise we’ve reached with our mortgage institution. I plan to stop investing into it and move to VIAC in the next 7-8 years, by re-investing part of the cash to amortize our apartment and reassure them enough to no longer need a pillar with them (to be confirmed/calculated mathematically by then if it’s a good idea).
For the rest, including Coinbase which was more of a fun trial, I am satisfied with our choices so far which are optimal for our situation.
Last but not the least: we have finally reached the CHF 100'000 invested via Interactive Brokers! Bye bye CHF 10 monthly fee :)
And you, how much cash have you accumulated in total since you started following the blog? What were your biggest mistakes? What did you learn from them?
]]>At that time, my parents were entrepreneurs. So it was normal for me to see work as something where you spend all your time, from Monday to Saturday, from 7am to 7pm.
One of my strongest memories is the happiness I felt when my mother was allowing me to get up at 6am on Saturday mornings, when my father needed “help” to prepare a business event. I was just happy.
I didn’t see it as work but rather as spending time with my family, while seeing clients walking by all day.
At lunchtime during these unforgettable days, we’d eat in a pizzeria run by Sicilians. It was the kind of old establishment where you feel the heat of the oven invading you when you enter, and the exquisite hot dough’ smell suddenly provoking you a gargantuan appetite. We always went at the same place.
I even remember that my mother often made me believe that we were actually not going there and go home to eat instead, but I didn’t believe her anymore because she was doing that joke to me every time…
We’re not not to be complained about financially speaking, but the restaurants were still exceptional moments in our daily lives. And those Saturdays were the tradition.
It also reminds me that my parents never ate outside or went for coffee at the corner café. Never. They always ate their meals at home as they lived close to their work. It was inconceivable for them to drive 1 hour (or more) every day to get to work. And even less to spend their money on daily frivolities.
Regarding evening or weekend outings, it was also very exceptional. What was less so, however, was to receive people at home or to be invited by friends or family. I grew up in this realm and have only good memories of it. And when I think about it a little more deeply, I connect it with the fact that humans derive a large part of their happiness by spending time together and sharing good times. No wonder why my feeling about this period is very positive.
I’ve never had any allowance at home. Neither in the form of a weekly allowance nor as a reward for household chores. My parents considered it normal to help and participate in the life of the house.
And for the rest, they paid us what we needed such as sneakers, clothes, school supplies, etc.
I still remember those kid-parent negotiations for an Adidas tracksuit (photo) or that Dragon Ball Z one (photo) that my bestfriend had. My parents were not fooled and knew it was just a fashion effect (I never watched Dragon Ball Z myself, but my friends did…).
As for toys, we sometimes received them unexpectedly (I would say 1-2 times a year), but our parents often linked it to something “extra”-ordinary, like a very (very) good school grade or other similar achievements.
Otherwise, it was via birthdays and Christmas. And then, well, we had to prioritize our lists because Santa Claus was not Creus (and, funnily, it’s still the case in 2018!)
I was receiving about 1-2 big gifts from my parents, godfather, and godmother. The advantage of this way of doing things is that I still remember most of the gifts today, including one in particular: a huge Lego gas station that I had admired for weeks before Christmas in the various toys’ catalogues. At that time, we opened our presents on the evening of the 24th, and I remember not being at all sleepy and wanting to build my station without going to bed at night. Unfortunately, I had to wait until the next morning (up at 6am!). But what a memory…
Last year, I had a flashback when we were at Toys’R’Us in Ecublens because Lego still produces this same series of toys around the gas station under the green and red brand “Octan”. By the way, it’d be nice if it could evolve with Tesla charging stations instead :) We must start educating at the earliest age!
Sometimes I also received money as a gift at these events. Money that I was saving directly. My memories are vague on this point but I think it was due to a mix of my frugal personality and my parents who advised me not to buy this or that thing on a whim because it was useless, or at least to think it over for a week or two.
Thanks to this introspection of my 0 to 7 first years, I now have a better understanding of where I got the following traits from:
Everyone will have a different opinion (positive or negative) on the different points above, and that’s why I don’t group them into “Do’s” and “Don’ts”. I’ll let you judge for yourself.
Anyway, if you think that this or that life lesson is positive, then it gives you some hints on how to educate your children (or what you can ask your parents for education — if you are so young, leave me a comment because I’m interested to know how you got on this blog at your age!)
At first glance, I thought I was going to write a single article and not a series about this subject, but it seems that my brain has stored more things than I thought it could.
So next time, we’ll review the period of my 8-13 years with what I’ve learned from it.
In the meantime, feel free to share what you have learned from your 0 to 7 years old, and especially what education factors have influenced these learnings (so that we know how to reproduce them as parents).
Note: I’m currently undertaking the major project of writing a book which describes the A-Z recipe of how to stop working at 40 in Switzerland. Before I take the big leap, I have interviews left to do to validate the idea. Hence I’m still looking for 3-4 people who have just started their adventure towards financial independence, and who are between 20-25 years old. If you fit the profile and are interested, drop me an email with the title “Book interview”.
]]>One of the main questions related to home ownership was how much rent we’d pay once we’d’ve bought.
Before signing, we heard a lot of answers ranging from “You’ll see you’ll pay much less than when renting” to the complete opposite “Be careful because yes, you’ll pay less but there’s the property tax and other fun stuff like the rental value (“valeur locative” in French, and “Eigenmietwerte” in Swiss German)… so it’s not so advantageous…”
We’re therefore quite lost and, even if the banks each announced a forecast estimate, we’re looking forward to only one thing (well, me, the family budget geek): it was to spend a few years in our new apartment and do our own calculations, based only on concrete numbers.
Mortgage interests
The first thing to include in our equation is the mortgage (unless you bought cash, of course…). In our case, it’s a mortgage with a fixed rate over 10 years, with indirect amortization through my third pillar that’s pledged.
Until 2026, we must therefore pay CHF 9'328.80 in interest (we’re at 1.69%) per year, which amounts to CHF 777.40 per month.
Co-ownership fees
As we’ve a condominium apartment, we’ve co-ownership costs including things like the renovation fund (for future work on the building), shared areas’ electricity (corridors, cellars), administratration fees of our condo (we go through a real estate agency to have someone neutral in this position), or the building’s wastewater treatment tax.
We pay a monthly fee of CHF 330.65 per month for these costs.
Wastewater treatment tax
As homeowner, we’re the ones who’ve to pay the wastewater treatment tax to the municipality (vs. before where it was included in the rent).
This tax amounts to CHF 51.70 per month. It depends a lot on where you live, but I think it’s easy to get the amount by calling the administration of your future place of residence.
Property tax
Since we use a piece of land in our municipality, we’ve to pay a property tax (also called real estate tax, additional real estate tax, or real estate contribution depending on the canton).
Again, you may check with your place of residence to find out the amount. This tax may actually not exist at all. Also, it’s an entirely different tax than the rental value (which we’ll see in the next point).
We receive an annual invoice directly from the municipality, which costs us CHF 38.70/month.
Note about the rental value
When you become a homeowner, you no longer deduct rent in the “Housing Deduction” category when you do your taxes. On the other hand, you have a rental value (representing what you’d pay to live in the dwelling you bought) that is added to your income sum, with the positive counterpart that you can deduct your administrative expenses, taxes, and mortgage interests.
Indeed, the Swiss system “makes the postulate of equality of all human beings regarding the law. This key principle of the Swiss legal system also has its effects in the field of tax law, through the requirement of equal treatment of all taxpayers. In the context that we care about, it’s a question of the fair treatment of homeowners in relation to tenants […]”, as explained by the Swiss Federal Tax Administration in this very detailed document on the rental value. (in German — go to the French version of this article if you want it in French).
That being said, as a tenant, you never take into account the impact of your rent when you tell someone about it. As a result, it makes no sense to take into account the impact of rental value and other potential deductions as a homeowner.
But as I’m curious, I did a simulation: I took back our 2017 tax document and turned us into tenants with the amount of our old rent. In the end, you win CHF 25.85 on the total amount you pay in taxes when you own your property.
Nota bene
In our equation, I don’t take into account elements that are paid separately from the rent such as electricity, water, heating, or ECA because it depends on everyone’s consumption.
Before becoming a homeowner, our rent was CHF 1'833 (including charges) for a 110m2 (4.5 rooms) in the North of the Vaud canton.
Now that we’ve bought our home, we pay a rent of CHF 1'198.45 as homeowner in Switzerland for a 130m2 (5.5 rooms) property located between Lausanne and Yverdon-les-Bains.
CHF 777.40/month (mortgage interests)
- CHF 330.65/month (co-ownership charges)
- CHF 51.70/month (wastewater treatment tax)
- CHF 38.70/month (property tax)
= CHF 1'198.45/month = our monthly rent as homeowner in Switzerland
This simple rent comparison shows that it’s clearly advantageous to be a homeowner. But we must not forget that the rent is only what we pay each month. Because there is also everything we paid up front when we bought our property, such as the notary or taxes paid only once.
This is what I plan to cover in a future article to see how much the apartment has really cost us since we have been living there.
I hope that after this blogpost, I’ll finally have all the elements in hand to write the famous article “Buying or renting in Switzerland as a Mustachian, what’s THE answer?” that I’d have dreamt to have available three years ago.
What is your rent as a tenant or homeowner currently? For how much surface area, and in which region?
]]>I remember that we frequently played the game of who’d invite the other at the restaurant — although it was often Mrs MP who paid at the time because she already had a job while I was finishing my studies.
It was less effective in terms of a common financial vision, but it still had its charm.
This period lasted several years, but don’t take it as a standard or a rule to follow because it depends on where you’re with your life. Nevertheless, it’s a good thing to take the time to get to know each other in order to choose the right person to continue with the next steps in this serie. This in order to avoid setuping everything and then having to undo/redo it with someone else if you split up.
Then came the time to move in together. We’d defined who’d paid what each month, keeping our accounts completely separated. So that there’d be no resentment or future criticisms, we’d taken care to share all of our expenses 50/50.
It was working pretty well. We never had any trouble making a payment on time, nor paying any bills. On that side, Mrs MP and I were aligned from the start: we hate to have debt or outstanding bills.
What sucked a little at times was the way we managed our remaining money. At regular intervals (every 3-6 months I’d say), Mrs MP found herself at the end of the month with a little overdraft. Nothing dramatic. The main and recurring reason was the lack of budgetary visibility — i.e. and not due to reckless or excessive spending. But still, we’d have been happy to do without such hassles.
On my side, I never had such “surprise” overdraft, for the simple reason that I didn’t have any income each month because I was still in school at that time in our lives. And the little I earned, I’d a strong tendency to save it.
To give you an idea, here is how the expenses were actually distributed:
Basically, we’d made sure that the “essential” expenses were shared equally, and for the rest it was everyone for himself.
The advantage of this system was that everything was clearly defined and calculated in advance. No resentment or excuse possible. No need for a common budget (i.e. I mean an Excel file or similar), because everyone received their expenses in their own name by mail.
On the downside, we’d no common financial vision because everyone did what they wanted with the rest of their money (which can be seen as a plus for couples who want to keep their “individual freedom” at all costs).
Another drawback of this system is that it implicitly makes you record who pays what for other non-essential and non-budgeted common expenses. A McDo-Movie night, for example, could lead to a discussion of “Who paid for the last time?”, followed by “Oh yes, it was you, but in the meantime I paid for the entrance to the water park…”
Although this kind of discussion was based on a good sense of fairness, it’d quickly turn sour again because of a lack of budgetary visibility. If only we’d had YNAB in our lives, it’d have closed many discussions very quickly.
However, I must admit, we had very few arguments related to the outings because I had almost no cash during that period, and my SO has a heart this big (the emotional comes before the rational with her, compared to me…), which made her take pleasure in inviting me much more often than I (could’n’t) did it.
A quick aside for our young readers: thinking back to those days when we lived with very little, I regret not having come across Jacob’s book or my own blog, because I’d’ve won 7-8 years of savings, during which we spent a lot and raised our standard of living as wages increased. Turned more positively: if you who are reading these lines are in your twenties, don’t make the same mistake and join the FIch (Financial Independence in CH) movement as soon as possible 1!
If we’d to summarize this first financial stage of our common life, we’d say: common household, shared expenses on equal terms, separate budgets, separate accounts, and some hassles due to lack of budgetary visibility.
Fast forward a few years later, when I got my first job after graduation.
Over the next two to three years, we gradually changed the way we divided our common expenses between pro rata and common account. This is what I’ll explain in the next episode of this serie.
If you’re in one of these phases now, or have already gone through it, I’d be interested to hear your feedback. And if you’re even more advanced than the MP couple, don’t hesitate to share your tips and tricks with us!
The easiest way for me to get deep into a new topic of this importance is to start with the first blogpost, and read up until now using the navigation links at the bottom of each article in order to not miss any financial optimization or investment idea. ↩︎
“But which ETFs do you choose in 2018, MP? “, I can already hear you asking.
My usual answer until then was to redirect you to the page of my ETF portfolio.
“But which ETFs do you choose in 2018, MP?”
Except that, as the assiduous people have pointed out to me, this page listing the ETFs in which I invest starts to be outdated. My last update being from…2016. So it was time to fix it.
Just a reminder for new readers: I’ve a certain obsession with simplifying my task when it comes to our investments. That is, the less time I spend on my e-banking and my online brokerage platform, the better I am.
The best way I’ve found so far to satisfy this need for efficiency is to build a Bogleheads’ portfolio, composed of only 3 ETFs.
If you want to know more, go read this article which is still valid today.
To make it short, this is my allocation as of today:
Concerning the ETFs themselves, here is where I’m at with my choices:
ETF in international equities
I have invested up to 60kCHF in the famous VT ETF from Vanguard.
Why 60kCHF? Quite simply because I still haven’t managed to get a 100% official answer regarding the estate law in the US which potentially taxes you at a 40% rate at your death on assets exceeding 60kCHF invested in this country. There is a US-Switzerland treaty which, after several (re)readings, is still incomprehensible (if you, dear reader, are a lawyer, don’t hesitate to enlighten us!). Even the tax department of the canton of Vaud couldn’t answer me (or maybe they didn’t understand the question…)
Since I passed this milestone, I now invest in the Vanguard FTSE All-World UCITS ETF (aka VWRL, as I buy the CHF version on the SIX market).
UPDATE 17.05.2020
It’s now clarified. The US-Swiss estate tax treaty covers our case. All information in this dedicated article.
ETF in Swiss shares
Until now, the allocation of my portfolio has always been too low in international equities, compared to the Swiss equities I own via our 3rd pillars, my international VT ETF (which contains its share of Swissness), and shares of my company.
As a result, we never bought this UBS ETF (CH) SMIM (CHF) A-dis. But to date, it remains my Swiss ETF of choice when compared to the competition with this research on JustETF.com (read my article on building a Bogleheads portfolio to find out how I got to these filters), as well as this performance comparison over the last years. When I see its yield history, I look forward to buying it by the end of the year/beginning of next year.
ETF in Swiss bonds
My most changing recommendation (compared to 2016) is the one about bonds.
As a reminder, the purpose of bonds in a Bogleheads portfolio with 3 funds is above all to reduce the volatility of it, i.e. to provide security for your investments in the event of major disruptions on the equity market. It’s therefore not the yield that interests us here (although we’ll never refuse it either:)).
As a result, I did focused my research on JustETF.com on the CHF currency at the time, again to not add volatility by taking a bond ETF in another currency (because who says another currency, says increased volatility due to the exchange rates).
I therefore told you that I had chosen the iShares Swiss Domestic Government Bond 3-7 (CH) ETF for my portfolio.
Two considerations have evolved in my thinking process since this announcement:
My recommendation is therefore as follows nowadays: if, like me, your allocation in bonds (including your 2nd and 3rd pillars, and excluding what is invested in equities with platforms such as VIAC.ch, as well as your safety cushion) is already too important compared to your ideal allocation, then don’t waste your time looking for a bond ETF in CHF, because you’re not going to buy it in the end.
On the other hand, if today I’d need to buy bonds, what I’d do would be to keep my cash in the bank wisely until the interest rates on bonds start to rise above 0% again. And only once this course would’ve passed, then I’d spend time choosing my bond ETF.
My Bogleheads portfolio for 2018 therefore looks like:
In any case, I’d like to thank our reader Max for reminding me that I’d’nt updated my ETF portfolio page for a long time. This has now been done :)
So I’m going back to auto-pilot mode until the next big change, which I’ll certainly share with you.
What’s your ETF portfolio in 2018? What about the allocation?
]]>The problem is that Mrs MP didn’t have the same dream, nor the same vision of how to reach it.
At that time, I’d have loved to have had some kind of guide that I’d follow to embark my SO on a common budget, and even better on my dream of financial independence.
That’s why I’ve decided to tell you about our experience so far. It certainly won’t be representative of every couple or personality. But I hope it’ll inspire you to see that you’re not alone in this situation, and that it’s possible to onboard your partner on a common budget, and on the dream of financial independence.
I went back to the time when we met with Mrs. MP, to see how far we’ve come. First appointments and first gifts, but completely separate financial life. Then settling together, with the first discussions, discords, and compromises concerning money.
We took a step forward when I started to work. That was the time for the common expenses to be distributed pro rata to our incomes, and for the opening of our first common account. Which generated further discussions, discords, and compromises :)
Big revelation five years ago when I discovered the world of financial independence and budgets. And there are even apps for that. I like one in particular: YNAB.
This piece of software really helped us to have a better view of our finances and to understand where our problems came from. I was convinced about it for my budget. We also managed our common expenses via this tool. But Mrs. MP had more trouble getting into it. It was a transition period full of good surprises, but always with some frustrations and heated discussions.
After having a hard time with several YNAB files, many separate bank accounts, and too many complicated money transfers, I felt the need to simplify and take our financial life up to the next level. My goal was to have a common vision, one common bank account, and one common YNAB budget. This big leap required a lot of preparation, discussions, negotiations, and changes. I’ll give you all my keys in this dedicated chapter.
Alongside this great milestone in our relationship (points 3 and 4 above), I also brought my dream of financial independence to the table. Between “This whim will eventually pass to him…” and “In fact I’m starting to believe it myself!”, I’ll explain how Mrs. MP put her first foot on the early retirement boat.
Daily routines can really have a negative impact on many things (although other times it can be really positive). Our savings rate, fueling our dream of financial independence, hasn’t escaped to this rule.
We had to have THE discussion to realign our objectives. This wasn’t the easiest step, but clearly the most beneficial in the long run.
I love the stories bloggers tell, but sometimes I feel disappointed and say to myself: “Cool stuff, but what do I do with it now, concretely?” Dont’ you?
It’s therefore this question that I’ll answer in this last chapter in order to not leave you hungry.
While I was preparing this serie, I came across an interview with about twenty financial questions to ask to your partner. The goal is to know more about your spouse in this field, and who says to knows more, also says you understands better, and thus discussions around money get facilitated within the couple.
So I asked these questions to Mrs. MP. You’ll find all her answers in this bonus chapter of our serie.
There you go! You now know the 4 steps we took with Mrs. MP. Those that have led us towards this common dream of financial independence, supported by a single budget, but while respecting the freedoms of both of us.
If you’re in one of these phases now, or have already gone through it, I’d be interested to hear your feedback. And if you’re even more advanced than the MP couple, don’t hesitate to share your tips and tricks with us!
I’ll see you soon for the first part of this series to find out how to onboard your partner on a common budget and on the dream of financial independence.
]]>I obviously agreed, and spent at least an hour answering many questions the day before yesterday.
But it’s not to tell you the interview that I’m writing today (I’ll put the link to the article as soon as it will be published anyway).
During the discussion with the journalist, she asked me if I knew how many people - in Switzerland - actually applied this frugal lifestyle to achieve financial independence. I felt like an ignoramus I must say… so I quickly looked at the number of active users on the forum while she was waiting on the phone, and answered a few hundred of Swiss persons.
It’s while writing these lines that I thought about the category “Share your story”, which contains approximately thirty stories of people on their way to a wealthy life.
Instead of remaining on a vague estimate before my departure on vacation, I decided to ask you the question directly:
Are you a Swiss reader who plans to achieve financial independence? If yes, in how many years/at what age?
Feel free to add contextual elements such as your FU number, your savings rate, your current net worth, where will you retire early, or what will you do when you become financially independent. The goal is to inspire the many readers of the newspaper with other cases as real as mine (in addition to having a more concrete answer).
]]>Since I took this alternative route, I regularly catch myself dreaming in the morning when I am waiting for public transport. I imagine myself letting the bus pass by, waving that I’m not getting on. Then I cross this quiet country road to take the small path that goes through the fields, and I go straight into the forest to watch the day rise peacefully. I take advantage of this plenitude to meditate during ten minutes, sitting on a tree trunk cut down by a woodcutter the day before, while listening to the song of the morning birds.
Once my lungs are full of clean air and my legs got their four and a half kilometers, I go home with the sun on my back. It’s only 6:39am, and Mrs. MP and the kids are still sound asleep. I go wake them up one by one so we have time to have breakfast together quietly. Once their faces have been washed and their teeth brushed, we set off to accompany them on their way to school. The advantage of retiring at age 40 is that Mrs. MP can take the opportunity to chat with some moms who are off due to their part-time job.
Then we go hand in hand, and I share with my significant other that we’re incredibly lucky to live such a life of freedom. We continue this philosophical reflection in front of a good espresso, nestled in our garden lounge in the coolness of this sunny May morning, before each of us enjoys their free time. For my part, it will be writing a blogpost for an hour or two…
I could continue to go through the rest of this perfect day, but generally, the daydream stops at the beginning of the paragraph, when I get on the bus and the driver greets me (yes, we are polite in the countryside!).
Because for the moment, I still haven’t reached financial freedom, and my schedule looks more like something similar to this (in theory, because life regularly brings its share of surprises) :
With this article, I wanted to push the dream further and define my ideal weekly schedule for when I’ll be financially independent. Because in the end, all these articles about financial portfolio and third pillars are only means that will allow me to reach this early retirement milestone.
As you can see, I will come back to a 6am wake up time to be able to watch more movies and series that I’m pretty much giving up at the moment. I had the misfortune to watch the first episode of “Casa de Papel” three weeks ago… I let you imagine the frustration of still not having had time to watch the second episode!
An alternative to waking up later may be to limit myself to one or two Netflix evenings, so that I can continue to enjoy this morning energy when the alarm clock rings at 5am.
The most obvious thing is the time saved with the kids. When I think about it, my reflex is to tell myself that I will miss the most important things by not taking advantage of this extra time with them right now. But although there is a part of truth, I already feel very lucky because I enjoy them enormously compared to many people who start their job at 8am and finish it between 7 or 8pm.
Especially since in less than a decade, although they will no longer be as dependent on us as they are today, I am hopeful that we will continue to enjoy spending time and sharing experiences together. It may no longer be Lego or football games (who knows!), but we’ll have just as much fun going to the movie theater or to a Cowboys Fringants’ concert together :)
On the blog and reading side, I deliberately put “only” five half-days because my goal is to give free rein to my creativity with the other “Free Time” slots for DIY stuff, a business project, or potentially just doing nothing and enjoy life.
I don’t dare to imagine (in fact, I do!!!) what I would feel if I’d lay on the sofa on our balcony (I hope I’d have a hammock by then), with a good book in one hand, a coffee in the other, and the view of the lake and its petrol blue color. It would be a sunny Tuesday afternoon in September, and there’d only be the noise of a tractor working in the fields in the background. Everything would be peaceful while the rest of the neighbors would be at work, stucked in their meeting rooms talking about things that don’t interest them… I can already see myself there!
Another thing I look forward to is that nap after dinner every day of the week. Every single day! What a delight it’s gonna be, I tell you. I’ve to see if I have it right after eating, or if I wait for digestion to happen and do it only at 3pm, after reading, blogging, or grocery shopping. What a luxury dilemma :)
Speaking of grocery shopping: the advantage of this new schedule is that cleaning and other happy chores will be handled during the week so that we can fully enjoy our weekends. No more stress of cleaning and tidying up just before friends arrive, or having to catch up on the pile of dirty laundry on weeknights because we were out the entire weekend. It speaks to you, doesn’t it?!
Then there is sport. As I’ll be ten years older by then, I’ve planned enough blocks of time to stay fit and fully enjoy this financial freedom.
And the best for the end: this Thursday morning which will allow us to enjoy our Swiss countryside and the surrounding Jura mountains. Currently, we try to enjoy nature on some weekends, but with children’s activities, birthdays, or household chores, we often get trapped with the remaining time available.
With this new schedule, I can already see myself climbing to the top of Le Chasseron regularly around 4-5am to watch the sun rise over Lake Neuchâtel and the Swiss Alps. Or canoeing on one of the surrounding rivers (by the way, if a reader has any recommendations on this subject in the canton of Vaud, I’d love to hear about it). In summary, so much fun to come!
I am well aware that this nice Excel file remains a theoretical plan. Because a decade from now, a lot will have changed. Children may be abroad for school, or we may have moved. I also reserve the right to take us on a world tour with no return date!
But right now, I really like this schedule. As my colleague Tawcan from Vancouver explained, it’s important to dream. And this schedule is the dream that helps me stay on this long road to financial independence.
My April resolution was to stop running and start living now. I intend to apply it to this ideal schedule dream by gradually integrating certain blocks of time today rather than making a big bang on the D-Day. And this on the one hand to not undergo a too rough transition, and on the other hand to not lock me into a new race.
A good example? Nap time! Since my kids will soon be going to school on the afternoon of the day I work from home, I think I’ll introduce a time slot to apply this rule at least once a week already!
And you, what’s your dream schedule? Is it not having any at all? Or have you ever imagined what your life would be like if you no longer had to work for money?
]]>I have always dreamed of achieving financial independence through the passive income generated by a blog that inspires people. I find it rewarding to imagine that I would live on content that I produce myself (vs. the actions of a third company).
Until recently, I had stayed at the dream stage.
Over the years, blog posts have grown from a few to several dozen, to over a hundred nowadays. By multiplying this by tens of thousands of visitors per year, it gives rise to many private comments and exchanges by email or via the forum.
I love to receive and exchange with you, dear readers of the blog, because you are the concrete proof that I get up at 5am every day for a good reason. In addition to the satisfaction of feeling useful, I must also admit that I learn a lot from these discussions, especially those that challenge this or that thing I said in one of my last articles.
But since the beginning of the year, the level of interaction has intensified, so I find it increasingly difficult to find the time I would like to dig deeper into certain topics - without having to take a three-weeks break between each publication.
My ideal would be to be able to reduce my working time to 80% to be able to dedicate at least a whole day to the blog and to the Swiss Mustachian community which is so close to my heart.
This would allow me to continue producing quality content.
The blog currently brings me a few hundred Swiss francs a year (I can feel the excitement among the voyeurs among you!) thanks to the few affiliation links set up. This is already huge, but by far not enough to replace a 20% hole in a salary.
Other bloggers (not necessarily Mustachians) are less scrupulous and have no problem filling their websites with flashing ads of all kinds.
My problem with this kind of practice? I hate these advertisements. On the one hand because it’s ugly. And on the other hand because it would be a bit contradictory to preach a simple and frugal life with alongside Google AdWords ads that try to sell you the last iPhone you promised yourself not to renew for 6 years…
So I looked for other options to make this dream come true. To make a living from my passion for writing.
That’s how I got to Patreon.
Thanks to this online sponsorship service, any creative person (writer, musician, blogger, etc.) can be supported by sponsors who appreciate their work and want more. In exchange, patrons receive access to certain privileges or exclusive content (you can see mine here), and to more content from their favorite artist or writer since this latter has more time to dedicate to it.
I figured it didn’t cost me anything to try the experiment. And I really like the concept of deliberately consuming certain media that bring us value, rather than wanting everything for free but ultimately being the product in one way or another.
To be honest, it feels weird to launch my Patreon page because I feel the impostor syndrome who is not really sure of the value of his work.
Thinking about it for several evenings, I asked myself: if I met one of the readers on the street with whom I was privately exchanging, would he offer me a coffee to thank me for having been able to save tens of thousands of francs thanks to some changes in his lifestyle or with his financial choices?
Given the ratio between the price of coffee in Lausanne (~ CHF 3) and several tens of thousands of francs in savings, I thought the scenario was plausible.
At least not impossible.
If you continuously benefit from Mustachian Post and the Swiss FIRE (Financial Independence, Retire Early) community, then you can benefit even more. And in a more personal way. That is what I am offering you with this programme of support through patronage.
I have detailed all the elements on my Patreon page - including your exclusive access, my objectives, and what I intend to do with the money I got.
I would be forever grateful if you decide to become a patron. I would live it as if you were buying me a coffee when we would have met on the train between Neuchâtel and Lausanne (it could be an interesting idea as a reward by the way, I’ll think about it!)
I can’t wait to see how this experiment will go. As usual, I’ll give you feedback in a few months.
Note: if you’re a creator of any kind, I just discovered while finishing this article that Patreon offers a referral program. Feel free to use my Patreon invitation link and we’ll both get some cash rewards. Here is your path to financial freedom ;)
As usual, I added this referral link because I use and trust this service. I’m not trying to sell you anything here — nor anywhere else on the blog.
So I asked the only Badass Saver Platinum (i.e. the nickname of those who go above the 70% level of the #BSRI if he would be willing to answer a few questions to inspire us to keep on improving our savings level. He said yes!
I obviously talk about Oliver from Frugalisten.de, and I would like to thank him again for accepting my invitation.
Oliver is 29 years old and lives (together with his girlfriend) in Hanover (Germany), where he currently works as a software developer.
On his blog frugalisten.de he writes about how he leads a happy and fulfilling life with much less money than the average German and how he wants to become FI before his 40th birthday.
I have included in my list of questions the responses to the survey I launched a few weeks ago. But feel free to add yours in the comments section below.
1/ How do you compute your savings rate to be sure that we are all on the same page?
To calculate my savings rate, I take my net income and subtract all my expenses.
My net income consists of my regular job income after taxes and health insurance have been deducted, as well as income from side hustles, selling stuff on ebay or money I get e.g. as a birthday present.
I don’t however count investment income (capital gains or dividends) as income, because they stay in my account or are just accumulated within my investment portfolio.
My expenses include rent and bills, food, insurances, holidays and travel, or “fun stuff”. Since tax and health insurance have already been taken from my job income, I don’t count these as expenses – I simply calculate my savings rate from my net income.
Currently, I don’t have a company pension scheme (2nd pillar or “bAV” in Germany), but when I had one during my time in England, I counted these contributions as income as well (including what was added/matched by my employer).
2/ How much do you make each month? How many and what are your income streams exactly?
In 2017, I earned approximately 2.800 € per month on average.
Most of that came from my main job as a software developer, as well as a period of three months at the end of the year, during which I worked as a freelancer for a relatively high salary.
Another 200 € per month (on average) came from a few side hustles as a web designer. About 50 € were gifts of money or revenue from selling stuff on Ebay.
In 2018, I reduced my working hours as a normal employee to 24 hours per week, in order to work more as a freelancer, where I get a higher hourly pay. This way, I try to generate a similar total income as last year, but with slightly fewer working hours.
3/ Regarding expenses: what are your three highest monthly expenses? And how much are those?
My single largest expense is my part of our rent, which amounts to 300 € per month, including all bills and internet.
I share a nice flat in central Hanover with my girlfriend – we have two rooms, a kitchen, a bathroom and even a quiet balcony.
The second largest expense is food, which is abound 100 € for groceries per month (on average) and another 40 € for the occasional eating out or takeaway.
My third largest expense are travel costs of around 60-80 € per month in recent years. Of course, these are average numbers, so I didn’t take a trip for 80 € every month. Normally, I do 2-3 trips per year that cost a few hundred Euros each, and a couple of less expensive journeys here and there, like visiting relatives or friends over the weekend. And then there are some months where I don’t have time to travel at all.
After that comes expenses for social activities, parties and going out with friends, which amount to around 40 € per month.
In 2017, I also spent an unusually high amount in the “tools and household items” category. Since my girlfriend an me moved together in our first own flat, we had to buy things like a fridge, a washing machine and some furniture (most of it used from classifieds, of course ;)), which pushed the monthly average in that category to little over 50 €.
4/ How much do you spend on average on each of the following categories:
Insurances (which)?
17 € per month. I have a personal liability insurance and an accident insurance (health insurance is covered through my employment).
How much on holidays/travel?
80 € per month on average.
How much on restaurants?
40 € per month for eating out or takeaway.
How much on fun?
40 € per month. Most fun things don’t require a lot of spending :)
Medical?
Usually 0 € since I am quite healthy, thankfully. :)
Every few years, I need new glasses for around 100-200 €.
Shoes/clothes?
50-60 € per year. I rarely buy new clothes and usually only replace stuff that is falling apart.
That doesn’t include shoes, however. Since I buy my shoes mainly for skateboarding, I count these as sports equipment rather than clothing.
Telecom (mobile/Internet)?
8 € for my share of our landline/broadband connection (32 Mbit/s internet and unlimited landline calls).
Almost 0 € for my current phone contract – it was a special deal that included a smartphone which I sold on Ebay. That covered the costs of the contract for the entire contract period. I still have 1 GB of data, 50 minutes of calls and 50 texts per month included.
Sports?
About 100 € per year for skateboarding equipment and shoes. Shoes wear down pretty quickly from skating, so I have always been buying them on Ebay for a lot cheaper (usually worn not more than a handful of times).
During the winter season, I had to go to an indoor skatepark, which added another 20 to 80 € per month (depending on how often I went). Luckily, a new skatehall is opening up in biking distance next winter season, which will lower the costs significantly.
Kids?
0 € (I don’t have any yet :))
Birthdays and Christmas presents?
About 20 € per month. With my girlfriend and most of my family members, I made the agreement to not buy stuff for each other. We rather take a trip together or go out for a meal.
5/ Regarding your rent/home: do you do any kind of house hacking? Or are these standard prices in Hanover?
Our flat is certainly at the lower end of the price spectrum, but I wouldn’t consider it a hack. Luckily, Hanover is not as expensive as other European cities yet.
The comparably low rent is mainly due to the size of the flat: Many Germans would consider 46m² more appropriate for a single person rather than a couple. We don’t share that opinion, though. ;) The flat is layed out very well and as Mustachians/Frugalists we don’t have as much stuff as others, so we still have plenty of free space.
6/ How many people live under the same income streams (single/married/how many children)?
Although I live together with my girlfriend, we have kept our finances separately so far.
She earns her own money, so I don’t have to support anyone but myself from my salary (at least for now).
7/ What do you eat for only spending 100 euros per month? Do you have an example of monthly grocery list?
I mostly buy simple, basic staples and cook my own food from scratch. Stuff like chickpeas, beans, carrots, onions, apples, tomatoes, nuts or oats are super healthy and cost almost nothing.
If you add some spices and smaller amounts of more exclusive ingredients here and there, you can cook amazing dishes for a bargain.
An example of what I eat over the course of a whole day can be found on my blog.
I don’t necessarily buy only organic, but I try to at least avoid ready-meals and industrial foods. These are usually just sugar, fat and flavourings in colorful boxes, serving mainly the food producers’ profits (rather than the health of the consumers).
I am also vegetarian (not solely for financial reasons), which might contribute to my comparably low food expenses as well (meat is typically quite expensive).
8/ What are you sacrificing to get to 70% that you wish you could have?
In terms of spending and consumption, I don’t really sacrifice anything. I personally enjoy living a simple life with less clutter and a smaller footprint.
I don’t have a fixed budget and usually buy whatever I want, which simply isn’t that much. So even If you gave me one million Euros tomorrow, I probably wouldn’t change my lifestyle at all.
What I do sacrifice in order to save that much, however, is a little bit of time.
With my current income, I would only need to work 10 hours per week to cover all my expenses. But still I work more than 30…
9/ Why don’t you work less and enjoy life/have more free time NOW?
I personally try to find a good balance between saving for early retirement and working less today. This was one reason why I scaled down my employment to part-time.
Full-time employment just didn’t feel like the right tradeoff. Now I work only 30-35 hours per week in total, and the freelancing part gives me much more flexibility. And I am still able to save a lot.
10/ Why did you stop at 70%? When do you plan to reach 71%?
I don’t really have a certain savings rate goal. I just try to earn money, spend it as wisely as I can, and the savings rate is simply the result of this process.
So if my savings rate happens to be 74 % next year: cool! If it goes down to 56 %: still fine. I think a savings rate can be a good motivator for yourself and it’s cool to compare just for fun (and in order to get in touch with other bloggers and fellow Mustachians, as you can see ;)). But I don’t think we should stress ourselves about it. In the end it’s just a number.
11/ How did you get your partner aboard about financial independence?
Luckily, my partner has never been overly spendy or materialistic, so I never needed to have “The Talk” or find cunning ways to convince her of the FIRE (Financial Independence, Retire Early) philosophy.
Also, when I first heard about Mustachianism about 5 years ago, we were still students and had not experienced massive lifestyle inflation yet.
That certainly helped a lot, because I didn’t have to change my lifestyle much in order to start saving and she didn’t have to adopt to any great change from my side.
When we started to work and earn money, I tried to keep an eye on lifestyle inflation. For example, when we were looking for a flat, I simply asked: “Wouldn’t a small flat be totally sufficient for us? Look, we don’t really have much stuff, and more space wouldn’t make us happier – but the lower rent would make our financial situation much more relaxing.”
Usually, she agreed with my suggestions – or we found a compromise that we were both okay with.
Generally, I think the best you can do to get a partner aboard is to lead by example.
If you can demonstrate that you live a much happier and fulfilled life and get much more choices and freedom by living frugally, he or she will very likely adopt at least some of the principles over time.
12/ How do you explain your wealth to your family/friends who just think you are lucky?
My family and friends all know my blog and some of them even read it regularly. So I don’t have to explain much, because everyone can read it on the web.
Since I publish all my numbers as well, everyone who reads the blog will get a good idea what is going on.
If someone isn’t interested or doesn’t like what I am doing – that’s fine, but at least I had the opportunity to explain myself. But usually I get positive feedback.
Some of my friends even ask me more detailed questions about investing or saving or tell me that they adopted some of the FIRE principles themselves after reading my blog.
13/ What are your best tips to stop spending on things you dont need but want?
What helped me a lot was gaining knowledge and creating awareness about the hedonic treadmill and the environmental impact of the consumer society.
I realised that if I buy a shiny new thing, I will get a short spike of happiness, which very quickly reverts back to baseline – but the money is wasted and can’t be used to buy me more freedom.
I also watched videos like “The story of stuff” or “Wake up call” by Steve Cutts and I read the book “Liberation from excess” by Niko Paech. These were eye-opening and made me aware that every purchase comes with environmental costs that are sometimes a lot higher than the price tag. Once I had fully digested that buying unnecessary stuff doesn’t make me happy, wastes my money AND destroys the planet I live on, I automatically stopped wanting these things in the first place.
Thanks again to Oliver for taking the time to inspire us with his simple but so effective way of life!
Do you have any more questions for him? Just ask directly in the comments section below.
]]>We therefore decided with Mrs MP to transfer her 3a from the LUKB to VIAC.
I present you below all the steps from the account opening, through the transfer request, and ending with exclusive infos of the future VIAC’s version 2 that comes out these next days!
That’s it for creating your 3a account at VIAC!
It took me longer to insert the screenshots for this article than to create my account, incredible…
Then you print, fill out, and sign the form. And you send it by post to the Terzo Foundation. That’s it!
I asked LUKB to confirm and they told me that if VIAC takes care of everything, then I really have nothing to do.
As it’s in progress, I don’t know if I’ll have to close my LUKB relationship (to no longer be listed as a client) or if it’s done automatically as long as I don’t have a 3a pillar with them (and that’s all I had there).
I’ll let you know with an update on this article.
In preview, as you are not just any random customer for VIAC, Daniel offered me seven scoops that will arrive on the app in the next few days:
Scoop #1 — Possibility to create several portfolios at VIAC
Scoop #2 — Creating an individual strategy with the option to choose your ETFs!
Scoop #3 — Loyalty program VIAC
Again, I repeat myself, but I only recommend the products/services I really use. I earn nothing with VIAC other than these potential CHF 1'500 of free management fees for life.
Scoop #4 — Granular selection of transaction receipts to be sent by email
Scoop #5 — New advanced email notification selection section
Scoop #6 — Possibility to rename your portfolio(s)
Scoop #7 — New detailed performance view
As you can see, the VIAC app is really well done. Even if it’s not a criteria for us Mustachians, it’s really welcome!
I look forward to playing with the app once our funds are transferred. I will not fail to give you an update after a few months of use.
And you, what do you think about this new VIAC service and their mobile app?
]]>At first I thought that the flies + mosquitoes episode was going to quickly end (we are talking about summer in French-speaking Switzerland, come on). The second year was just as unpleasant. I hence looked for mosquito nets, telling me that the problem would be solved with a phone call to a contractor who would come and install them.
But then, the “shock”: we got announced an amount of CHF 3'949.85!
So we decided to spend the summer with a fly swatter from Jumbo for the modest sum of CHF 9.50 :)
The problem is that with the heat of the summer, we often opened the windows, and we ended up with 20-30 flies a day. Cool thing when you eat. And I don’t speak about the “traces” left by these visitors on white surfaces like our brand new ceiling!
As for the night, I don’t draw you a picture of this unbearable noise and itching when waking up. So, no choice but to play tennis at 2:30am…
We nevertheless hold up the entire summer but in September, I said “I don’t spend a summer like this again!”
And April came again, with its sunny days.
At the beginning of the month I told myself “Well, I’m sure it wasn’t that bad”. Three days later, a fly entered the apartment and memories of sporty nights (spent playing tennis, right ^^) came back immediatly!
I had to find a solution.
I knew that mosquito nets would cost us a lot, but at this stage I didn’t see another way of solving the issue.
I went to the “Comptoir of Yverdon” as well as several professional sites, and I stumbled upon the same figures: around CHF 4'000 (at least). This amount includes equipment, installation, and VAT for:
It bothered me a lot to put this money for only four months a year.
I had once looked for mosquito nets to install yourself, but there were plenty of different models and it was not easy to find the right one.
But as a good Mustachian, I booked a Saturday morning last month to do more research on the subject with our friend Google.
By dint of perseverance to compare several sites (like Hornbach, Coop Brico + Loisirs, Jumbo, and others), I realized that the pictures of their mosquito nets were quite similar (but the prices varied by a factor of two).
Looking at the details of the references, I came across a name: Windhager. I did some research about the brand. Seen that they distributed their products all over Europe (view complete list). With good reviews on most sites. The only problem? You have to install them by yourself. First reaction: uh, I’m not that much a DIY handyman. Second reaction: no excuses, I’m a Mustachian!
The price of all these brand items was 50% off (i.e. the actual price in France…) for 2 weeks at Jumbo:
We could save CHF 3'469!
I said GO!
Window mosquito nets with a vertical retractable screen
Among the three systems I could play with, this one is the hardest if you only have a hacksaw (vs. a jigsaw). But once the cut is finished to adapt the mosquito net to the right dimensions of your window, it’s a breeze.
As a reference, I took the “Plus” white 100 x 160cm Windhager model.
Regarding quality, this is the model that I prefer as it’s able to fit perfectly the window size, and thus don’t let enter any mosquito.
Below are the mounting key steps:
1/ The product
2/ The cut
3/ The assembly
4/ The mounting
5/ The final result
Window mosquito net with a fixed frame
For your information, I bought the model “Flexi Fit” white in 100 x 120cm on Amazon (via Windhager) as it wasn’t available in Switzerland.
This frame requires almost no tools except a chisel and elbow grease.
Quality-wide, the aluminum is a bit light but it’s good enough.
Also, be careful to have a minimum of 4cm deep where you want to put the mosquito net because once mounted, you need this space to be able to slide and position it. I had not seen this detail, and had to put it behind our rolling shutters, because the rail prevented me from putting it in front.
Here are the steps to set it up and mount it:
1/ The product
2/ The cut
3/ The assembly
4/ The final result
The bay window mosquito net with slat curtains
Our bay windows were the subject of long discussions, in order to know if we were splurging about CHF 2'000, or if we tried to find an alternative.
Having two bays, we ended up coming to the following conclusion: we could put a mosquito net (fixed) on a door, and enter only through the other door that we’d open/close each time we need. That way we could always let fresh air in, while being able to go in and out at our convenience.
I analyzed each Windhager door model but both the doors and the retractable nets did not seem to fit because of our beveled bay window and our rolling shutters.
We ended up with the standard door slat curtains model — I just see now that the one with velcro is the entry level, and there are some that look nicer (we’ll check this next year!)
In order for these CHF 29.90 to give us entire satisfaction, I added a MP personal touch to the setup:
1/ The product
2/ The mounting
3/ The MP touch
4/ The result
I’m already looking forward to this summer without fly or mosquito, enjoying our cool apartment with windows wide open, and that without breaking the bank - we talk about a cost price 7x cheaper still!
And that’s without taking into account the personal satisfaction I felt every time I finished setting up a net, both for the money saved and for the work done.
As you could read on social networks, this first project inspired me, so I decided to embark on a more complex one: the realization of my reading bench in my home office. Stay tuned!
How do you protect yourself against flies and mosquitoes if you live in the countryside?
]]>But, as the human being that I am, I felt into the “want more” trap once again.
I just ended up on the famous early retirement calculator that I like to play with from time to time. This was last November.
And it started all over again.
“The path looks so long, there must be something I can still optimized. I need to rethink my alternative paths. Let’s think outside of the box.”
These were the sentences that I was ruminating while staring at my actual numbers.
Usually, I’d work on expenses optimization. But this time, I was in a “Think Big” mindset about income alternatives.
Coincidentally, I did chat with my friend Mr. RIP 1 during the same period. We talked about my current opportunities, and more specifically about one that would change my path to Financial Independence. One that’d dramatically increase chances to reach FIRE by 40. But one that’d also dramatically impact my happiness in life.
Filled with wishful thinking, I embarked onto the “dream stage” where I visualized myself a decade from now, financially free.
I decided to give it a shot.
During the next days, I crafted the perfect plan to make this hard-to-catch opportunity a reality. I even took a break from the blog to focus solely on this objective — this gives you sense of how I was committed to it.
At the start of the journey towards this new goal, I envisioned only the best-case scenarios regarding what I was about to trade in exchange of (a lot) more money: less freedom, less happiness (due to less time with family), and less meaning. I was convinced that I could live with a bit less of each, in exchange of a FIRE-shortcut-plan.
As I approached the finish line, I questioned more and more the new life direction I was about to take.
Was I really ready to make these trade-offs for almost a decade? I mean, we were talking in years, not just a few weeks or months!
When the project was close to completeness, I had to make a choice. Numbers were crystal clear, but reality was blurred.
I spent evenings thinking about this happiness thingy. What it meant for me. At what level it would be if I made this life-change.
Thankfully, I ended up on this “Happy” documentary website.
It helped me to revisit answers I already read on blogs, and also to discover new paradigms that clarified my blurred reality.
The main concept laid out all along the movie is that genuine happiness happens when you focus on things that are bigger than yourself. Things like gratitude, compassion, caring, and love.
“Happiness is a skill that can be learnt the same way you learn violin or golf.” — The Happy Movie
Moreover, they explain that the formula for happiness isn’t the same for everyone. Nevertheless, most of the things anyone loves to do are the building blocks of a happy life:
These things make us happy, and they are free. And the cool thing with happiness is that the more you have, the more everyone has. A perfect virtuous cycle.
This documentary helped me to step back from my FIRE-shortcut race for a moment, and to decide with more clarity what life option to follow.
After weeks of discussions with Mrs. MP and lengthy WhatsApp chats with Mr. RIP (who happens to also be in a questionning phase as you can read in his latest blogposts), I came to a final decision.
I chose to stop this opportunity before I crossed the finish line.
The shortcut-path would have taken me away too far from family and friends (i.e. less time with them), from doing things that are meaningful (something I luckily have in my current life setup), and from helping others (via this blog notably, as I’d have been more tired and stressed, hence lower writing frequency).
This big opportunity (and challenge) ended up unexpectedly. But the learnings have been tremendous as it clarified a lot of things about my life. It allowed me to ask myself some serious question on my path to FIRE, and about how I want it to happen.
Here is how I’d summarize my new guiding principle: “My shortest path to FIRE is the one that brings the most money in, and ensures the same level (or more) of freedom, meaning, and time with family as I have nowadays in 2018.”
You may think something along the lines: “Tsss dear MP, you just refuse to admit that you like your comfort zone. That’s not really Mustachian. You accustomed us to a more challenging life.”
To which I reply: “Don’t get me wrong, I’m not refusing some money that easily, and I keep fighting as hell to find other revenue sources to shorten our path to FIRE. It’s just that now, I’m way more selective as I assess any such opportunity against my new guiding principle outlined above. For instance, if the new option isn’t meaningful, hence doesn’t bring more happiness, then I discard it as I don’t wanna trade meaningfulness against money.”
This thinking process reminded me the vision I did setup for this blog back in the days: “Build wealth while enjoying your life”. I only have one life, and I want mine to be happy. From now on.
Before this sizable project, I had the feeling that I switched from the rat race to the FI race. Both being races during which I forgot to enjoy life, as well as to consider them just as a milestone vs. an end in itself.
I now switched my mindset to something like the “Coasting to FI” concept, but that I amended it with “in a Tesla, with stops in nice coves”.
Which means that I get to do a job that I love (i.e. Coasting to FI, also known as BaristaFI), and that is quite well paid (the “in a Tesla” part, with its regenerative braking that brings more cash in) vs. a fun-but-low-paying job in the initial model!
I also think to compensate more regularly my overtime (the “with stops in nice coves” part) to enjoy it like mini-retirements (temporary reduced working percentage or full weeks off), instead of getting it paid at the end of the year.
That’s the theory I aim to live up to. For this, I’ll have to work consciously on my high achiever mindset 2 in order to enjoy this luxury situation more, on a daily basis.
As Mr. RIP told me at some point during our evening conversations: “You seem to already have a post-FI job bro!”
He was right, and I’m all in to seize this rare opportunity.
What about you? Did you already favor more money for less happiness — by trading meaning or time with loved ones? How did it end?
Side note for the INTJ readers like me: find the right person(s) who can be a good confidant, and then force yourself to open up and share your struggles and ideas, because that’s one of the most powerful thing to make you go forward in life (included on FIRE topics). ↩︎
I need to remove (or at least diminish) the pressure I impose to myself on any project I get to work on (at the job or at home) ↩︎
DEGIRO is a player that seems to be here to stay amongst the brokers with cheap costs. I’m not switching to it yet myself for the reasons that I explained in this article, but I keep a close eye on them to see how they evolve.
Today, it’s my blogger mate The Poor Swiss who will share more infos about DEGIRO by sharing his experience after 4 months spent with this online broker.
I’ve now been using DEGIRO for about four months. It’s now time for a review of the tool.
I would like to mention that I never tried any other broker. I decided to use DEGIRO four months ago based on their cheap costs. Moreover, I’m a computer scientist, so I’ve no problem with potential tech issues. Finally, my portfolio is very small, so my experience may not compare to yours.
Before the review, let’s check what’s DEGIRO. It is a Dutch brokerage company. The company is still relatively new. It was founded in 2008. Their online platform and opening to the public happened in 2013. Since then, they now expanded to 18 countries, all in Europe. Switzerland was opened in November 2016.
Although it is quite recent, it is now the fastest growing European brokerage firm. DEGIRO already has 150 people. They are probably the cheapest broker in Europe. They are now managing around 35 billions CHF of transactions per year.
The media are generally praising them. They have received several awards. But individual reviews were generally not as kind. Several of them mentioned the lack of security (no two-factor authentication, impossible to change password), the lack of trade confirmations, no mobile application or problems with the website or the support. But, most of the reviews were done in the early days of DEGIRO. And, as we’ll see in this review, most of these issues have been solved since then.
The main point about DEGIRO is its low fees. That is their main marketing argument. One thing that is very important is that there are two types of accounts with DEGIRO: Basic and Custody. In a Basic account, the default one, your securities can be lent by DEGIRO to its prime brokers. In a Custody account, they hold your securities separately and they will never lend them. Personally, I strongly dislike the Basic account and I opened a Custody account. But, it’s unlikely that you would lose money because of the Basic account. But it’s still possible and I don’t want to take this risk. If you open a Custody account, you won’t have access to Futures and Options, but that is not a problem for ETF investors like me — and you probably! Moreover, you’ll pay a small tax on dividend (3%) that you receive. If you have a dividend-focused portfolio, this may be a bad thing.
The first important thing is that there is no custody fee! You won’t pay something based on the total value of your portfolio or inactivity fees.
Now, for ETF, there is something else that is really good. Each month, you can buy or sell shares of an ETF for free. You can find the list of the ETFs that are free here. If the ETF you want to buy is not in the free list or if you want to buy/sell a second ETF in the same month, you’ll have to pay a fee. For each buy (or sell), you will pay 2 EUR plus 0.02% of the amount you buy/sell. If you buy for 1000 EUR of an ETF, you’ll pay 2.2 EUR of fees. This is only 0.22% fee. If you buy for 5000 EUR, you’ll pay 3 EUR of fees. This corresponds to 0.06% fee. Because of the 2 EUR flat fee, you should avoid to invest very small amounts.
Finally, the last fee is the connectivity fee. You will pay 2.5 EUR per exchange you used (hold or transactions) per year, excluding the SIX exchange. So if you have traded (or hold) in OMX and EAM one year, you’ll pay 5 EUR.
You can find all other details of DEGIRO fees on their website.
Enough about the fees. This shows that they are quite cheap. You just have to be careful because of the flat fees for buy/sell and the connectivity fees. But if you pay attention to that and use mainly commission-free ETFs, it should be really cheap.
Now, let’s go to see how to use this broker. The main entry is the website, directly accessible at degiro.ch, after you registered an account. I won’t cover the registration in details here since I already explained when I created my account. But it’s very simple to do and you should be ready in less than 10 minutes. I would strongly advise you to opt in for two-factor authentication that is now available, for more security!
The main view (Market) gives you the recent information on the Market, on the principal indices (SMI, S&P500, etc.), and about some news related to the market. You also see the main currency exchanges rates as well as the winners and losers of the day. More importantly, you can see the global information about your portfolio. With the total value and the total difference. You can also see the day difference by changing the combo list. I don’t use this view much, but it gives quite some information if you want to see the current state of the market.
The most useful view for me is the Portfolio one. You can see all the positions you have and their result. For each of your securities, you can see the total value, the total result and the day result. This is what will give you the most information on how your portfolio is going. For instance, you can see that mine does not do very well ;)
You can also see the dividends that will be paid soon. One thing that is missing here is the total value in the base currency. I personally use the total value in the base currency to compute my net worth in each currency. This makes it easier to follow the performance of the position without issues with currency fluctuations. If you only care about the current total result in CHF, it should be fine.
Finally, it would be better if we could select the columns we want. However, it gets the job done.
You can also get details about each of your position. It will give you the history of the price of this position and some information on the prices. However, it only gives you the total value of this position, not the current number of shares. This view should give more information. For instance, the history of buy and sell would be great. Also, the day results and total results should definitely be here as well.
If you want to buy/sell, you only have to click on the button in the position view and you can configure your order. You can then choose between different types of order. For instance, you can use a limit order to say you want to buy 10 shares at a maximum of 183 EUR. Then, the order will be executed as soon as possible based on this. It will give you an estimate of what it will cost you. This view is pretty good, it’s really easy to use.
That’s it for the web application. It’s a pretty straightforward tool. It gets the job done, but it’s pretty limited in information and some things are missing from some screens. Moreover, there is no customization possibilities. It may be the computer scientist in me that talks here ;) Hopefully it will improved in the future. But it’s still quite enough for a passive investor like me.
Another way to access your DEGIRO account is to use the mobile application. You can download the application on your phone, on Android or on Apple. I only tried the application on Android. I don’t think there are significant differences between the two versions. Since you already have an account, it’s very easy to set up the application. After you’ve setup the connection to your account, you’ll have to use a passcode to connect. Something I really dislike about this is that you have to use a 5-digits passcode… This is way too short and I don’t like the lack of security. One can argue that it’s already protected by your phone itself. Still, we should be able to use an arbitrary password here.
For information, I’m using a Huawei P9 Lite for testing.
The application is very straightforward to use. If you are already using the web application, you’ll see that it is quite the same. It’s just smaller and some information got moved or are not here. Let’s go with the review of the main screens.
The default view is once again the Market one. You can see your balance and day result, but not the total result as you could in the web application. If you want to see the different indices and market’s winners and losers, you have to scroll down quite a bit.
On the portfolio view, you can finally see your total result. And also some global information about your portfolio. You can see every position as well. But, you cannot see the total result of your positions. This is really lacking. I don’t really care about the daily result. I’m more interested in the total results of each of my position.
You can also access information about each of your position. As you can see, the first thing is the graph. It’s barely readable. It should be lower on the view. You can see the shares, current price, current bid/ask information, and global price information. You may notice that you cannot see your results. There is no information here about the daily and total results of the position. This is really a problem for me since there is no way to see the total results of each position in the mobile application.
To buy or sell, you use one of the huge buttons at the bottom of the position view. This opens another view. It is very easy to use, nothing much to say here. It’s not a very nice view, but it gets the job done.
Overall, the mobile application is not bad, but not very good.
They should add more information. They should focus on the important information first rather than put everything together.
Moreover, they are wasting a lot of screen space for non important stuff. Most of the text is too big for me. Some customization of the views would be welcome.
But, it’s very easy to use. Since I use the web platform more than the mobile, it’s OK for me. If the mobile application is your main platform, you may be disappointed.
I’m really satisfied with DEGIRO as a broker so far. It’s very cheap and very easy to use. There are a few problems of course. The web interface is good but lacks some information and has a few issues. The mobile application has the same issues. It has even less information and its security is lacking.
If you are an active trader and want a lot of information about your positions, it’s likely too limited for you.
But for simple passive investors who invest around once a month, it’s pretty good. I also had a few contacts with the support and I think it’s pretty good.
What about you? What do you think of DEGIRO? Which broker do you use?
Big thanks again to The Poor Swiss for sharing his experience. Don’t hesitate to ask him your questions via the comments section below
Note: if you choose to open an account at DEGIRO via one of my links, you won’t notice any difference — but the MP’s blog will get a referral commission. I thank you for this.
I long hesitated before subscribing to their affiliate program because I am not entirely convinced by their service. I therefore reiterate my advice here: subscribe to DEGIRO only after doing your own research and being fully aware of the advantages and disadvantages of this online broker.
Note bis: for financial compliance reasons, please note that investing involves risk of loss.
]]>As it’s one of the most powerful personal finance tool to reach Financial Independence, I wanted to study how the leaders in this topic were reaching crazy figures every month.
Hence I created the Blogger Savings Rate Index (aka. #BSRI) in order to get inspired by my fellow personal finance bloggers.
Last year was the third edition of the #BSRI.
No more talking, let’s get to the final ranking of the #BSRI 2017 vintage!
I count on you dear readers to spread the word so we are even more people on this index in 2018.
So, what was your savings rate in 2017?
]]>This year, however, I won’t go through a 2017 retrospective, nor talk about what will come in 2018. I won’t not do it because of a lack of envy, but because I unfortunately don’t have the time for it…
Which brings me to the (bad) news: I’m going to take a break with the blog until about the end of March. This decision was hard to take, but my “One thing” will be another project than the blog during the next three months.
I can’t give you more details unfortunately, but what’s sure is that I’ll share with you what I learn from this incredible experience in future articles in one way or another.
This blogpost will be one of the shortest I have written but I did’t want you, dear (new and old) readers, to think that the blog was dead: it’s still very well alive, but just on break for a quarter. I can’t wait to be in April!
In the meantime, if you are short of Mustachian Swiss news, I recommend you to have a look at the list of previous articles to read those you have not yet discovered — ideally accompanied by a good glass of champagne, red wine, or beer to properly celebrate the 4 years of the blog!
And you, what will your 2018 year look like? New projects? New money coming in?
]]>In particular, Joshua drew my attention to the fact that I was often talking about “Mustachian” but that he had no idea what it was. And probably that it was the same for new readers.
“New readers?” I told myself … “What do you mean, everyone doesn’t follow me since the beginning?” I thought, realizing that it was almost three years since I started to blog at the time.
Although I like the small “community” effect that this kind of reaction brings to the blog, I always try to be inclusive rather than exclusive. So I thought it was time to clarify what it means to “be Mustachian”.
The term “Mustachian” was introduced for the first time by Mr. Money Mustache (aka MMM) in 2011.
This word describes a person who wishes to reach financial freedom in order to pursue his own aspirations without having to depend on active work to live.
No more precise precept has been set forth by the Mustachian community, as it’s a lifestyle that must be adapted to the conditions of everyone.
Married with children or single? Peaceful life in Eclépens or nightlife in Zürich? 23 or 55 years old? Passionate about goldfish or Ferrari? Want to travel once retired, or rather to get involved in local associations?
We understand quickly that it’s difficult to extract a unique way of life.
“A Mustachian is a person who wishes to reach financial freedom in order to pursue his own aspirations without having to depend on active work to live.”
That’s why when I get the following question: “MP, do you think this purchase or investment choice is Mustachian?”, I always answer that in the end, the only judge remains yourself. I can of course give you my opinion but it’s only my point of view with all the bias it implies.
Taking into account these considerations, I nevertheless found it interesting to undergo the exercise to describe what it means to “be Mustachian”, for me, MP.
Rather than condense this way of life into a pompous paragraph, I have extracted a list of guiding principles. I want it to be evolutive, as much for me as for you. Make it your own, modify it, and adapt it to your own living conditions.
Guiding Principles of a Mustachian
Passive income rather than employed for life
Frugal rather than spendthrift
Minimalist rather than consumerist
Efficient rather than lazy
Critical thinker rather than conventional
Deliberate rather than unintentional
Lifelong learner rather than complacent
[Your guiding principle here]
This list allows me to guide my choices about my lifestyle to achieve financial independence, and I hope it can bring you the same clarity when you have to make decisions.
What do you think ? Do you have other guiding principles about Mustachianism?
]]>Before I go any further, I would like to point out something: cryptocurrencies are an instrument that is always very volatile, and I don’t recommend anyone to put their hard-earned money into this vehicle. I see this experiment rather like going to the casino, at the risk of losing everything when the bitcoin bubble burst.
After various readings on the web and several exchanges on the dedicated thread of the MP forum, I came out with three cryptocurrency names: BTC for Bitcoin, ETH for Ether, and LTC for Litecoin.
They correspond to the gold standard in the world of virtual currencies.
Knowing that I only want to invest 1'000 euros in this game, I didn’t want to waste too much time gambling on the best distribution, so I went with 1/3 for each currency.
My investment strategy remains the same as for equities: buy and hold them for a long period of time.
There exist a plethora of options when you begin to delve into the vast subject of cryptocurrency brokerage platforms. And that’s without taking into account the storage solutions of your virtual money that can be decoupled from your purchase platform in order to increase the security of your money.
Following my research and discussions on the forum of our Swiss FIRE community, I came up with three options:
Compared to my choice of brokerage platform for my stock trading, I allowed myself to go for the simplicity for this cryptocurrency experiment: I opened my account at Coinbase.
Once your account is opened, you must make a first money transfer that is free if done via SEPA wire transfer - or paid if via credit card (3.99% fee).
An interesting feedback to share: Coinbase refused my first transfer of 1'000 euros indicating that to validate my bank account I had to send a small amount in the first place. As a result, they returned my payment and I lost money because of the EUR-CHF exchange rate… I did a second transaction of 1 euro which passed, and then I was able to send my 1'000 euros without any issue.
I strongly advise you to make this initial transfer of 1 euro, so you avoid a loss of money for nothing.
Once the euros are on your Coinbase account, everything is very simple. Whether via the Coinbase web platform, or via their iOS or Android apps, I don’t present you screenshots because everything is so intuitive.
Once logged in, click on “Buy”, choose the cryptocurrency you wanna acquire, select your virtual currency wallet in euros, and validate the transaction. That’s all!
As planned, I’m ending with fifteen euros of fees (i.e. the 1.49% mentioned above). It’s outrageous, and it’s only because it’s for a little experimentation on the blog that I accept it.
What I recommend, however, is to go through GDAX to pay only 0.25-0.30% of fees. After checking the platform in more detail (a little too late), I realized that except a few more clicks, it’s not that complicated.
The steps: 1/ Create your Coinbase account, 2/ Transfer euros to it, 3/ Go to GDAX, 4/ Click on “Deposit” at the top left, 5/ Choose “Coinbase account” then proceed with the funds transfer, and finally 6/ Click on “Place buy order” to acquire the cryptocurrency of your choice.
Now. Don’t wait for Bitcoin or Ether or Litecoin to come down again. Or that they go below a certain threshold. Tomorrow the bitcoin may be at CHF 1'000, or at CHF 35'000. Nobody has any clue. Buy now.
This is one of the lessons learnt with this experiment. It’s been awhile since I hadn’t played to such an addictive money game: after the publication of my last article on the topic, Bitcoin was announced as being in a bubble that would burst very soon. And that when it’d cross the CHF 7'500 mark, it would surely mean the beginning of the end. So, I waited a week to buy it when it’d be in the CHF 6'000. And ditto for Ether and Litecoin. When I saw that it was still above the CHF 8'000 mark, I said “Come on, if it goes down in the CHF 7'000 range, I buy”. And then it went above CHF 9'000…
At that time, I was already fed up with losing all this time after only a few days, hence I decided to buy, telling myself that at worst it would be useful for the experiment. At the time of writing, Bitcoin is at CHF 10'425, and the price has even risen above CHF 11'000 in the last hours…
In summary, if you are like the majority of my readers, i.e. you aim to test cryptocurrencies for the long term, then buy it now, remove the Coinbase app from your phone, and forget about all this frenzy that only makes you waste time and money.
We all had our dose of fun and gambling, as if we had spent an evening in Las Vegas. Now, I propose to return to our respective activities which are much more interesting and less volatile than these crypto-currencies.
For my part, I’ll give you an update about my portfolio in a few months, once there has been some news, like a big crisis, or a price boom. In parallel, I’ll keep an eye on the forum cryptocurrencies’ thread.
And you, what is your strategy with cryptocurrencies? You ignore them completely? Do you base 100% of your financial independence strategy on it?
]]>Regarding toys, we’ve had enough of it during the first years of our parenting life between birthdays and Christmas, with their gifts from grandparents, friends, uncles and aunts, and so on. So much so that we ended up becoming minimalist with this part of our life too.
I reassure you right away: we aren’t telling our children that we stop ordering gifts to Santa Claus, because we love too much the magic of this period for that.
Nevertheless, we try to teach them the benefit of an “experience” gift vs. a toy; meaning that a shared experience will remain in their memory longer than a toy that they will give up after only a few days.
Even if it’s difficult to understand at their age (especially as it’s still hard for some adults!), it slowly but surely makes its way with time.
We aren’t going to lie to ourselves: we also loved to receive toys when we were kids, so we’ll continue to offer some to our children. But from now on, as good Swiss, we aim for “moitié-moitié” between toys and experiences.
We’d be able to achieve this goal this year, because we have been talking to several people around us recently, and we realized that we were fairly aligned on the subject.
I advise you to try to test the waters with your family and close friends, because you’ll maybe also have good surprises!
Moreover, benefits of the “Experience” gifts for parents are non-negligible:
Without more suspense, here is the list of 10 gift ideas - which aren’t toys - for your children:
With all this, you have no reason to follow the frenzy of tomorrow with the BlackFriday, and can live this day as a normal Friday. Your wallet will thank you at the same time!
On your side, do you have other “experience” gift ideas to share with us?
]]>Nevertheless, I told myself that I could use the blog as an excuse for experimentation with a small amount defined at the outset, this in order to understand that parallel monetary world which will surely change a lot of things in the coming decades.
So I’m going to invest 1'000 euros (and no more for now!) in a cryptocurrency portfolio, and make a regular report of what I learn as a Swiss investor.
I have several goals with this experiment.
First, I want to better understand this ecosystem and see if it can be a good way to grow one’s money in the long run.
Secondly, I like having concrete data on which to base my reflections rather than speaking in theory only.
Also, having some cash invested will motivate me to stay interested and to regularly document myself on the subject.
Finally, as a personal finance blog, I found it cool to share with you my journey in this parallel world, just as I do with financial independence.
Before going any further, as I know that not everyone is familiar with this subject, I propose to review the definition of a cryptocurrency.
“A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange [on a decentralized network] using cryptography to secure the transactions, to control the creation of additional units, and to verify the transfer of assets.” (Source: Wikipedia)
The two important keywords are “digital asset” and “decentralized”.
The first means that it is not something physical like a coin or a note. It has the advantage that it is easier to trade, but also easier to lose.
The second word “decentralized” is important because it brings a new concept that challenges the existence of banks, i.e. the cryptocurrency system no longer needs trusted third parties to ensure the non-corruption of the system.
The most famous cryptocurrency is Bitcoin (BTC) which you have probably heard about recently, given the latest records of its value. Like CHF or EUR, it is used for transactions.
Another cryptocurrency is Ether (ETH) which aims to create or operate “smart contracts” based on the Ethereum network. The basic purpose of this currency is therefore not to be a currency as we know them, but to allow the creation of a contract between two people without the need for a trusted third party — such as a notary when you buy your property for example.
Finally, the last cryptocurrency I’ll talk about in the next articles is called Litecoin (LTC). It’s a direct competitor of Bitcoin, which therefore plays a role of currency, with more powerful characteristics (from a technical point). This is the second most used currency with Bitcoin.
These 3 crytpocurrencies are the best known and famous. Will they still be there in 10 or 20 years? No idea. This is why I create this experiment so that we have a place to talk about it regularly. There is also a dedicated thread about the topic on our forum.
The blockchain (or “blockchain” in French) is the technology behind these new cryptocurrencies. It is like a ledger that would be publicly accessible, secure, tamper-proof, and completely decentralized from any financial institution.
Each block in the chain represents several transactions, hence the name blockchain.
In my following article, I’ll explain you where I opened my cryptocurrency account, my portfolio choice, and how I bought my first digital coins from Switzerland.
As I am completely new to the field, don’t hesitate to share your feedback via the comments below so that we can exchange and learn together.
On your side, did you start to buy some cryptocurrencies?
Note: there is a Coinbase affiliate link in this article. If you use it to open your account there, you won’t notice any difference — but the MP’s blog will get a referral commission. I thank you for this.
As usual, I only write and review things that I trust and/or use in my personal daily life.
This adjustment allows us to save an extra CHF 85 per month which, once invested in ETFs, will yield around CHF 15'000 thanks to compound interest over 10 years.
The only allowed excuse to buy a new Apple device is if the current makes my life impossible because of slow or other recurring bugs (like my keyboard problem that lags on my iPhone 6 with iOS11 right now, it begins well…)
The two minimalist questions that I ask myself in order to gauge a desire are the following:
At the moment, as you’ll have guessed, the answer to both questions is a big “No”. And it’s even more simple to decide when I picture a big envelope filled with CHF 15'000 which I deposit at the BCV, to then transfer them to my Interactive Brokers account, and buy my favorite ETFs.
In addition to the purely monetary aspect, it is also my vision of materialism which pushes me to throw myself into this challenge: to keep my purchases even longer, and to consider them as valuable items rather than simple objects which can be replaced on the fly. This in order to reduce the environmental impact of my possessions by slowing down my geek consumption cycle.
I find that Juliet Schor sums it up perfectly in the “Minimalism” documentary:
“We are too materialistic in the everyday sense of the word, and we are not at all materialistic enough in the true sense of the word. We need to be true materialists, like really care about the materiality of goods.” — Juliet Schor
Being grateful regularly helps me in this quest for immunization against mass marketing and compulsive buying. I’m happy with my current items. I value them for what they really are. I take care of them. And I nowadays feel more satisfied to own an iPhone 6 than to be envious of a new iPhone X.
Being materialistic makes me happier.
We see each other respectively in September 2019 for the Mac, and in 2020 for the iPhone. It’s gonna be long, but I’m holding up!
Are you ready to take up this challenge too? #AppleShoppingBan6Years
A special note for Mrs. MP who has already won the challenge handily, with her MacBook Air from November 2011. She was about to change it when her battery inflated last year, but instead decided to fix it and keep her current laptop. Congratulations to her!
]]>DEGIRO was founded in 2008 by five former employees of Binck Bank. They launched their online brokerage platform in 2013, and set out to conquer Europe in 2014, first with Belgium and France, then with Switzerland in November 2016. They are now present in 18 European countries.
The 180 employees of DEGIRO currently manage more than 200'000 investors, with 9 million transactions a year, representing 30 billion euros under management (i.e. 35 billion USD, or 35 billion CHF). Comparatively, Interactive Brokers has a portfolio of 450'000 clients valued at 115 billion USD (i.e. 115 billion CHF).
DEGIRO doesn’t have any custody fees for ETFs (nor for most other products except some funds).
Like many players in the low-cost market, the company offers a long list of ETFs free of transaction fees in which we find my two favorites from Vanguard. For other ETFs, such as those from UBS for the Swiss market, you have to pay transaction fees of 2€ + 0.02% of the transaction amount.
So I updated my table comparing the best online brokers for a Swiss investor, and the result is clear: DEGIRO is the big winner.
A clarification concerning DEGIRO’s commissions on currency exchange: when you want to buy securities in a currency other than CHF (for example an ETF in USD), DEGIRO requires “0.10% of the amount” for the automatic conversion mode, or “10€ + 0.02% of the amount” with the manual conversion mode.
As a comparison, Interactive Brokers charges 0.002% of the transaction amount (with a minimum of 2 USD) up to $1 billion.
With our scenario where we invest quarterly between CHF 1'000 and CHF 20'000, it does not change much: DEGIRO remains far ahead with its very low fees.
Also, if you choose a deposit account (i.e. an account that DEGIRO won’t use to make money on your back), you will be taxed on the dividends paid by your ETFs up to 1€ + 3% dividend (maximum 10%).
For more information, you can find a detailed list of all their fees for a deposit account by following this link.
Mathematically, the decision is clear: DEGIRO leads the ranking of online brokers.
Nevertheless, I still have some reservations before leaving Interactive Brokers knowing that DEGIRO exists “only” for 9 years compared to CornerTrader whose bank was founded in 1952, and Interactive Brokers in 1978.
If it was to invest a few thousand or even tens of thousands of CHF, I would not hesitate, but there, we still speak about hundreds of thousands of CHF.
So, for the moment, my online broker will remain Interactive Brokers and I will wait to see where the wind takes DEGIRO, and how the latter reacts to the next global economic crisis, even if it means that I lose a few hundred CHF by then.
And you? Did you choose DEGIRO? Do you have any information in favor or disfavor of this newcomer?
Note: if you choose to open an account at DEGIRO via one of my links, you won’t notice any difference — but the MP’s blog will get a referral commission. I thank you for this.
I long hesitated before subscribing to their affiliate program because I am not entirely convinced by their service. I therefore reiterate my advice here: subscribe to DEGIRO only after doing your own research and being fully aware of the advantages and disadvantages of this online broker.
Note bis: for financial compliance reasons, please note that investing involves risk of loss.
]]>For those who did not follow, and believed that this blog was abandoned, I reassure you that it’s not the case! I was simply translating all my 98 articles into French. And that’s it, after 80 days of intense work, it’s completed.
I transcribed the last paragraph two weeks ago, when we spent the Federal Day of Thanksgiving, Repentance, and Prayer with our family. After a Saturday spent eating more than reasonable, and playing outside games, we didn’t go to bed very early but, as usual, my internal clock woke me up around 5.30 am on Sunday morning. With the cold weather, I was really not motivated to get out of bed… but the idea of finishing this last article for good has defeated my Sunday laziness! 5:40 am, downstairs in the living room, my MacBook Air warming my legs, I went for the final straight. I had extra-motivation as I thought about this very moment when I’d announce you that I was done, and also as I’d be able to get back in “creativity” mode rather than stupidly copying and translating blogposts. When the sun started to rise a little before 7am, and that I had entered the last period of the last sentence, I was about to almost open a beer or a bottle of champagne as I was so glad to have finished this huge project! But well, I thought it was a little early ;)
In any case, I am glad that all the Romandy has access to the full content of the MP blog in French! Now you no longer have any reason not to share your favorite Mustachian Post articles with your uncle or cousin who does not understand anything in English!
Apart from these studious weeks, this summer was synonymous with local holidays - at least with no airplanes nor Canada. Knowing that we went away last winter, and that we plan to have long haul holidays in 2018, our budget forced us to play the local and frugal tourism card. Concretely, that means going from 5-7kCHF for a family of 4 on vacation in Quebec, to a few hundred CHF for gas and restaurants as we stayed here in Switzerland!
And frankly, it’s good to enjoy your own home, and to discover surroundings that one never takes the time to visit.
We started the season by a few days in the south of France in the region of Antibes where we had a wedding.
It was then time for a large family gathering where we met a lot of cousins that we had not seen in a long time.
That reminds me this TEDx talk where Robert Waldinger explains the secret of what makes a beautiful life: having good relationships with loved ones, focusing on quality rather than quantity. Even if I tend to be lonely as an INTJ, I assure you that this Waldinger guy is right, and that it is necessary to cherish these moments spent with your relatives.
The month of August was much more local as we took the opportunity to discover or re-discover spots close to our home.
We began by celebrating the National Day in our new village with a superb summer evening where we had a good Swiss fondue, sprinkled with fireworks. We had such a good time on the balcony that around 10pm, we went down to see the bonfire closer, and the fireworks of the big cities around - the kids were like crazy to be able to go to sleep later for once!
Liking all what looks like Canada, the Jura is a good substitute with its rolling hills dotted with forests. We improvised a walk from the Col du Marchairuz one Sunday late in the morning to enjoy a picnic overlooking the Neuchâtel Lake. Everything was top notch: spending time with family, being in the middle of the wild, having a sunny weather but not too hot. The only thing we did not expect was the wind at the top, which made us shorten our meal and take refuge at the alpine restaurant of the Pré-aux-Veaux. Sheltered from the fresh air, the back in the sun, around a good coffee, it was pure happiness!
Another place that we knew but that we had never taken the time to visit was the Lavaux and its vineyard slopes. I’d read an article from my friends at Novo-Monde which inspired me, and I can tell you that we didn’t regret the trip. It was splendid between the view on the lake, on the Alps, and on the mixture of the green of the vineyards and that of the surrounding trees; it does not surprise me that the site is listed as UNESCO World Heritage!
Last touristic element of this back-to-school blogpost: les Diablerets. I had often heard about it for its ski resort, but had never had the opportunity to go there in the summer. I can only recommend it. River, fir trees, snow-capped peaks, clean air, and … a great alpine film festival with the FIFAD. That’s what brought us to this place perched at 1,160 meters above sea level, as I wanted to see the world premiere of the documentary “Passion Alaska”, a work I recommend you for its simplicity and authenticity, and of course for its sumptuous far north landscapes.
The author and main actor Nicolas shares his vision of life in communion with nature, far from the frenzy of an increasingly connected world. However, he does not deny any technology as the Amish do, using for instance a solar panel for electricity, or a Ski-Doo instead of a pack of dogs. A return to the source that has something minimalist, and Mustachian with its anti-consumerist vision that focuses on the essentials. A large bowl of fresh air!
And to finish on a monetary note, I have a good news to share with you: that’s it, we are quarter-millionaire, i.e. we crossed the CHF 250'000 mark of net worth! We are already looking forward to the next milestone which means to cross the 500kCHF mark, where we’ll afford a good gastronomic restaurant worthy of the name to celebrate it!
So far so good for the MP fresh news. I hope that on your side, you also had a beautiful family and frugal summer? Or have you gone to exotic places?
]]>Since then (which was more than a year ago), I experimented with four ways to keep the momentum and remain in such a grateful mindset to recurrently enjoy what I have.
The first night we slept in our apartment was so weird as we moved from Yverdon-les-Bains with its city-noises to the countryside with its silent nights. The calm was so great actually, but disturbing. In a relaxed state, I lay on my bed, deeply breathing, listening to the sound of silence, to realized that it was done. We’d moved. We’d bought our apartment. All these stressful mortgage meetings, all these boring contracts, all these lengthy workshops, it was all over. We were Home Owners.
In case you move in a less peaceful place than I did, you can nevertheless use the sound differences as an anchor for your mind to step back and enjoy your purchase.
I learnt this technique during one of my Calm meditation sessions. The teacher explained that you have to visualize an object that you face daily, and use it as a visual cue to stop thinking about the past or the future in order to be here in the present moment, and be thankful about what you got.
I remember to have pictured the cupboard wood doors of our CHF 40k gorgeous kitchen. Now, every time I face this oak surface, I step back from my mental strain and get back to the present, feeling grateful and lucky to own the home we bought.
Usually when you buy your home, it’s because it has something special that you like about it. For me it was two things: first, its huge balcony where I was picturing myself enjoying sunrises and sunsets on the lake as well as on the Jura mountains; and second, its fourth room that I’d make my home office from where I’d admire the Swiss countryside view at 5am every morning as I’d start my day with a one-hour writing session.
When I actually live one these dreamed setting nowadays, my brain automatically gets back in the present moment and I realize the chance we have. I cherish these old dreams as they are a source of contentment each time I experience them in real life.
Another trick to contiounsly feel the satisfaction of home ownership is to view your property from the outside. I literally mean to view your building/house from the exterior. Often when I come back from work by bus, or when we get home after a football session with the kids, I get to see our purchase from the same external angle as when we visited it for the first time more than a year ago. This helps me to realize that this is it, this is our home, finally.
Here we are, this was the last chapter of our “How to buy my first home in Switzerland” guide. But don’t be sad: it’s just to better start another part of the journey as I will continue to document my story with follow-up articles like “Home owner in Switzerland, the numbers after one year”.
Did you experience other ways to enjoy your new home?
]]>Fincon… It’s a gathering of people that brings sparks in the blogs and twitter feeds of people that go there. I wanted to go one day. And then, PT and the MustachianPost (double thx for that) made it possible for me to go to the Fincon Masters in London. This is a side event, much smaller and intends to keep the spirit of Fincon.
Yes, I was enthusiastic to go there. And even more enthusiastic now that I have been there.
The main event took place in the evening. It allowed for a meet and greet with some drinks. Even after a few meetups, it keeps surprising me how easy it is to get the conversation going. As we were all into FIRE (Financial Independence, Retire Early) and blogging, we had a lot to talk about. And there seemed to be no competition: people shared best practices, tips and tricks. You got to put a face on some blogs that you read.
Maria is a professor that blogs. After the meeting, we went for a drink and I appreciated her opinions, as they were based on solid research and experience. She brought some interesting points to the table. The following two made most sense to me.
The first message was that when you want people to change their behaviour, it is not by telling them how to spend less or how to do this or that. You need to make sure they get motivated. That a habit starts to form. We also discussed this topic in the BENL (i.e. Belgium-Netherlands) meetups. I am a big fan of this idea.
The second message of Maria was that in retirement, you need sustainable passive income. So, not an income from selling items you no longer need. Being part of the FIRE (Financial Independence, Retire Early) community, this is a no brainer.
His topic was the impact that bloggers can have and how to deal with it. This is actually an interesting angle: with great power comes great responsibility. Some individual blogs, and the blogger community as a whole has a great impact on the decisions and habits of many readers. And how do you manage that when money joins the game. Do you publish a sponsored blogpost when you think it might damage readers due to the nature of the message? And what if you really need the money?
Above all, I remember that blogging is about sharing your story. Getting your messages and learning out there so that others can learn from it.
She tackled the topic of Facebook Live: what is it and where/how to use it. She brought the topic based on her broad work experience in the field. For a few moment, she was even live on Facebook, although that did not seem to be part of the script… Check out her Facebook to see some of the interaction she has with her audience via this format. At first it seems easy: take your smartphone, press the button, and done. In reality, it requires a lot of intensive planning and research, not to forget the aftercare of the movie.
Why is that important: a strong community of loyal tribe members is something that stays. By giving a strong focused message and setting an example, you can select the kind of people you look for.
Thinking back on my reasons to start blogging, it is all about community and interaction. That is why I am so grateful that I went to the FIWE weekend in Budapest and now host meetups with Mr CF in Belgium/Netherlands.
Chris is a non-FIRE speaker. Last, and surely not the least. It was about personal branding and what matters in life. He brought his life story as an example. A very energetic speaker.
There are three key messages that I’d like to share from his talk.
First, being different is more important than being better. You need to make the difference to the others in what you do.
Secondly, Family is what matters. Spending time with people you like and love is the most important part of life. Relationships need to be treasured, not used. When people reach out to you to “abuse” your network, they should not become good friends.
Thirdly, be deliberate: when you say yes to something, you say no to something else. This is so true.
Knowing what you value and what you want to reach makes it easy to decide what/where you want to spend your money and even more important, your time.
Being there has reconfirmed a lot. Some elements, I already apply, other points were in the back of my head. I can take action now.
Being to this side event of Fincon makes me want to go to Fincon even more. The energy, the people, the talks, it is worth it. I also realize that being part of a community is important. It also reaffirmed that I want to keep growing my local community.
About the author: ATL is a 40 years old married father with 2 toddler kids from Belgium. He recently discovered the FIRE community (although he already bought his first mutual funds 15 years ago) and is now on is way towards financial freedom. You can find more about him at ambertreeleaves.wordpress.com
]]>Before, my thoughts on such a schedule were along those lines: “I’m not a morning person!” or, “Come on, how can you be motivated to wake up at 5am?!”
But the fact is here: it’s been six months since I wake up between 5 and 5:30am. I even woke up in the 4am range twice, and I felt so powerful. On week-ends I wake up early too, and the taste is even better because there is no workday afterwards!
A book. Once again, this medium hooked me. I read “The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life Before 8am” (can be found on Amazon DE, FR, US, UK) and finally, I became a morning-person. That can sound too good to be true, but actually, the catchy title wasn’t a lie…it did work.
After I finished the book, I went on to define the life I wanted to live. The goal is to create excitement for you to wake up to work on it.
For instance, one of the thing that drives me nowadays is this blog that you’re reading. Before I applied the The Miracle Morning’s principles, I would often regret in the evenings that I didn’t take the time to write. The problem is that these regrets were useless, and not changing the fact that I published less blogposts than I wished. Then, I prioritized my life, and it changed everything.
Once you have this clear vision of what’s your dream life, the how-to-do-it is actually easy to implement.
We can summarize the author’s theory like this: the best way to craft your life is to work on it while your motivation is at its highest, id est during the morning. Indeed, you’ve to think about your motivation as a smartphone battery: it’s full when you wake up, and it drains as soon as you tap into it. And as you have no clue about how much you will need during the day, the best way to ensure that your life goals are constantly progressing is actually to start to work on them first thing when you wake up!
That’s how I end up being so excited to set my alarm clock at 5am to craft the life I want, every day.
Hopefully you’ll have noticed that I’m way more consistent with publishing nowadays, as I manage to keep my one-post-per-week average that I always looked for in the past, but never managed to reach 1.
Same goes for this blog’s french version that I always lured but never got started. Here it is now!
As I work on these projects before the start of my “usual day”, you can’t imagine how empowered I feel when I get to work full of energy, satisfaction, and accomplishment! That’s life-changing.
You may wonder how waking up early has any relation to financial independence? Well, it actually matters a lot! It can mean more time for you to learn new skills to get career advancement, or to create your first budget and read all MP’s posts since the beginning, or maybe to start this side hustle that you never have time to work on. All points resulting in more money to stash in your brokerage account, to finally retire way before you thought would be possible!
What is your dream life that you could start to craft tomorrow?
Some hard times on the personal level broke the streak during last weeks. But I’m getting back on track! ↩︎
I had just finished to watch Minimalism: A Documentary About the Important Things. And this setting would repeat twenty more times with all the bonuses. I never watched a bonus previously. This time, I craved for it as the wisdom shared was so impactful.
Before we move on with my usual “Action points” review style, I would like to recall what’s “Minimalism” for the new readers that may have never encountered this term before:
Minimalism (or simple living) is the practice of simplifying one’s lifestyle by reducing one’s possessions, by being satisfied with what they have rather than want. People follow this lifestyle principle due to different purpose such as spirituality, health, increase in quality time for family and friends, work–life balance, personal taste, frugality, or reducing stress.
This film impacted my life in seven concrete ways. I hope you get inspired to watch it, as it will bring so much value to your life too.
If there is only one thing to remember from this movie, it is a question. One that you can ask in many situations, such as to declutter your home, to keep your relationships sane, or to live a purposeful existence. A question to drive your life.
It automatically recenters your focus on what matters. To you, and to the rest of the world.
“Does this add value?” is the question.
Does this new shirt bring value into my life? Does this new car add value to my life? Does this person add value to my life? Does this sentence add value to the conversation? Does my action add value to my company? Does this blogpost add value to my readers?
It’s a great way to live and have a positive impact on your realm. And the best part is that this way of living is like a boomerang: all the goodness shared comes back. The stronger you add value, the more it multiplies when it returns.
Try it and let me know its effects on your life. It changed mine.
I identified myself with what Dan Harris (a TV journalist on the US channel ABC News) experimented: a stressful life and a never-stopping brain always craving for more. More challenges to face, more problems to solve, more to-do list items to check off. As he explained, one thing helped him to calm his mind, and feel more happy, more content. Day after day, he could step back more easily and avoid to get caught by the rush of the daily business.
This magical remedy was meditation.
The morning after watching the bonus, I re-downloaded the Calm app that I discovered some months ago, but didn’t stick to at the times. Since last December, it’s one of the apps I use daily, first thing in the morning.
It has improved my life tremendously and allowed me to feel better, more zen, and more calm. At home and at work. It helps me to step back from the rush, and live more mindfully. I can’t help but to recommend that you try it for thirty days to make it a habit.
Jesse Jacobs is an US entrepreneur in the tea world. He shared an efficient way of using an old Stoic art called negative visualization to bypass fear when it prevents you to take action on anything into your life.
It helped me to unblock my project to have this MP blog translated into French.
Following this method, I asked myself what worse thing could happen if I’d translate the blog? That I fail miserably due to lack of time, and have to throw away weeks of hard work as well as disappoint my Romandie readers. Well, I could still survive it and treat it as a learning experience.
What less worse could happen? That I get recognized by family and relatives, which could lead to jealousy and tensions due to our aim to become millionaire in our thirties. That stressed me quite a lot. But facing it made me think about solutions instead of focusing on the fears themselves.
What a bit less worse could happen? That I get to help an additional 1.5+ million of Romandy people struggling with their money. That wouldn’t be so bad!
And so on and so forth, until I realized that the “Monsters of the Unknown” in the closet could be overcome, and that the benefits could be tremendous compared to the hypothetical side effects (that may actually never happen.)
Compromises are part of any lifestyle design, be it Minimalism or Mustachianism. For everyone. For Leo Babauta at zen habits, for Ryan from The Minimalists, or for Joshua at Becoming Minimalist: they all would like their partners or family to follow faster their will to be less cluttered, or be more mindful about consumption.
And it’s the same for the MP household, I still would like us to save a bigger chunk of our incomes.
Having such references who expressed their struggle helped me to feel less alone in this situation, and to understand and accept that each and everyone has its own view of the world, of the clutter, of the personal finance. And that it’s OK.
If you happen to struggle too, remember this: it takes time to onboard your family or partner on such topics, and it won’t happen overnight. Compromises are key to your lifestyle design changes if you want them to work on the long run, and if you want to keep your relationships sane. Even if it means to apply it for yourself at first, and let pollenization work for you.
When you fake to be someone else, or are hiding some part of you, people will feel a lack of deep connection. Try for instance to engage the conversation with someone by talking about the weather, and repeat the experiment by talking about financial independance. The difference in tone and in connection will be huge. People connect more deeply when you’re genuine. And as we (humans) are wired, deep and honnest connections are one of the source to reach the much desired true happiness.
I started to behave and communicate more genuinely with people (even with clients). Nothing complex, I simply talk about what intrinsically drives me, and the connections deepen automatically. This new way of living makes me a lot more happy.
I learnt that the human kind is scientifically wired to crave for more. The explanation comes from million of years ago when our species was threatened, and that they couldn’t just rest on their laurels and feel content as some concurrent species would aim for more power and domination on the food chain. At that time, craving for more was key for species to stay alive.
Nowadays, we have the luxury to be safe and have enough of everything. But we have to be mindful about it in order to not feel discontent for the rest of our life. Being grateful is one of the good remedy to fight against this natural behaviour.
That last one is funny. The next morning after I watched Jesse Jacobs’ interview, I started to drink tea (I couldn’t drink such beverages beforehand as I felt they weren’t tasting anything except water…)
Jesse explained how coffee was often a way to cover people’s discontentment (sleep, work they don’t really enjoy), while tea was used since more than one millenium to connect with nature, with your body, as well as with other people. He said that you tend to take a tea in a more mindful and slower manner than you would with coffee. I already noticed this phenomenon with my colleagues and relatives: the ones who drinked tea were always the more zen people.
The way Jesse expressed that made me wish to experience this feeling too.
I’m sure there are people who researched the topic and explained this way better than me; but the fact is, drinking tea channels my energy where I want to direct it (while coffee is still useful when I need a shoot of boost.)
These 7 actions are only the peak of the iceberg. The 438 minutes you will spend watching the documentary and its bonuses are one of the best investment for your brain. The resulting mindset shifts will have repercussions on your entire life, including your path towards financial independence. It is one of the best food for thought when you look for more happiness into your life (while stashing even more cash as a side effect!)
Do you have a documentary name you think I should absolutely watch?
]]>I wanted to have these inspirational talks. Those that act like a shoot of motivation. The ones that make you fill your “Best ideas ever” to-do list in less time than you need to write an article draft.
My other drive was to gather with like-minded people with whom one can talk about money, savings rate, net worth, ETFs, cheap broker, and all of these nerdy things. An environment where everyone understand you — for once. A place where you’re not stared at like you’re Scrooge McDuck (although I find him fancy!)
So back then, I got in touch with Philipp (aka PT) to talk about the idea. He wasn’t yet ready to jump in. And I actually decided to keep my focus on writing in the meanwhile, which is already a strong commitment in itself.
To my surprise, Philipp contacted me last week.
FinCon is coming to Europe. Finally!
The format is a bit different than the large meeting that we know in the US.
PT’s team called it “FinCon Masters”. These are satellite events to the main conference and will happen this year in New York, San Francisco, and London.
The small setting sounds quite interesting: 80 persons will gather during 3h around an open bar (or how to make anyone to engage in any conversation), a dinner, and some dessert.
The whole thing will be punctuated by advanced-level sessions with featured speakers like J.D. Roth from Money Boss and Chris Ducker. I even heard that the famous Mad Fientist should be around too!
Save the date if you want to attend: it will happen on the 5th of June 2017, from 6-9PM in London (Rainmaking Loft, 1 St. Katherine’s Way).
I’m quite busy on the personal and professionnal side in the upcoming months, so I won’t make it this year unfortunately. Bummer.
But you can! I offer you the opportunity to win a free pass to the event that is worth 99$.
You got three things to do to be eligible for the draw:
One of my kids will randomly pick a name on the 24.04.2017, and I will announce the lucky winner.
I genuinely hope that this opportunity can add value to your financial life, and beyond.
Looking forward to reading your comments!
Let’s dive into the last parts: Status of Securities, Deductions, Informations, and Summary.
For the sake of our example, we will claim that I have one bank account, some Novartis shares (i.e. the fake company I work at), some good old ETFs, no bonds (as the filling is the same as for shares, so this will help to limit the number of screenshots). I will also talk about the US withholding tax with its famous R-US 164 and DA-1 US forms.
I don’t select funds in this screen as mine are US-based, so they need to be treated with the DA-1 form (third checkbox ticked in blue).
You can find your fortune and yield (as of 31.12.2016) on your bank statements.
Numbers of this screenshot mean:
The numbers on the screenshots above correspond to:
An explanation about the numbers on the screenshot:
With US-based securities, you have 30% withholding taxes on dividends. You can reclaim 15% (for sure) with the R-US 164 form. Then you can (potentially) get back an additional 15% with the DA-1 form (I will explain the detailed rules in a separate article).
If you are with Interactive Brokers (based in UK in my case), you can only use the DA-1 form. In case your broker is in Switzerland (like Cornèrtrader), you can also fill in the R-US 164 form. I got this confirmation by the tax department of the Canton of Vaud.
Pro tip: instead of paying an accountant for tax questions, first try to reach out to your Canton’s tax department.
I contacted again the Canton of Vaud’s tax department to know how to fill the form with my ETF (i.e. a fund). The fact that one can’t select “Funds” is a bug of the VaudTax software. They advised me to fill my ETF as an action, and carefullly indicate its value number so that they process it manually when they receive my declaration.
As they explain in VaudTax, you have to add several lines in case you get dividends paid more than once a year. The important thing is that for each of these lines, you must not include the fiscal value as we will declare that as a last line.
This means I don’t enter any increase/decrease for the first four entries of my dividends.
Explanation of the numbers in the above screenshot:
Important: I did my computation with the number of shares I had when the dividends were paid (in my case it was always 20 as I bought 10 on the 02.03 — i.e. before the first dividend payment).
You can find the fiscal value of the VT ETF (as of the 31.12.2016) on the Vanguard website (see screenshots below). I assumed a CHF 1 = $1 currency exchange rate here.
Explanation of the numbers in the screenshot above:
I hope that this tax declaration step-by-step guide was helpful.
If you lack some information on one of the screenshots, let me know via the comments below and we’ll fix it. In case there is any misexplanation, or any tip I missed, please let me know as well.
As said, I will cover the homeowner tax situation in a separate article. Stay tuned.
Happy taxes everyone!
]]>(This blogpost was first published on Rockstar Finance. Special thanks to J.Money for this opportunity.)
Since I was young, I’ve been passionate about cars. It must have something to do with my grandpa who founded a car dealership which was later taken over by my dad. I spent my childhood surrounded by cars of all sorts: V6, 1.0L, pick-ups, luxury berlines, you name it.
When I got into FIRE (Financial Independence, Retire Early) lifestyle four years ago, I knew I had to make a choice. Passion or reason? V6 or Toyota Prius 1.5L hybrid? Two hundred bucks per month in exchange for 10 minutes of fun, or for more savings?
Reason won out in 2013. I’m reminded how glad I am we went this path when we update our budget every month. I would never go back.
It is a process to go frugal. But the sooner you do it, the wealthier you will become.
I was interested in seeing what other personal finance bloggers drove, so I asked a handful of them and their responses are posted below.
There are many frugal ones in there, but also some that may surprise you!
I drive a 2005 Honda Accord with 120,000 miles (i.e. 190,000 kms). I paid $9,000 cash for the car in 2010 from an ad on Craigslist. I do not track MPG — never have, never will.
I bought the car because it fit under my $10,000 cash budget, and my track record with Hondas are that they last for a long time.
We purchased the car, 7 years ago, with the assumption that my son would drive it when he turns 16 (that is two years from now). At that time, my wife and I will purchase another one.
We buy used cars with the goal of driving them for 10 years.
I drive a 2015 Honda Fit that cost about $20,000 out the door. I traded my 14-year-old Land Rover Discovery II at the time for $1000 and assumed a $235 a month lease after-tax.
I decided to lease the car for three years under my business instead of purchase because I wasn’t sure how long I would own the car given I’m highly considering moving back to Honolulu, Hawaii. Further, in case of a family, I want to own a bigger car for safety.
The car’s name is Rhino, and it gets about 38 MPG (i.e. 6.2L/100kms) on the highway and 28 MPG (8.4L/100kms) in the city. It is the perfect small car to take advantage of 20% more parking spots in San Francisco!
I drive a black 2008 Lexus RX350 SUV affectionately (and probably boringly?) called Lexi :)
I never thought I’d ever buy a luxury car, especially as a $$$ blogger, but when I had to get a new ride over the summer on short notice I just couldn’t find a car that excited me more. It was either that or a minivan, and, well, I just couldn’t do it yet ;)
So def. not a frugal move, but extremely nice to ride AND reliable - which was key since I needed it to start transporting my kids around every day.
My smashed up FrankenCaddy just wasn’t going to cut it anymore :(
We ended up donating her to a Veterans organizations, and taking on a car loan for the first time in a decade to the tune of $20,000 at a low interest rate. We can pay it off any time, but we like the cash buffer.
And I’m pretty sure I lost more blog readers after sharing the news of Lexi than I ever have in my 9 years blogging, haha…. But hey - thanks goodness it’s my life, right? And never again will I assume people buy fancy cars just for looks or showing off. There’s something to be said for the quality and way you feel in ’em for sure.
Our family of five owns just one car, which is weird for families of our size who don’t live in a major metropolitan area. We bought the car last year in 2016 and paid USD$8,200 cash (including taxes and registration fees). The car we chose is a 2009 Toyota Sienna LE minivan which made it seven years old at the time of purchase. We bought it from a used car dealership because they had just lowered the price significantly after the car sat on their lot for six months. I couldn’t find anything as cheap and reliable on craigslist in spite of trying for several months.
The minivan was in great condition mechanically and looked good overall on the outside other than a few scratches and dings. The dealer told me nobody wanted this particular car because it doesn’t have leather seats (the LE model is second from the cheapest in the Sienna minivan line; more expensive models often come equipped with leather seats). We prefer cloth seats anyway so it was a win-win for us: pay less and get what we want.
We drive very little around town (around 2,000 miles per year, i.e. 3,200 kms) since we live in the city and everything is nearby. We walk a lot and occasionally use public transportation. We chose the minivan primarily for road trips since that was its primary intended use. We wanted something large enough to accommodate at least five or six passengers plus luggage and have room to stretch out and relax. In 2016 we went on three road trips totaling 5,000 miles (i.e. 8,000 kms) and it was perfect!
I think this is a frugal vehicle because it was relatively inexpensive for a large vehicle (seats seven very comfortably). It’s very reliable mechanically which means lower maintenance and repair costs plus we can rely on it for long road trips without worrying about driving an older vehicle. The fact that it isn’t a luxury car means routine maintenance and repairs are much cheaper compared to luxury cars. The minivan gets 19 MPG (i.e. 12.4L/100kms) in the city and 23 MPG (i.e. 10.2L/100kms) on the highway according to our EPA estimates. The city estimate is about right but I think we get better gas mileage when it’s all highways with little traffic.
If you want to read more about our minivan and my thoughts on the life cycle cost of buying used cars, check out this article of mine from last year.
We are a frugal family and we have 2 cars. What is wrong? Is the second car really a need? Or is it a want to show off to the neighbours? Given that we drive a Skoda and a very modest second hand Ford Fiesta, it is not to show off…. For a long time, we got along fine with just one car. Now that our kids grow older, their activities increase, we decided that a second car would make our life so much easier.
Some examples of when we need it:
I drive a severe orange Honda Element with a manual transmission. The car, known for its unique styling (think cardboard box), has since been discontinued. I still love it, even though Honda didn’t.
I paid $19,100 for it (that was painful to type). I financed it (4.0%), but it’s been paid off for over a decade.
It’s 14 years old! I own it since 2003! We bought it new. I know, I know, that was a mistake. To punish myself, I’ll try to get at least 300,000 miles out of it (currently 160,000).
We got it from a car dealership. And I had to travel over 100 miles (i.e. 160 kms) to get the car. Manual transmissions are hard to come by here in the states, so I had to search far and wide to get it.
Gas consumption is 24 MPG, i.e. 9.7L/100kms (this is the least aerodynamic car ever made).
We bought it because I thought it would be versatile. And it has been. I have camped in the car and use it to haul around building supplies. It will fit a 4x8 sheet of plywood or drywall in the back (not flat, but still).
Buying new cars is simply ridiculous. There was nothing frugal about that and I won’t do it again. However, I earn frugal points if I manage to keep the car for another couple of decades. Wish me luck!
Besides broken plastic on the right turn signal, the Element is in pretty good shape. I take good care of it (only the best synthetic oil) and drive gently. Despite its advanced mileage, the Element still has the original clutch and I’ve only done the brakes on it once!
I drive a Mazda 2, purchased via a 3-year car finance loan in 2012. In 2015, I paid off the loan balance in full, using money I had saved up over the 3 years. The total cost was around £13,000 (i.e. USD 16,000). I have always bought new cars and I bought this one as it had an important accessory — a sat nav! I needed to replace my previous car which was no longer mechanically economical, i.e. needed expensive repairs.
It does around 50-55 MPG (4.2-4.7L/100kms) but I have no idea if this is frugal. I’ll be keeping it as long as it’s economical and stress-free to do so.
It has no name, it’s a car… However, it does have a private number plate - not very frugal I guess but I have had the plate for over 20 years!
If you’re interested, here’s a post about my cars I did back in 2014.
We have 2 cars: a black 2004 Nissan Sentra and a blue 2010 Subaru Forester.
Mr. T was given the Nissan Sentra from his parents in 2004 after returning from a 2-year mission to Cambodia. They paid $10,000 cash and it was new. We purchased the Forester from my cousin that was leaving Alaska in 2014 for $17,000 in cash. The Sentra wasn’t our choice, but it’s been a good little car.
It’s over 100,000 miles (i.e. 160,000 kms) and it’s still plugging along. We purchased the Forester because with 3 kids, we didn’t need a second car, but reached the point where it would be a lot easier and we could spend more time together as a family if we had two cars. When our cousins announced their move, it was a perfect fit.
Subarus handle great in Alaska as they are all 4-wheel drive (fun fact: the taxi cabs in Anchorage are Subarus). The mileage was low on the car, it was in perfect condition, and they sold it to us for less than blue book. I have no idea the MPG (i.e. L/100kms) of either car as it really varies greatly depending on how cold it is outside, how much snow there is, etc (blasphemous that I don’t know!). We’re lame and don’t name our cars… though our Sentra has been a part of a “bear jam” (as pictured) — that’s what it’s called when a bear is spotted in Denali National Park and all the cars stop and the cameras come out!
When we moved back to Scotland in 2014, we bought a used 2006 Honda Jazz with about 60,000 miles (i.e. 95,000kms) on the clock for £2,400 (i.e. USD 3,000) cash. It’s been my favorite car we’ve ever owned!
It gets 50+ MPG (i.e. 4.7L/100kms), it has loads of space inside (so we’re able to move all of the stuff we own in just two or three carloads), and it’s small and quick so it’s actually fun to drive!
We drive a 2008 Dodge RAM 2500 HD 4x4 pickup truck. It pulls our Airstream that we live in full-time easily, and acts as our main vehicle around town. We bought it in March, 2016, used after the first owner paid for the majority of the depreciation for $25,000 cash. No lease. No loan. It is ours. It gets between 12 and 18 MPG (i.e. between 13 and 19.5L/100kms) depending on whether or not we happen to be pulling our Airstream.
We certainly don’t consider this to be a “frugal” vehicle. But, it’s required to pull the trailer that we live in full-time. We’ve named the truck Clifford because it’s red.
We drive a very boring, sensible, practical family car: a Toyota Prius Plus (the wagon version of the Prius).
We paid CAD25.500 (about €18.200/USD19.500 at that time) for it. But because we traded in our older vehicle, we walked away paying CAD20.500 (i.e. USD15.600) and got a set of extra rims and 3M tape on the hood (or bonnet, depending where you live) of the car to protect against gravel damage. It still was a lot of money, but not for a nearly new car like this. We also paid about CAD8.000 (i.e. USD6.100) to ship it to the Netherlands. Considering it’s worth much more in the Netherlands (currently still €16.000, i.e. USD16.900). It made financial sense to take the car with us.
We got it on cash, but it was initially financed at 0.9% because this way we did not have to sell any investments. But we paid the car off within the next 12 months or so.
The car is from early 2013, so about 4 years old. It’s still a pretty new(-ish) car, we never owned anything this new before (and probably won’t again – too expensive in the Netherlands).
We bought it late 2013, it was 9 months old and only had 6.700km on the odometer. Considering what the car costs new (including shipping, prep., etc.), the previous owner must have really not liked the car as he/she paid nearly $1/km in depreciation! No gas mileage can compensate for that.
Looking at our Excel sheet, on average we’re at about 5.21L/100kms (i.e. 44.82 MPG). This includes a couple of rough Canadian winters as well. Our best ever on a tank was 4.47L/100kms (i.e. 52.2 MPG), this was in the middle of summer.
Why we bought this car can be summed up in one word: SPACE. This car is huge on the inside, which is great for tall Dutch people like us. At that time we also had a big dog and a separate stroller and car seat (+ associated kid). It all fitted perfectly and we even had space left. All of this space comes with good gas mileage and low maintenance, an (almost) perfect package. Too bad it is not a pretty (or fast) car…
It is a very frugal from a gas and maintenance perspective, but very pricy from depreciation point of view (especially in € terms). However, we would not have bought the same car in the Netherlands, simply too expensive. We will keep it a few more years and get rid of it after our next long road trip. Might trade it for a smaller car, or just rent/borrow cars thereafter. Have not decided yet what to do. But we do want to limit our exposure to depreciating assets like cars.
We went to a car dealer to buy it as there was no private party selling their car at that time (there was only one Prius for sale within 300km from our home!). The dealer gave us a reasonable deal too, especially with the extra’s like the rims and 3M tape. Plus the money we got for the car we traded in! Another bonus was free warranty for 5 years on the car and 8 years on the battery + free oil changes for life (too bad all this did not hold true when we exported the car from Canada…).
Our one and only vehicle is a Toyota 4Runner named Bruno. Bruno was assembled on a factory floor in the year 2000, which makes him a senior citizen at age 17. We bought Bruno in 2014 for the ripe price of $7,500 cash. He was sold to us by a kind man off Craigslist from Sebastopol, California.
Bruno’s purpose was for our Great Big Adventure - road tripping overland to Costa Rica. We looked specifically for a Toyota 4Runner because it has 4WD and a high clearance for river crossings & off-roading. Everyone loves 4Runners for their reliability and solid resale value. It was also one of the only cars that 6-foot-tall Travis could lay down flat in comfortably, since we’d be camping in the car.
Best miles per gallon we’ve ever gotten out of Bruno is 21 MPG (i.e. 11.2L/100kms). And that must’ve been on his very best day. Bruno is so named because it is goofy and regal, all at the same time. Bruno was in fairly good shape when we bought him - cosmetically and otherwise. Amanda must’ve still thought he needed some character, because she sideswiped a parked green van in Guatemala leaving colorful scratches on the back bumper.
Bruno’s the Best!
My wife and I each drive a Toyota Prius. We bought them at the same time new from a dealership through a car sales program our insurance company offered. I believe they were around $29,000 each. We paid a down payment of about $10,000 on one and $8,000 on the other (which we got from selling our old cars) and took out two loans for the balance. We paid off one loan 3 years early and the second one 2 years early, which saved us a couple thousand dollars in interest. We’ve been without a car loan now for 3+ years and it’s quite nice.
We bought the cars new in 2010, so they are just hitting 7 years old. Each has over 120,000 miles (i.e. 190,000kms) and they are still running great. Gas costs are fairly low – I get between 48 and 52 MPG (i.e. between 4.5 and 4.9L/100kms). This is much better than my previous car, which got about 24 MPG (9.8L/100kms). Maintenance costs have been minimal.
They have suffered no major breakdowns and I’ve only had to perform routine maintenance.
In fact, due to the car having regenerative braking, we’ve never even had to replace the brake pads – even after 120,000 miles (i.e. 190,000kms)!
I plan to keep this car until I have enough saved up to buy a Tesla Model S!
I drive a 9-year-old Honda Civic. I paid in cash, and bought the vehicle when it was 5-years-old. It has awesome gas mileage, though I don’t know the exact specs. Here’s an article about the purchase.
My vehicle is not frugal but I do consider myself to be a frugal person. We have a Jeep Wrangler Rubicon that has a pop top and is fully equipped to take us anywhere off roading. The total price for the Rubicon and all of the extras were high, but well worth it for what we are wanting in life. It’s a great addition to our RV life since we RV full-time and wanted a vehicle that could take us anywhere. With our Jeep, we can off road somewhere far away, sleep in the Jeep, do some hiking, and be in the beautiful middle of nowhere. The MPG is horrible but luckily we tow it behind the RV so it’s not going super far distances unless we are going somewhere close in it.
My wife and I just love cars, well designed and with good motorisation. And of course we are keen on getting good value for money when it comes to a purchase. We always pay in cash and preferably buy demonstration cars which are in an excellent state and offered at an attractive discount. It is important for us that a car keeps a good resale value as we will bring it into the price negotations when it comes to buying a new car in the future.
In February 2016 we bought our beautiful red Mazda 6 Skyactiv-G 165 Ambition, a very spacious combi. Comfortable for each distance, roomy and accommodating inside it is the perfect car for our family of four with two children. Strong fuel economy ensures relatively low running costs for a car of that size (it’s around 6.8l/100km on average, i.e. 35 MPG). The list price was around Swiss franc 36'000 (i.e. USD 36'000) and – having chosen a three month old demonstration car with only 3'000 mileage status - we concluded quite an attractive price in the amount of CHF 29'000 (i.e. USD 29'000). I gave my ten year old BMW1 in exchange and got CHF 5'000 (i.e. USD 5'000), so the final cash purchase price for our new car was CHF 24'000 (i.e. USD 24'000). Quite a bargain, especially given the fact that we managed to include in that price some additional features such as a five year workshop insurance which covers engine damages and includes a breakdown service.
Although we’re a Hippie de Land Rover family , we do drive a BMW Series 1 full equipped, actually that car is the same car I bought in 2011 (I call it “The black”).
The car is from 2009. The previous owner was lady that quite never used it, I got it with something like 30,000 kms (i.e. 18,500 miles) and included a BMW 5 years service package as well as a second set of winter wheels. I paid 23k CHF (i.e. USD 23k) for it.
When I told some of my friends about the car I bought they though it was quite a nice car but… 23k?
I looked at it in a diffrent manner. The car was quite new (the original invoice from new was 35k) so puting things in perspective was a good deal The car has now just over 190,000 kms (i.e. 118,000 miles) and this type of motor is quite good, it should last 300,000 kms :) (i.e. 186,000 miles)
The car costs us somehting like 300 p/m including, taxes, insurance, tires, services and gasoline. This year I missed the window to change my insurance provider but that 300 p/m could easily go down to 270, let’s see next year.
We drive a 2010 Subaru Outback station wagon and a 2010 Toyota Prius.
The Subaru was paid $12,000 cash in Spring 2016, the Prius $9,000 (cash too) in Spring 2016. Both are from 2010. Both bought on Craigslist.
The Subaru is 22 MPG (i.e. 10.6L/100kms) in the city and 29 (i.e. 8.1L/100kms) on the highway; the Prius does better with 51 (i.e. 4.6L/100kms) in the city and 48 (i.e. 4.9L/100kms) on the highway.
We live on 66 acres in extremely rural Vermont with no public transit options, so we need two reliable cars. The Subaru has All-Wheel Drive, which is ideal for our icy/snowy wintertime conditions and, as a hybrid, the Prius get extremely good gas mileage, which is important for our long treks into the city.
Both cars are frugal because they were purchased used for cash and both get good gas mileage. They’re also reliable vehicles.
Here’s my full post with lots of photos.
The Subaru is called RooBaRoo because greyhounds “roo” in lieu of barking, and our greyhound rides in our Subaru, so it’s only fitting that this car be anointed “RooBaRoo”!
The Prius is Snowdrop, because its white and we have lots and lots of snow where we live!
We drive a Honda Odyssey when we have to have the whole family along. The Tesla Model S every other time.
I paid around $77k for the Tesla, which I lease through the business. I got it at the end of 2015 right from a Tesla store. Gas mileage is quite cool — I mean, it’s all electric.
I bought it just for fun. I don’t think it’s frugal at all. It’s absurdly luxurious in every way. Anyone who says they bought it for the gas savings is ill informed :) — the total cost of ownership is huge.
Below a pic of us taking 7 people 700 miles (i.e. 1,120 kms) for Christmas.
I drive a pretty sweet two-tone 2006 Chevy HHR with 133,000 miles (i.e. 214,000 kms) and a few door dings. We paid about $11,000 for it used back in 2007 or 2008 from a used car lot after seeing an ad online. At the time, my wife and I were somewhat nomadic as I was working locum tenens jobs in different parts of the country, so we wanted a vehicle with good gas mileage. We already had one HHR, which my wife liked, so we picked up a second one, which is the one we still have today. The other one was swapped out for a minivan when we had our second child. Those HHRs used to get around 33 MPG (i.e. 7.1L/100kms) on the freeway, but now struggle to stretch a gallon to 30 miles (i.e. 7.8L/100kms), which only happens on rural highways where speed is more restricted. I hope to drive the nameless vehicle until one of us dies. The car had better go first.
Hey MP, I’d love to be part of your post, but I don’t drive a car at all. I’ve been largely car-free since about 2012. I currently walk or take public transportation everywhere, and I plan to continue doing so for the rest of my life. It’s cheaper, safer, healthier, and just plain more fun!
Note from MP: I wanted to include Jason’s reply as it’s somehow the closest answer to my lifestyle. My wife is the one mostly driving our Prius to go to work, and I’m like 90% of the time on public transportation/walk/bike. It’s a habit I got used to since we live in Switzerland and I would never go back. This frees me up so much time where I can blog and read, or whatever else other than losing time driving in traffic jams…
First, let me thank all the bloggers that took time to share their wisdom on the frugal car topic. I would like to highlight the three main lessons I learnt from these exchanges.
Lesson #1: all these people made their choice consciously, and aligned with their values.
In the end, I don’t think there is one good or wrong answer. There are only people with different lifestyles and in different stages of their life (babies, dogs, etc.), who managed to adapt their car choice accordingly.
Lesson #2: in those answers, I was glad to read what my dad repeated me countless times during my childhood: “Never ever buy a car new, always one that is used.” He would continue: “As you sign the check, it will depreciate. 50% during the first year. Then 20% each following years.” He exagerated but at least it stuck with me.
Thanks dad for teaching me this lesson early in life. You were right!
Lesson #3: out of all the answers, 75% of the cars are from Japanese manufacturers. Toyota, Honda, Nissan, Mazda, or Subaru: they all craft reliable and efficient vehicles. You now know what to look for!
What type of car do you drive?
]]>Next, let’s dive into the Wealth, Real Estate, and Debts.
In this blogpost serie, I will play the tenant role. For all the home owners amongst the readers: don’t worry, there will be a dedicated article about real estates taxes. Stay tuned.
Here you can claim debt, leasing, or mortgage. For the latter, it will be included in the article referenced in the previous paragraph. For the two others: go fix this debt now so you don’t need to bother with this section next year!
Some additional information about the numbers on the screenshot:
Again, three more steps that were relatively easy — moreover as a tenant.
In the next blogpost, it will be more interesting with the categories Status of Securities, Deductions, and Other Informations.
Depending on how many screenshots I will end up with, I may add a fourth article for the Summary and Sending parts.
And if I missed some tax savings tips on the screenshots above, please let me know in the comments section below!
]]>First, please note that this article is dedicated to Vaud Canton residents. For others, you may still go through it and learn some rules that are also applicable to your Canton.
Second, I will assume you never used VaudTax before, meaning you don’t have a .tax file from the previous year that autocompletes a lot of the data to fill.
Last but not least, I split this post into three parts as it was getting too long.
Follow this link to download VaudTax.
Choose the software of the past year (current year is anyway not present) as you always declare your taxes for the year preceding the current one. In our case, pick the 2016 version.
I let you follow the setup instructions depending on your Operating System (Mac, Windows, or Linux).
The first time you open VaudTax, you see the following screen.
Start a tax declaration file by clicking on “New” on the top left of the screen.
Important point: if you get the family allowances from a separate entity than your company, like for instance the Centre Patronal, you have to declare this income source as an additional line in your incomes list.
In case you’re an employee as I am, these first three steps were relatively easy.
As for the next blogpost, we will go through the sections Wealth, Real Estate, and Debts.
And if I missed some tax savings tips on the screenshots above, please let me know in the comments section below!
]]>Let’s get moving! The frugal way please.
With most of the rental leases, it will be at minimum three months in advance that you have to announce your leave.
By experience, I can’t help but to recommend to take a buffer of one or two weeks between your move and the actual end date of the lease. This will allow you to make the move on the first week-end, and then to clean your previous apartment the week-end after.
As we talk about cleaning, I often heard that it was impossible to clean an apartment properly in Switzerland without having money reclaimed on the rental deposit. That’s not true! We did it, so you can too.
Come on, you won’t pay CHF 200+ for something you could do, that will avoid you to pay a gym subscription, and that will add up cash to your investments!
Make me a favor: go clean this apartment, get your entire rent guarantee back, and invest it into nice ETFs.
If you have hard times to find motivation to declutter your home, use your move as a trigger.
Read the book “The Life-Changing Magic of Tidying Up” and get started.
Create space in your life, it is life changing.
Moves are part of friendships. They reinforce them.
To make sure that everyone is on time the D-day, I followed the next steps:
Children are cute and all. But a move is definitely not a place for them to play in, as they could hurt themselves.
Ping their grandparents three months in advance so they can take care of them.
As you understood in the chapter above, you won’t pay someone to prevent you to get healthier and richer.
You will load your boxes into the truck by yourself. Hence you need a truck.
Check with your acquaintances in case they happen to have one.
Else, find a rental company and reserve one.
For a 4.5 rooms, and a move within 20-40kms, one day is more than enough. I’m sure you need the truck only for half a day if the rental company allows such timeframes.
As a reference, we rented ours for CHF 209 from 8h to 17h on a Saturday. It was a 20m3.
We used the last three week-ends before the move to put everything into boxes.
Think about it in advance to avoid busy periods at work, and to not plan any social events on week-ends.
Focused hard work will help you to get through this step faster and stress-free.
There are some things such as kitchen appliances that you will need until the very last moment. What we did was to package these items nevertheless, but keep their boxes opened. It helped to have a clear view of where we stood with our progress.
This is also the good timing to remind your family and friends about the moving-party date.
Finalize boxes. If you’re really disorganized, you won’t need this blogpost to notice that’s almost the only single thing left to do at this point in time.
I’ve heard funny stories of people who, the morning of the move, count on their friends to actually put stuff into the boxes.
You don’t wanna be one of those.
You will be way more efficient if all (I mean ALL) your stuff is well packaged, and only wait to be loaded into the truck.
The custom (or is it only mine?) is to put a notice for your neighbors to know that there is some noise to expect, as well as some cars and trucks that might be on their way during the move.
Don’t tell anyone, but the constructor was kind enough to give us the key some days in advance so that we could already get our new washing machine delivered in the basement instead of a delivery at our previous home that we should have moved a few days later…
If you can negotiate this, go for it as we also used this opportunity to bring in the new apartment all the fragile stuff (TV, lights, paintings, etc.). It helped to not stress out during the D-day.
At this point of time, you should be all set for the D-day. Don’t forget to keep scotch tape and some free boxes for the last items you may have forgot to package.
A practical advice: sleep on the matress directly on the floor, and roll it up when you wake up. This way you can already dismantle the bed beforehand (i.e. not the morning of the move).
You need to maximize the space available in the truck. Really, try to play it the Lego-way.
You should do at maximum two round trips. If you’re really minimalist (not like me), even one should be enough.
You will gain time and efforts doing so.
Also, make sure to enjoy the process of moving, so that you actually realize it.
Enjoy your friends, make it a party, and have fun.
Once you’re done, let your friends get back to their home, take a shower, and meet at a restaurant where you will invite them to say thank you.
This money will be way better invested into friendships than in a moving company.
Congratulations, sincerely. You made it up until this point. You did move, the frugal minimalist way.
It will now be time to truly enjoy what you’ve waited for so long: be a home owner.
That’s what we will discuss in the last article of this serie.
If you have any tips and tricks about moving, I’d be glad if you could share them in the comments’ section below.
]]>We had a wonderful time. We liked the snowy period. We celebrated the New Year Eve with our loved ones. We had fun with kids on the Ski-Doo trails. We enjoyed crazy negative temperatures on our dog sled.
Everything went very well.
Everything, but one…
As any good Mustachian traveler, I scanned airlines websites through various comparators such as Kayak and Liligo.
We found a flight at CHF 515 per person — quite a decent price to make it from Europe to North America.
The only drawback was the return flight with its two stops.
When we ended our holidays, the head full of memories, we got onto the first internal flight. All fine. Then we took the second (night) flight to cross the Atlantic Ocean back to Europe.
That’s when it started to suck…
We got informed by the pilot-in-command that we might have some delay due to baggage loading.
A dozens of minutes later, he said the delay was indefinite as it seemed that a baggage trunk’s spare part was broken, and it had to be fixed before we took off.
The wait lasted more than one hour and a half.
Thankfully, the entertainment systems worked during this timeframe… so kids enjoyed this “problem”, as it meant more time to watch cartoons!
We landed in Europe twenty minutes before our last connecting flight. In a wishful thinking mode, I told MP family that if we ran through the airport, we’d surely manage to make it on time.
We got out of the plane on gate A. Our next departure gate was Z…
We did run. We did arrive two minutes before official departure. We did see our plane. I mean, we did see it take off…
At least we did our sport training!
Lufthansa (our flight company) managed to find us another flight in the afternoon, and offered four coupons of 7.5€ each for us to have a snack.
Still, we would arrive with more than three hours late. Kind of important when your buffer between end of holidays and school start is tight…
We eventually reached home, a bit tired, but all was fine. You may think — rightly — that one can’t always save on costs and have all the benefits.
While we waited for our replacement flight, I quickly googled about late flight compensation.
I didn’t expect much. But as with any problem in life, I always search for other people experiences as in 95% of the cases someone already went through the exact same situation as yours.
I found many websites claiming that I could get back a few hundreds euros by just filling one form on their platform, and that they’d manage all the legal process.
The only fee they took was 25% of what I’d get reimbursed. If nothing was compensated, I didn’t have to pay anything to them.
I filled the estimation form of one of these website and got a rough indemnity value of 200 to 300 euros.
I was doubtful.
I investigated deeper about the legal basis they were referring to.
I stumbled upon this European law: “For any European flight, or any flight starting from or ending on a European airport and operated by a European company, with a delay that exceed 3h, customers have to be reimbursed: 250€ < 1'500kms, 400€ between 1'500kms and 3'500kms, and 600€ > 3'500kms. The compensation can be reduced by 50% if the company found a replacement flight and that you arrive at your final destination 2, 3, or 4h late at maximum.”
Then I finally found this form template to fill linked from a French government website (obviously way lower ranked on Google compared to the other profiteers’ services). You can find the same form in English on this website.
The week after our return, I sent the form via email to Lufthansa.
They replied within thirteen days by proposing a deal to which I could just say OK, and the money would be transferred right away.
The deal was 300 euros. Per flight. Meaning 1'200 euros in total!
I was astonished as that represented more than 60% of our flights total value of 1'930 euros!
“Time is money” as they say…
And you dear reader, do you have any tips on how to save money on flight tickets?
]]>Although I recommended you to not care about brokers’ User Interface when you choose yours, I must admit that the one of Interactive Brokers (IB) is quite cryptic.
Several readers asked me how to buy the VT ETF (or others) and how to exchange currencies with IB’s tool.
I had to provide you this how-to in case you followed my experience and chose this broker too.
As a reminder, I went for IB after having compared the top brokers on the Swiss market.
In case you didn’t start to invest yet, I can’t help to recommend you to start today by opening an IB account now, and come to this article afterwards.
OK, so did you fill the lengthy form?
Good, you’re now on the path to build your wealth!
For the ones who are new here, you can pause for a moment, and go read this article where I explain why I chose to invest into the VT ETF.
Everyone ready?
OK so let’s pretend we’re Wall Street traders, and dive into this fancy user interface!
In this how-to blogpost, I consider that your base currency is in CHF (or at least one different than USD), that you already transferred cash to your brokerage account, and that you would like to buy for CHF 4'000 worth of the VT ETF.
The process is pretty simple with only two steps to follow:
As simple as it may look, IB made it a bit complex when it comes to the tool. I had to sync with the customer service to get all the needed infos. I precise that they replied promptly with the right answers.
If you checked on their website, you noticed that they have several tools to connect to their trading platform.
I used the WebTrader to do this two-steps process.
That was my first mistake as I realized that I could complete none of the steps with this one.
As the customer service explained me, their online service doesn’t have the full feature set of the desktop application.
I had to download this latter in order to complete my transaction.
I honestly have hard times to understand this strategy in 2017…
But well, being the #1 broker on my list, I won’t complain too long for such a detail, moreover when you know I have to connect to it only once per quarter!
Once you have installed the software, simply login and follow the next screenshots.
Download the “TWS” version to have the time-tested version — the “Latest” and “Beta” are newest versions that might be less stable than the simple “TWS”.
1/ Convert CHF 4'000 to USD on the FOREX
On the top left of your screen, enter USD and hit “Enter” on your keyboard.
In the list that appears, click on “United States dollar - IDEALPRO > Forex”.
Then you can see the bigger window as shown below where you select “CHF”.
Click OK, and you will get asked if you want to open FXTrader: reply with “No”.
Once you have the following line on your screen, select the button “BUY” (1), choose the quantity of dollars to ask for (2), setup the currency rate limit up to which you’re OK to exchange your CHF for USD (3).
Also, make sure you change from “IDEALPRO” to “FXCONV” (4).
IDEALPRO is for leveraged FOREX trading, while FXCONV is for currency conversion.
Then, click “Submit” to place your order.
You may have a transaction confirmation screen. In that case, check that all is OK and accept.
You can then track your orders as shown below.
It will also appear on the WebTrader where you can’t do FXCONV transactions, but still see them (actually marked as IDEALCONV which is a false info there).
When you come back after your order got processed, go to your “Account” view (I prefer to use the WebTrader tool for this, instead of this old Java app…):
Then, you will view a screen like this, with CHF and USD on your account (you can see that I got only USD 22 left as I already bought VT ETFs worth CHF 4'072 when I took this screenshot):
2/ Use the converted USD to buy the VT ETF
As for the FOREX exchange, I couldn’t find the VT ETF via the WebTrader tool. You need to use the desktop application for this step too…
Enter “VT” (1) in the search box and select “Stock (SMART)” (2).
Select “BUY” (1), set the quantity of ETFs you want to acquire (2), your limit price per ETF (3), and choose between “Stock (SMART)” or “Stock (Directed)” routing (4).
Pro tip for the max limit price: don’t start to gamble as you better invest today than to wait for the perfect share value that may never come.
Regarding the routing mode, the “SMART” one (that I use) will find the best price for this ETF amongst the stock markets on which it is traded. The “Directed” option is to choose by yourself on which stock market you want to perform your transaction.
In case you wonder, there is no extra-commission nor fees if you choose IB’s SMART routing.
Once you submit your order, you will have a recap of its costs. Validate it to definitely transmit it.
You may wonder what happens if you buy more ETF than you have USD? Well, the transaction will simply not be executed as you lack USD cash.
In my example below, I have the error message as I don’t have enough USD in reserve. In case you’re richer than me, you won’t have any error message and will be able to place your order.
You can see your order in your orders list (present on both the desktop app and WebTrader).
As soon as the stock price is below your limit (given you’re in stock market opening hours), your shares will be bought by IB using your USD stash automatically.
In case you plan to buy an ETF such as the Vanguard FTSE All-World UCITS that is traded in CHF, it will be faster as you can skip the step 1, and “simply” trade your ETF with your available CHF cash.
You now know how (got to read that aloud!) to buy stocks on IB in another currency than your base one.
If you target financial independence, you have to make your money work for you.
You got to start today. Even if you invest small amounts at first, start today!
Go open your Interactive Brokers account, wait a few days to receive your access, transfer your savings, and then start investing following this simple two-steps process.
You will thank yourself in some decades!
In case you use IB and have some tips and tricks on how to use the platform, please share them with us in the comments section below.
]]>You now see yourself in a hike in the Canada Wild because you diserve it?
That’s what we did actually! And you should too. Because you’re gonna need your full brain-power in the next couple of months!
There are three slots in which you can be for the workshops phase:
We were in the second slot that is (to us) the most comfortable with all electric outlets positioned and other complex setups done. Our constructor confirmed that people often do bad choices when they can decide on that, as they think they know better than construction professionals.
This article covers our experience (i.e. slot #2) between our forward sale (signed in July 2015) and the final signature (done in February 2016).
This workshops phase starts like a month in YNAB. You get budget envelopes funded for each type of expense. The allocation definition is done in your purchase contract, and subject to negotiation.
As with any envelope budget: if you stay on track, all fine; if you spend more, you gotta pay for it.
The good news is that if you underspend in one area, you can use the remaining cash in another category.
Our budget was CHF 80/square meter, which is huge compared to the standard CHF 40-50/square meter.
We underspent in this category, which provided some overflow for another category —unfortunately we couldn’t put these savings to work in a brokerage account…
We appreciated that our constructor works with local resellers for tiles, which helped to be advised properly vs. going to mainstream stores where sales persons do not have a clue about their products.
Together with the kitchen, tiles are the craziest choice one has to made. There are endless possibilities.
So much that our advisor told us: “Constructing one’s home is the best way to test one’s marriage: if you are still together when you move in, then that’s for decades!”
After we finally found our dream tiles for each room, we understood why she said that: you need to communicate so much, and make concessions all along the process… both basic rules for any successful relationship.
As a reference, it took us one month and a half to make all of our tile choices. This can seem large but don’t forget to take into account visiting stores (when they are open), getting a sample to try it at home, checking with different lighting settings, and so on and so forth.
This was our “When the hell will it stop!” moment.
We had finished all workshops. I was at work. I got a call: “Hey Mr MP, we are starting to put on the tile, and I forgot to ask you: which color do you want for your tile joints? White, light grey, grey, or dark grey?”
My (internal) reaction?
“WTF!!! I thought we were all done. When the hell will all this stop?!?”
As with many choices, I answered the stylish constructor that I had no clue, and asked him what he would do? He told me light grey was a good option. He chose it at his home because white gets dirty too fast, and strong grey is darkening the room.
“Bingo! Go for it, we trust your judgment more than ours!”
Seriously, did you ever checked the tile joints color anywhere you went? Now, you will!
We went for this type of floor for our bedrooms and home office. We didn’t have a price defined. We had to choose from a specific brand’s products — namely quick-step.ch, with way enough color declinations.
Fortunately, we are aligned with Mrs. MP on our style tastes, so it took us two or three iterations to have our final decision made.
You would think they take the same material as the floor, and add baseboards accordingly. And you’re right.
The thing is that you have to choose the form factor of the baseboard itself!
Straight cut or rounded cut? With straight you have dust accumulating quicker, and with rounded it’s a bit less aesthetic as it’s higher.
“So what do you choose?” the promoter asked.
We went for the straight. But man, baseboard! Who would think you even have a choice for them!
Same as before, no budget but a predefined brand, id est the German company Huga.
I can’t help but to be thankful for the constructor we got, as his material choices are of such a superior quality.
We appreciate it every day when we can relax in a room or be on the phone, even though people talk or children play in the room next door.
To my surprise, you can have a 300-500 pages (no kidding) door handles’ catalog and no specific budget as they have all an equivalent price tag.
But hey, with 10-20 items per page, can you imagine the choice?!
Side story: we finally agreed on one model, but the supplier had only 5 left (end of the production) and we needed 7…
The second choice was the good one!
OK, here you gotta close the (Huga) door, and shut down your social medias so you don’t share what is the most anti-Mustachian thing you will read on this blog! Ready?
Let’s start by what hurts, the budget.
CHF 32'000… and it ended up at CHF 37'000.
Now the details.
In Switzerland, when you buy an apartment in a standardized building where the constructor looks for economies of scale, you get a kitchen for about 20kCHF. That’s already the price of the Toyota Prius (third of the name) I like so much!
With our Italian constructor who likes good design and qualitative materials as we’ve seen before, we were initially at a budget of CHF 32'000, which got increased by CHF 5'000 during the take-it-or-leave-it final negotiation.
I clearly would have preferred to use this as a discount on the overall apartment price, but that wasn’t a deal option.
Even though I understand why we paid so much, this kitchen still represent one year of early retirement expenses…
But honestly, I’m entirely OK with it as I love so much our open-kitchen space. We truly enjoy it with all the wonderful moments we spend there with our kids and friends.
As introduced earlier with tiles, the kitchen workshops were the most challenging.
At least the layout was done, as well as the furniture provider imposed.
We had to choose the material, the color, and the cabinets’ setup.
To make our final choice, it took us three workshops of one hour and a half each with the constructor, and several brainstorming sessions with our interior designer cousins.
We finally went for a white oak wood mixed with some darker brown as we got told that wood is something that last with time, both in terms of taste and quality.
The main recommendation here is to not follow fashion — remember the red kitchen trend five years ago that no one likes anymore.
Then, just before the order was sent to the Italian supplier, the constructor called me back while at work (as always as you may have noticed).
“I forgot to ask about the kitchen baseboards and interior of the drawers, which color do you want there?” to which I replied by the same “What would you do for your home.”
That was a strong advantage to have this direct contact instead of a big corporate that wouldn’t have cared about us.
We went for some standard grey in case you ask!
As part of the kitchen budget (about half the CHF 37'000) were the kitchen appliances.
Hood, ovens (yes, we got two, but a wine storage would have been a better idea if we really had to spend this budget), induction hobs, dishwasher, fridge, etc.
We chose from a (imposed) Siemens brand-catalog.
It’s always the same with these appliances: you read the features list and think you will love each of its complex programs.
In the end, you end up using just the timer and the inside light — even my wife who is quite a cook doesn’t use much of the programs it offers.
That would be my advice for this Categories: buy only what you are already using as appliance features.
Our italian shower… This was a dream.
It was an upgrade that the constructor added to the inital price, meaning we had to get it (life is too hard sometimes!)
I don’t have the price details but it was around 2-4kCHF.
The layout was done. We had to decide about the floor color, as well as the length of the shower glass.
Did I already mentioned that I love this shower?!
The layout of the furnitures was decided. We only had to choose material and color, and the range wasn’t too wide so it went fast.
As if you were choosing a provider for a business project, I recommend you to ask for references of recent constructions that the promoter sold or that the constructor built.
Then go talk to the people who live there, and ask about quality, pricing, how went negotiation, etc.
What I liked most about our local entrepreneur is that he built it as if he would live in it afterwards. I’m so glad we didn’t end up with one of these big construction companies as I heard stories where some would buy cheap materials to make more profits overall — that’s not the case of all though, let’s not generalize.
Overall, it was a great pleasure and a lot of fun to decide upon all of these details.
We enjoyed the process thanks to several factors, such as the fact that we have the same tastes with Mrs. MP, and that we were also able to communicate on the few things we didn’t agree upon.
Also, we got a constructor with design tastes close to ours, and we could rely on two interior designers amongst our cousins.
We were lucky, and I’m grateful for it.
We love every corner of our new home. Not to mention the huge forest and country side that is surrounding it.
You did a good job! And you didn’t divorce during this critical step, congrats!
I wish you nothing but to have a lot of fun, and to enjoy creating the home of your dreams, the one in which you will raise your family and blossom during the next decades.
After this splurge of cash, it’s time to think about the move. How to make it frugal and minimalist? How to save time on your moving date? That’s what we will cover in the next article of this serie.
If you’re on your way to home ownership (or already a home owner), I’d be curious to know about your workshop stories (fun or nightmare?), and about some of your budget numbers. Let us know in the comments section below!
]]>For now, let’s review my successful and failed attempts of last year.
1 - Have blogposts available both in English and French Failed
The purpose of this blog is to bring value in people’s financial lives.
In return, I get their feedback on my Financial Independence journey to keep improving my strategy.
At the moment, the blog is only in English which reduce considerably its audience. This pushed me to decide one year ago to bring French translation to leverage this coverage potential.
But I was scared to get there.
“People might recognize me more easily…”
This fear-thinking kept me from moving forward.
One year later, I feel more confident.
Recognized? Then, so what? What worse could happen? Mockeries? Jealous people? Who do we talk about anyway. Colleagues? Acquaintances?
I’m fine in my shoes, and my financial decisions are aligned with my life values.
And let’s stop being selfish: who cares about my life except myself anyway?!?
I won’t commit to anything about this 2016 failed attempt, but this is the one priority on my 2017 roadmap.
2 - Average at least one blogpost per week - i.e. at least 45 posts in 1 year Failed
I self imposed a rhythm of one post per week as a regularity goal.
Taking into account vacations and some margin, I set the year as a 45 weeks period.
I managed to get 29 blogposts out to the world. Not bad when you know the amount of research that some needed.
The cool thing is that it leaves room for improvement, although that’s pure data, and I don’t want to publish just for the sake of it, without adding value to your life.
3 - Write between 15 and 30 minutes per weekday Success
I had this item already in 2015. I always thought this would be the maximum I could afford in my busy life…
I’m now targetting one hour per day in the chair thanks to the HtWB course I took last summer.
I track my writing time since September. On this last quarter period, I logged 52 hours of deep concentration. Way above the 28h upper range of my initially planned challenge.
4 - Setup a newsletter email for new blogposts published Success
That’s done. And I’m glad I did it so you don’t have to watch social media for new posts.
5 - Average 40% of monthly savings Failed
In 2015, we were only 3% off track.
Last year, we completely missed the target with purchases for the new home as well as expensive vacation in my beloved Canada.
I took drastic actions to get it back over 40% no matter what.
It seems to work looking at the stash that piles up!
Let’s see in which category I end up on the #BSRI 2017!
6 - Rebuild our emergency fund up to CHF 15'000 Success
That’s done! Just in time last December.
That rocks as it means we started the year by logging-in to our cheap online broker to buy some Mustachian ETFs!
7 - Read “The Miracle Morning” Success (available on Amazon DE, FR, UK, US)
That’s done.
Life changing.
I can’t believe I do wake up between 5-5:30am at least four days per week since the beginning of December.
Not to mention my joy when we don’t have social events on week-ends so that I can wake up at 5!
I will write my habitual book review in the coming weeks. You don’t have to wait for it though, it’s a must read!
8 - Read “The magic of thinking big” Failed (available on Amazon DE, FR, UK, US)
Started the book and stopped in the first half as too busy period at work — excuse! — and maybe because not enough narrative urgency in it. But I plan to get back to it as there were some ideas that still stick to me nowadays.
9 - Read “The millionaire next door” Failed (available on Amazon DE, FR, UK, US)
Didn’t read it yet. Still attracted by his title though!
10 - Read “The Life-Changing Magic of Tidying Up: The Japanese art of decluttering and organizing” by Marie Kondo Success (available on Amazon DE, FR, UK, US)
Read it. It changed my home in the next days. Perfect to hone one’s minimalist skills. I wrote a book review that includes the number of garbage bags we sold/donated/thrown away.
11 - Read “Your money or your life” Failed (available on Amazon DE, FR, UK, US)
Not sure I will finish it one day as I wasn’t hooked. Maybe it’s because I’m already acquired to the cause…
I recommend it to anyone starting his/her financial independence journey though.
12 - Go to sport training once a week from beginning of March Success
This one I’m proud of! Counting 45 weeks per year, it leaves 37 weeks since March. And my habit tracker states that a decent 37 sport trainings were achieved since then. That’s for a success!
I used to like a lot goals’ setting posts from other bloggers as it was a source of inspiration. I started two years ago to do the same, to inspire you guys and gals.
What I learnt since then, is that to achieve goals, you have to get strong daily habits.
At least that’s how it works for me.
So I won’t stop to have goals in 2017 per se, but instead of writing two blogposts about it per year, and have the risk to forget about them in between, I will make them ingrained in my daily rituals.
I will dedicate an article about my current daily planning so it inspires you to start your own life-changing routines.
And you, how were your 2016 goals? Failed attempts? Successes?
]]>I can’t help but to think that these parents who give the feeling to their children that everything is unlimited are doing it wrong. They think they give them a gift. They actually make them future consumerist, and never-satisfied grown-ups.
Along my Financial Independence journey, I run an educational quest to grow MP’s children with financial awareness.
On the scarcity chapter, we started with things like “Electricity isn’t coming magically on a button press, you have to preserve it because it is scarce.”, “You can’t get the entire catalog for Christmas!”, or “Please finish your plate and be grateful for it, there are kids that don’t have food at every meal.”
Now that they get older, I wanted that they experience scarcity by themselves — in a fun way though, in the hope that it resonates on the long run in their life on matters such as budgeting, time management, or ecology.
We don’t have any games console at home but my older kid got introduced to this Italian funny plumber at school playground.
When I told him I downloaded it on my iPhone, I saw lights into his eyes like on a Christmas day!
I connected the dots.
I explained my kid that he could play, but that there would be rules.
The goal was that he learns about scarcity by himself, and give him the opportunity to feel what it is to have the power to control your own life, decisions, and acts.
I sat down next to him with a white sheet and drew a weekly planner.
On each day I put two credits totalling fourteen credits per week. One credit is one game.
He could use the fourteen in one day if he wanted, but then would have to wait for one week to play again.
I also introduced pitfalls into this gamification: you are capricious during the day, you lose one credit. You complain that you could only play a limited amount of time instead of being grateful, you lose one credit.
How cool is it to be a parent!
The results were mitigated with this first scarcity teaching attempt.
Long story short: my kid learnt about limited resources. That was the positive side.
On the negative side, he became too addicted to his two credits per day. So much that every day started by “When can I use your iPhone daddy?”
#Fail. Don’t wanna make him a junky.
We changed the rule to make it a better experience for both him and us.
He now will get 2 credits of 15 min per week.
It’s like we switched from a daily salary to a biweekly one. We already see that he doesn’t nag us that often as before.
We hope that he gets less addicted on the long run while remaining autonomous in his credits budgeting. He will also learn to manage his time instead of a number of games, which is a good skill to have.
Inspect and adapt as they say!
I will keep you posted on the results of the experiment.
Do you have tips and tricks to teach scarcity to your children? I would be thankful if you could share them with us.
]]>As it’s one of the most powerful personal finance tool to reach Financial Independence, I wanted to study how the leaders in this topic were reaching crazy figures every month.
Hence I created the Blogger Savings Rate Index (aka. #BSRI) in order to get inspired by my fellow personal finance bloggers.
Last year was the second edition of the #BSRI, and we welcomed five new bloggers who joined the challenge.
No more talking, let’s get to the final ranking of the #BSRI 2016 vintage!
N.B: some of the registered blogs on the #BSRI 2016 were either discontinued or not updated, hence I removed them from the list as they might not be relevant for you anymore. In case I get news from these, I will keep the list updated accordingly.
If you were adventurous enough to be listed on the second edition of the #BSRI, below are your badges that you can use to share the wisdom on your blog or any other media.
*Source file Platinum badge: HD / LD* *Source file Gold badge: HD / LD* *Source file Silver badge: HD / LD* *Source file Bronze badge: HD / LD*I count on you dear readers to spread the word so we are even more people on this index in 2017, in order that anyone from anywhere and in any situation can easily find similar bloggers so that he/she has appropriate information to get his/her financial life forward.
So, what was your savings rate in 2016?
]]>This 3rd year in the blogging realm was the time to take the leap towards quality and contribution.
In order to provide you qualitative content, I took this writing class to improve my fluidity and conciseness. I can’t help but to recommend it. Moreover when you know that it’s from Joshua, one of the founder at theminimalists.com.
I try during my writing sessions to always think “How can I contribute to my readers’ growth? How can I add value to their (financial) life?”
Looking back at the analytics and number of comments, one of my prides is this home ownership serie experience that I shared with you.
2016 was also the year where we launched the Swiss FIRE community. This wasn’t a goal at all, but an answer to a real need when I see how lively it is.
Habit building was the key to this growth in both quality and contribution. 2017 will be the year to make those routines stay for the long run.
This third year of my journey towards financial independence was a big step.
We achieved our mid-term life goal by being home owners — one year earlier than planned.
Secondly, we reworked our budget to ensure a consistent savings rate over the months.
We also took the time to: find the best broker available for Swiss investors, define a Boglehead ETF portfolio for 2017, and get the best Mustachian 3a pillar.
We are now ready to focus solely on our long-term FIRE (Financial Independence, Retire Early) goal: increase incomes and savings rate in order to get closer to FI date.
2017 will be the year of entrepreneurship. I will support my wife with the start of her new business (yeah!).
2017 will be the year of meaning. Meaning in why I blog. As my main goal is to add value to as many people (financial) lives as possible, I renew my commitment to reach the widest audience possible in Switzerland. This will start by the French part of Switzerland which is my mother tongue (I know I committed to this already last year…).
2017 will be the year of authenticity. I want to give more of it in my blogposts. Bring more personal reflections about the feelings about my journey — on top of the cold numbers that we all love.
2017 will be the year of 5am habits. I’ve read “The Miracle Morning” (action points from the book will come in a separate article) which has been a source of inspiration. I may stop goal settings in favor of focused habits.
All in all, I’m so grateful for being where I am in life right now. I can’t help but to view 2017 as a year full of new opportunities and growth. I’m excited to continue this journey towards freedom with you guys and gals!
And you, what is your financial retrospective for last year? What did you learn? Fail? Master?
]]>Jungle of real estate lions. Sea of money sharks. River of negotiation pirahnas. You defeated them all!
Now is the time of rejoicing. Let’s just go through some interesting details before we open the Champagne.
Less fun stuff first (can you read this out loud!?). Be aware that notary have their load of legal blabla. As I don’t like to sign unnecessary things, I went through every tiny details of the purchase document.
I stumbled upon some crispy sentences:
I was like “WTF!!!”.
I asked them to remove these sentences that were not acceptable for a new construction.
I discussed with the notary and my financial institution, and they all told me that it was standard stuff and that in this situation, with this real estate constructor, there wouldn’t be any issue.
I had two choices: fight against an established notary and real estate guy, or accept and sign right away.
I went for the latter. Out of trust in those people, and fatigue about all these steps, I signed.
When I think about it, more than a year later, I still can’t believe that people get paid to write such clauses. I wonder in what lawsuit we would have ended if one of the constructor supplier would have went on bankruptcy… If anyone in the room has such legal background, I would be happy to hear about you!
Back to our comfort zone!
Now is time to show off your damn money!!!
Our transaction was split into two parts: the first downpayment to lock down the purchase in July (we agreed on a bit less than 10% of the total value), and the second one when we got the key and signed at the notary in February (the remaining 90%, that included transaction fees).
Transferring your first downpayment
If you happen to buy your home via a forward sale mechanism — i.e. you buy the property now but will be the owner in a few months with the final signature — you have to transfer your first downpayment when you go at the notary office for the lock down signature (pro tip: make sure to transfer it a few days before the meeting, so to be sure it’s on the notary’s bank account when you sign).
For us, this signature happened two weeks after we closed the deal with the constructor.
We agreed on a payment of CHF 60'000.
If you need to unlock money or accounts, keep in mind this forward-sale situation where you may need cash before the final signature.
Transferring your final payment
Then there is the D-day when you get the real estate property ownership transferred under your name. When you actually get the key.
We used some remaining cash and money from our second and third pillars for this second transaction part.
Don’t forget to split your withdrawals on two fiscal years to save some money.
One thing to notice is that this cash gets directly sent to the notary account — you never see it on your bank account.
Another question that bothered me: when do you need to transfer the last part of the cash? Do they need it a long time before the D-day, which means I have less time to save? Thankfully no. You just need to make sure it’s on the notary’s account when you go to sign — else I think the real estate transaction couldn’t happen.
I wondered how the transaction taxes should be paid. Should I pay some cash to a separate tax entity? Would I receive a notary fees invoice a long time after the purchase?
It’s actually quite simple: you, the buyer, transfer all the money to the notary who then handles the distribution to the constructor, the tax office, and themselves.
The distribution went as follow in our situation:
+ Total home value = 700k
+ Reimbursement of mortgage notes to the constructor = 3.5k
+ Transfer rights to the canton (3.3%) = 23k
+ Land registry + notary fees (1.7%, lower in our case)
+ Land registry to the canton = 2.5k
+ Notary fees = 6k
=> Grand total = 735k
A summary of our payments below:
- First downpayment (in July) = 60k
- 2nd pillar Mr MP (in November) = 29k
- 3rd pillar Mrs. MP (in December) = 16k
- 3rd pillar Mr MP (in January) = 20k
- Mortgage (in February) = 555k
- Final downpayment (in February) = 55k
Or is it a real estate one? I don’t know. Yet it’s usual that the seller invites the buyer for a celebration coffee or lunch after the signature. We got the coffee — I knew I should have bought a mansion!
I’m sure that the info you looked for in all this series is the Champagne brand that MP recommend to celebrate such an event, or isn’t it?!?
Congrats for your patience. The announcement is now!
We chose the preferred Champagne of my wife: a Laurent Perrier Rosé. As tasty and fancy as the bottle looks like!
Congratulations for your purchase. Now is time for the cool (and stressful) part: customization of your property. We were lucky to be quite aligned with Mrs. MP but still, it was quite an experience.
We will cover all the details of this design phase, and share all what we learnt along the way.
If you’re on your way to home ownership (or already a home owner), let us know about notary or downpayment specificities you might have encountered in your case — as well as your preferred celebration liquid!
]]>On my side, I’m grateful for the following things that happened this year:
The last but most important thing I’m grateful for is to be alive, and to be able to wish you a wonderful Christmas and New Year’s Eve times.
And remember: Financial Independence is a great life direction, but don’t forget to enjoy the now.
I look forward to discovering what 2017 will reserve us! See you next year folks!
What are you grateful for?
]]>Two years ago, I detailed a hack of the Swiss telecom system to bring our home and mobile internet expenses down to CHF 100/m for a two persons household.
This setup has worked for several of the readers!
In case you were not a reader by then, I’ll share with you our new Mustachian setup as it changed since we moved.
Last year, the alignement of the stars were perfect. QoQa released an incredible anniversary offer with the Sunrise Freedom Super Max plan at CHF 55/m with everything unlimited in Switzerland, as well as abroad except for Internet roaming which is capped at 2GO/m abroad (great for free GPS during holidays).
We hesitated to take this CHF 110/m deal. The game changer was the no-daily-limit internet usage, meaning unlimited wifi at home, as well as unlimited personal hotspot during commuting or working in the train.
We subscribed.
We should have ordered a CHF 5/m dual SIM but Sunrise decided to offer it for marketing reasons — for once I like it!
I recommend you to watch out for such an offer next week as it’s QoQa anniversary again.
I hope they do something similar so that you can get this subscription too!
In case it doesn’t come, I checked the actual Mustachian options on the market, cheapest first:
About the material to use: what I adviced in the previous blogpost appeared to be a bad choice. Mine died after a few weeks, and looking at reviews on the web show that it was a common problem…
Our new 4G modem is the Huawei B315 model (Amazon DE, FR, UK, US). Simple to use. Powerful. Reliable.
Counting in our (not so Mustachian) Teleboy and Netflix subcriptions, we end up saving roughly CHF 2'300/year compared to our initial setup. For the same level of services. This means about CHF 36'000 in ten years with compound interests! That’s the price of a Tesla Model 3!
Watch out for QoQa anniversary next week or go for one of the alternatives. Buy this Huawei B315 4G Router (Amazon DE, FR, UK, US). Then drop this CHF 100-150/m optical fiber connection with TV channels you never watch, and landline you never use as even your grandma switched to FaceTime!
Did you already take the leap to hack your telecom for your household? Do you have an even better Mustachian plan to recommend us?
Note: if you choose to buy the Huawei modem, I’ll get an affiliate reward from Amazon — without you paying more for the item. As usual, be aware that I only share things that I use in my life. I recommend them in the hope that they will bring you as much value as it did to my personal life.
]]>I have read articles titled “Pay yourself first!” or “Save upfront, and live off the rest.” None worked.
The issue was this variable in our budget.
So far, we assigned every dollar a job in this order: planned expenses such as electricity bills, emergency expenses such as car repairs, variable expenses such as groceries, irregular expenses such as an improvised pizza-party with friends. And then, we assigned the remaining amount to the savings category.
This was our variable.
When receiving our 13th salaries, we would first book our holidays. And then, the leftover would go towards our savings.
This was our variable.
We tried to save 40% of our income upfront. But we failed. We would eventually overspend in the “Dining out” category, and my aversion to red numbers in some categories would make us withdraw money from our savings to cover the over budget.
This was our variable.
Favor green over red in YNAB was the mistake. A mistake which allowed us to avoid unpleasant discussions when one partner would buy something unplanned on his own, or to lazily not bother about these few spendings, as we were already saving a big chunk anyway.
Last November, we reversed our budget: savings, planned expenses, emergency expenses, variables expenses, and then, irregular expenses. Irregular expenses are our new variable. No matter what, we save 40% first.
You may wonder what happens if we overspend in one category? Well, as we should have always reacted to this situation: consider it as a debt incurred on next month budget.
This tweak changed everything.
Now, constructive discussions happen more often. Priorities are (re)defined. Stash steadily increases. 50% savings rate feels reachable. Financial Independence is in sight again. Life changing.
What about your variable? Are you ready to re-align your budget with your life goals?
Note: special thanks to @momanddadmoney for their enlightening autopilot-budget blogpost which was the starting point of our new strategy.
]]>Last month, I successfully chose my cheap online-broker, the first step of investing the Mustachian way.
This month, my challenge is to build a well diversified ETF portfolio with the lowest fees and taxes possible, the second step of investing the Mustachian way.
I think I already talked about the buy-and-hold strategy on this blog, but I will repeat it to be sure it’s been heard. You are not smarter than anyone, neither am I. We can’t beat the market. The only path that can grow our stash on the long run is to follow a buy-and-hold strategy.
“Can you summarize it quickly MP?”, you ask. Sure thing! You buy. You hold for the long run. That’s it. You never sell during market downturns. You never frenetically buy stocks of the latest trendy Silicon Valley startup. You buy. You hold.
“I got that MP, thanks. But what kind of ETFs should I buy in such a portfolio, then?”, you wonder with impatience.
Here we have to pause for a moment to remind ourselves something. Something that yielded me to an ever-growing stash during last years. This something is: seek for Grandpa advice.
Seek for Grandpa advice. That is how I call it. For every unknown topic you faced during you childhood, you would go to your grandpa to siphon the best advices from his wise brain. You are (and will always be) a child compared to someone else. Any question you may have today has already been answered yesterday by a Grandpa.
In this article, Grandpa is called John C. (Jack) Bogle. He is American. This long-ago-retired man taught me that the best buy-and-hold strategy is one that is KISS. One portfolio with only 3 ETFs.
Not any ETF, though. Like Grandma’s recipes, there are specific ingredients to use to get a good cake: 1 international stocks ETF for the diversification (with as many companies as there are grains in a sugar box), 1 home-currency stocks ETF in case all currencies get crazy for a decade, and 1 home bonds ETF for the safety margin.
I hear some of you at the back of the classroom who shout at me “Hey MP, you’re an ignoramus, true Mustachians invest into Vanguard mutual funds, not into your ETF stuff!”
Let me reply to you here so it’s written elsewhere than in the Community: Vanguard mutual funds that are recommended in US boglehead-portfolio aren’t available to non-US residents as of the day I write this blogpost. The best equivalent that one European can find is to go the ETF way.
About the cake ingredients’ quantity, Grandma relies on Grandpa’s allocation recommandation: the bonds percentage should represent your age (i.e. you’re 31, then 31% of bonds), and the stocks get the remaining part (i.e. 69% in our example).
For the stocks ETFs part, he says to go for a 50-50 split — although that’s true for US investors, that a bit too biased for other countries such as Switzerland when you compare countries financial weight. I’m more in favor to allocate 55% for the world (which already includes about 3% of Swiss large-caps), and to have 15% for Swiss stocks.
When Grandma continues to cook such cakes, you can be sure that Grandpa will live a wealthy life until he dies!
Before I forget, my Swiss Grandpa tells me to precise that you should include your second and third pillars money when you compute your percentage numbers into your fancy spreasheet (seen how cool Grandpa is?! He knows about spreadsheets!)
He advices to consider second pillars as bonds. For third pillars, it depends on which one you got; for instance my preferred one would translate in my spreadsheet as 55% of bonds, 22% of Swiss stocks, and 23% of international stocks.
Talking about spreadsheets, mine is below so you have a real-life example:
With Grandpa Jack advice in mind, it was so much easier to narrow down the huge list of available ETFs. I used justetf.com to do this filtering.
Still, I was left with more than one item each time. In order for you to be autonomous, I will share my own recipe on how I compare and choose the best ETF.
TER
The TER stands for Total Expense Ratio, meaning the total costs of a security. In other words, how much of your money the ETF will eat up due to various fees.
As a Mustachian, I consider the range 0-0.15% amazing, 0.16-0.30% very interesting, and 0.31-0.40% okayish if what’s tracked interests me and the returns are good. Above 0.40% I usually disregard.
When you choose a security, you shouldn’t use TER as the single property to assess. You have to include the next criteria in your analysis to get a reliable evaluation.
Returns
The second criteria is historical returns of an ETF. After all, why would we, Mustachians, invest into the stock market if it wasn’t for getting returns!?
I look at three things: returns since one year to see how it goes currently, average returns since the existence of the fund to see overall performance, and the returns for each year since inception to check what’s the trend.
As a comparison benchmark, I use the 4-8% returns bracket which is what we, long-term investors, expect from our stocks’ investments.
Fund volume
For the size of the fund, I always try to choose the ones which are >500 millions, if not >1 billion. The smaller a fund is, the riskier it is that it gets closed or merged, which implies that you respectively may have to sell at an inappropriate time, or pay more fees.
You can find a risk-assessment color range on any security detail view which indicates whether a fund volume is risky when between 0 and 100 millions, okayish between 101 and 499 millions, or fine above 500 millions.
Trade volume
I use this value to check the liquidity of an ETF. The very popular ones get millions of trade per day. The rule of thumb with this trade volume value is that the higher it is, the most liquid a fund is.
It’ll be important for you when you’ll need to sell at FI stage, because the more liquid a fund is, the more you can be confident to sell at a good price thanks to a tight bid-ask spread ratio.
Many of you waited for my selection to be released. I am glad to offer you this Christmas present in advance:
International stocks ETF: Vanguard Total World Stock ETF (VT)
This ETF is very diversified (7'627 companies including small-, mid-, and large-caps), and has: a low TER of 0.14%, about 4.5% of average returns since inception, a fund volume of 8.8 millions USD, a monthly trading volume of around 600'000, and the possibility to optimize US taxes.
I will invest up to CHF 60'000 maximum into this ETF because afterwards, the US estate law makes your heirs lose 40% of the amount invested into this fund. I will then switch to the Ireland based ETF Vanguard FTSE All-World UCITS (another option could be iShares Core MSCI World UCITS with its larger fund volume, but I prefer Vanguard that tracks the FTSE index, as it includes emerging markets).
Swiss home-bias stocks ETF: UBS ETF (CH) SMIM (CHF) A-dis
This UBS tracker includes the 30 largest and most liquid Swiss mid-cap companies (large-cap being already covered by my International ETF), and has: an acceptable TER of 0.25%, about 13.5% of average returns, a fund volume of CHF 618 millions, and a daily trading volume of 4'293.
I also looked at UBS ETF (CH) SPI Mid (CHF) A-dis which is more diversified with 80 companies, but the fund volume of CHF 78 millions is too low for me.
Swiss bonds ETF: iShares Swiss Domestic Government Bond 3-7 (CH)
This mid-term bond has: a 0.15% TER, 1-2% returns, a fund volume of CHF 418 millions, and a daily trading volume of 842 — my current allocation will allow me to wait to invest into this one, which is a good news looking at the bad period that Swiss bonds face these days.
What ETF portfolio did you build to ensure a bright FIRE (Financial Independence, Retire Early) future?
N.B. I’m not a financial advisor so you won’t be able to sue me if you loose all your stash when investing on the stock market. What I share here is my experience, not financial advices.
]]>Now is the time to call back the money man that offered you the best mortgage rate.
This is a critical step. You’re about to sign for what will be your rent during the next five to fifteen years. You need to choose your mortgage based upon three key factors.
Key factor #1: Mortage type
There exists three types of mortgage in Switzerland: fix-rate, variable-rate and LIBOR-based rate.
The fix rate one is the most used these days as interest rates are very low, and people like the security feeling of knowing their rent budget on the next ten years.
Historically, it is nevertheless not the best option for two reasons:
Variable rate mortgages are not used a lot anymore as they are more expensive in this low rates period. The idea of this type is to follow mortgage market trends: if it goes up, your interests goes up; if it goes down, your interestes goes down. The bank where you have the mortgage is the only one who decide about the rate — i.e. there is no central authority who defines it.
It can be useful if you need flexibility though. For instance if you plan to make multiple reimbursements when you sell your property.
The last type is the LIBOR-based mortgage. It states for London Inter Bank Offered Rate — i.e. the average rate at which world leading banks exchange money between themselves.
Banks use it as an index for mortgage. Contract duration is usually of three years and the rate is updated every three months.
It’s quite recommended by independant advisors as it’s the most transparent and has the best past performance amongst all three types. They often say that it is for people that can handle the market peaks — which sounds like us, Mustachians.
Key factor #2: Mortgage tranches
Banks and insurances want one thing above all when it comes to mortgages. They want to lock you down within their firm for the next thirty years. To do so, they use mortgage tranches.
But this powerful money-making tool can be used in a way that it benefits you, not the bank.
The devil example: you sign for a fix-rate mortgage split into two tranches of respectively five and eight years.
What happens after the first five years? You are locked with your current institution. A transfer of an ongoing mortgage is either impossible or costly (with mortgage exit fee, and mortgage note to transfer to the new financial institution). The best you can do in this situation is to renew this tranche for only three years (to match the eight years of the other tranche). But the bank is free to propose you only “bad deals” for a three-years period. You end up choosing a longer duration to have not-too-bad-interests-rate. You are stuck with them. Bye bye competitors with your cheap mortgages.
Rinse, repeat, and pay expensive interests for the rest of your life.
The Mustachian example: you use tranches to your advantage. The first one is a LIBOR on three years; the second one is a fix-rate on six or nine years. This way you enjoy the security of low interest rates (like in this actual period), and you leverage LIBOR opportunities.
In a situation where you’re sure to live in the same home for 20-30y, a full LIBOR mortgage could be interesting if you look at historical rates. This advice takes into account that you’re a Mustachian who can handle peaks with no worries, thanks to your high savings rate.
As you understand it, the choice of duration and split percentage depends on your personal situation, and also on the market period.
The important point with tranches is to make sure to not be locked into one particular organization for decades. You want flexibility. You want the ability to choose the lowest rate on the market.
Key factor #3: Direct or indirect amortization
This factor might be the most stupid one. Which country could favor people to keep debt as long as possible in order to lower their taxes…
In Switzerland, you can choose to either reimburse your mortgage every month (i.e. direct amortization), or to open a 3a pillar and use it as an indirect amortization tool (i.e. the insurance part of the 3a is pledged by the bank).
The actual regulations say that the more real estate debt you have, the less taxes you pay. Also, if you have a 3a pillar, you can claim the corresponding tax deductions. Double-win to keep your debt the longest possible.
Current interest rates are so low that it’s really appealing to pay them, and to invest all the savings made on rent and taxes.
I’ll write a dedicated post on this topic with more numbers and examples as it can be confusing for newcomers.
MP mortgage definitive choice
We went all-in for this purchase, left with a cash cushion close to CHF 0.
In such a situation, we had to take a safety measure. We chose a ten years fix-rate mortgage. We could have taken a shorter period, but interest rates were so low historically that we felt better to lock it down for a long period.
You may wonder why we didn’t choose some LIBOR tranche neither? Well, even though our savings rate could allow such a decision, one of us could still be fired, and with two kids, we preferred to secure our budget while we rebuild our emergency fund. We’ll clearly have a different approach when we renew in ten years.
As for the amortization, we went for the indirect one.
In the event we didn’t touch to our emergency cushion, we would’ve go with two thirds of LIBOR to leverage the (very) low rates, and one third of fix-rate to keep a safety margin.
There is often a delay between the time you visit your money man and the actual notary signature. Mortgage offers are usually valid for thirty days, and if your transaction last more time, you will have to get a new proposal with an updated rate — which might be higher or lower than the initial one.
A solution banks and insurances provide to lock a fix-rate is called the forward rate.
I saw two types of “forward rate” during my journey.
The first one: companies claim it is free, but in fact they start the fix-rate duration at contract issuance. This means that if you get your five years fix-rate contract signed on the 1st of July, and start the mortgage at notary signature on the next 1st of January, you will end up with a contract duration of four and a half year.
The second type is that you pay to lock the rate (either a fee, or a slightly-raised interest rate).
We chose the first type of “forward rate”. Hence we have a shorter mortgage contract (~9.5 years instead of 10). At the time, I was disappointed to lose half a year of very low interests. Now, I see it as an opportunity to switch to a LIBOR mortgage sooner than expected.
New 3a pillars to open
When you want to go with an “indirect repayment strategy”, you often get enforced to choose a third pillar from your lender.
Their conditions are far from optimal — compared to the best third pillar out there — but they nevertheless propose third pillars invested in stocks.
When I went to negotiate with the money man back in July last year, he offered three third-pillar options. I told him that I would like the one with the less fees and the most invested in stocks, to which he answered that it should be fine.
He was convincing with his suit and paternalistic tone. He told me to not stress out. I should focus on my mortgage and apartment negotiation, he said, and that we still had until November to finalize it all to be on time to leverage tax optimizations.
In this period, my focus was to get everything in order to sign the real estate forward-sale contract, lock the transaction, and breath again. I listened to my lender. I did not worry about the third pillar opening.
Fast forward in November. I contacted my money man so that we meet. I went there well prepared about what I wanted. Prepared about the worst third pillar my lender would try to sell me. But not prepared to the “I understood what you want, but I’m worried that my mortgage department may impose another one.”
One day later, he emailed me. I was enforced to take one of the two least interesting options due to our borderline 20% financial situation. And he went on to propose to split it into one for my wife, and one for myself. I asked for another meeting.
I went there again. After one hour of negotiation, we found an agreement that I accept his third pillar, but that I take it all under my name. I wanted to keep the possibility to choose a Swisscanto product for my wife.
You may ask at this point why I didn’t step back and claim that I would not take his mortgage if I couldn’t choose my third pillar? Well, remember that the mortgage contract was signed since July, and that we were in November finalizing the side contracts.
You’re right if you feel he cheated on me. I felt it too. Still today actually.
The lesson I learnt is dead simple, yet we overlook it when under time or trust pressure. The lesson is: get important and implicit agreement written down. That’s it!
I won’t mention the first contract draft he sent me, which was containing the worst third pillar option. I politely told him about the mistake. The correction — as well as excuses — were made in the next 24h. Was it a sales strategy or not, I will never know. What I know is that the trust is broken. I consider him as yet-another-money-man, versus someone to whom I will ask other services.
Existing 2nd or 3rd pillars to withdraw or to pledge
As a confident (stupid?) poker player would do, my home purchase looks like an “all-in” strategy. Still, I felt confident. I used my second and third pillar money, and my wife pledged her second.
I convinced myself that we never know which laws will be invented in the next three decades about the rights that we have on our personal pillars. Hence that it was better to put this cash at work for now, and not let it sleep into a low interests pension fund.
If you play this withdrawal and pledging game too, the thing to do is to get the cash out of your pillars on two different fiscal years.
This simple rule is also valid when you will reach the legal retirement date.
The law dictates that the percentage of taxes increases the more you withdraw. Why would a Mustachian refuse himself to save several thousands!
We saved around CHF 1'000 by doing so.
You can find one concrete example with numbers in this VZ article (DE here, FR there).
Taxes and fees
I presented the taxes we had to pay on our second and third pillars’ withdrawals in the first article of this serie.
But there are more. More debits to your hard earned money!
For my second pillar withdrawal, we had a CHF 500 fee to pay.
And for the pledge of my wife’s one, we got a nice CHF 200 invoice…
I can’t wait for fintech to fix these non-sense fees!
It is worth to check your contracts to see if the amount of fees is worth the withdrawal.
I remember to be lost in a vicious circle during this contract step. I needed to backup my financial engagement with a mortgage before signing at the notary (that’s a legal requirement), but I also needed to have locked the real estate transaction before signing a mortgage contract.
Be reassured! My lender confirmed that if the deal was cancelled, the mortgage contract would be voided as well.
Be really careful that financial people don’t cheat on you as it happened to me.
Be strong. Be rude if needed. You won’t see their face for years, and they will have changed company in between anyway!
Focus on numbers and contract details. Don’t worry about how you look with your picky questions on the fine print of the contract. Dare to ask for a written confirmation of what was said in a meeting.
You got to fight for what you want. No one else will do it for you.
If you’re still alive after this more-than-two-thousand-words post, it means you made it!
Next step is notary signature. And a bath of Champagne — just because you deserve it.
But don’t think you’re all set… You gotta show off the real cash now!
There are interesting details to know. When to hand the suitcase? How much money goes to whom during a real estate transaction (although you might only care about what goes out of your pocket)? What Champagne brand does MP recommend to celebrate such an event?!?
If you’re on your way to home ownership (or already a home owner), let us know about contractual details you faced, or ones that apply to different types of real estate transaction.
]]>I’m excited to announce you the launch of the Swiss FIRE (Financial Independence, Retire Early) Community! You can find it at this URL: forum.mustachianpost.com.
Whether you want to challenge your boglehead ETFs’ portfolio, or to find the cheapest healthcare insurance, you’re in the right place. It’s all yours.
I count on you to make it a living community where people inspire and motivate each other. If you are a rookie, feel free to join as well to get help with your first steps in this amazing realm.
The more we are, the better our learnings will be.
Below is a list of the forum categories. I will adapt them following your feedbacks:
Let’s the financial discussions start!
]]>It’s now time for the step I find the most interesting!
You have to negotiate the final price of the property and the conditions of the deal.
Beforehand, let me share with you all the know how I learnt during my home purchase experience which is useful to be aware of before you start any price discussion.
As with any transaction, timing is important in real estate.
You need to know where you are on the Negotiation Power Curve so to leverage all your potential appropriately.
For a real estate deal (at least in the case of a new construction), the curve is split into three phases, each with its different level of negotiation power.
Negotiation is not being a bullshitter. It’s not about manipulating people. It’s not something you’re born with. No, negotiation is nothing of the sort.
Negotiation is an art. A skill. Something you can learn and hone.
There is a book I discovered some years ago. The 101 of “Negotiation”. Once you’ve read it, you’ll have a framework to handle any problem that needs a solution (including the discussion with money men). Life changing. I use it for all my negotiations.
Please note that this book is all but a way to learn how to put pressure on others, or similar dirty tricks. It’s a way to negotiate in a fair manner.
A funny fact about it is that it was initially written decades ago, and withstood time.
The authors wrote the book as part of a renowned program of Harvard University. Many more books (also part of this program) have been written since then, that are all worth being read. This one is the starting point.
It is called “Getting to YES: Negotiating Agreement Without Giving In” (Amazon DE, FR, UK, US).
You must read it before your home purchase.
It provides a four-steps method to handle any problem-solving situation:
As an example, we can fill the step 2 together based on the negotiation power curve we just discussed before.
When you are in the first phase “Promoting”, one clear interest of the promoter is to sell his first apartments as soon as possible. His position may be to stick to the brochure price, but you can satisfy one of his interests by signing the contract right away instead of taking your decision after several days or weeks — in exchange of a discount obviously.
On the other hand, one interest of the promoter during the second phase “Construction” is to finish the building the soonest possible. He doesn’t want to bother with sales nor with tile-color-choice workshops. If you try to get the deal against other potential buyers, one way to satisfy his interest could be to commit to a maximum number of workshops, and also to deadlines for your choices that you will respect carefully.
This could help you to win the deal.
In the third phase “Post-construction promoting”, the promoter wants to sell quickly, again. By stating you’re paying in cash, you could sign at the notary office the next morning with money in his pocket the day after.
You unlock his next building funding. He offers you a decent rebate.
These situations are only examples to show you how one can — and need to — be creative when looking for solutions. For sure there are many more interests to be uncovered in order to propose appropriate options that provide mutual gains for both parties.
On our side, we had a crush on this apartment. We never saw a new construction with so much character, in our area, and so “affordable”.
Our interest was to buy our first home.
We knew we were backed up by financial institutions up to CHF 700'000.
The initial price displayed on the online ad was CHF 670'000. We were so excited that we forgot to hide it during the first visit with the salesman, in order to keep some negotiation power for later on.
The guy told us to think about it for one or two days, and to contact him back if we wanted to make an offer. It was somehow pre-booked for us during this timeframe.
Then, we got to meet the promoter for a second visit to supposedly confirm our interest with a double check. This was an excuse to get an apointment to announce us that there had been a miscommunication between the real estate salesman and the promoter: additional expenses during the construction phase brought the apartment value up to a new total price of CHF 700'000…
We were so angry and disappointed. What to do. Just give up? Or accept and sign for the home we were dreaming about?
Side note: When I think about it nowadays, I can’t help myself but to still think that the real estate salesman talked to DL, who informed him about our top limit of 700kCHF. Then he called the promoter to let him know about a potential buyer, and they played this fake meeting to announce us the additional expenses. Coincidentally, the new price was just corresponding to our maximum target… we will never know.
I’m sure it wasn’t that legal (if you’re lawyer, your opinion would be appreciated!) to propose an offer about a displayed price and not respect it. Although the guy was smart enough that he didn’t ask for a proper offer, we nevertheless confirmed our interest for 670kCHF by email and asked to meet to finalize the deal.
That being said, we ended up in a final negotiation, in the worst phase of a real estate transaction (i.e. the second one), where our single option was to go low profile so that the promoter accepted to sell at this point of time. An alternative was to wait for the building to be finished and try to re-negotiate then, with the possibility that the apartment would be already sold…
We tried with a proposal of 690kCHF. The promoter made a counter-offer of 700kCHF, with an additional 5kCHF envelope to spend on kitchen equipments. They played the “Take it or leave it game”. We didn’t want to play the “We don’t accept, our last price is 690kCHF” as we really wanted to buy this home. We accepted the promoter’s deal.
In another situation where we’d have had more than one apartment option, we’d have asked to negotiate directly with the promoter, but that was far from being the case.
To give you a timeframe, the first visit was the last week of May, and we closed the deal during the first week of July.
We learnt the following lessons: treat your home purchase as a business transaction, at least in front of the sales; don’t be as emotional as we were during the visits; don’t show your excitement in the emails you exchange; don’t give numbers, stay vague; and finally, don’t accept to hand in numbers to third party partner companies as it’s almost sure some information will get disclosed in one way or the other, and will be used as a negotiation tool to not lower the price — or even raise it!
You’re about to make the biggest purchase of your life. It’s a great adventure. As such, it needs to be prepared. You need a strategy. Read this 101 negotiation book that you can find on Amazon (DE, FR, UK, US).
Once you’ll have gone through it, I will need you to focus. To be determined.
Remember one thing before any visit or apointment: the next thirty to sixty minutes will be decisive for the base price and interests you will pay during the next decades.
You have to feel confident like an athlete before a competition. It is your competition. You set the rules. You win!
Don’t hesitate to come over the blog and ask for support if you’re in this hardest step of the process.
Whoooaaaaa! You got out of this intense negotiation apointment. You closed the deal! Congrats!
Now that you agreed on a price, go celebrate to recharge your batteries. The next run is coming.
Although you’re very close to the end, you need to be careful as that’s during the next step that you will sign for what will be your rent during the next five to fifteen years.
There are many contractual details to be aware of. We’ll review them.
I’ll also explain you how our lender cheated on us, so that you don’t fall into the same trap.
If you’re on your way to home ownership (or already a home owner), let us know about your negotiation best practices.
Note: if you choose to buy the book, I’ll get an affiliate reward from Amazon — without you paying more for the item. As usual, be aware that I only share book references that I’ve read. I recommend them in the hope that they will bring you as much value as it did to my personal life.
]]>We crossed the finish line some months ago, finally.
It could have been faster if I knew about these strategy tips back then.
I lost a lot of time. Which altered my motivation. Which in turn made me go slower. Vicious circle.
Retrospectively, I identified three pitfalls to avoid that could help anyone reach paperless-status in 90% less time than it took me.
1/ Make it a sprint, not a marathon
With some thousands of sheets to scan, I first tried to build a habit of “5 documents scanned per morning”.
It worked for a few days, and then the calendar reminders started to stack in my inbox.
Instinctively I waited for the weekend to process these todos all at once.
It took me some months — and a week-end with no plans — until I spent two days in a row to scan everything.
For such a boring task, moreover a one shot, make it a sprint. Not a marathon.
My mistake was to consider it as a potential habit. But habit are here to stay. Not this todo.
2/ Batch per tasks, not per process
My process to digitalize paper is:
My first attempt to make it a habit was a batch of 5 times this process.
When I realized it would take ages, I found a way to trick myself: use my aversion to disorder as a motivator.
I batched the scanning per task: first, scan all files (step A) and store them in one single folder, with the Scannable default name. Every time I would need to find a document, I would have to open my Mac, and go through each file to find the one. This would drive me crazy; and that was the goal.
My second task batch was to rename all files properly (step C).
The last batch was to put scans in their folder (step B).
My mistake here was to not leverage industrialization processes that Henry Ford and others have identified some decades ago. Remember: when you’re stuck on some task, never forget that there are 99.9% chances that someone else in the world already faced the same issue, and that he wrote about his solution!
3/ But what about important contracts?
At one point, I was stuck with one binder containing our home deed of sale and mortgage contract. I knew I needed to scan them but I couldn’t imagine to throw away such important documents.
Would it mean I would never become paperless after all?!
There were also the official diplomas, current work contracts, and some more. All in different binders.
This fear of never reaching paperless-status stayed until I overcome it with a two-steps solution:
It feels so great to be paperless, so practical too. Now I have everything with me, everywhere, at anytime.
Got this administration service lady on the phone who asks you for an electricity bill as a proof of residence? Twenty seconds later, she gets a Dropbox link in a her mailbox. That’s what I call handy technology!
No more fear like “what if my house burns” neither. I don’t care anymore. We’ve got backups.
Last but not the least: this clutter-free feeling you experience with every new incoming (post) mail. Let’s say it’s a bill to have the most complete usecase:
You got to experiment this freedom, really. Moreover it’s way faster to reach than FIRE (Financial Independence, Retire Early), you don’t have any excuse!
So, when do you start?
Note: for the early followers of the MP’s blog, you’ll have noticed that there is a lie in this article: I’m not completely paperless… Indeed, there is still this one big IKEA box with all our postcards and wedding/birthday/etc. invitations. And also recipes of my wife, but I gave up on this latter.
Anyway, I could not imagine to not share this important minimalism step with you. So let’s call myself…administratively paperless!
As I blog anonymously, and don’t talk about it in real life — except to my wife, I thought that the best accountability partner I could find amongst my close relationships is actually you, dear reader.
If you’ve got ten minutes, I’d be keen to explain you why I’m passionate about writing.
Since my childhood, I always loved to write. I liked the feeling of writing. I was amazed to see the thoughts coming from my mind, down to the paper through words, written with a beautiful ink pen.
I remember I took pleasure in writing novels when I was young. I even won a prize for one I wrote when I was about 10-12 years old. I was so proud although this was unexpected as I didn’t really prepared myself for it, nor defined any writing technics to make sure my essay would be the best I could submit.
Later on, my pleasure was to write letters to my friends, including girlfriends…
I spent evenings replying with passion to these messages, trying to find the correct words to transcribe accurately what I had in my mind.
And these English and philosophy classes… I remember there to have identified a pattern to get good grades.
Each time the pattern was used, I would get congratulations from the teacher as he really felt engaged with my words. Really, no kidding. This English teacher was cool!
“What was the pattern?!” you may ask. Well, nothing very innovative. Quite obvious actually.
It is inspiration. Every time I would face a topic that inspired me, good grades were almost ensured.
I remember this essay where I could talk about how I was proud of my grand father who participated to the WWII, with all his heroic stories. Inspiration, that is.
Then I lost this passion after high school. New interests. Applied sciences. More computers and chemical formulae. Less rhetoric art.
Blogs started to emerge then. From day one, I felt attracted by this new way of communicating.
Write. Edit. Publish. The world can see what’s in your mind. Amazing.
When I started at my first company, I created a blog to share the learnings from my field. I liked it. A lack of inspiration as well as a lack of personal stake made me let it go after some posts.
And then, mustachianpost.com.
I felt the urge to apply Mustachian and FIRE (Financial Independence, Retire Early) principles to my life the day I first read about them. On my journey to figure out the Swiss specifities of this realm, I discovered that not much was being shared. Almost nothing.
I then started to document my first steps. At the time, I wondered whether it was a passade, and that once a new project idea would popup, I’d drop this blog.
It was somehow the case during 2014 when work suddendly became more intense, and that I didn’t have writing habits setup.
It made me sad to not write. Exchange and share my journey. Have a voice in the FIRE community. I missed all of that.
That’s when I read about Essentialism. I decided to throw away other side (idle) projects, and to put all my focus on my two passions: writing and personal finance.
It’s quite funny to love something that is so hard. I mean, every new blogpost starts with a blank page. It’s painful. But you just need to get started.
Then you need to edit. They say that “For every hour you spend writing, spend three hours editing.” That’s hard too.
But it’s so rewarding. You hit this “Publish” button. And then you check Google Analytics to see that people actually read what was once into your brain. I’m still astonished by this.
And what to say about this feeling when you get your first comment on a new blogpost…
I always felt that words were my vehicle to express my creativity.
But I was (I still am) often jealous when I saw designers who crafted beautiful websites, or architects who were able to translate the vision of what is “a modern room” on paper. It was visually attractive. More than a series of words.
Now that I take the time to reflect and explain it to someone else, I think I got something.
Creativity isn’t represented solely visually, like a painting or a design.
Words can transcribe creativity. My words can transcribe my creativity.
This is inspiring!
Some months ago, I said to myself: “I sure love to write but I feel there are patterns that produce good blogposts, good content. But it’s hard to tell which ones, and to identify them.”
Some bloggers I follow really manage well their words in a way that I can’t stop reading their posts before I reach the end. It’s engaging. It’s inspiring. I want to learn the technics to achieve the same level of writing.
I then googled something like “how to write good content”, and stumbled upon magic methods to get 1 million page views — sounds familiar isn’t it.
I refined my search until I ended on this page: howtowritebetter.org.
I can remember the headline without opening the site: “Words have power.” It stuck with me.
Then it continued with “You want to write more concisely, more clearly.” This was exactly what I was looking for. I decided that this class was for me the second I saw its author’s name: Joshua Fields Millburn, from theminimalists.com.
So I started this course. Hopefully my future posts will be more and more captivating and inspiring. That’s all I wish for this blog.
Voilà! I think we spent our 10 minutes chatting about me, and I thank you to have listened, dear close relationship. If you have any questions or remarks, I would be happy to continue this discussion via the comments’ section below.
And you. What are you passionate about?
Note: I’m not affiliated with Joshua/HtWB. As usual, I would inform you about any such link. And also, I only write and review things that I trust and use in my personal daily life.
]]>I’m excited to welcome as a first guest my fellow J. Money from budgetsaresexy.com.
Let’s see what he is willing to disclose on The Internet (come on, we talk finance here, how’d you think about that)!
1/ What are all the numbers you’re disclosing on the Internet, and their values?
I’m the biggest fan boy for disclosing net worths (since it keeps people SO accountable, especially myself as I have to show the world it every month!), and right now that’s exactly $513'016 - which covers all savings, investments, assets, etc.
Our kids also have their own net worths we divulge too: $5,596.91 for Baby Penny and $4,305.23 for Baby Nickel.
I also disclose our cars worth: $1,000 for Frankencaddy, and $4,203 for my wife’s Toyota. [MP note: we had the interview some time ago and J. was still the owner of his beloved Caddy…]
As well as some of the apps I test out: $4,004.75 total saved using Digit and $402.15 total invested using Acorns so far.
I used to share all our debts like mortgages and credit card stuff too, however I’m proud to say we have absolutely $0.00 left after just selling our house - woo!
My goal is to give people an inside look at someone’s real-life finances, so I’m a strong proponent of sharing both the bads and the goods with money. It’s what got me hooked (and learning) about finances myself through personal finance blogs, so I’m happy to carry on the tradition!
2/ What are the numbers you’re not disclosing on the web - and why (be it salary, money you make via your blog, groceries bill, etc.)?
I don’t post how much I make off the blog or any of my projects - though it’s all reflected in my net worth updates as far as how it affects my total income.
I feel like you usually choose one or the other to post online, but not both? Maybe because it’s overkill or it’s just weird saying “hey! here’s how much $$ I made off you this month!” Haha… Though I’ll admit it is pretty fascinating to read as a blogger in the space :)
And quick plug for my list over at Rockstar Finance where we showcase the net worths of over 200 bloggers who post ’em up. If you love seeing peoples’ money, you’ll definitely want to click on that link.
Other thing I don’t disclose anymore (but I used to) - my budget. When I was first getting a handle on where all my money went and started my blog (Feb of 2008) I used to post it up monthly to help others get a good picture of how I did things…
But as the years went by and my spending got back in my control I stopped tracking every last penny and out the door went the sharing of my budget as well. It also became a lot of work tracking everything for yourself and THEN also for the blog readers too, which is probably another variable into why bloggers tend to only post one main transparent piece of the puzzle each month…
3/ What is your take on blogging privacy? You don’t care to be identified? Was it always the same or did it change overtime? For instance when you were an average employee, did you disclose your salary on the blog without the fear that your colleagues would discover it?
As ironic as it is, I prioritize anonymity pretty high in order to be more transparent with my finances. And as my net worth, as well as my family, have grown over the years, it’s helped to give me some much needed privacy as well. Especially from the psychos online that will literally threaten you and your family for no apparent reason whatsoever (I’ve gotten over 70 death threats from a single person before - not fun). You can only do so much to protect yourself of course, but having these obstacles in place certainly helps.
I first started with being anonymous in both name and face/pictures, but over time I’ve revealed myself more and more since I attend a lot of conferences and other fun meetups, but my name is still very much anonymized. Though I have joked that one day I might for real change my name to J. Money since he’s much more popular than the “real” me! :) Plus, it’s pretty fun having an alter ego and nowadays going under a pseudonym isn’t as shunned as it used to be.
For anyone starting out and struggling with which way to go, just remember that you can always divulge more later, but you can’t very easily do the opposite. Once you’re out there you’re out there.
4/ But don’t you fear schizophrenia? Who are you with real people close/around to you? Do you reveal your real life name to people at conf? Or they call you J. ?
It was weird at first, but it’s been so long now (8 years!) that I’m used to it :)
I literally have double of everything (email, phone #, etc.) so it’s easy to at least not mess up technologically, but more people know me as this J. Money character than my real self for sure, haha…
But yes - I do have to be careful with what I say and to whom and to how I intro myself in person. I do my best to give my right nickname to the right person though (I have like 3 of them! haha..) so that way depending on how they address me I know exactly where I know them from and what I’ve told them or not… I only go as “Jay” around financial blogger people, whether online or on skype/phone/conferences etc. and rarely bring up my stuff outside of that unless I think it’s worth divulging in the “real” world…
Most times people don’t even care though or remember since who likes talking about finances for fun? ;)
5/ What about family and close friends? They now know about your blog or do you hide it?
I was super sneaky about it the first year or two, but they all know about it now for sure… Though they still ask me what “I do” approximately 13 times a year so I can probably just tell them my blog is the Mustachian Post and they wouldn’t know the wiser ;)
6/ Last but not the least: it is easy to disclose a one big net worth number as it protects your identity. Do you confirm you wouldn’t show exact numbers about let’s say your car insurance or any other thing so that people working there can’t even find your identity out?
Oh, when it comes to $$$ I disclose everything to the penny unless I’m being lazy or just rounding up for effect. I guess an employee could try to look me up that happens to be curious, but is there a way to do that based on an exact bill amount? Or amount in my savings/investments?
I’ve worked in a lot of customer service departments and have yet to see that search feature, haha… But sure - better odds of them figuring it out than someone off the streets I suppose. If they can figure it out they can win the prize of my real name :)
7/ BONUS: as a last crispy voyeur detail from Jay’s life, can you tell us how much you’re making per month on average as a full time blogger/online entrepreneur (for the ones who don’t know, J. quit is 9 to 5 job some years ago and live from his passion since then)?
Oh man, that’s a tricky one as it fluctuates so much…
When I’m on my game and paying attention to the business side of things which admittedly bores the PANTS off of me, I’ll make $10,000-$15,000/mo, and the other times when I’m treating it more as a hobby than I should (just cuz it’s way more fun!), I’ll make $6,000-$8,000/mo.
So really depends on when you catch me :) I think the most I ever made one month was $30,000 and the least $3,000 so it can get pretty wild up in here…
8/ BONUS BIS: What is/are the activity/hustle that brings in the 80% of your monthly income? Don’t tell me it is Adwords on RockStarFinance?!? ^^
Hah! Rockstar doesn’t make much money actually - more of a passion project than anything :)
I’d say 80% of my income these days are affiliate-related from sharing products & services I love and use myself. Though unfortunately there’s only so many of those, so it’s kinda limited until I stumble across new ones… Sometimes I wish I was just in it for the money so I could pimp any ol’ product that paid well! There’s a sickening amount of money floating around online, it’s pretty incredible.
9/ Final question as it might interest readers too: what is the 20% of exact products/services that bring in the 80% of cash?
[Jay didn’t want to share this infos but agreed to explain why.]
Yeah, not sure exactly why it makes me feel weird? Nothing really too exciting or sneaky I’m hiding…. in fact, there isn’t one main affiliate I have - rather just a handful of them that combined total a larger amount. So you’re not losing anything from omitting this question :) Just more comfortable with personal $$$$ than business $$ details.
Thanks again to J. Money to share with us such interesting insights.
I find it so valuable to know how others perceive the privacy topic.
If you’re interesting in showing your numbers to the world, just ping me and we’ll organize an interview.
]]>You now have a concrete usecase to present to the money men. Are you ready to dive into the sharks’ pool?
Before finding a concrete property, I went to see banks and insurances, with barely the 25% cash needed.
The goal was to know until which amount they’d follow me, and under which conditions.
As it was all hypothetical, these meetings were kept short by the salesmen and I was out after 30 minutes of meeting with a “Contact me as soon as you found your future home”.
The day I brought back a real case study, it was a whole different story.
Even though it may sound like a cliché, it is actually the reality: I got welcomed with the red carpet now that I was a potential client.
It is your moment of glory. And in the same time, I remember the apointment with one of the selected banks; when I entered the salesman’s office, I read in the banker evil smile: “Look at this fresh and young meat, it’s gonna be an easy and highly profitable contract with the highest rates and conditions one could ever get. Yearly bonus, here I come!”
Nevertheless, you must be confident.
I repeat it: it is your moment of glory, not theirs.
You’ve got the power to say no in the end.
The hardest thing is to be rational and avoid any emotional decision based on “That’s my dream home, I want it no matter what!” — easier said than done, I know…
That is also why to have the 25% or more in cash is so important: it brings you so much confidence and avoids you to sell your case too short.
The behavior I recommend you is the following: play the competition game by giving them valid reasons why you are coming here.
For instance, tell your current bank A that you checked the company B as one of your friend works there — and not that “You wanted some competition to happen”.
Or claim to company B that you come to meet them as they are famous for their low rates, and because your current bank A didn’t manage to satisfy you with their conditions.
1/ Hard pressure from the salesman
Remember the banker with the evil smile? After our meeting for the mortgage, he sent me his proposal.
With it, he informed us that he already opened a third pillar account where we’d need to transfer the cash from our actual one.
He even provided the account internal number as well as the IBAN.
This can stress you out if you aren’t confident with laws: I didn’t sign any damn paper so I just ignored the underlying pressure of a potential “No” from my side — it was his problem if he’d need to close this account.
I still wonder if a third pillar transfer of cash — even without any contract signed — would imply an implicit agreement that locks you down…
Bad practice anyway. Stay away from this kind of people. They don’t play it fair.
2/ Upselling overdose
When for a “standard” mortgage, one proposes you — with no alternative solution — no less than three new third pillars, just run! Even if this is the house that you dream about since years!
The guy was such a “good” salesman: he took his time for the meeting even though it was later than 7pm (rather unusual in Switzerland). He even took the time to bring me back home — faking that it’d be faster than my bus. The guy was nice, starting a small talk along the way about family, job, etc.
This should be an alert when you get the combo “Huge upselling+uber nice person”.
Don’t get me wrong, I know how sales work and I do appreciate that someone takes time for me; it’s just the other part of the combo that made this case insane!
Sidenote: it’s quite usual that companies push for a third pillar opening at their company when you come for a new mortgage. One is OK, three is crazy!
3/ High mortgage rate and third pillar enforced, for no added value
Back in July 2015, Swiss mortgage rate average was between 1.8% and 2% for a fixed one on 10 years.
The evil smile guy — him again! — dared to propose me a rate of 2.25% as well as a new third pillar. All that for what added value compared to others: none!
As a Mustachian, you must get that a fixed mortgage is a thing you setup and forget afterwards — there is no added value to be in this bank or this insurance, except their numbers.
You don’t need a super customer care team nor an uber nice sales contact person. You won’t see them before the end of the fixed period, ever!
What you will see is only the regular mortgage interest bills. That’s it. So, better if they’re as low as possible!
And keep in mind: bankers are here to sell you their highest rates, and insurances their third pillars based on life insurance. Definitely they aren’t here to make your life cheaper!
As a reference, I want to share the rates proposed to me last year (for a 10y fixed mortgage). Notice that I’d only the 20% bare minimum cash in bank — vs. someone who’d have more negotitation power with more %.
Even if the comparison list below is a good representation of company rates’ ranking, don’t take for granted that this is the cheapest company, and that is the most expensive: this is only my experience and you’d go check by yourself. For instance, some banks offer special mortgage rates when they open a new office; I’d feel bad if you miss a nice deal because of one blogpost!
Cheapest first:
As a reminder that one can’t predict any market: I thought “less than 2%” was crazy at the time, but as of today (i.e. August 2016), rates are lower than 1.5%!
Thankfully, I wasn’t overbooked at work when we decided to go for our future home.
Visiting your money men is like a marathon.
In less than two weeks, I had all these seven meetings plus all the homework, as well as the online research to try to find a better deal and more detailed infos about mortgages.
This is the required time to invest to not lose your opportunity.
My advice to you if you’re close to find your property: arrange your work and personal schedule for the next two weeks to one month in order to have enough margin. This will help you to step back and keep a clear mind for such an important and emotional decision.
You probably heard the open secret that some companies still finance the extra 5% of transaction fees. I heard it too but still wasn’t sure as no bank nor insurance really confirmed it during the first step of this quest.
The answer is: yes, some banks and insurances still finance these 5% of fees.
Insurances seem more free to do it (from a legal point of view), and banks play the “you’ll have to go through a special committee” motto.
Although it is far from ideal to be in this situation as your negotiation power gets reduced, it is still good to know it.
We were somehow in between as when we signed for our home, we didn’t have all the 25% cash, but the 6 months between the transaction and the final signature allowed us to get it all, right on time.
We discussed this d-l.ch in our first article of this serie.
As a reminder, you basically pay them CHF 900 and their job is to find you the best mortgage rate out there.
As a brokerage firm, their model is based on preferred partners like insurances and often Credit Suisse it seems. There is still the risk that they make money via commissions on life insurance sales.
Nevertheless, from what a friend in the financial field told me, the real estate financing file they provide is good, at an “affordable” price.
All in all, I think it can be a good service to use as you can save so much on the mortgage interests in exchange of a one-time low fee.
At worst you lose CHF 900 if you found a better deal than them…
If I had to do it again, I would 1/ ask a friend to look for a mortgage with my numbers to the companies I’d like to check, and 2/ go to DL to check if their deals are better. The reason of this strategy is that it’d avoid DL to ask one company you already checked — both the company and DL would feel like doing the work twice, something that no one likes.
If one of you, dear readers, already used their services, please share with us your feedback about this company.
Here we are: the step I find the most interesting!
Now that you found your best mortgage option, meaning you’re backed up by a bank/insurance contract proposal, it’s time for you to negotiate the final price of the property and the conditions of the deal!
We’ll list the different negotiation phases in which you can be during a transaction, so that you know how to get the best price no matter when your purchase happens.
I’ll also reveal you the single book I recommend to lead any negotiation (including the discussions with money men): life changing!
If you’re on your way to home ownership (or already a home owner), let us know your strategy on how to deal with money men.
I will update this blogpost based on your comments.
There is a reason behind this silence: I stopped to invest. It sucked anyway.
I expected to make 100-200kCHF of dividends after more than one year of patience… but it didn’t happen… I mean, why would I lose 30min per quarter to win a ridiculous 4 to 8% of compound interests, and pay many broker fees moreover?!?
So I stopped. And luckily I found THE thing that works for me. Actually there are two.
I’m 100% sure they will make me richer than this previous stupid stock market strategy!
I will share it with you as that’s why I created this blog: to share my failures, but also my wealth secrets.
Are you ready to be rich?
The first decision was to put this money into the bank where it’s safer — they even give you some interests on their side too.
The second decision was to start to play lottery and cross my fingers every day.
Are you still reading?
Come on, this was funny, isn’t it?! Moreover on a non-“April Fools’ Day”!
In the paragraph above, there was one truth, and two lies.
I still don’t use a bank’s savings account as vehicle, nor I play lottery.
But I stopped to invest one year ago when we actually took the big leap.
We needed most of the money for the purchase and although we could have left some cash into the stock market, I played it the conservative way to avoid any market bad surprises.
And here we are one year later, waiting impatiently to be back into the stock market game, while we currently finish to build our emergency cushion.
Although I wasn’t active in the place, here are a few takeaways I wanted to share with you regarding my previous portfolio:
I’m currently checking what will be my future portfolio, as well as which broker to choose. Feel free to share any good hints you may have found.
Happy investing!
]]>I assumed it was the normal path of any rookie blogger that wants to start a blog on a good track.
Who wants to create another blog from scratch because he realizes he disclosed too much information, and isn’t inspired anymore because his privacy bubble, where no one judges him, broke off…
After blogging for more than two years, I’d still struggle to know if it was a smart decision to disclose what car we own or which bank we are registered at, and lately to reveal our salaries.
On the other hand, I love blogs where all crispy numbers are revealed, and even more if there is a real person behind the story so I can relate to his/her situation.
As for everything I don’t know, or that I want to learn about, I follow my rule of “Ask the person who faces the same situation and knows more than I do”.
Which is why I start this new series called “Show me your numbers!” where we’ll discuss about blogging privacy.
You wonder why I named it this way and not something like “Blogging privacy: what should I disclose and what not?”
That’s a good question!
The first reason is that I’m an incorrigible (money) voyeur — like you are.
Secondly, I wanted to make it a learning for the interviewed persons as well so that they tell — without deep theory thinking — which are their public numbers and which not, and then reflect on the reasons why some digits are more comfortably disclosable than others.
For our first interview, we’ll be lucky to host one of the most famous personal bloggers out there. Be ready.
Until then, enjoy a nice summer!
]]>Our first visit happened some months after our initial research phase.
I wished someone could have shared with us the key questions to ask and the most common pitfalls to avoid.
I don’t want you to repeat my mistakes!
That is my first lesson learnt.
Like a well written blog post, one key element of a good classified is its story telling tone. It makes it engaging. It makes you dream about your future home.
Except that qualitative presentation and inspiring stories are called marketing for stuff on sale!
The only thing that can disentangle your dreams from the reality is to check the property by yourself.
Our first visit was an apartment close to Yverdon-les-Bains train station.
It was a brand new construction as we like.
Despite the nice pictures on Homegate, the reality check made us realize that the sun was hidden from 4pm on (have you seen our winter’s duration in Switzerland?!). No picture described this. I even knew about the sun exposure and it wasn’t a blocker since the pictures were so nice…
The closeness with other buildings weren’t on the picture neither.
Another bad point was the feeling.
We had the floor plans and knew the dimensions were OK.
When we visited the property though, the feeling was so different from cold square meters. It felt tiny. Too tiny for us.
Thankfully we didn’t buy this one as we learnt some weeks ago that material quality used by the constructor was poor…
The opposite to the previous statement is also true.
We almost missed our life opportunity.
This property is now what we call our home!
We saw this classified of a gorgeous rural farm, composed of few apartments.
I went there to check what was around and follow my first advice.
On the marketing brochure, the close neighbors weren’t mentioned.
I came back home and told my wife that it was a nogo for me.
Yet she persuaded me to visit it as the apointment was already setup.
The next day, we entered the apartment.
It was a revelation. It was clear for both of us: this property was our home.
About my “too close” nogo, it was due to scaffolding which were giving a wrong visual impression.
Enter. Then decide.
I’m glad I’ve listened to my wife!
You have to be prepared before a visit.
The stronger your questions, the less you will risk to face a real estate agent who try to rip you off.
It will help in the next negotiation phases.
Document yourself and think you are knowledgable when you visit.
Don’t feel “less good” than your real estate agent.
As said the author D. J. Schwartz: “You are what you think you are.”
I started to prepare you a list with things to ask like:
Then I realized that someone surely had created such a checklist. I found several ones.
I would recommend you this one in English from Homegate.ch. It is quite complete and even has some questions I didn’t think about.
Print it and fill it together with the real estate agent.
If the guy/gal feels upset with all your questions, don’t feel bad. We talk here about one of the most important purchase of your life.
We lost negotiation power after our first visit.
We were so cheerful in our reactions.
The real estate agent must have thought by the end of the visit: “It’s gonna be an easy deal with this young family!”
Instead, you should mention all the cons out loud during the visit. And keep the good points for the debrief with your wife afterwards.
I don’t ask you to play gambling negotitation, just to not reveal your interest until it becomes necessary.
If you’re in a situation where you’re not under pressure - i.e. 50 visits of the property planned the same day - then don’t share infos about your numbers with the agent.
They almost all ask what’s the status financially, which is normal as they don’t want to lose their time with lurkers.
You don’t wanna give them weapons for the future negotiation phase…
Simply say you’ve got the required amount of money for the property.
Be also careful with partnership between the agency and real estate financing solutions’ companies.
The agent tells you that you can get free help from a financing company which does the mortgage research work at your place.
I have no problem as I think these independant companies - when really independant - can do a great job to find the best interest rates.
But, this direct link between the two companies bothers me. I can’t help to imagine they share at least some infos like “Don’t worry they have way enough cash to support the sale!”.
My advice is to choose who you want to work with and pay for it. It will cost less in the end compared to the potential increased price from the real estate agency (as they know you have cash).
In total we visited three potential apartments (including our current home).
The first one was in Yverdon-les-Bains which confirmed we really liked new constructions.
Noticing prices weren’t going down, and our will to buy as soon as possible, we went for a visit in the countryside to see if we could accomodate with birds and trees - as well as lower price tags.
We didn’t feel well in this small town.
The apartment wasn’t amazing neither.
We ended the visit declaring: “The countryside isn’t for us. We are not ready for such a change. We really prefer to stay in Yverdon-les-Bains.”
Some months later, we decided to challenge ourselves again.
The village was way smaller than the small town.
Nevertheless, we felt good. We still do.
You know how the story ends.
We were lucky to be quite aligned with my wife. Even though, comparing properties can only help you to triple check your assumptions and maybe change your opinions.
Do not neglect this step. Moreover, it’s free!
You can have really good surprises in the end.
After many visits, you found your gem. Congratulations!
Serious discussions can finally take place.
Now that you’ve a real usecase, your money men will be way more listening to you as they know there is potential to make money…
That sounds like a cliche, but it’s really the reality.
Be prepared, it’s gonna be harsh to dive into the sharks’ pool!
If you’re on your way to home ownership (or already a home owner), let us know about your secret tips to handle a visit like a pro.
I will update this blogpost based on your comments.
Do you wanna know how much income we earn?
Then, today is your day!!!
I’ve always had the goal with this blog to be as transparent as possible.
I want my real life examples and experience to inspire you and transform your own personal finance situation.
I hate these articles where all we learn is statistics and theory vs. real numbers!
Don’t you?!?
As a money geek, if there is one thing above all that always interests me, it is clearly to know people’s salary.
Net worth is much more representative of oneself financial situation.
But I think my voyeur side still anyway wanna ask: “But how much do you earn?!?”.
With no more suspense, here is the number you’ve waiting for - or not?
Our MP’s household (family of four) earns CHF 9'982 monthly - net salary, after taxes.
As we get both a 13th salary, this results in a yearly income of CHF 130'573 - net salary, after taxes.
For the US readers, this means $10'270 / $134'344.
I don’t forget you European people: € 9'210 / € 120'480.
You might think that it’s quite high - and it is - but don’t forget that Switzerland has the highest cost of living in the world.
And you guys/gals, how much do you earn per month?
]]>In the second article of this home ownership “guide”, we went through all different criteria you can play with to define what type of home you want to purchase.
Once again, I don’t claim to be a real estate expert.
I want to share with you my experience so you benefit from it as much as possible.
Let’s continue our guide with this third “Research” part.
There are three types of real estate information source.
Two of them are quite easy to setup.
The third one can be quite challenging as it involves your social skills.
We are lucky in Switzerland. We have many online tools for such a small country.
The first set is a list of common search engines where people and companies can input their properties:
These are the main Swiss players.
There are surely some more that exist around there.
Our second tool is Comparis.ch.
It aggregates as many Swiss online search engine results as possible.
It avoids you to go to plenty of websites one at a time.
My strategy is to subscribe to the alert newsletter system of each of the search tools listed above.
You simply save your search criteria and receive an email notification everytime there is a new property available for you on the market.
Powerful, time-efficient and, you won’t miss an opportunity anymore!
There is a third way to find a property before anyone notices it. Or at least with less people on it.
It is called Anibis.ch.
This classified ads website proposes a real estate category.
It can feel polluted by professional agencies that post on this channel too.
But there are still some gems from people who want to deal directly with buyers.
These real estate agency newsletters are powerful.
Usually they promote new constructions early on.
By the time these properties reach the search engines, you are usually too late or left with the less interesting stuff (bad exposure apartments for instance).
I subscribed to the ones below for the Romandie region when we were looking for our home:
You must talk with people about your will to buy a home.
Talk to your neighbors. They know the local market of entrepreneurs. They will tell you who is trustful and who build the best homes in your region.
If your research is far from your current home, go talk to the local neighborhood.
People love to talk. Even more when they can teach something to someone. They will reveal you a lot of insights.
In relation with point 2, meet regularly with real estate agencies’ people.
I didn’t do it myself because no one told me to do so…
I realized how powerful it can be when we had a coffee with the agency salesman and the constructor after the notary signature.
They were discussing about all current opportunities that were obviously not on any of the search engines yet.
Some projects were getting legal validation while others were properties going on sale soon by the cousin of the sister of the husband of etc. etc.You know the story.
Another place to talk about your quest: at work.
Again, people like to know something that others don’t. And they like to tell you about it.
Use this situation to your advantage to know more about all what the real estate market has to offer.
Last but not the least, talk to people who meet a lot of people: your baker, your hairdresser, your car dealer (wat? you own a car?!?), etc.
They are a huge source of potential deals.
You know your search criteria.
You have great tools to help you.
You’ve got social skills to hone.
Now, be aware that you’ll mostly navigate between steps 1, 2 and 3 during some months, if not years.
Welcome into The Damn Loop.
Three keys to successfully get out of it are:
Yes! Finally!
You have found a place that potentially match all or some of your criteria.
Congratulations! It’s going to be more concrete now.
Your next step will be to visit.
I will share with you what are the good questions to ask.
You’ll also learn how to behave to not betray yourself during the visits.
If you’re on your way to home ownership (or already a home owner), let us know about your secret advices to find good properties.
I will update this blogpost based on your comments.
Is groceries shopping this fun for you these days?
Or is it more like “Damn, it’s time again to get there.”?
Losing one hour of your time (more? really?!?), with impatient children driving you crazy, and huge waiting queues?
Then there is a way to change this.
You can make it shorter.
It can be twice as fun.
And also cheaper.
Grocery shopping can be managed like a project.
It can be strategically planned as such.
It has a vision: getting food, drinks and other supplies to feed your family and keep your home clean and tidy.
It has a scope: you usually have roughly the same list of items to purchase.
It has a timeframe: from what I’ve read on the Internet, I got shocked to learn that our close neighbor France has an average of 2h and 41min of grocery shopping per week!!!
On our side, we are around 30 min per two weeks.
It could be 45 min per month but the issue is that our fridge isn’t this big and also because fruits and vegetables wouldn’t feel that fresh after one month…
Do you wonder how is it possible?
The solution is actually pretty simple and logical.
It’s so much faster once you apply it!
Let’s assume you’re a couple (or a family).
All what you have to do is to leverage the power of each of your family members.
We are two adults able to handle groceries at the moment, so first, we simply split the groceries’ list in two.
Then, the best part of this secret method is the second one: you split yourselves once entering the grocery store with one shopping trolley each.
As logical as it sounds, you’ll end up with your entire groceries trip time divided by the number of family members.
Not to say that you have to leverage the power of habits too by always keeping the same store area for each member in order for him/her to improve his record time by just repeating the same path and picking almost the same article in the same quantity every two weeks.
You now have the key to improve your return on time investment.
What about you make this timeslot as fun as it’s fast?
As we split in two teams in front of the supermarket (we take one child each), we are gamifying the next half hour by betting on who is gonna be the faster to the finish line!
What’s funny is that your potential complainy-children turns into a motivation machine so that you get faster in order to win the race!
While writing these lines, it makes me think that we could actually play even more and bet real stuff like “The team who wins will have to prepare the lunch for the other one!”, or something similar.
When we enter the grocery store, we are somehow in autopilot mode with the routine we built over time: same store, same path, same articles on the list.
We don’t look to other products anymore as we are on a mission: cross the finish line the first!
This way we avoid temptation.
Factor in the fact that we go shopping only once every two weeks (which also helps to reduce your exposure to marketing lures) and you are all set for saving money with cheaper grocery bills on the long run.
I’m curious about your situation: how do you organize yourself? Do you know ways to make it even faster and funnier?
Sidenote A: there is the alternative to get your groceries delivered but we don’t use it often (at all?) as 1/ in Switzerland you have to pay for it until you reach a certain amount, and 2/ you don’t always have the entire choice you find in stores.
Sidenote B: regarding the drive-in facilities, it doesn’t exist in Switzerland. We already used it in France and even if it’s quite handy, there is still the issue that you might not get some articles you ordered as not available…
]]>In the first article of this home ownership “guide”, we’ve done some math homework to define our mortgage capacity.
Once again, I don’t claim to be a real estate expert.
I simply want to share with you my experience so you might benefit from it as much as possible.
Let’s jump into this second article right away so that you define what to do with your cash ;)
I won’t reinvent real estate search engine filter criteria here. I only want to give you some of my Mustachian thinking process.
Challenge your location assumptions!
My very first advice is to be open to very different options.
We got forced to be opened minded about the location because we didn’t find anything fitting our budget in the first area we defined as our “preferred” at the time.
Without this odd set of circumstances, we would have miss this huge delighting opportunity!
Enlarge your research, don’t be afraid about the unknown, it takes more time at the beginning but it is worth the effort!
Vicinity of the work
I was always a fan of being close to work (something like less than 1km) so that you don’t lose your time every day.
This was before we came to Switzerland where I learnt that commuting can actually be used to build life changing habits!
One could argue that it is still better to be at home and I won’t disagree.
But there is the fact that this provides you two fixed time slots every day which can help you to stick to focused and efficient routines.
I think that this blog wouldn’t exist without commuting…
Not to say that my wife and I both work in cities where we wouldn’t like to live - even if we’d be closer to work - because, hey, we so much love the countryside.
And second, because the home we managed to buy would cost us almost twice the price for less added value in a Swiss city.
Be sure to check the next point which is closely related to this second parameter.
Vicinity of the (frequent) public transports
Ah, the Swiss public transport system.
I love it so much.
Trains, buses, metro and boats, clean and always on time.
Since I got a glance of it when I started to use them for commutting, I would never go back to using a car.
From a Mustachian point of view, I would advice to live close to both train and bus stations so that in case you can’t bike (snow, rain - excusitis again), you at least don’t need a car at all.
In our countryside’s case, we had to compromise for a stop close to our home with two buses per hour which is the very minimum - it just needs some organization and planning.
About the train, we have more choices with about three trains per hour to get to our jobs.
Our idea with this setup is the ability to be car independant as much as possible.
We currently work on relocating kids’ activities so to reach this point for good.
Vicinity of the Wild
I hope I don’t bore you when I’m in awe of Switzerland and its beautiful Wild!
I must admit that at first this wasn’t a parameter we considered enough.
Luckily, once we found our actual home, it was in the countryside and close to a huge forest.
This made us realize how important Wild is for both us and our children.
For us: my wife and I were having a mindset of practicing sport in club instead of a Mustachian one such as “get outside and have free healthy activities”.
Since our move out of the city and closer to the Wild, we started to run once a week, as well as to enjoy random forest family walk on sunny Sundays.
I knew I would like it a lot but my wife was the one who got the most surprised by her inner self who needed more sports and nature.
For our children: although the parks in Swiss cities are of quite good quality, this is of no comparison with what the surrounding Wild has to offer them.
They now enjoy endless play zone to learn how to ride a bike, no “Watch out!” at every road intersection, and so on and so forth.
They even have a full sized football pitch only for them. What else could you ask for?!?
Vicinity of the school
In case you have children or plan to, you have to consider this parameter.
Think about it: 2 to 4 times a day, 5 days a week, 38 weeks or so a year ~ 600 travels per year!!!
That’s what we can call a damn optimization opportunity both in time and gas expenses!!!
Be aware that countryside isn’t incompatible with children school commutes as in Switzerland, it seems that most towns/villages have some local school transports in place.
This parameter “House” vs. “Apartment” is somewhat very personal and I’m gonna expose you only my point of view.
By becoming financial independant, what we aim for is to choose what we wanna do with our time.
Mowing the lawn or taking care of an outside isn’t an option to me when instead, I can have the Wild accessible near my home for cheaper.
That’s why an apartment with a huge balcony and in the countryside was the right compromise for us.
Less square meters to take care of for more time outside with no space limits!
Be careful: living in an apartment isn’t for everyone as then, you need to deal with multi-units building cons like potential annoying neighbors, majority decisions, etc.
Our ideal apartment is between a 4.5 and 5.5 rooms.
This represent a floor area which is between 110m2 and 130m2.
A 4.5 rooms is our minimum in order for every family member to have his/her own room - we are four.
And a 5.5 rooms is the maximum luxury we would allow ourselves in order to accomodate a home office as well as a guest room.
While we couldn’t afford a bigger home than a 5.5 rooms due to Swiss prices, we anyway wouldn’t get one because it would:
In terms of floor, I’m a big fan of “in the middle of the building” because of one main reason: heat insulation.
By having someone below and on top of you, you get heat from everywhere around you, hence saving cash as you don’t have to use your heating system as much as the others.
The cool thing is that this reasoning fits perfectly with the home vs. apartment choice!
I wouldn’t choose the first floor as it implies exterior to take care of.
And for the top floor, even though you get all the heat from apartments below, you still have no one on top of you - although I admit this reasoning isn’t that relevant with brand new constructions as nowadays, insulation regulations are so strict that I think you don’t see the difference anymore (no data here, just guesses - feel free to teach me if you know more about the topic).
As a Mustachian, I guess you would expect myself to be a DIY person who look only for “used” or “to renovate” properties.
I will have to disappoint you as the home we bought is a new construction.
Why did we choose this path:
Thanks to the first article of this serie, you should now know what is your maximum mortgage capacity, hence the maximum home price that you can afford.
My single advice for this parameter is to not consider your maximum mortgage capacity as a target, nor a goal!
It is only a way to limit your research to what you can really afford, and avoid deceptions.
What we did was to focus on all parameters’ definition first, play with them, challenge them. And then use the price only as a way to eliminate out of budget properties.
Last but not the least, one thing I would tell you for sure today that I didn’t know back in time during our research is: check the property developer reputation of any new construction you look for.
Indeed, we learnt by talking to people and neighbors that we got very lucky to end up with a property developer who has the reputation to build stuff with good materials, as if he was going to live in what he constructs.
We didn’t know it when we signed.
Even worse, we learnt recently that the buildings close to ours which were built a few years back by another property developer are of lower quality (materials, finishes, etc.).
Just get out and talk to people about the various property developer names you encounter on real estate search engines and seek for word of mouth feedbacks. Then use these learnings to filter out companies you wouldn’t want to deal with.
This criteria alone could avoid your first home purchase experience to be a disaster!!!
You now have all the Mustachian advices I can think of regarding your new home research criteria.
Your next step will be to stop the theory and start to practice with the research step!
If you’re as well on your way to home ownership (or already a home owner), let me know about your own quest criteria. I will keep updating this blogpost based on your comments.
]]>As we were discussing, I figured out we were both targeting independence, although not the same kind.
He wants to reach what one calls location independence.
Let’s start with the interview.
MP: First, tell us some words about you and your blog.
Benoît: Hey thank you for inviting me! My name is Benoit and I come from the beautiful mountains of Wallis in the french part of Switzerland.
At the moment, I work as a web developer in a start-up in Zürich but I’m also a part-time travel blogger (yes, a travel blogger on the Mustachian Post :) ).
To make things short, I started blogging with my future wife 3 and a half years ago. At that time we were expats in the cool city of Vienna (I was doing my PhD in numerical biomechanics there ;) ). But at some point, we decided we wanted to realize our dream and travel the world for a long period (best decision of our life!). So we quit our jobs and left for China… we came back only 19 months later (that was 10 months ago).
Before we left, I always wanted to learn how to build a website from scratch (I’ve always been a curious person) and we were looking for a way to stay in contact with our family and friends… This is how our blog novo-monde.com started!
We put a lot of passion and energy to share our travel stories and pictures the whole trip long…
And I have to say, we had a lot of fun doing it! We always tried to inspire our readers and show them how beautiful and simple travel can be.
What did it changed in our life? Everything! We have now big dreams and we strongly believe we can fulfill them.
On the blog side, we have grown up a solid basis of readers and a very engaged community… Every single comment, e-mail, picture… we receive from them is our reward for the time and energy we put in our blog. From a personal point of view, every single skill I learned with the blog helped me switch from biomechanic to web development! I told you… the best decision of our life!
MP: Before we dive into the topic; did you know what was financial independence before you found mustachianpost.com?
Benoît: To be honest, I did not know specifically about financial independence, but I already was really interested in the topic of “passive incomes”. I started looking into “passive incomes” because I wanted to start monetizing our growing organic traffic without bothering our readers (and also because I prefer to do a lot of job once and earn some passive money with it instead of looking for partnerships and stuff like that all the time).
That’s why I started implementing affiliation on some of our pages…
But if it is done well enough, I’m sure it could allow us to reach FI at some point, although it is a completely different way of doing it compared to you :)
MP: Back to our topic. Let’s first ask you what’s location independence from your point of view?
Benoît: Well, for me it is simply being able to exercise my professional activity from anywhere in the world as long as there is a decent internet connection :).
I’m talking about internet connection because I’m planning to work online but it does not have to be like this.
Imagine you are an English teacher, you could teach almost anywhere in the world. But that’s not the only example, the possibilities are limitless!
You could be an artist, a waiter, a writer, a translator…
Of course, in our numerical age and with all the tools at our disposal, it has never been so easy to work remotely. There is no more distance between people, you can do skype conferences, there is 3-4G everywhere and even some companies don’t have any offices anymore because all of their members are working remotely!
But what I like the most about being geographically independent is the flexibility that comes with it. It will actually allow me to organise my work around my life and not the opposite anymore. And I truly believe this is the path I should choose to be happy in life.
MP: Was there a specific event that happened, or a specific blogpost that made you think “This is my lifestyle dream!”?
Benoît: There was no specific event or blog post that made me think that way (of course I read many blog posts about the topic)…
It was more of a process.
During our travels or through our blog, we met many people that were geographically independent (for example we met the Hecktic travels couple recently in Finland… they are really inspiring people doing house sitting all around the world) and they were actually looking very happy.
It made us realize that there are alternatives to the so popular “corporate lifestyle” that we were supposed to experience after our university studies.
Most of these guys are not owning much (I mean no house, no car, no furnitures…) but they looked more happy because they can simply be more spontaneous thanks to the flexibility this lifestyle gives you.
And for me it is really all about improving my life quality by being more flexible, being less bound to a single place, being able to organise my work as I want to, being able to jump on opportunities more easily, being my own boss (even if it is not a direct consequence of being location independent)… and so on.
MP: As Mustachians say: “Having a dream is good. Taking action is what will bring you closer to realizing your dream!”
So, do you have a detailed planning with next steps and a “deadline” to make this happen? If yes, what is it?!?
Benoît: Ohhhh yes!
For me and my future wife, 2016 is going to be the year of change.
At the moment, we both have a job that we love (she works 100% and I work 70%) and the first step and not the least is going to be to “quit our jobs”. Once it’s done, we will finally have enough time to work our ass off on all our projects - MP’s note: at the time of publishing, Benoît and his wife actually already quit - it was on the 3rd of May - congrats to them!!!
We have a really clear idea of what we want in the future.
We will of course keep up working on our blog novo-monde.com (we plan to redesign it completely by the end of the year), spend some time to improve/optimise it’s passive income and also continue to work with tourism boards on different projects. But we also want to diversify our incomes. We plan to create at least 2 new websites, one focused on the swiss tourism and the other one focused on passive incomes (I want to try a niche website).
As a personal project, I’ll try to keep some time to develop a wordpress plugin that came to my mind recently (I still want to do some programming :) ).
MP: Quitting must be one of the hardest steps! Thankfully it’s the first one to do.
And tell us more, is moving to another country already planned in 2016?!? Or you plan to stay in Switzerland the time for you to setup your projects’ basis before moving abroad?
Benoît: Actually we still don’t know :)
It will depend on a lot of factors and we will probably decide a little bit “last minute” in function of the priorities we will give to our different projects.
But there is a good chance that we will move for some time somewhere else in Europe to reduce our costs while we build up a solid basis for our business. But we will probably stay relatively close to Switzerland as we have a project deeply related with our beautiful country ;).
MP: Once your business(es) are all setup and ready to rock, I was wondering whether what was the true meaning of location independent for you: do you plan to move every now and then? Like for instance switching country every 3 months to discover the world? Or even a more “freestyle mode” like in “we decided to leave a place tomorrow just because”? How do you picture yourself in your new way of life?
Benoît: The true meaning of location independence for me is to have the freedom and the flexibility to live at a pace that fits us, to jump on opportunities when we feel like it, to have more time to spend on crazy ideas that we truly believe in.
Both Fabienne and I are hardworking people and we love our actual job. But sometimes we feel a bit trapped in a corporate system that is not really made for us.
How many times we would have preferred to work on a rainy Sunday instead of the shiny and sunny Tuesday that we had to spend in the office. How many times have we been talking about some crazy projects but never had the time to actually realize them.
So why not create a lifestyle for ourself that would allow us to work from anywhere at any time of the day, that would allow us to jump on opportunities and realize some crazy ideas?
It would feel much more natural to me!
I already had this feeling during our round the world trip that everything was possible.
I felt really inspired, I learned how to code websites, I learned spanish…
That’s why I truly believe that our way to happiness goes through a more flexible lifestyle that provide more space for creativity and I can’t wait to live like this ;)
To answer your question about if we will switch country every 3 months or not, I would rather say that we will just go with the flow, move where the opportunities are, go where we feel like going…
We might stay one year at some place, 2 weeks at another one. It doesn’t really matter because we will have the freedom to do so :)
MP: And what about family? I don’t want you to tease anything but how do you imagine such a lifestyle with one or more children? Homeschooling or not? Roots with a country and with family?
Benoît: I was kind of expecting this question and to be honnest, we already talked a few times about it with Fabienne.
The thing is that at the moment, we’re not really ready to have children. But we also know that it might change in the future. So we decided we will start and try this lifestyle as a couple and that we will figure out some solutions later on.
During our travels, we met many families having a nomadic lifestyle. We talked with some of them and even if living like this require organization and some sacrifices, it is far from impossible.
And I have to say that the children of these families we met looked really happy and more curious than the average children (because people tend to think the opposite).
To me, homeschooling is a viable option even if, as I said, it requires some organization. But I can also imagine that with a young child, we will like to settle down for a bit at a place we like to have more stability. Anyway, we will see how we feel about it when the time comes.
MP: And what about cash/money. What banking setup do you plan to use? Some cheap and smart solutions such as Number26.eu?
Benoît: Well we have used PostFinance “Plus” account during our round the world trip and it was great.
We have been able to withdraw money for free all around the world with the “Plus” card and we don’t pay any gestion fees as long as we have at least CHF 25'000 on our account.
It is really simple and we like the web interface. So we did not even look for another solution…
But I had heard about Number26 as very interesting mobile solution. I’ll keep an eye on it but for the moment we’ll keep going with PostFinance as well as Paypal on the side.
MP: Last but not the least, in order to know where you are and where you go financially while around the world, are you using YNAB (referral link) yourself? Or at least a budget spreadsheet ninja?!?
Benoît: To be honest, I’m NOT the budget guy in the couple…
It means that Fabienne takes care of the budget.
During our round the world trip, she has been a spreadsheet ninja. She wrote down everything we spent in a notebook and then summarized everything in spreadsheets.
After every visited country, she wrote a VERY detailed article about the budget needed to travel in that country (how much we spent in food, transportation, hotels, activities, extras…).
And these articles had a lot of success with our readers because they gave them a very good idea of the budget they would need if they travel backpack in that country.
Even now, some of these articles bring us more than 1000 visits a month each.
About YNAB, I never heard of it, but it looks quite interesting. We might give it a try in September when we start working for ourselves :)… Are you using it yourself?
MP: If Fabienne is the one, she must check it for your new life ;)
I wrote a post last year on how this piece of software changed our life: this might inspire you and get you started!
Thanks again to you Benoît for having taken the time to share your inspiring vision (and story).
If you, dear readers, are like me (i.e. passionate about travels or planning a round-the-world trip), I can only advise you to visit novo-monde.com (they blog in French), it’s a gold mine of information!
What do you think by the way: financial or location independence? Or both?!?
]]>Me: Have you ever broken your toilet?
Wife: What?!?
Me: During your entire lifetime, did it happen to you to break your toilet?
Wife: No. Never. But why are you asking me this??
Me: You are helping us to potentially save some more cash on our liability and household insurance.
Can you believe we are paying money every year to prevent a potential break of our toilet, sinks, ceramic glass and windows!?!
I continue: to your knowledge, have you ever broken a window at home since you’re born?
Wife: Nope!
Me: OK good. And as far as you can remember, have your parents ever broken a toilet or window at home?
Wife: No. I don’t think so or can’t remember such a situation.
Me: OK. Perfect. It’s the same for me since I’m young. No one from my parents to my siblings broke a toilet nor a window.
Based on this historical data, and knowing we are aligned on educational matters, our children should keep the tradition alive for a long time. Don’t you think so?
Wife: Indeed I think there are not much risks.
Me: And in the worst case with have our cash cushion and we will pay for it ourselves!
Thanks Darling! You helped us to save CHF 147.50/year. Forever! Something like CHF 2'300 on the next 10 years by simply answering a short 5 minutes survey. What a return on investment!!!
Lessons I learnt from this real life experiment:
What about you, dear readers: have you ever broken your toilet?!?
]]>I wish I had someone holding my hand some months ago when we started the process of buying our first home in Switzerland.
That’s the reason why I decided to write this sort of “guide” to explain you through which steps I went from research to finally getting the keys!
Once again, I don’t claim to be a real estate expert.
I simply want to share with you my experience so you might benefit from it as much as possible.
In this first part of the guide named “Mortgage capacity”, I’ll discuss how you can easily avoid to go deception after deception.
Who wants to experiment deception in his life? Certainly not you dear MP readers!
Be ready to enjoy your couch for some evenings, but also to get yourself out to talk to real people.
Buying a home is so exciting!
I want you to be the leader of your first purchase. And not the banks!
We’ll cover this point too.
The first step in getting to know your mortgage capacity is to compute how much money you’ve got so far and how much you currently make.
In case you already did compute your net worth, you will already have almost all what you need.
Below are the four numbers you need to gather.
Here we talk about cash and assets you may have at disposal.
As a Mustachian, you should consider to keep some cash cushion and not go full all-in poker style!
In this category, don’t forget to take into account money that people from your family could lend you.
In our case, we had a bit less than CHF 100'000 in cash but I knew I could also get some cash (CHF 10-20k) from my parents in case it would be really needed.
One sidenote while we talk about donation between family members and others: there are taxes that can be applied depending on the donated amount.
It also depends on which Canton you live in.
I found this very interesting Swiss donation taxes summary (source: Crédit Suisse) that shows you all the taxes numbers of your Canton for your situation - be sure to double check on your Canton’s website as this file is from 2015.
You can find this info on the paper issued once a year by your pension fund: it is called “termination benefits” (it’s “prestations de sortie” in French and “Austrittsleistungen” in German).
Our situation is a good usecase to explain you some tricky rules about the 2nd pillar.
Second pillar rule #1: Can’t exceed 10% of the home total value
A Swiss law got voted back in 2012 to assist people with their money - everyone is not a Mustachian unfortunately - so that they don’t go bankrupt…
This law limits the pension fund withdrawal so that it can’t exceed 10% of the real estate total value imposes that you have minimum 10% of the total value in cash.
In our case with our home value of CHF 700'000, it meant that the max we could withdraw from our 2nd pillar the min we should have would be CHF 70'000.
We didn’t have to brainstorm too much as we had less in total - being young can bring its own “advantages”!
UPDATE 30.01.2017:
Thanks to @pave’s comment I fixed a mistake in the paragraph above.
Second pilar rule #2: You must reimburse all of it if you sell
In case you sell back your property in some years, you will have to reimburse the money that you took out of your pension fund.
Second pilar rule #3: Can’t use this cash source to pay your notary
You can’t use this 2nd pillar money to pay the notary fees which are around 5% of the property value.
Second pilar rule #4: Withdrawal is taxed
There are taxes applied on your 2nd pillar withdrawal that you’ll need to pay about 1 or 2 months after the actual transaction.
Update 27.04.2016: thanks to the comment of Scafo, I have to notice you that in case you sell, you will get reimbursed the tax you paid (but you have to claim it).
You need to prepare your budget accordingly.
An example for the Vaud Canton: we used my 2nd pillar money which was worth CHF 29'500 and got a taxe invoice of around CHF 1'000.
You can use this PostFinance online calculation tool to compute your own numbers (it works for both 2nd and 3rd pilar withdrawals).
This last figure is optional in your gathering as 3rd pillar are private pension fund, meaning it won’t be anyone else than yourself having decided to start one.
In case you have one, you have the right to withdraw part or all of it as that’s one of the three usecases allowed which are: property ownership, moving abroad and retirement.
You’ll find your number on the yearly status update sheet from your 3rd pillar company.
It’s called “surrender value” (in French it is “valeur de rachat”).
As for the 2nd pillar, the cash you withdraw from your 3rd pillar gets taxed.
In our case, we used CHF 20'000 from mine and got to pay CHF 500 in taxes.
Wife used CHF 16'000 and got a tax bill of CHF 360.
There is always this question whether one should use his retirement money to finance his home?
My opinion on the subject is that if you don’t buy something to gamble and try to beat the real estate market (i.e. if it’s a long term investment), I tend to prefer using my hard earned cash as I want instead of letting it rot in a low interest account that is regulated by state rules - with all the respect and trust I have for Swiss legislations.
Additionally to your net worth, one number you’ll need is your annual gross salary in order to know if you can assume the mortgage interests and your new home charges. This can be a deal breaker.
I’ll explain below how the check is calculated in Switzerland.
Now that you gathered all your numbers, let’s compute your mortgage capacity ourselves before going to bank sharks.
You can use one of the many online tools for this.
I let you go to your preferred bank or insurance websites and check their online mortgage calculation tool - they almost all have one.
My preferred independent tool is the one from DL which gives you a very quick and accurate overview of your mortgage capacity.
Don’t hesitate to grab interest rates to start evaluating the current market options.
Nevertheless, for the sake of DIY on paper, let’s do some (basic) math together!
Let’s take our real life example to show you how to compute the thing on paper:
Short explanation: in Switzerland, banks ask for 20% of the home value as a cash down payment.
It is a must have requirement.
You also have to pay cash for notary fees which represents an additional 5% of the home value.
You can’t use the mortgage to pay them - this is theoric as some companies still find workarounds to help you finance it.
This leads us to a total of 25% cash as down payment in order to get a Swiss mortgage.
Don’t overlook this step and run your numbers yourself.
It will help you build confidence when you face bankers and avoid a “teacher-student” relationship.
They aren’t smarter than you.
The only key differentiator is the data they know.
You can learn it too.
Just to be clear, here we defined the maximum value of your mortgage, not your target value!
Don’t make your bank decide what you have to buy.
It’s you the leader of your home purchase.
And now that you have the numbers at hand, you know what you can look for and avoid to go deception after deception.
In step 1.d, I asked you to grab your annual gross income.
The goal is to make a last check to completely remove deception possibilities when you arrive at your banker’s office.
Continuing with MP’s household example - yeah I decided to disclose some more numbers dear voyeurs, let’s round our annual gross income number to CHF 145'000.
The money men rule is to check whether all interests + charges on one year aren’t higher than one third of your annual gross income(s).
Still based on our example, here is roughly how they compute it:
Here we go with a total charges theoric number for the MP household of: CHF 27'500 + CHF 7'000 + 5'500 = CHF 40'000.
Our theoric maximum capacity for charges is 33% of our annual gross income: CHF 145'000 x 0.33 = CHF 47'850.
Yipiiie, we are in the safe zone with our theoric maximum charges capacity of CHF 47'850 > our total annual charges theoric number of CHF 40'000!!!
Once you have done your homework, get out and talk to bankers in order to get challenged about your situation.
Prepare all your numbers and visit them to listen to their conclusion regarding your mortgage capacity.
If you followed the step 2 of this article, you shouldn’t have many deceptions but it’s better to check theory against reality anyway.
And potentially you’ll be able to teach us even more stuff in case you learn something new!
While you are it, start to gather their interest rates so to see if what you found on the Internet was accurate or not (they often have special conditions compared to what’s on the web when you go discuss with them).
Important note: Don’t commit to anything at this stage
Indeed, you have no clue about what you will find as a home.
Anyway, you will be surprised about how they will treat your case very quickly as at this step you don’t have a real usecase on which they could lend you money.
Another tip: Visit companies where you are already a customer
You might have special rates there due to your loyalty.
The meeting should also get a bit faster as the bank/insurance may already have some or most of your personal information - or not.
Last advice: Make sure to have this 25% cash downpayment
Also try to have enough cash cushion so that you feel very comfortable giving away this huge amount of money.
This will help you to lead the negotiation game and not to have to prove anything more than needed from the first meetings on.
That’s what happened to us.
We don’t recommend.
You now know exactly what is you mortgage capacity.
You also have a rough idea about current interest rates.
Next step for you is to start to define the what.
Stay tuned for the second part of this interesting home quest.
And please, if you’re on your way to home ownership, let us/me know about some crispy details of your situation. I’m sure I’ve still plenty of stuff to learn.
]]>Last time, we featured Mr. 1500 from 1500days.com with whom we chatted about rationality in order to cross this 1M$ mark!
Today, it’s time for Michael from financiallyalert.com (third US guy of this serie, from sunny San Diego) to answer THE question: “How can I be rich like a millionaire as you managed to do it?”.
“The journey towards becoming a millionaire starts with investing in yourself.
Take the time to understand basics of personal finance.
This means learning how to track your expenses, income, and net worth.
http://www.financiallyalert.com/how-to-budget-like-a-badass-the-easy-way-part-1/
http://www.financiallyalert.com/how-to-budget-like-a-badass-the-easy-way-part-2/
Next, you’ll want to save 40% or more of your income (it doesn’t matter how much income you have in the beginning, it’s just to setup the habit long term).
Take this money you’ve put aside and invest it into assets that will grow consistently over time.
My suggestions are index funds that track a larger stock market index (eg. S&P 500).
If you want to accelerate your growth even quicker, consider learning about real estate investing and seek out cash flowing income properties.
A well purchased real estate investment can deliver huge returns.
Never purchase property based on future appreciation.
Appreciation should only be the icing on the cake.
That’s pretty much it!
Over the life of your career, income should hopefully grow and with it your savings. Just stay the course and you’ll be a millionaire quicker than you ever thought possible.”
For my Swiss readers, this Switzerland based investing strategy post might be more relevant in case you’re having your salary and life based on CHF currency.
For the sixth post in the serie, I’m still looking for YOU, the one that made it up to the 1M$ net worth!
If you’re interested to be featured in the next article of this serie, please ping me on Twitter.
So until recently, I kept applying what I had learnt during three decades and thought I wasn’t doing so bad in the matters of decluttering and organizing.
This was until I stumble upon the best seller book “The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing”.
For years, I looked for a method to always have our house in order, without any success.
KonMari is the answer to your home organization and clutter issues!
KonMari method is the answer to your home organization and clutter issues!
Before diving into the 3 action points I undertook right after finishing this book, I would like to share with you a secret that I learnt while getting back to reading.
This advice is valid for any topic in your life.
If you apply it, you will experience nothing else but success on the long run.
It is as simple as this: when you have to do something, never forget that some people must already have thought about this point beforehand, and that there must exist a methodology that can help you to perform better and more efficiently.
Google what you try to accomplish to learn more about the topic.
Find books.
Buy them.
Read them.
And get to improve your skills continuously!
Find a mentor (I don’t like the word “expert”) in the field of your interest, analyse his habits, check what he reads as well as what he writes about.
Dare to contact him to ask him your most stupid questions (there are none by the way)!
Now that this secret is shared, let’s get back to our book review with the 3 action points I undertook.
One of the magic point from this book is the way it makes you sort all your stuff. You can have a mansion or a tiny apartment, this method doesn’t care and can treat each type of house with the same rigor.
After having finished the book, I was thinking about all the clutter my parents did accumulate during all those years.
This method could help them a lot! Even though they own a home twice as big as mine. How possible?!?
The key is to sort by items’ category, not by room.
Once you understood this point, you’ll have taken a huge step forward in your future clean and tidy life!
This literally means that:
Nothing more, nothing less.
As simple as one paragraph and four bullet points.
If only I knew about it years ago…
At least I know what I’m gonna teach to my children!!!
The key is to sort by items’ category, not by room.
As said above, before reading this book, I was deeply convinced I was quite well organized and that I wouldn’t throw away the book’s average of 40 garbage bags after this phase.
Let’s count together what we ended up selling/donating/throwing away:
Mr. MP
Mrs. MP
Mini MP 1
Mini MP 2
Kids (didn’t split between them while sorting)
Kitchen
Drugs
Decoration
CD, DVD and PlayStation games
Electric/electronic
Stationery
Course materials
Various linens
Bathroom
Sentimental items (presents from beloved, photos, etc.)
Did you keep computing while reading?
I’ll do it for you: 45.5 bags in total!!!
How hard it is for me to believe this number when I was thinking I’d only throw away something like 3 to 5 bags, maybe 10 at max!
And I was considering myself as an organized person…
The second take away from this book was an unexpected one.
Like, really, I never thought I would change my organized way of folding and piling my clothes.
Neither would I have thought to play with color harmony into my wardrobe to impact my daily mindset.
This may sound silly at first - my wife still qualifies me of a weirdo when I share with her that clothes can be happier if fold or organized in a specific way - waaaat ^^!!!
Don’t believe me?
Dare to try and come back to comment this article!
What are these changes you wonder? Here you go:
If you’re a YNABer like me, this advice will sound like “how the hell did I not do this before?!?”.
Indeed, as you give every one of your dollar a job (see rule #1 here), you must give every room centimeter its object/item/stuff.
“Wait! Waat?”.
No, I’m kidding you. That’s the other way around!
Every beloved item you own must have its dedicated place in your home.
But first and foremost, you have to sort and get rid of all the overflow.
Only once this is done you can start with organizing - else the magic won’t work…
Also, if you’re a family, consider having one space per person with all his/her categories inside it.
Relating this book to money, I can’t help but think that Marie Kondo and Jesse Mecham must have some family relationship like cousins or so. Don’t you think so?
On your side, did you ever discover such a life changing home organizing and tidying method?
In case you used the KonMarie one, how did it affect your life?
I’ll base this guide on our own experience - which wasn’t the most straightforward neither representative of all situations - that hopefully will help you to cross the gap!
One thing I learnt during our recent purchase is that if you can avoid some disappointment, then you better do it early as you’ll get some anyway.
This starts by computing how much money you have in order to define your mortgage capacity.
This way you will know what max amount of money you can borrow. And most importantly it will prevent you to dream too long, or too big.
Just to be clear, here we define the max value of your mortgage, not your target value! Please don’t make your bank decide what you have to buy.
Before diving into any search, you need to know and define what you’re looking for.
Vicinity to train station, city or country, how many rooms, etc.
Ah, and price as well by the way! Now that you know your top limit.
Take your criteria list and prepare yourself for tradeoffs!
Spoiler: you’ll most likely navigate between steps 1 and 3 during some months, if not years.
Visit the house(s)/apartment(s), ask good questions, cheat on your interest about the property when it makes sense. Visit again, and again to compare and re-compare.
Now that you’ve a real usecase, your money men will be way more listening to you as they know there is potential to make money…
That sounds like a cliche, but it’s really the reality.
Entering this step means you are close to a purchase.
Know in which negotiation phase you are before entering the game, have real mortgage proposals at hand and make your final price proposal.
You eventually found your new home. Price is ok for you and the seller. It’s time for you to finalize your mortgage contract and potential pilar (2 and or 3) withdrawals, and maybe define the new third pilar(s) needed to satisfy your money man.
Gosh you made it until here! Now is time to show off your damn money!!!
In our case, we could choose the interior design details (such as floor tile and co) which was already great - but so much more work than we would have thought! Be ready to use your brain - or not…
Book a truck, call friends and do it the frugal minimalist way.
Once you reached this point, take some time.
Relax. And enjoy what you’ve been waiting for so many years!
Here we are with these 11 steps towards home ownership that I will describe in details in this blogposts serie.
In case you were or are already in a home buying phase yourself, please notice me via the comments section of any missing step - that I would add to this serie.
See you very soon for the first part of this interesting home quest.
]]>As it’s one of the most powerful personal finance tool to reach Financial Independence, I wanted to study how the leaders in this topic were reaching crazy figures every month.
Hence I created the Blogger Savings Rate Index (aka. #BSRI) in order to get inspired by my fellow personal finance bloggers.
No more talking, let’s get to the final ranking of the #BSRI 2015 vintage!
N.B: some of the registered blogs on the #BSRI 2015 were either discontinued or not updated, hence I removed them from the list as they might not be relevant for you anymore. In case I get news from these, I will keep the list updated accordingly.
If you were adventurous enough to be listed on the first edition of the #BSRI, below are your badges that you can use to share the wisdom on your blog or any other media.
*Source file Platinum badge: HD / LD* *Source file Gold badge: HD / LD* *Source file Silver badge: HD / LD* *Source file Bronze badge: HD / LD*I hope we’ll get more and more people on this index so that anyone from anywhere and in any situation can easily find similar bloggers so that he/she has appropriate information in order to get his/her financial life forward.
So, what was your savings rate in 2015?
]]>Are you ready to embrace a new year with its load of opportunities?
Or are you more feeling like a boat on a river that just want one thing: follow the flow and see what happen?
Either way, there is no bad or good answer!
Indeed, the sure thing is that it’s up to you! It’s your call! It’s your choice!!!
How is that powerful!?!
Here in Switzerland, I’ve decided to focus this year.
To focus on what I started but didn’t achieve in 2015.
But also to focus on a more precise purpose with this blog!
I let you discover this through my goals below.
1 - Have blogposts available both in English and French
After a discussion with one of my fellow blogger from Switzerland, I came to the point that if I wanted more close connections with my readers, one of the axis would be to focus on local ones.
As I’m from the Romandie part, I will start with French post translation in order to reach a wider audience around me.
In case French is your mother tongue, let me know if you think it will help you to spread the Mustachian Swiss lifestyle with your family, neighbors and co?
2 - Average at least one blogpost per week - i.e. at least 45 posts in 1 year
This one is a real challenge to myself.
Indeed, last year I’ve seen how easy it was to get out of focus due to work overload.
I hope to better manage my time in 2016 and already took productivity measures so that it works out.
Let’s see if I get successful!
3 - Write between 15 and 30 minutes per weekday
Strong habit skills make hard work easier!
Same as for item #2, I take over this one from 2015 in order to hone my habit building skill.
Strong habits make hard work easier!
4 - Setup a newsletter email for new blogposts published
One more taken from 2015.
I’m a big fan of newsletter as it avoids me to follow too much on social networks…and then get lost in there for hours.
Instead, I receive emails of my favorite blogs, read it, take action if any, then archive.
No temptation to procrastinate on Facebook or Twitter.
5 - Average 40% of monthly savings
Last year, our household ended up with a decent savings rate of 37.2%. Still 3% missing to be on track.
With our fixed costs normally reduced with our new home, I hope we’ll be able to get over the 40% mark in 2016!!!
6 - Rebuild our emergency fund up to CHF 15'000
After an (almost) all-in for our new home, we won’t invest much in the stock market in 2016.
Instead, we’ll invest into our financial security by putting aside at least CHF 15'000 of cash cushion.
I found it quite funny that I included this goal into my list while just yesterday, my fellow UK blogger Weenie published a post where she explained how important it is to have an emergency fund!
Thanks to this blog, I’ve rediscovered the pleasure to read. And to learn stuff.
It’s so sad to see how you’re enforced to read and learn anything but what you like during your childhood and teenage years…
I find it dramatic that I may have lost for the rest of my life the deep satisfaction that one feels once he learnt a new thing that get him forward in a given field.
If I may give you one advice in this post, it would be to figure out what you deeply like, then to go to your library or to Amazon.
You can be sure you will find a book related to what you’re passionate about!
Just order it, and start to read. And enjoy!
7 - Read “The Miracle Morning”
After having tried to wake up for a few days at 5am, I really want to know and find more tips and tricks on 1/ how to build this habit strongly and 2/ on how to make the most of this 1.25h additionnal daily availability.
My fellow UK blogger Huw Davies confirmed that it was worth to read it.
8 - Read “The magic of thinking big”
I hope to find in this book some help in how to shape my ideation process when it comes to building passive income - by thinking bigger than what I usually do.
I’m sure I’ll learn some stuff even if it doesn’t provide me everything I wait from it.
9 - Read “The millionaire next door”
There are two reasons why I want to read this book.
First, because it contains the word “Millionaire” in its title which happen to be one of my life goals.
Second - and this one is a funny one - because I wanna know how many characteristics I have in common with the “millionaire next door” persona - like driving a Prius for instance!
10 - Read “The Life-Changing Magic of Tidying Up: The Japanese art of decluttering and organizing” by Marie Kondo
This tidying method is also known as the “KondoMari” method.
As an organization freak, I felt urged to read this book when I stumble upon various smart people mentioning it in their posts.
Moreover when I read the cover 3 months before the move to our new home, the timing was so perfect that I dropped my ongoing reading (see goal #11 below) to start it right away at the end of last year.
I will report to you with a blogpost describing the action points I applied to our move.
11 - Read “Your money or your life”
“Goal debt” from last year.
I got into it while I was in holidays. And then, busy at work, I stopped in the middle…
To be honest, I’m not sure it’s worth my reading time as I wasn’t that hooked into it after the first third part.
But still, I would like to 1/ finish to read it and 2/ know if I put it in my “must read” list.
12 - Go to sport training once a week from beginning of March
Back in September last year, I decided to not renew my sport subscription as I knew we were going to move six months later.
I unfortunately didn’t take enough care to replace my weekly habit by another one. Then you know how it goes… Drop sport training one week, and it’s gone for life!
Once our move will be done, I commit here to get back on my bike weekly, enjoying the countryside in which we’ll be by then!
And you guys and gals, what challenges did you set yourself for the amazing upcoming 2016?!?
]]>At the time, this was yet another item on my side projects list. At the slight difference that this one was particularly inspiring me!
You know how it goes. You’ve found a new topic that you spend hours reading about and you want to be part of the community. So you start a blog!
I’ve had done that in the past but for the bad reasons: to prove something to myself and others.
But mustachianpost.com was feeling different at the time. I really felt it like a topic that truly inspired me and that I could write about even if I wouldn’t ever make any money out of it.
And for once I’m glad to realize I wasn’t wrong as I’m still here blogging about personal finance in Switzerland, while I still don’t make a living with this passion!
So if you think you’ve found a passion, here would be my recommendation to you in case you want to start a blog about the topic: just do it!!! Hop on the train. Work hard. Give it a one year trial.
Working out? Still a passion after 365 days? Still liking it?
If yes, go for it you’ve found your way, congratulations!
If not, discard it and go to your next side project.
And most importantly, see what you leave as a life experience, and not at something failed or missed.
Be proud of yourself to have taken action. And to not have stayed locked in the dreaming pattern “If only I had done that, I could be so happier or so rich nowadays”.
I always find it interesting when bloggers open up their blog numbers to us, other blogger voyeurs!
So here you go, as my 2yo blogger’s present, below are some of the key 2015 figures that represent you - the readers.
On the 37 posts I’ve written, you guys were engaging with 280 comments!!!
It must sound not so much for other bloggers for a 1 year period. But for me it means so much when someone takes the time to interact and/or ask questions.
I hope I get even more of them in 2016!
It’s quite amazing to step back after one year of blogging to realize that I reached quite a great amount of visitors:
N.B. for readers who have a blog: make sure to exclude all these spammy bots’ views from your analytics data, else you’ll think you’re doing extra great while you’re only doing good!
The total list contains 120-130 countries in total, including “fancy” and far away ones like Saudi Arabia, Mozambique and New Zealand.
The cool thing is that 50% of visitors are in their 25-34, and 30% are in 35-44.
I find it cool as the impact of the blog should logically be more important as the readership still have 2-3/4 of their life left to apply personal finance tips and tricks so they reach financial independence one day.
Even more awesome would have been a 50% of readers in their 15-25yo so half of you would all reach FIRE (Financial Independence, Retire Early) at 30-35yo!
On the gender side, it seems that my blog clearly bring more guys with 72% of male vs. gals with their 28%.
Let’s see how this evolve in the next years.
This one amazes me quite a lot!
As we all seem to be more mobile than ever, you readers seem to like to be in an comfy setup to browse through the blog.
Home desk or laptop on the couch - that is the question?
If Google don’t lie, here are the figures:
Who recommended you to visit mustachianpost.com?
Below are one of the Google search people have used to find the blog:
The main thing this blog project taught me is rigor.
Rigor about maintaining a pace of publishing.
Rigor about my daily writing habit with 15 to 30 minutes dedicated to this practice every single workday during my morning commute.
Rigor about stashing money until we’re able to reach our first financial goal which will get delivered in some weeks!!!
The blog has also helped to frame the vision of my/our life and to find support through like-minded people. Thank you guys/gals!
After a discussion with one of my fellow Swiss blogger Benoît from Novo Monde, I decided to focus my blog even more on my geographical niche that is Switzerland.
I already talk a lot about my country tip and tricks to reach Financial Independence, but one of the drawbacks is that I blog in English…which isn’t one of the 4 official Swiss languages.
So my 2016 plan is to serve better Swiss people by going bilingual and have all MP posts available in both English and French.
By doing this, I hope to help even more local readers and reach a wider audience.
This way you will now be able to share awesome content with your friends/mothers/wives/husbands!
THANK YOU! Without you, all this wouldn’t make any sense!
Also, special thanks for you that, on top of reading my posts, take time to let comments and interact with other readers and myself.
I’m really glad to spend this second year anniversary with you - like-minded friends.
Hopefully we’ll celebrate some more birthdays together!
Cheers!
]]>So let me first wish you all the best for the upcoming 2016 year.
I want you to be healthy. Happy. Then wealthy. In this very order.
You can be thankful if you’ve got the first item on your side. Be damn grateful if you get one or the two other bonuses, your life must be awesome!!!
Hey!!! Look at that! I just noticed I’ve found back my aptitute to put one word after the other!
OK so I wanted to discuss goals with you today actually.
Since one year, I entered the circle of people who wanna take control of their life and not only follow the flow. I get to think of what I’m dreaming about, what would make me really happy in this new year. Then I transform these dreams into SMART goals.
Let’s analyze together my 2015 goals’ results.
1 - Average at least one blogpost per week Failed
Although I want to blame work because that’s the main reason why I didn’t reach these 47 blogposts (we’ve 5 weeks of holidays here in Switzerland), I can only assume my prioritization of job over the blog at some point during the year.
I nevertheless got 34 posts written in 2015, which is more than the double of what I wrote back in 2014. Not bad if I can keep up with this growth!!!
2 - Write between 15 and 30 minutes per weekday Failed
I started to track my habits in May ‘15 with the Way of Life iPhone app and it looks like I managed to reach 1/3 of this goal.
I’m a bit disappointed on one hand but on the other hand I’m really happy as I started to build a new habit which is to write every day during my morning commute.
3 - Propose RSS to readership Success
Done. You can subscribe to the Mustachian Post RSS feed by clicking this link.
4 - Setup a newsletter email for new blogposts published Failed
Didn’t take the time to do it although it could bring you added value - and potentially more recurring readership for the blog!
5 - Have a first blogpost where reader’s involvement is rewarded by something cool Success
Gosh, this one feels like it’s been years ago! Summary in Q1 2015 goals update.
6 - Find another Swiss blogger who is seeking financial freedom Success
My fellow Swiss blogger can be found at retiredat50.me.
Cherry on the cake: I get more and more Swiss readers who comment on the articles which is very rewarding for me, as it means people in Switzerland are browsing, ending on the MP blog and actually reading the stuff I do write!
7 - Have “Early Retirement in Switzerland” ebook written, ready to be proofread by family and readers who subscribed early to buy it Failed
Hmmm hmmm… While I started the project, I got lost on the way because the topic is too vague for myself to see where I head to.
I’ve decided to stop it for now on, and think of a better format to share my learnings in details about Financial Independence in Switzerland.
I’m thinking of very focused online courses. Or small ebooks.
The idea(s) and motivation are still here, I just have to refine the vision, the business model and the format.
8 - Average 40% of monthly savings Failed
We were close, but we failed.
Nevertheless, we still managed to reach a decent 2015 savings rate of 37.2%.
9 - Reach CHF 122'000 CHF 162'000 of net worth to support mid-term goal Success
We made it!!!
As explained last year, a change in how we compute our net worth helped us succeed this goal too easily. Hence the CHF 162'000 target raise!
We anyway ended the year with around 170k of net worth!
10 - Max out our two household 3rd pillars Success
Done. As in DONE.
11 - Read either “Your money or your life” or “A Random Walk Down Wall Street” Failed
Although I started to read “Your Money or Your Life” during our Canadian holiday, I didn’t finish it.
Main reason was crazy work period at job during Q3-Q4 2015, as well as the fact that I got hooked in another book called “The Life-Changing Magic of Tidying Up”, also known as the “KonMari method”.
As we are moving to our newly purchased home soon, I knew this book was for me the moment I’ve read its cover! Must read! Book review to come soon!
12 - Read “Essentialism: The Disciplined Pursuit of Less” Success
I finished this book so quickly. It’s definitely a must read!
It’s also from this point in time that I decided to abandon the usual book reviews to share with you my feedbacks. I instead opted for a format in which I write down all the real life action points (an example here) I implemented during and after reading the book.
13 - Read “The Miracle Morning” Failed
I bought the book and it is waiting for me to start it!
It will be for my 2016 reading list - I’m really motivated to dive into it after my fellow UK blogger Huw Davies recommended to read it too.
14 - Go to sport training once a week Failed
Autumn, then winter coming. Factor in the overload of work. And you get a MP completely out of track when it comes to sport…
I’ve set myself the deadline to get back on track once we’ve moved in our new home so I don’t get the excuse to drop out because we changed location - or how to trick yourself!
Here we are. One of my main challenge in 2016 will be to track more closely my personal goals as I do with my professional todos.
And you, how were your 2015 goals? Failures? Successes?
Side note: pssst, did you notice? It’s my 50th blogpost!!! Champagne!
]]>Last time, we featured Justin from rootofgood.com with whom we discussed about patience in order to cross this 1M$ mark!
Today, it’s time for the now famous Mr. 1500 from 1500days.com (second US guy of this serie, from sunny Colorado) to answer THE question: “How can I be rich like a millionaire as you managed to do it?”.
Strive for rationality.
The single most important thing in life is to be as rational as you can possibly be. Use your brain to come up with your own thoughts based on sound logic, reasoning and science. Ignore the media. Ignore stock tips from screaming people on TV. Ignore the advice from the unwise. Ignore the advice from the ignorant. Ignore the advice from people with ulterior or corrosive motives.
Always be seeking wisdom to add to your mental framework. This isn’t easy to do and takes a strong filter. Follow the great teachers from the past and present; Voltaire, Benjamin Franklin, Thomas Jefferson and Charlie Munger come to mind for me. Acknowledge that these people had (and have) some of the greatest minds that ever lived and devour their teachings. However, that is just the starting point.
Throughout your life, never stop in your pursuit of knowledge, reason and rationality. Continue to identify teachers in your daily life, books and history. Again, don’t forget that filter.
Having a strong, rational mind will serve you well. You’ll be a better parent, passing your wisdom on to your children. You’ll be a better neighbor, thoughtful and wise. You’ll be a better citizen of the Earth.
Money?
Oh wait, the original question was how to be a millionaire. There is no better tool for a financial mind than rationality. In my completely amateur estimate, 99% of the stuff published in the Money Media is garbage. A rational mind will allow you to filter out that trash. You’ll learn that people like Mr. Money Mustache (lifestyle design), Jim Collins (investing) and the Frugalwoods (all around great people) are worthy of your attention and emulation. You’ll follow their teachings and live the best and happiest life. And perhaps, you’ll even become a millionaire.
Stay Rational my Friends.
Amen :)
For the fifth post in the serie, I’m still looking for YOU, the one that made it up to the 1M$ net worth!
If you’re interested to be featured in the next article of this serie, please ping me on Twitter.
Below are the three options we evaluated. Hopefully this little frugal experiment can make you discover some new ways of getting from A to B at the cheapest fare possible!
As a Swiss common transport addict since five years (yeah yeah, it took me two years to get rid off my old French wrong habits), my first check was obviously to see train possibilities.
The lowest price I found to get to my destination was around 50€ (~ CHF 55).
A bit too expensive for a 300 kms travel.
Moreover I would have ended up in a station from which I would still have had to use a taxi cab or local public transport…
I just found out this second option while searching back prices for this article!
I’d never have thought it was possible to do a cross-border bus trip in Europe.
And if possible, I would have bet on the same fares as the train.
While googling for a price example, I stumble upon an ad that was saying “Lausanne-Lyon for 9€”. This catchy title intrigued me. I clicked and I landed on a website named “Flixbus”.
It seems it is a German company that recently joined the French market, which I learnt was already full of other long distance bus solution like Eurolines (Transdev), iDBus (SNCF), Starshipper (French cooperative) and Megabus (Stagecoach).
I checked all websites and although they all provide cross borders trips, FlixBus appeared to be the only one proposing a Lausanne-Lyon itinerary.
The one-way price: 11€ only! Honestly I couldn’t believe it at first.
But by reading The Internet I found it was true and that other people even had better deals like a trip from Lyon to the South West of France for 1 or 2€.
They normally provide USB chargers and Wi-Fi onboard for free but that last point seemed to not always work, if at all (N.B. info found on rating websites).
I will definitely keep this option in my frugal cross-borders travel list! Special thanks to you dear readers, you made me discover something today!!!
This was initially the reason of this blogpost: sharing my carpooling experiment.
By discussing with some family members recently, they reported to use extensively the famous (via TV ads) BlaBlaCar carpooling service.
When my wife told me the price of the train, I decided to check this frugal thing and downloaded the app.
Five minutes later I had found a guy proposing a similar trip than mine. Click. Boom. Reservation made!
Less than an hour afterwards, the guy confirmed the booking. I then got him on the phone to sync about the pick-up place. Done. 15€.
You may say that this solution is more expensive than the newly found bus one, but all in all, this carpooling is still way cheaper because I could ask the person to drop me exactly where I wanted, without having to pay any taxi or local bus to get me at my final destination - not taking into account the time lost by doing so.
Regarding the experience itself, it was really fun to discover someone new.
We discussed all the way long about our jobs, hobbies, Indian Summer colors (yeah, I know Canadian readers, I’m addicted!), etc.
He also explained me some tips and tricks about the BlaBlaCar system like for instance with the review system: the users can or cannot accept comments from other people, but they don’t have the choice about the stars’ rating.
Hence if you find someone with an average of 3 stars on 5, but without any comments, then you better think twice about carpooling with him/her as it’s very common that everyone leave comments on the platform.
In three words, I could conclude with “Sharing economy ftw!”.
I’m always surprised (and glad) to discover that what makes most sense pragmatically and ecologically, as well as what makes us most happy, is very often (if not always) the most frugal option.
Again with carpooling, for the minimum price, you get all the advantages of having your own car like deciding (almost) exactly where you want to be dropped off. You fullfill one of your most basic human need with someone who accompany you, which implies social interactions. And be sure that it’s a lot of fun too, to get to discover someone else’s life!
Also, if you get easily tired by driving on highways as I do, you have someone to talk to. That helps to not fall asleep.
For a longer distance - e.g. from Spain to Germany - you might prefer to choose the bus as it could be a cheaper option although you might loose some other advantages of carpooling.
What are your frugal travel tips for such a 300 kms distance trip?!?
]]>In the end, her busy holiday schedule combined with mine (professional, we work here dude!) made that we couldn’t find time to meet.
We decided to not stop here though, and exchange a bit more via a 1-question-1-answer email chat.
I actually got this idea as I previously read this post about Swiss work-life balance (point of view of an American) and also spent almost three weeks in Canada this summer.
It reminded me that there is a - sometimes huge - gap between our two continents.
Hence I wanted to exchange with Paula on the topic (with questions like “what you hated most in CH”).
Some forewords about Paula: she is a globetrotter, entrepreneur and investor.
She has traveled to 33 countries and owns seven rental property units. She is her own boss and lives on her own terms.
My single advice if you meet her in real life, don’t start any sentence with “Wow, your life is so great/incredible/inspiring/younameit, but I could never afford such a lifestyle.” - she would really get mad at you.
Here is the first question we talked about (expect more about this privacy blogging topic in the future as this really intrigues me):
1/ Did you decide to go public from the start with your blog?
“Yes, although when I started blogging, I wasn’t financially independent (nor was I really thinking about FI). I had just returned from traveling in southeast Asia and Australia, and several friends were asking me how on earth I could have afforded the trip – particularly since everyone guessed that I earned a mediocre salary (small-town newspaper reporters are not a well-paid group of people).
I started Afford Anything to explain how I paid for my travels, and more broadly, to explain the idea that every dollar is a decision. You can afford anything, but not everything, and each dollar that you spend on X is one that you can’t spend on Y.
You can afford anything, but not everything!
After I started blogging, I became interested in real estate investing.
Initially, I didn’t think of it as a path to FI; it was just an investment that created some cool cash flow.
After my first property, I realized the power of passive income - and then I was hooked. I learned as much as possible about FI and passive income, and blogged about my experiences along the way. I found a few great cash-flowing properties that put me on the fast-track to FI, and I came much further, much faster, than I had ever anticipated.
So yes, I’ve been public about my finances the whole time, although in the beginning, those finances were rather dull and unimpressive. I’ve learned a lot in the past five years, and I think my longtime readers enjoyed seeing that journey unfold.”
“If I’m buying a single-family residence, I prefer to buy a 3-bedroom, 2-bath that’s at least 1,200 square feet (though I make exceptions. I bought one house that’s a 3/2 with 1,000 sq ft., and I bought another that was a 3/1 and then I added a second bathroom.) If I’m buying a multi-unit property, by contrast, I prefer 1-2 bedroom units.
I’d theoretically prefer more multiunit properties, but I typically find better deals with SFRs.”
“Yes, I revealed my name/face from the beginning. I think that was important in helping my readers establish a bond / trust with me. Although if you’re going to choose to be anonymous, then at least create a strong “character” like MMM or J. Money from Budgets Are Sexy. Even though they’re anonymous, they “feel” like they’re not, because their online character is so strong.”
2/ What’s your hometown in USA?
“I grew up in Cincinnati, Ohio, but I left when I was 17 and haven’t lived there since. I spent about 7 years living in Boulder, Colorado, before I left the U.S. for a few years, to travel. When I returned to the U.S., I moved to Atlanta and lived there for 5 years. I recently moved to Las Vegas.”
“My first move – to Colorado – was to find people who shared my interest in traveling / adventure / outdoors. Then when I left Colorado, it was to spend a few years outside of the U.S., so that was just purely the pleasure of travel.
I moved to Atlanta partially for business-related reasons and partially because I had family there.
I moved to Vegas because it has 300+ days of sunshine per year, mild winters, mountains, canyons, hiking, camping, snowboarding, proximity to southern California (where many of my friends live), and NO STATE INCOME TAX!!! Wahoo!!”
Now that you have a new blog to read (I know, life is hard, Internet is too big and days are too short…), let’s prove you that you also have another destination to add to your wishlist!
More seriously, I’m in love with the country I live in because I decided it. It’s by design that I’m in Switzerland. It’s a choice.
After living since birth in France for many years (gorgeous country too, but it’s more its system/politics/people with whom im not aligned), I spent half a year in Canada which opened my eyes. Something else existed.
It was up to us to decide where we live. Not a definitive choice made by our parents our ancestors.
We moved to Switzerland, seven years ago.
It’s by design that I’m in Switzerland. It’s a choice.
Since then, everytime I meet someone who also has chosen to come to Switzerland (holiday or definitive move), I’m always curious about his/her reasons to compare our visions, and to know more about the people from the world.
When I heard that Paula was coming, I couldn’t resist to ask her some questions.
3) Why the hell would you spend your money for holiday in a very expensive country?
“Haha, great question!! I’m fascinated by everywhere.
Traveling is my #1 passion in life, and I want to see (almost) every country (although I’ll stay away from war zones).
When I was younger and money was much tighter, I could only travel in countries where the dollar-exchange rate worked in my favor: Cambodia, Laos, Myanmar, Vietnam.
I always wanted to see Europe, but earning in dollars and spending in euros was unthinkable. After college, I made some brief trips to Europe, camping in tents or staying with friends, eating bread and cheese from grocery stores. Paying for a $15-per-night hostel was a major splurge. Now that I have more disposable income, I’m finally pursuing a long-held dream/goal of exploring Europe – though I’m still staying in hostels (sometimes), and upgrading to Airbnb spots (at other times). That’s a huge luxury.
Switzerland always fascinated me – it’s smaller than most U.S. states, yet it has a huge international reputation.
Ohio isn’t that famous – and its the birthplace of aviation.
Why is tiny little Switzerland so famous? How did this country give the world gruyere cheese and great chocolate and global human rights and our best chance at creating world peace? I wanted to go there myself to get a sense for the answer.”
3.bis/ Did you manage to get sort of an answer in the end?
“My best guess is that Switzerland is at “the crossroads of the world” – located in the middle of powerhouses like Italy, Germany and France, yet distinct from them all.
One thing that fascinated me is that Switzerland has the 4th highest gun ownership rate in the world (after the U.S., Serbia and Yemen), and yet you manage to not kill each other. How?! In fact, you’re a symbol for world peace.
In theory, that makes sense: your attitude towards Italy/Germany/France is full defense. “We’ll leave you alone. But we’re going to protect ourselves. We have mountains and guns. Don’t invade us, because you’ll lose. In fairness, we won’t invade you either. Deal?”
And in theory that makes complete sense. But I’m still amazed by the fact that Switzerland actually managed to pull it off. And I’m extra-impressed that you all don’t turn your guns against each other, at an individual level, the way that we do in America. That’s the part I still can’t answer.
Any thoughts?”
4/ So what was your itinerary in Switzerland from landing to leaving back to U.S?
“I started in Zurich, then went to Interlaken, then Bern, then Montreux, before flying out of Geneva. (Plus plenty of stops in small towns like Lucerne, Gruyere, etc.).
Next time that I’m there, I’d like to visit the area near the Italian border – I feel like that was the a major section of Switzerland that I missed completely. :-)”
5/ What is the ONE thing you loved the most about Switzerland during your trip (sunset, place, chocolate, younameit)?
“Oh wow … that’s a tough question. Mountains? Cheese? Architecture? Diversity of languages and cultures in a small setting? I love those all.
But if I had to choose just ONE thing, I’d say that I love it’s cleanliness.
Seriously. Switzerland is so clean that I feel like I could eat food that’s dropped onto the roadway. There was one day, after a hike, when I was tired – and I laid down with my head on the pavement of a parking lot. I wouldn’t do that anywhere else. Switzerland might be the cleanest country I’ve ever seen.”
6/ And of course, what is the ONE thing you hated the most?
“It never got warm! That’s fine for a 10-day visit, but I think it would wear on me if I lived there. :-)”
Last 2 questions to start a little local battle on the blog:
7/ What side of the Röstigraben (https://en.wikipedia.org/wiki/Röstigraben) did you prefer in term of culture/people/language? Swiss German or Romandie (Swiss French), and why?
“Hmm – that’s tough. I liked the food on the Swiss French side better (mostly because I love cheese), but I liked the architecture and buildings on the Swiss German side better. So – different sides for different reasons.”
8/ What city did you prefer during your Switzerland trip, and why?
“Geneva was interesting, because of its mix of people, and Bern was incredible just because it was so pretty. But if I could choose a small town (rather than a big city) I’d say somewhere like Montreaux or Gruyere or Interlaken. :-)”
Hey, but wait! We didn’t talk about money/cash yet. Last question I swear!
9/ How did you feel the cliché that every Swiss citizen is a billionaire, with plenty of secret bank accounts and gold in the basement?
“I’ve never heard that cliché before. I’ve watched movies that play on the idea of secret Swiss bank accounts, but I haven’t heard the stereotype that everyone who lives there is stashing gold in their basement. :-)”
Thanks again, Paula, for this virtual meeting. Hopefully next time it’s in real life!
And you, dear readers, what’s your take on Switzerland? Love? Hate? Any preconceived ideas?
]]>Right after our Canada trip, we hosted the East Coast Canadian FrugalTrader from milliondollarjourney.com who explained us how he used goal setting to be where he wanted to be: above the 1 million dollars mark.
Today, it’s time for Justin from rootofgood.com (first US guy of this serie, from North Carolina) to answer THE question: “How can I be rich like a millionaire as you managed to do it?”.
“There’s a few things to focus on.
Getting your income high enough to allow significant savings.
Structure your finances and investments to keep taxes as low as possible.
Closely examine your spending and particularly focus on the big three: housing, transportation, and food. Those three expenses comprise more than half your total budget, and any cost cutting in those areas can free up even more money to put toward saving and investing to become a millionaire.
Last but not least, give it time. You won’t get instantly rich overnight, but over time you will.”
The last sentence above is why I became Mustachian only from 2014 on.
After having stumble upon MMM’s blog, I understood that I had to build a strong personal finance basis (many optimizations in spendings and savings, start investing, etc.), and then let it work for me while I learn to be patient.
Before that, I thought about rich as a state you either reach in one night when having a new mobile app smart idea, or a state you never see in your life.
Mustachian’s best quality is patience.
This makes me think that I would be so glad if more Universities start to give FI courses from frugal bloggers such as New York University with Mr and Mrs Frugalwoods so that millenials wake up earlier than I did.
For the fourth post in the serie, we’ll be lucky to host the famous Mr1500 from sunny Colorado, US. In the meanwhile you can already check his blog.
Let’s see what his single recommendation will be!
While this “Essentialism” methodology provided me the basic framework to re-focus my life on the truly meaningful stuff, The ONE Thing made me think bigger about these very specific things.
I’ve written down 6 action points that I took away. Hopefully they can inspire you.
“Essentialism” re-focus your life on the meaningfull things. “The ONE Thing” make you think (way) bigger about these things.
If you’ve read Getting Things Done, you might face the same challenge than me: it’s cool to have a free mind as you input all your thoughts in a todo-list. The problem with this is that you get growing todo-lists. And when review time is coming every Friday, it starts to feel like pollution even though these todos are in the “Someday” category (control freak me? Naa… Yeaah…).
This book helped me to apply the Pareto law to my todo-lists by keeping only the 20% that will bring me 80% of the results.
I remember our Canada summer holiday; I was in our cosy Airbnb and I opened my Things iPhone app and started to check every todo: “Is this part of the 20%?”. This was liberating. Literaly. After reducing by two third my lists, it got cut even more to its very essence.
That can sound like an easy one shot advice but don’t get me wrong, even I have to train and force myself to think through this principle again and again as sometimes after some weeks, clutter potentially comes back.
This one I must admit I’ve had a hard time to stick to.
The idea is that once you’ve got your ONE thing identified, then everything else will be easier or unnecessary. Which means you have to focus on this thing and nothing else.
For that to happen, and I already read this advice in Tim Ferriss’ famous book, you allow yourself to check your inbox only two or three times a day.
In theory, this sounds easy (the rule, not doing it I mean). But my problem is that sometimes my ONE thing includes sending an email, or searching for a specific one (not talking about my inbox addiction here…).
How do you do these two actions without opening your Gmail inbox?
I’ve got you covered with two bookmarks!
The first one explains how to compose a new mail without opening the mailbox.
And the second one is about searching Gmail without opening your inbox.
Helpful, isn’t it?
What the authors explain in this chapter is that your willpower is like your iPhone battery life: not infinite… And you need to take care of this as such.
Did you ever come back home from a party with only 10% battery remaining?
What do you do in this case?
Indeed, you don’t use it to play Angry Birds and reserve it for emergency call to your wife in case you’d have an issue on the road.
That’s how one should behave with his willpower.
Contrary to what most people think, willpower doesn’t come at will…
Hence this advice to start each day with what matters most (not necessarily the hardest one) when your willpower is the strongest.
This explains why it’s 6:17am and I’m writing this blogpost since 5:15am!
When your thing is defined, meaning it’s the most important step you have to take now, then you need to give it all the time it requires (i.e. something like 4-8h) and then go back to life (i.e. not work, real life).
The rest will be done later on or when you have time.
This can sound idealistic but you’ve to understand that it comes after you defined your ONE thing using the powerful question: “What’s the ONE Thing I can do to … / such that by doing it / everything else will be easier or unnecessary?”
I tell you, this is a very hard step and I’m still working on it, fighting against my multi-priorities habits.
Gary W. Keller and Jay Papasan take some time explaining the importance of work/life counterbalancing.
You definitely can’t have (by definition) a perfect balance between work and life. And that’s not what you should aim for actually.
You should and must have hard period of work when you deliver the best of yourself towards your ONE goal. But, because there is but, you shouldn’t go too long neither too far without counterbalancing these hard sessions with real life: family, kids, friends and integrity.
It’s not 9-to-5 or 100h work week. There is clearly an in-between. You’ve to find it out as it really depends about your situation. What’s sure is that you can’t ignore your life because of your work. And vice-versa.
I can give you advices on this one if you need, as I constantly deal with a wonderful wife, two great children, one passionate work and one side-work passion (i.e. the blog you’re currently reading).
When asking yourself the question “What’s the ONE Thing I can do to … / such that by doing it / everything else will be easier or unnecessary?”, you need to fill the three dots with a great question.
The greater the question is, the greater the answer will be.
The book explains that there are three categories of question: A/ Doable, B/ Stretch and C/ Possibility.
Let’s take my Financial Independence goal to show you how this works.
I got into this category when I framed my question before starting this blog with something like “Become financially independent, someday”.
I knew I could do it. But didn’t check the “when” parameter at all.
This type of question represents something that’s potentially achievable if you put some efforts into it.
For me, this step was reached when I got the final numbers computing from my financial advisor who told me: “49 years old is possible, 44, forget about it. I mean, except if you plan to get half of your salary as a raise in the coming years?”.
So my stretched question timeframe was “between 44 and 49” before reading this book.
I somewhat accepted it as it looked feasible and reasonable. Like an achievement in itself, I wouldn’t have to do too much more than nowadays to make it happen.
Then, I took this decision to travel West Canada and to read more books this year.
Authors says that there are people who accept ordinary, and there are high achievers who go for the extraordinary!
What would you choose? Better live a life where you leave something behind instead of living it with boredom, nope?!?
That’s where they start to explain that the answer is to be found completely outside of your comfort zone.
You need to analyze what exist, to check who did what already. What you find is representing the level #B. Because your level #C is above this!
It’s up to you to create it.
My answer to all this, you may wonder?
It was simple: “Thank you dear financial advisor, you showed me the way! No way 49. Fuck 44. My path is to be financially independent in Switzerland, by 40!” 1
Then I went to my Twitter account and I updated my profile accordingly, as a first step to shout this news to the world!
That’s it. The 6th action point is for me the toughest: I now need to study various ways to find my great answer. Will keep you posted.
Take a break now and think about what would be your (very) big thing.
The ONE thing that is more scarying than exciting you because it’d be so crazy if you would succeed at it. What is it?!?
I dare you to share it with us.
You know it will change your life to put your fingers to type these words.
It means you will get started! Please. Do it!
While linking my very first blogpost above, I realized that I already wrote this “possibility”: “I aim to have my life self-financed when reaching my 40”. The difference with the me of almost two years ago is that now, I know that this is a level #3 goal, and what it implies. ↩︎
As far as I can remember, I was about 6-8 years old when I felt in love with Canada.
Though I don’t know what the exact trigger was, when I hear the word “Canada”, the picture I get instantly in my mind is a blue glacier lake or a gorgeous river, surrounded by a beautiful green forest and some mountains. Obviously with some mooses and beavers around.
In one word: Wild.
In two words actually: Wild and Wide Open Spaces!
I mean, can you imagine that Canada equals 240 times the size of Switzerland, for only 4 times more population (33M vs. 8M).
Everywhere you go, you never find yourself in a crowded place.
During our roadtrip holiday, we had a wonderful time from Vancouver to the Canadian Rockies, then back to Vancouver.
Daily scenic views proved me that books and TV documentaries I had seen weren’t a lie. Thankfully.
In case you would ask me about the three best places to visit in West Canada, here is what I’d tell you:
Canada has the best Wild ever from my point of view. Lakes, forests, creeks, mountains. Rinse and repeat.
The other point I like and which I noticed during my experiences in Quebec, BC and Alberta is that Canadians have a mindset similar to the U.S. when it comes to the “everything is possible if you’re ready for it”.
But, because I don’t want to get killed by my fellow Tawcan and MoneyRamblings while comparing them to Americans, I must state that there are two big differences: the one being that Canadians look and feel more humble (like not the center of the world, you see what I mean), and second, they seem closer to Mother Nature (at least the government part who manages parks and urban planning).
I didn’t realize something, back in time when I was living in Montreal. Maybe I was less ecology-aware than nowadays (although I hate this misused word).
Anyway, dear Canadians, you must wake up and stop killing your Wild!
Did you ever picture yourself in your beautiful-shiny-manly Ford F-150s and RAM 1500s?!? In the damn city centre of Vancouver, at a 18km/h average speed!
It’s not like you consume 13-15l per kilometer - and this is only for the brand new F-150 2015, not the older ones!
Seriously, I love North American trucks as much as I love personal finance (maybe not that much, but that’s not the point).
They look great and must be so fun to drive in farmer-like conditions.
But hey, mate! There is no dirt, no 1m deep rivers to cross, neither tons of haystacks to transport on a 100kms distance…
Really, you have such a beautiful Wild. You can’t mess it up this way…
One solution amongst many others: bike!
You have the best place in the world to ride through - I mean flat enough for me with great point of views. And moreover, you would save plenty of money on your gym subscription!
“You know MP, winter conditions are worse than in Europe!” I hear. Well, we also have snow here in Switzerland.
I’m like you guys, I don’t like biking when it rains nor snow. So what do I do in “bad weather” conditions? Well, I simply take the bus and public transports!!!
A bit less healthy I admit, but way more frugal and ecological than a huge truck! Actually, it’s also healthier (at least intellectually) than car transport as there are plenty of activities that one can do while commuting!
I couldn’t end on an ecological lessons as I’m far from being perfect on this side.
So another point that make me hate you fellow Canadians: what about you stop leasing everything, starting by your car!
I can believe you make some money out there on the West Coast. But really, 20 years old and already a brand new 2015 Ford Mustang? I think one has to revisit his priorities!!!
Didn’t the Cowboys Fringants tell you to be careful not to hang out too much with your U.S neighbors?
I too loved (and still do) cool and manly cars but do you feel better since you bought it?
Did you calculate the ratio between how much money this fancy car really cost you per month vs. the number of minutes you really enjoy it?
Well, I did it for my last V6: CHF 210/month for 10 minutes of (relative) fun. Yes you read it well, for only 10 minutes per month. That’s when I discovered this crazy figure that I decided to switch to something dramatically more frugal.
I strongly recommend you to compute your numbers as well, you might be surprised. Moreover, you could save even more money per month than I did as frugal cars are way cheaper on your side of the Ocean! It’s time to get rich guys!!!
If we are lucky enough to have some Canadians amongst our readers, I would love to hear some frugal car switch stories, or even car-to-bike switch. Don’t hesitate to share it with us, it might inspire others!
]]>Before the summer break, we were lucky to host my Swiss friend RetiredAt50 who provided us with Swiss Made financial advices that led to many Q/A in the comments section.
Today, it’s time for FrugalTrader from milliondollarjourney.com (East Coast Canadian!) to answer THE question: “How can I be rich like a millionaire as you managed to do it?”.
“The first step in becoming a millionaire is deciding to become a millionaire.
What I mean is that you need to set specific, time based goals.
Start with the bigger overall goal of a million dollar net worth by a specific date, but then break it up into smaller steps.
What will you need to do this year to make that bigger goal happen? This month? This week? Today?
After you’ve come up with your plan, make yourself accountable.
Write it down, tell someone! I used goal setting strategy to go from $200k net worth in 2006 to $1M in 2014 all while keeping myself accountable through my net worth updates.
(Disclaimer: This interview should be used for informational purposes only and should not replace the advice of a financial professional.)”
Note from MP: this specific and time based goal setting is one of the key to any big goal you set to yourself. Be it to become a millionaire, or to achieve financial indepedence by 40.
If you’re interested in this kind of method, I recently read a book called “The ONE Thing” that could help you get your goals up to the next level! I’m gonna publish the action points I took out of it, as I did with my last reading.
Next interview will be published by the end of September.
After Swiss and Canadian advices, we will head to North Carolina in the U.S to meet our fellow Justin who blogs at RootOfGood.com (and who already reached Financial Independence!!!)
Let’s see what his single recommendation will be!
Groceries
Below the average month due to the fact that we left for our Canada summer holiday a bit before the end of July.
Eating out
With the birthday of Mrs. MP and summer being around, we quite overspent this category. I also wasn’t that motivated to prepare us something to eat everyday, which resulted in some (too) high expenses regarding lunches…
Medical
Quite a big month with some child check-up as well as some back check for me too. Add to that some drugs refill - we should now be set for some months hopefully!
Transportation
Like the “Eating Out” category, we went visiting some friends and took a trip for Mrs. MP’s birthday within Switzerland. Very well spent money!
Various
Refill the stamps stock, some swimming pool tickets and new shoes for me. Nothing savings rate breaker.
Presents
We started to prepare our children birthdays that are coming soon. And we also had two births within our family and close friends circles.
It’s always a pleasure to give away presents to the ones you love most!
Telecommunication
Same as for June, I had to buy some extra GB of data to finalize our new home purchase while commuting on the train. I really get crazy when I see Swiss telecommunication prices compared to French ones…
Children daycare fees
Same as usual although a bit more expensive due to school summer holiday.
New home!!!
Thankfully we were lucky enough to be able to buy our new home in Switzerland last month.
I don’t really account that as an expense as it’s more like a transfer of money and stays in our net worth but we’re so happy about it that I had to talk about it again ;) I mean, it was a five figures down payment!
As for June, July was even more crazy regarding income.
We had:
With 1% more savings, we would have set a new record after the great January 2015.
Anyway, for the second time in the same year, we managed to reach the awesome savings rate of 59%!!!
Which brings our 2015 average to 39.6%.
What about your July month? Where are you standing on the BSRI 2015?
]]>1 - Average at least one blogpost per week Failed (so far)
Until end of April I did very good to keep up with the publishing pace.
Then there was this new home that came in May and disturbed all my blog schedule…for the better!
We signed the deal only in July, right before well deserved vacations. Which also means that August was calm too on this blog.
Anyway, thanks to my new routines, writing becomes more and more natural as I practice it every morning. And this goal might be a success now that we are back to school.
2 - Write between 15 and 30 minutes per weekday In progress
As for the first point, June wasn’t good with our new apartment, July not that bad, and August was vacations.
We should now be back on track with our “usual” work schedule.
3 - Propose RSS to readership Success
Done. Summary in Q1 2015 update.
4 - Setup a newsletter email for new blogposts published In progress
I must admit I forgot about this one during last weeks when my single main goal was to try to publish blogposts first…
Hopefully I find sometime by the end of the year.
Question to you: do you miss this feature?
5 - Have a first blogpost where reader’s involvement is rewarded by something cool Success
Done. Summary in Q1 2015 update.
6 - Find another Swiss blogger who is seeking financial freedom Success
Done. Summary in Q1 2015 update.
7 - Have “Early Retirement in Switzerland” ebook written, ready to be proofread by family and readers who subscribed early to buy it In progress
Good news! I’ve started for real to work on this book project!
I’ve locked in a daily timeframe to be sure to go ahead with this goal. For now I’ve mainly worked on the research phase about how to write a book, how to structure it, etc. I’m also close to have a table of contents which makes sense.
I don’t think it is realistic to have something proofreadable by the end of the year but I keep the challenge as I could maybe have sort of a draft, at least for myself. Stay tuned!
8 - Average 40% of monthly savings Failed (so far)
I’ve to set temporarily this goal status to “Failed”.
Indeed, during the first 6 months of 2015, we averaged 37.5% of savings rate.
Even though I’m now “only” a Bronze Badass Saver on the #BSRI, I feel really happy to be increasingly far away from the ~10% that was the norm before we started our journey towards financial independence!
Also, beginning of Q3 2015 looks better and it should help to increase our rate.
9 - Reach CHF 122'000 CHF 162'000 of net worth to support mid-term goal Success - but we want more!!!
As explained last quarter, a change in how we compute our net worth helped us succeed this goal too easily.
Hence the CHF 162'000 target raise!
As of June, we were on a very good track with a net worth curve going in the right direction. Being already at the end of August, I can tell you that the curve looks even better so I’m confident we will manage to make it!
10 - Max out our two household 3rd pillars Success
Done. Summary in Q1 2015 update.
11 - Read either “Your money or your life” or “A Random Walk Down Wall Street” In progress
Thanks to your feedbacks, I ordered “Your Money or Your Life” and started to read it during my Canadian holiday.
I must say that I got hooked and that I won’t have any issue to finish it before the end of the year!
12 - Read “Essentialism: The Disciplined Pursuit of Less” Success
During Q1 update, I told you I had finished to read it and that I loved it.
Instead of a boring summary, I decided to share with you all the real life action points I implemented during and after reading the book.
It is definitely a must-read!
13 - Read “The Miracle Morning” In progress
The book is bought and waiting to be read after goal #11.
Fun fact is that J. Money started to wake up at 5am recently (following Benjamin Franklin’s schedule!) and this made me realized that I didn’t have to wait for the book to start this new routine.
I managed to wake up three times out of five already, and it’s such a great life changer! Will blog about it for sure.
14 - Go to sport training once a week Failed but back on track since back to work
Gosh I failed miserably this goal during June and July.
Between work, new home, summer and holiday, I still had the time but no motivation…
Then, back to school period came in last Monday and it helped me to get back on track. Hopefully until the 31st of December!
There we go! I’m really proud about financial and reading successes. A bit less about my health goal but I will work on it!
And you? Did you manage to get progress towards your 2015 goals? Have you been lazy or hyper-productive?
]]>Today, it’s time for my Swiss friend RetiredAt50 to answer THE question: “How can I
be rich like a millionaire as you managed to do it?”.
This guy must have done something correctly to have a net worth above the 1.5 million of CHF mark in the bank! Let’s listen to him.
“My #1 advice is always maximizing the savings rate by having automatic transfer from your personal account to a saving or broker account just after you receive your pay check.
For the #2, is to have an investing strategy and stick to it, it can be an active capital gain, a mix of capital gain and dividend return or 100% dividend return.
All have different risks associated, but our mix strategy has been working fairly well for the last 10 years, clearly having the chance of being at the end of financial crisis.
The #3 is always re-invest the dividend received.
The #4, is not to have debts, so pay back your debts as quickly as possible, we are FREE of debts…
The last point that helped us being millionaire at 40, is to have some luck; we have been expatriated for 5 year in total for the last 9 years, that clearly helped the savings rate (+100% vs. home base savings rate).
So in conclusion, there are 4 major rules that must be followed and a bit of luck.”
Smart 4 rules that we got here.
If you have any questions or want to discuss some points more deeply, feel free to comment in the section below. RA50 should be around to answer them, so should I.
Correction! Next interview will be published by the end of August (see note below).
After the Swiss point of view, I’ve decided to bring you someone from the country I love above all: Canada!
In 3 weeks, our fellow Canadian Mustachian FrugalTrader who blogs at milliondollarjourney.com will share his single recommendation.
Can’t wait to read about the advice of an East Coast guy!
The blog is going to be calm during the next 3 weeks as we enter our holiday period.
I will see you again by the end of August, ready to start a new year talking about Financial Independence and other fancy things!
Enjoy the summer folks!
]]>Groceries
Expensive month compared to usual. Mainly due to refill of stuff we buy in pack (beans, soap, etc.).
Eating out
We had a great week-end in Porto (Portugal) with friends which implied some more eating out. Overspent. For the better. Human relationship for the best!
Medical
Some scheduled appointment to take care of my back. Proactive vs. reactive care is always better.
Transportation
It was also an overspent category in June with our trip to Portugal. But it was expected in YNAB, so all fine!
Various
We had some unusual fees with the ASLOCA in order that they help us to get back some money that our property management made us pay as they weren’t allowed to. Expect some more income in one of the next months!
Presents
June was father’s day and some other birthdays in our family. Again, planned in YNAB. No issue, just more cash flowing around!
Telecommunication
Damn Swiss prices… I had to buy extra GB of data in order to manage our new home purchase on the way… It should get back to normal in the next months though, now that we’re all set.
Children daycare fees
Same as usual. No surprises.
Holidays
Some expected fees for our Porto hotels. Was a great trip. The country is really amazing, I can’t only advise you to visit it!
This month was crazy regarding income.
We had:
We almost exceeded our January 2015 record with an amazing 55% of savings rate.
It feels really great to be above the 50% mark even though we know it won’t be like this every month.
What about your June month? Where are you standing on the BSRI 2015?
UPDATE 27.08.2015
Damn I just noticed that a wrong calculation happened and that my June’s savings rate was only 48%… Sucks!
Last week I was reading new articles about the never ending topic “rent vs. buy”.
We have chosen our side for now, and I will be very happy to report about it as my fellow Canadian Mustachian did (his website is no longer available).
I could already run some forecast numbers but that would be nothing else than gambling.
I prefer to wait for the facts.
So far so good folks, I think that’s going to be the shortest post of this blog but I have to put this Champagne bottle in the fridge for tonight!!!
Celebrations time!
Cheers!!!
UPDATE 14.10.2017
Buying a home is such a big and complex thing — moreover with all the Swiss specificities — that I decided to write an entire blogpost series dedicated to it. I hope it helps you if you start a similar journey!
And from time to time, often during evenings or week-ends, your inner self was typing into Google stuff like “how to get rich quickly” or “how to make money on the Internet”…
Then you would stumble upon recipes to get rich quickly: play online casino, become a drug dealer, start a blog with only Google Ads, and so on and so forth…
After 1/2h browsing the Internet, you would remain at the same point without any action plan, hence you’d switch off your Mac and boot your PlayStation to resume your game…
Sounds familiar?!?
I don’t remember exactly how I got myself into Mustachianism (except that I landed at one point on MMM website) but what I learnt during the past years is that the best way to master a topic - be it to know how to play poker, how to make money or how to ride a snowboard - is to start by learning from the ones who master it successfully already.
This way you will get introduced to other master authorities and your knowledge will grow more and more until you eventually become a master authority yourself.
That’s why I’m launching this series of interviews with the richest bloggers from our Financial Independence Community.
I chose them based on their net worth that I checked on Rockstar Finance Net Worth Tracker.
My goal is to get 14 answers from the “over 1 Million net worth” bloggers on this Earth.
As above with Google, I asked each writer what would be their one single most valuable advice to someone who ask them THE question: “How can I be rich like a millionaire as you managed to do it?”.
I’m really looking forward to bringing you other perspectives than mine, and I also hope that I’m gonna learn new stuff myself too!
I couldn’t start this series by someone else than RetiredAt50, my fellow Swiss Financial Independence seeker.
The guy has already managed to cross the 1.5 million $ mark, so he must have some wisdom to share with us!
Looking forward to being next week!!!
PS: if you’re a millionaire guy/gal with a blog, and looking for Financial Independence, please first add yourself to the Rockstar Finance Net Worth Tracker then drop me a line so that I add you to the interview series!
]]>You are amongst the first to be in the confidence: we might have found the place we will own for the next decades!!!
I say might as we didn’t signed yet at the notary…
This is crazy how fast this happened. It all started at the end of May when we were being really pissed off by the lack of real estate opportunities in the area that we look for.
We then decided to enlarge the “Vicinity” parameter on Homegate.ch by some kilometers…and then: boom!
We did hit a very nice apartment at a reasonable price.
We checked one of our main deal breaker criteria which is the closeness to a train station. There was one quickly accessible! Great, no need for another car!
All the rest was fine and matching our household criteria: brand new (i.e. no renovation work needed), modern design, enough space for our family, but not too much either.
Last but not least: Italian shower!!! Yeah, I know, a Mustachian could do it on its own but I’m not in the construction thing (yet).
One other point we weren’t sure about at the beginning is that it’s in a small countryside village. We like small cities (there is one close) with easy access to train station and last-minute groceries shopping.
But the hesitation was quickly gone when we thought about all the advantages: raising children in a better environment with less daily speed, proximity with wild (gosh guys, there is a forest within a distance less than 2kms!!), less city noise, less city lights at night, and so on and so forth with all what make countryside a nice place to live! Checked!
After one month of watching pictures, visiting the place several times, it’s a clear yes for both my wife and I. We’ve seen quite some real estate opportunities so far but none was even close to the gut feeling we together have since the first time we visited it!
If it’s a clear YES, then it’s a clear YES!
Once we were clear that we wanna proceed, I started to hunt for the best mortgage interest rate out there in Switzerland, as we want the best from the start - unlike car insurance and mobile phone subscription that I decreased iteratively due to my lack of knowledge of Swiss specificities.
Just so that I’ve it written somewhere: we missed an enormous mortgage opportunity back in January this year when Crédit Agricole Financements opened a new office in Yverdon-les-Bains with their 0.98% on 10 years!!!
God I wish we had found the apartment earlier… But well, there must be a good reason. Probably that CAF will soon be out of business due to its french holding - one tries to convince himself as one can!
Back to our topic: first thing I did was to open Comparis.ch and find the top ten banks/insurances with the best mortgage interest rates.
I also randomly checked other websites just in case Comparis wouldn’t have listed them all.
I will publish a dedicated post about this when we will have (hopefully) closed the deal!
In parallel, our real estate middleman proposed a company with whom he works with. They’re called DL and are mainly present in Romandie.
What do they do? They take in all your financial infos and then, based on their experience and knowledge, they go to the best mortgage possibility for your case.
If your case is refused or they consider the offer not good enough, they jump onto their second best option. Then third, and so on and so forth.
They told me that usually they go up to two until they get the deal they consider the best.
Sadly (or not), I already started my own investigations before I met the DL guy so in order to not confuse banks/insurances with paralell contacts, I followed my way and in case I wouldn’t have found something good enough, I could have contacted back the DL people.
What I didn’t do so far as I found a good deal - to be detailed if we finally get this new home!
My feeling about this DL is somewhat mixed. As it was recommended to me by the broker himself, I feel the one guy who know about my finances could guide the one trying to sell me a more than half a million property at the price he really wants…
I’m almost sure they don’t share numbers as it’s not legal, but maybe some indicators like “Yeah yeah he can really afford this…” - read “Don’t give up in the negotiation, they will give up themselves!”.
If I would start over, either I would do it all myself, or else I would chose a company like DL, but independent of the broker.
It’s incredible how each business domain has its own rule. Thankfully I love to learn new things, else I would probably have given up…
The most important topic I learnt about during last month is the negotiation power curve - i.e. when you have the most/least power to ask for your price.
This applies to new building construction (maybe to other types of real estate property to some extent, but I have no clue about them).
There are three main sale phases for a real estate promoter:
My advice as a rookie in the real estate realm is to try as best as you can to fall into phase 1 or 3.
A pro tip if you look for your new home: you can be in phase 1 by attending various salons like the SIL or the “Comptoir” events. Promoters are often there as such (vs. constructor) with their beautiful shiny projects and attractive prices.
We got our offer accepted by the promoter which is the first very good news. Then, we are now trying to find an agreement on mortgage rate and conditions with the loan entity (that seems to go in the right direction at the moment).
Once all that will be solved, we should have no more blocker to sign at the notary and celebrate this huge step in our lifelong financial goals.
I’ll keep you posted with more news about the topic. Also, we will go through each details of the transaction in further blogposts so that I share all what I learnt with you dear readers.
Your feedbacks are obviously more than welcome as the topic is so huge that I can’t pretend to know it all!
UPDATE 22.07.2015
We finally signed and bought are first home in Switzerland!!!
Back to business: how did we do it in May on the financial side?
Compared to previous months, we were quite calm/stable on the expenses side.
Groceries were slightly below budgeted values. Yeah!
This was perfect as it allowed us to balance our “Eating out” YNAB category which was higher than planned due to a very nice evening with friends in a restaurant that we are used to go to.
Some medical check for our child weren’t planned but the expenses were rather low and our emergency fund is still full so no issue!
On the transportation side, we had quite a busy month as two week-ends were spent at various family places which were quite far, hence quite some gas needed. That plus the presents for our hosts.
All in all, it was a great month full of meetups that we like a lot. As I keep reminding you on this blog, money is important, but close relationships are much more valuable and spending cash for it is for me a good reason!
One not really planned expense was new furniture for one of our kid bedroom in order that he have more space to play, and a better organized room. Thanks IKEA!
Finally, the last variable which are children daycare fees was higher than expected due to some unexpected fees but nothing dramatic.
One yearly expense we had to pay is Billag. This “service” is here to ensure you pay fees for national radios and TV channels. We are a bit angry about this bill as we almost never watch their TV shows nor listen to their radio. But as soon as you have an Internet connection, you must pay it…
CHF 462.40, almost the same price than our Prius insurance…
We got small bunch of additional incomes all along the month like this user testing session I participated to, our cash back from our Migros Cumulus free credit card, or also my brand new 4G LTE router that I sold to a friend who can enjoy (him!) an Internet as fast as light for the cheapest price out there in Switzerland!
This resulted in a very decent 37% of savings rate for the month of May. I will stick one more month to the “Badass Savers Bronze” category on the #BSRI 2015 - but I’m confident to go up to the next level in June with the numbers I’ve seen on my YNAB the last days! Stay tuned!
What about you? Did you have a great month in May?
]]>There are mainly two kind of costs to be covered when you start to play on the stock market:
1/ Safe custody fees
You have to pay this for the bank to host your equities and bonds. There are certain banks which offer them but that’s not our topic today.
At Swissquote, you pay 0.025% of the value of your portfolio per quarter (and a minimum of CHF 15 excl. VAT).
Let’s say you have CHF 100'000 invested, then you have to pay yearly custody fees of: 4 x CHF 100'000 x 0.025% x 1.08 (VAT) = CHF 108/year.
In my own case with a portfolio still below CHF 60'000, I anyway pay yearly 4 x CHF 15 x 1.08 (VAT) = CHF 64.8/year.
These fees are the one you can’t reduce - except by changing of bank/broker.
2/ Buy transaction fees
Everytime you buy one kind of ETF (for instance iShares SMI (CH) A) , you have to pay:
In order to keep the fees as low as possible, the best is to choose only 4 ETFs and to buy big quantity of each every quarter. Like this you minimize the fees while still having a yearly balanced portfolio.
With this strategy, you should average something around CHF 120/ year of fees at Swissquote.
With my mid-term goal in mind, my portfolio allocation wasn’t the best to hope that many returns in 2014.
This year seems to be better for Q1-Q2 2015. But that’s another story.
When you start to invest on the market, there are two kind of returns you can expect:
1/ Capital gains
This gain one can make is due to the increase in value of a company. Let’s say you buy for CHF 100 worth of Apple stocks and that you want to sell them two years later at CHF 145. Then you would make CHF 45 of what we call capital gains.
In 2014, our household was glad to see these returns going up to about CHF 600 for our CHF 15'000 invested. Which means about 4% of returns - way way better than any Swiss bank.
Unfortunately, Swissquote’s user interface is the worst one can think of as I couldn’t find any way to see my historical capital gains performance values… that’s why I give you only approximate values that I remember of.
2/ Dividends
On the other hand, the second source of income you can expect from your investments is the money the companies you invest in are ready to give you back as a sort of interests. This is completely up to them to give you how much they want. And when they want.
There are people who base their investing strategy entirely on these companies who pay more interests than the others. If you want to read more about this topic, you can check the famous Dividend Mantra’s blog.
For 2014, our ETF’s dividends reached a total of CHF 22.22.
I hear you saying that this isn’t that much money earned! But it is normal as these are for 2014 only, and some companies are paying dividends only once a year after Q1 for instance, or twice a year.
I will report you how was 2015 by the end of the year but be sure that it will be a lot more cash (at the moment we talk about four times more).
When you invest, you must be patient. You definitely won’t make millions in one year. You are there for the long run so be ready for it!
Also, take your time to analyze what online trading tool fits your strategy the best.
In my case, Swissquote works just fine looking at how I invest four times a year - OK, except its shitty user interface but that’s fine as you deal with it only 1h per year!!!
Finally, and you’ll have to start to invest to trust me, but the feeling of getting automatic money in while you blog from your couch is a pure inner joy!!!
Please share with us your fees and returns’ own experience in the comments section below! I’m looking to learn from your failures and successes too!
]]>Then I have a good news for you! You’re not a bad reader! You were simply not reading the right books for you!!!
At least that’s what I discovered for myself when I read “Essentialism: The Disciplined Pursuit of Less”. I never waited that much for my commute back home. Usually I would be tired after an intense workday and opening a book would be the last thing I would think of.
Nothing like that with this Essentialist book: I was motivated to read as I never was, from the beginning to the very last page!
I think this is due to three main points:
Before starting this article I’ve googled the title “Essentialism: the Disciplined Pursuit of Less” and found many book reviews/summaries about it so I decided I wouldn’t write one more.
Instead I will list you what are the concrete actions I took right after (or even before) I finished to read this book.
1/ Sleep 8h/night
This one is I think the most life changing effect I put in place straight away.
As you probably are an investor if you read this blog, imagine that you would throw the best asset you have - i.e. your money - to buy fancy things such as a brand new Audi RS5 on a leasing contract. Don’t you think this would be stupid regarding your bigger goal which is to become financially independent?
When it comes to sleep, this “activity” is so intangible that people don’t see how ridiculous and bad it is to waste it for some more working hours or late TV watching…
But you must understand as young as possible that the best asset of your life - hence of all the projects you undertake - is first and foremost your health.
And as you’re doing it great with your money, you must do the same with your sleep to protect the most important asset of your life! Because without health there is no time, hence no money, no investement, nothing.
So whatever you do think is very important, take care of always sleeping enough. You’ll be a better yourself. And you will achieve a lot more!!! Which in return will produce more, and get you even more money back than if you didn’t sleep correctly.
Because without health there is no time, hence no money, no investment, nothing.
2/ Create space in your schedule to step back, breath, read and explore.
In our world of opportunities and information overflow, we (at least I) tend to always have something on our todo list no matter what we manage to achieve.
If you are lucky to be organized and have read Getting Things Done, I’m sure you once managed to have some free time on Friday prepare your next week while realizing it would be a calm week counting how many remaining todo items you’ve got.
And then baaam! In the middle of your planning, you receive this super important mail that can’t wait (at least you think it can’t) and which piles up ten more todo items on top of your for-once-almost-empty-todo-list… Sounds familiar?
This issue is very often a symptom of over-achievers and I-can-do-it-all people. You end up feeling busy all day long, but without achieving anything… Or not something that you can remember of.
As with any job task/meeting, time to step back, breath, read and explore needs to be scheduled!
That’s why I now book one full day every one or two months which is dedicated to reading books, exploring stuff that I never have the time to check and most importantly, to step back from my daily business and think about the global picture and where I wanna go! No phonecall, no email, no external disturbance! I planned to do that from home when wife is at work and children at school.
As with any job task/meeting, time to step back, breath, read and explore needs to be scheduled!
In the book, the author gives the example of Bill Gates which has two “Think Week” per year. I will see if my format is good enough, else I will consider the former Microsoft CEO’s solution.
3/ If during a potential employee interview, my gut feeling is lower than 90%, then it is a clear no.
This is another concept described in the book that explains that you will always find good opportunities, but seldom they will be essentials!
As I’m involved in the hiring process at my company, I decided to first apply this 90% rule to the people we interview.
Hiring is such an important thing - as you never want to be bothered with an average employee, or even worse, with people that you wish you have never hired - that from now on it’s clear: gut feeling < 90% equals a strict no. No matter the experience or the seven PhD the guy has, it’s a big YES or a strict no!
The same can apply to the choice of your ETFs or to your high dividend stocks.
4/ I dropped a side mobile app that was bringing in CHF 100/year.
As a former software developer, I was always thinking (and still do actually…) that I would become rich thanks to a super app idea I would have. Raise your hand if you know what I mean. Ah, I saw you behind your computer screen ;)
That’s with this goal in mind that I released a simple and stupid app on the Apple AppStore which to my surprise managed to bring in more than CHF 100/year. Even during the last months while its design was only optimized for iPhone 4…
Before reading the “Essentialism” book, I was still thinking that this was cool to have something on the AppStore to brag about, that the app was paying my Apple Developer yearly fees, and that I would update it at some point with new features that would for sure definitely bring in way more money.
Guess what? Yes it continued to pay my yearly fees. But no, I never found the time to update it as it was not motivating me. No real purpose except the potential money I could make…
That’s why I decided to let my Apple Developer account expires in a few days, and the app to die by being removed automatically.
I already see the benefit of not having to think about it anymore. Not having to regret the fame and money I could have got with it as it’s not longer existing.
Now I have more space and freedom to focus on what matters!
5/ I stopped two other online side projects.
The second large opportunities that I cut were two private website projects.
Same as some clutter in your wardrobe, they weren’t bringing that much value but I spent so much time on them at some point that it was hard to let them go.
But the verdict is the same as point 4. Not essential? Drop it!
And God I feel better now! Declutter man, declutter!!!
6/ I dropped a huge amount of neglectible todos.
Do you have todo lists somewhere? On Post-its or in a software like Things?
So read this book first, then go through your todo list: you will never have seen it like this before!
I cut my todos (I would say I had about 50-100 items) by at least two third just after I finished the book.
You can’t believe how much free space in my mind I got by simply decluttering items I thought I would work on someday (read “never”).
The problem with self assignements is that the wrong ones rapidly become broken agreements with yourself. I talk about these polluting ones that remain in the list after months.
The best way to get rid of them is:
7/ I clearly decided that my main side project focus of the moment is this very MP blog.
And Financial Independence at a higher level.
As many entrepreneur’s minded people, I have a new project idea every now and then. Now, I learnt that one entrepreneur best skills to develop is to focus.
Thanks to this book, I stepped back to ask myself the following question: “If I would do something for free, what woud it be?”
I figured out that writing about my journey towards financial independence was THE thing! The one that I’m doing for free and that I would continue to do for free no matter what.
So be reassured, this blog shouldn’t die in the next months!
8/ I created routines to write and read every single workday.
This action point was so obvious once I finished to decide about it that I can’t think I never did setup it before…
Greg explains that routines can have a dramatic impact on your life - either positively or negatively.
Example of a very bad one is the habit some people have to smoke just after a good lunch, or right after waking up.
On the other hand, a very good habit can be to read a foreign newspaper every morning during the breakfast in order to learn another language.
Routines can have a dramatic impact on your life - either positively or negatively.
On my side, I decided to make routine work for me during every morning and evening commutes.
Concretely, it is defined that my morning commutes are now reserved for writing about personal finance stuff on this blog. This way, it helps me to stay focused on what’s important.
After some weeks, I don’t have to think about it anymore. I jump on the train, find a seat, open ByWord on my iPhone, and start or continue to write an article!
For the evening commutes, they are dedicated to reading so that I always have about 2h a week to learn new things.
9/ I declined a meeting with a financial company CEO as I was away for holidays with my family.
I’m actually very glad to have read this book just in time before I had to make a decision about the following dilemma:
This is exactly for these kind of decisions one has to make that this book was written. I did step back up to the scale of my life (and not only the following days/months) and I asked myself: “Some invaluable free time with your wife and children VS. two hours with strangers that won’t change my life for sure.”
What would have been a tough decision otherwise became such a clear and easy task in the end thanks to this book: I liaised with my colleague on Slack and informed them they would have to make it without me this time.
Did I regret it? Not even one second! When the C-level meeting occured, I was actually at an amazing Italian restaurant with my children, wife and wife’s parents. This was essential! Not this one other meeting!
Well, I see at least two concrete relations between “Being an Essentialist” and “Becoming Financially Free”.
The first relation is that by following the Essentialism path, you will start living by design and not by default anymore. You will choose your life and what you make out of it.
Everything you will undertake will come from your true self, hence you will multiply the otherwise so-so outcomes by hundreds! And as everyone know, once you start doing something which is important to you, there are many - financial or not - benefits that come as consequences.
That way, I see Essentialism as a very good support towards your Financial Independence goal: doing what you love while building your stash!
The second link I see between Essentialism and Financial Independence is that it will help you solve the post-FI-journey question: “What should I do now?!?”.
It’s awesome to stash cash as you surely experienced it, but what are you gonna do once you will have reached your FI amount? Sit down on a beach and get fat at light speed by doing nothing meaningfull of your days? No thanks, not for us!
That’s when the Essentialism way of life will come to your rescue as you will ask yourself what the hell you would like to do with your life now that you don’t have to work for money anymore. My advice: read it way before this D-day and don’t waste your precious life until then.
“Essentialism: The Disciplined Pursuit of Less” is a must-read. That’s it!
Honestly, it is quite an amazing list for one single book! Not to tell you again that this is a must-read.
I’m wondering if the next books I purchased earlier this year will be of the same quality? What I’m sure, on the other hand, is that if I start to read a book and can’t manage to get motivated by it after some chapters, I will simply drop it to focus only on the Essential ones that bring me something!
What about you? Do you know of any must-read book that produced more than 5-10 dramatical effects on your life? I would be very glad if you would share them with us!
]]>Well, April was a rather spendy month compared to our expenses history.
For once, groceries category wasn’t the responsible as we were in-budget although we had some unplanned apéros with close friends.
Regarding healthcare, one of our kids had a medical control which led to expensive fees (as usual in Switzerland) that will be reimbursed - we just have to pay 10% of the bill. But with our healthcare insurance Assura, it’s up to us to pay in advance. No brainer when you have the liquidity!
I almost forgot that we took an Easter break earlier in April in the South of France. Was great! Sun, family and chocolate! And expenses were correctly budgeted.
As every month, the most variable budget point are the children daycare fees which were in the normal range in April.
On the luxury side, I had quite a bunch of eating-out lunches and beers that weren’t planned, neither mandatory for work. Nobody is perfect! But everybody has only one life to live!
Ah and we finally booked our flights for our Canada trip! We can’t wait to get back in this wonderful country! Obviously, this has decreased dramatically our savings rate…
I also renewed my Dropbox subscription - notably used in my quest for minimalism - that I was paying monthly as I waited for Apple to release their cloud pricing. The latter is more expensive and doesn’t bring that much more value so I chose to renew Dropbox yearly - CHF 20 saved while doing nothing. Not bad.
Last but not least: we hired a financial advisor! Yes, you don’t dream. We want to take our Financial Independence journey up to the next level, meaning to use every possible Swiss tips and tricks to reach faster our Early Retirement goal.
All his advices will also be very useful to provide better and more accurate data for the ebook I’m writing for you.
As you can imagine, wealth advisor isn’t the cheapest service one can think of in Switzerland. It crashed our savings rate under the 20% mark. For an even brighter future I’m sure!
Canada plane tickets and Swiss-class financial advisor are bringing down our April’s savings rate to 16% while our average for 2015 is now at 33.3%.
But! Because there is a but! Come back in one month as we got yet another income surprise that confirms my guess that 2015 will be a purely awesome vintage!!!
Stay tuned! And until then, keep up with the good work so that one day, you get ranked 1st on the #BSRI 2015 - right in front of my Belgium friend ;)
As with any new topic, I think I just needed to have a blog to read from A to Z about the journey of an inspiring guy in order to get into the field.
It is a bit like with Mr Money Mustache when I was looking for a path to a wealthy life.
So I started to read Joshua’s blog from the beginning (i.e. 2008) and I got infected by the minimalism virus. One week before I discovered his blog, I actually already started to clean our basement but I was feeling alone in my task. Now that I found a community that gives a structure to the decluttering task, my own path looks clearer than ever: back to the essential!
As Joshua points it out, he is always looking for possibilities to minimalize his space, even if he has only few hours ahead of him. I tend to do the same but I’m trying hard to get one thing done after the other, and not to multi-task, neither to start one thing and then another one but without finishing any.
Hence my first step into minimalism of the moment is : going paperless!
What does that mean in reality? Well, we talk about:
I still didn’t officially convince wife for the three last points but it doesn’t matter at the moment as my focus goes first to the eleven binders and their archives - which are taking most of the space. One step at a time.
For this first huge decluttering step, we use the following approach:
As a frugal and newly minimalist person, I tried to find the tools to scan and organize my documents that would allow me to do it from anywhere, at anytime, and that would hopefully not require new hardware.
At first, I thought that I would at least need to buy a proper scanner to have crystal clear documents. One that interested me was the Fujitsu ScanSnap iX500 model which is worth CHF 400. Not that frugal…
I reviewed several setups until I found the best one for myself, which allowed me to not buy anything new and do it all with stuff I already own.
Tools to go paperless:
I basically sort document by folder and filename. I decided to not use Evernote as 1/ I don’t like their software User Experience and 2/ I don’t want to be bound to a software for my critical documents.
For sure it would be great to be able to search in scanned PDF but in case I really miss this Evernote feature, I’ll try something like this OCR (Optical Character Recognition) software.
I think this first minimalist project will be one of the longer I will do as the number of sheets is huge! But you can’t believe how much such a first big step motivates me!
I’ll make sure to publish an “after” picture to share with you the results vs. the picture on top of this post.
You might wonder what the heck Minimalism has to do with my Financial Independence journey?!? Actually both are very tied. We always talk about being frugal as a strategy to achieve the FI vision. But being frugal already implies spending.
On the opposite, minimalism should strongly help me with my Early Retirement goal via the following benefits:
Thanks to minimalism, we will manage to save even more money than we do nowadays!
What about you guys/gals? Are you minimalism addicts already? Ever heard about the word? I want to learn everything possible about this new topic in my life!
]]>This is somewhat crazy when you think about it: be a millionaire! Until I entered the Mustachian world, I thought this was a dream like many others… This was until I took control, organize, and make the dream happening!
Many people would be jealous or envious of such a plan but there is no need to!
They can, or should I say YOU can become a millionaire in less than 20 years.
And as you see in the list above, there is no gamblings or magic implied. Only numbers and additions, with some compound interests. And boooom! There you go with 1 million stashed!!!
In order to show you that this idea isn’t only a MP’s dream, go and check the J’s Million Dollar Club page to see how many people are on track to be millionaires too!
You can be a millionaire one day as well! Seriously! You just need to get started with a plan and let the money accumulate and grow!
Are you willing and ready to be part of the Million Dollar Club? Or maybe you’re already on track with this goal?
]]>1 - Average at least one blogpost per week Success (so far)
This is a tough one as publishing one (interesting hopefully) entry per week is a fast pace to maintain! Thanks to my new commute routine, I feel it gets easier and easier.
If I can achieve only one goal this year, I hope it will be this one! Only nine months left to go!
2 - Write between 15 and 30 minutes per weekday In progress
At the opposite of the first point, I failed to maintain this rhytme on a daily basis. But I allow myself to have a 80% success rate and want to see how it goes all along the year.
Again, with this commute routine of writing every morning in the train, I think I’m back on track. Let’s check again in three months!
3 - Propose RSS to readership Success
This one wasn’t the hardest but it was the minimum least I could propose you! Hopefully you enjoy it when you get fresh articles automatically distributed to your preferred RSS reader! Let me know in the comments if anything doesn’t work regarding this point!
4 - Setup a newsletter email for new blogposts published In progress
This one is also easy but I didn’t take the time to work on it so far. Do you miss it?
It was more important for me to stay on track with the first goal.
My plan is to find some time during a next week-end and prepare you this present!
5 - Have a first blogpost where reader’s involvement is rewarded by something cool Success
Yes! Success! In case you haven’t got the news so far, Aki, a fresh expat in Switzerland won a free YNAB license right here on this blog! She even had the chance to get some tasty Swiss chocolate on top of that!!!
I’m really glad to be able to offer you something as a reward to thank you for the time you spend reading my posts.
As far as I know, Aki is on the way to transform her relationship with money and I’m sure YNAB will do a great job supporting her.
Welcome on board Aki!
6 - Find another Swiss blogger who is seeking financial freedom Success
For this one, I must admit I got lucky. Something like few days after I just published my fresh 2015 goals list, I got a comment from an MP reader pointing at the new Swiss blogger RA50 which I thank to have the will to share his adventures in the journey towards financial independence!
Long live RA50!!!
7 - Have “Early Retirement in Switzerland” ebook written, ready to be proofread by family and readers who subscribed early to buy it In progress
Hum… Except for a MarkDown file opened with less than ten lines of notes, I unfortunately didn’t go far with this goal…
But come on: we are only at one third of the year, I finished to read the “Essentialism: The Disciplined Pursuit of Less” book which lead to better focus in life, I still have “The Miracle Morning” book to read as well, and also the “The ONE thing”, and for inspiration there is “Your Money or Your Life”!
So let’s say that I just have everything in place to at least properly start this goal, if not to achieve it!
8 - Average 40% of monthly savings Success (so far)
Personal finance god was kind enough to let the MP household reach a new savings rate record! As I explained, I don’t think we will get 13th salary nor bonus every month but still, these will help to keep up with the 40% average for 2015!
Let’s cross fingers - and keep up with the good savings work!
I must stay a Silver Badass Savers after all!!!
9 - Reach CHF 122'000 CHF 162'000 of net worth to support mid-term goal Success - but we want more!!!
I recently changed how I compute my net worth so to take into account all my wealth assets. Thanks to this simple change, we already crossed the CHF 122'000 mark last month.
As we aren’t going to rest on our laurels like this, I bumped the target figure up to CHF 162'000.
10 - Max out our two household 3rd pillars Success
That’s simply done! Two times done! Two times CHF 6'768 fully tax deductible!
Do you hear the sweet sound of the winning slot machine?!? Cashiiiing!
11 - Read either “Your money or your life” or “A Random Walk Down Wall Street” In progress
I finally chose to read “Your Money or Your Life” following your recommendations. I hence bought the book and it’s in my book-reading-list top 5.
I’ll tell you what I think about it afterwards.
12 - Read “Essentialism: The Disciplined Pursuit of Less” Success
This one is a great success!
Both because I’ve read it in less than 2-3 weeks (which is quite crazy when you take into account that last books I’ve read took me something more like 1-2 months) and also because I immediately saw how it changed the way I prioritize things in my professional and private lives.
I’ll dedicate a full article soon, sort of a book review, to let you know why this is a must-read!
13 - Read “The Miracle Morning” In progress
Same as goal #11, I bought it and it’s part of my next 5 books to read!
14 - Go to sport training once a week Success
Leaving out holidays and one business dinner I had to attend, so far we are all set for a great healthy success!
There are times when I leave work and I’m not that motivated to go home and then go again out for the training. But as it starts to be a habit, I tend to do it automatically.
Days being also longer now, it should help me to stay motivated until the end of the summer!
Voilà! I’m glad to see progress on the target I imposed to myself earlier this year.
And you? Did you manage to get progress towards your 2015 goals? Have you been lazy or hyper-productive?
]]>Overall, March was a rather usual month if we compare it to the budgeted expenses.
We overspent about CHF 50 in the groceries category due to an unexpected dinner with friends and some unnecessary fast food. Both were very cool and worth the expenses for the great time we spent with our friends and family!
I keep saying that but it’s not to find myself an excuse, it’s really because some things in life do not have a price tag!
March got as well its own medical issue. This time, sun and spring arriving, I had to buy some medications to counter-attack the hay fever that got me by surprise. I didn’t realize we were already mid-March!
Nothing serious thankfully!
On the gas consumption side, everything went as planned with few car trips to go here and there, like to the “Salon Immobilier de Lausanne” for instance (which wasn’t as cool/big as we would have expected).
Something I never mentioned so far because it is recurrent - but still we have to pay it - are the fees for our rent, payment of our health insurance and children activities.
The two first are mandatory fees that we always work on in order to keep optimization at its highest level.
On the more fancy side, we enjoyed the carnivals period with our children and also had a wonderful movie evening with “Ice Age 4”. I think I loved it even more than my kids! This last episode of the series is a pure gem! I definitely recommend it!
We also subscribed to the “ASLOCA” (Association Suisse des Locataires) as we still have issues with our rental property management. We will need lawyer advices soon which will be free after we paid our CHF 60 membership fee. I’ll talk about that in details once we’ve experimented it!
Thanks to various factors (including February being a shorter month), children daycare fees were particularly low. That delighted my wife’s third pillar which enjoyed to be maxed out before end of Q1!!!
One big expense that we can attribute to both luxury and health is that I renewed my Freitag bag to go for a backpack (welcome in your thirties, MP!) as my shoulder bag was doing more damages to my back than it was fancy! Thankfully I could sold it at a good price so the new one was at least almost half paid!
In case you don’t know this brand: it’s the story of two brothers from Zurich who were looking for a way to carry on stuff in a bag which could resist to their city biking life, including rain. They then had the idea to recycle truck tarpaulins and seat belts to get a rock solid bag. More infos about the complete story can be found on their website.
Their brand got so trendy that they now have stores all around the world.
Leisure luxury lifestyle wasn’t left aside neither as I had a cool day spent skiing with friends in the near Jura mountains! Who said Mustachians were living a monk life?
On the phone consumption, we were again above the CHF 30 line due to some professional calls. I hope that Xavier Niel will bring some good stuff to Orange Switzerland with his experience with Free in France!!!
Last but not least, the expense of the month which completely destroys our savings rate: my public transport yearly fee - for which the money was saved all along the year but still, that’s almost CHF 2'500 that are out…
This can sound expensive for non-Swiss citizens but trust me, once you experimented trains which are always on time, clean and secure, you don’t go back!
So, after a good start into the year, March will be the lowest month of 2015 with a savings rate of 15% 12% only (update 03.05.2015: forgot to take into account an expense for job that came after computing on my credit card bill…).
But don’t worry, April reserves us a good surprise regarding income! Stay tuned!
How was March for you???
]]>When nowadays, I see people reading - by default - the 20minutes in the train, it reminds me that during two third of my almost thirty years of commuting, I was doing no better.
As part of my 2015 goals, I currently read Essentialism: The Disciplined Pursuit of Less by Greg McKeown who, in one of its chapter, explain how to design your life and not let others design it for you.
It’s not because advertising baron offers you free reading during your commute that you have to read it!
I mean, you can choose to waste your time and I’m completely fine with that. But If you choose to waste it, do it fully and consciously! And it’s actually not that much of a waste anymore - as you made a choice - but something you decided to spend your time on which produces some value or pleasure to you.
Since more than five years, I’ve decided to leverage as much as I could my transit time so to not waste it anymore.
Having went through car only to public transport and bike only, I have listed below all the things that I did while commuting so far. Things that I decided to do by design, not by default!
The value of some activities might differ from your own scale but the main point is that you define it and actually do what brings most purpose to your life!
I’ve grouped activities in three big categories of commute means, and a fourth one which groups few common activities that one can do in any of the other categories.
Then, there are the activities that work no matter the mean of transport you are using.
There we are with the activities I experienced during last years.
As I explained above, I finished last week my “Essentialism” book and it has helped me to finally decide on how to better plan my commute routine vs. before, when each time I entered the train, I had to decide which thing I’d prefer to do - which sometimes ended in procrastinating on Twitter or this blog’s analytics data…
Now, it is defined in advance. I dedicate the morning commute to writing blogposts and the evening one is reserved to reading books. After one week, the single fact to have designed these routines work actually very well. I arrive in the train in the morning, find a seat, and then get ByWord loaded and I start to type stuff on my iPhone. Evening is similar; once I sat down, I get the book I’m currently reading out of my bag and there we go. As simple as it sounds!
I’m wondering if I covered most of commuting activities (except maybe knitting) or if there are more out there?!?
What are you doing while commuting?
Header credits: ©SBB CFF FFS
]]>Your net worth corresponds to the CHF value at a time T of everything you own, minus everything you borrow.
The resulting value is the wealth you can claim to be your own.
1/ The first point is to take into account all the cash you have stored in every of your checking and saving accounts. Don’t forget your bank accounts opened abroad in case you have any. Same for cash you hide under your matress (even though it would be a great financial mistake).
2/ As a wise investor, I assume you’re making money on the stock and bond markets, aren’t you? So all of your invested stash is to be considered as an asset.
3/ The next point is the money you have accumulated in your 2nd pillar. I take the current value of it which is named in French “Prestations en cas de sortie”.
You can withdraw this money before the retirement legal age if:
Depending on the country you live in, it might not be a good idea to take into account your pension fund as it depends too much on the government laws that rule it.
In Switzerland, the 2nd pillar being funded fully by the employer and the employee, I’m in favor of taking into account its current value as it is money you contractually own.
4/ The other asset to take into account is the CHF you’ve invested into one or more 3rd pillar account(s). Simply ask your bank or insurance to give you the surrender value.
As the conditions to withdraw this money are the same as with the 2nd pillar, I think it’s a good idea to consider that for the computing of your net worth.
5/ The value of your home(s) - if you’re lucky to own one or more.
6/ In case you’re renting your current home, there is another hidden amount of CHF that can be found in your rental guarantee deposited in a bank account. This has to be added to your net worth total too.
And while we are at it, please don’t get fooled by these insane rental guarantee companies such as the “famous” SwissCaution which makes millions on your back. In case you don’t know this system: you basically pay a yearly fee equivalent to 6% of your three months rent warranty and you don’t have to give the cash to your property management.
7/ Any other assets you are ready to sell right now can be considered as potential cash to increase your net worth value. Being a Mustachian, you shouldn’t have anything in this category as you don’t bother with clutter in your life!
1/ Let’s start with the first conceivable loan in our Mustachian realm: mortgage. This number must contains the amount you owe the bank, including the interests.
2/ Credit card also needs to be considered when you compute your net worth as it is some minus you will have to pay with your next month bill.
Red zone below. Be careful!
3/ Credit card debt anyone? There is a huge difference between point 2 and point 3 as the 2nd is basically consuming money which is in your bank account.
While this very point is an emergency to be reimbursed as soon as possible due to the huge interests you are paying for every single month!
4/ Car loan/leasing is also something to be considered as you drive something which is not your own property. I won’t detail this point as it’s such a nonsense in itself, and nobody reading this blog has one, so why talk about it?!?
And before you ask, no, your car isn’t an asset! It probably the thing that depreciate the most on Earth these days!
5/ Any other loan you try to put under the carpet need anyway to be substracted!
As a huge fan of YNAB, I was wondering whether I should take into account my cash cushion and also my savings for planned expenses into my net worth calculation.
The answer is simple: your net worth is all your money at a time T. Which means that for once, you’re allowed not to think in budget, but in banks accounts. Compute the sum, and there you go!
After clarifying all the points above, I computed all our numbers and there is a breaking news: we are over CHF 100'000!!!
It such a great feeling to see where we stand only a few years after we started our journey towards early retirement. I hope the next hundred of thousands will be that easy to collect!
To know the exact amount of our stash, I let you check this net worth dedicated page to get the most recent figures.
In case you’re living in Switzerland, I would love to exchange on the topic as people tend to have very different opinions on the topic - mainly on the pension fund. Please use the comments section to explain us how you compute your numbers!
By the way, I’m surprised I didn’t see yet your figure on the most famous net worth tracker on Earth. Where are you?
There was this initial goal I did set to myself a long time ago which was to work 80%.
I calculated what would be my salary and the cut would be too large for various reasons, the main one being our journey towards early retirement which would be extended by some more years.
So after checking with Mrs. MP which remote day would fit best in our household schedule, I decided to go for the tradeoff of home office!
Make it clear to your colleagues when you are available
During my first days of home office, I didn’t inform precisely my colleagues of when I would be available during the day, and by which means. The result was that people were pissed off because they tried to reach me and I was replying only some hours later.
We discussed about this issue and since then, I have setup a clear schedule in my Google Calendar stating when and how I am reachable. Everyone is happy as my fellows now know when to contact me, and I know when I have uninterrupted time slots at disposal for some focused work.
Inform your customers that you are available by email and not by phone on those days
If you have a position which requires customer interaction, then explain to your customers that you are only reachable by email this day of the week. This will avoid frustration. If you’re in a good relationship with them, you can even explain them that you’re lucky enough to have a company who accepts home office.
I did it and I was surprised that many people told me that it is so cool to be able to experiment that, take more time for yourself, your family, etc. They might be slightly jealous, but happy for you. And they also might ask you some questions about how you organize it, what’s your setup at home, etc. Nice exchanges to foresee!
Clearly communicate about it with your family/children to manage expectations
When you are physically at home, there are some assumptions that you will take care of the dishes, do some laundry, pick up the phone if it rings, etc. I mean, come on, you’re at home after all. And it only takes you few minutes!
You have to be clear about the fact that in the sentence “working from home”, there is also the word “working”!
The hardest part to handle is mainly for the kids to understand that Daddy is at home but can’t play all the time with them…
I now (try to) use a tradeoff which is to timebox 1h of my day when we play together, and then they have to play together on their own. I explained them the rule and since, it (usually) goes well.
Basically, as many things in life, it’s all a matter of communication and organization.
Once everyone got used to it, the home office day becomes a habit and you can start to enjoy the good parts of it!
As Mustachians like to say, the best things in life are the ones you can’t buy. And remote work contains many good parts on which you can’t put a price tag on. Let’s get a taste of early retirement!
It starts with this feeling of freedom that you have when you wake up later than usual. Alarm clock still rings early on in the morning (child at school anyone?), but you feel more happy than the other four days knowing that you will drop the commute routine part.
Indeed, at the time you normally think about getting on your bike to catch the train, you are still enjoying a good breakfast with your children!
In case yours are at school like mine, you will have the pleasure to accompany them to school, and come back home with a big smile on your face realizing that you just used your invaluable time for the highest priority in your life! The smile gets even bigger when you think about your workday to come: sitting on your comfy sofa, with a glass of fresh orange juice, and Spotify playing a nice acoustic playlist.
Enters another good part of home office: no outside disturbance like phonecalls nor colleagues coming to your desk asking for this or that project. Only you and your focused work. You can plan your day as you want and enjoy for once to stick to this plan!
As things get done quicker at home, I also leverage my remote workday to make personal appointments with bank and other similar companies which usually force you to take some worktime off.
I’m glad (and lucky) that I can work from almost anywhere via emails and Slack!
It’s then lunch time (prepared the evening before to optimize time). One more invaluable moment you spend with the ones you love most. Amazing feeling!
Afternoon is at the moment a no-school-time for children but they are napping so there is still a calm atmosphere.
When I have enough overtime to compensate, there are two main things I love to do during these afternoon: the first being to blog while children are napping. No noise except Spotify and the keyboard sounds. That’s during these writing sessions I have the most inspiration!
The second thing is obviously to actually take a nap while kids do! If that’s not pure luxury, then I don’t know what that word means!
The cherry on the cake comes with the monthly daycare bill! This moment when you feel that you get a discount because you’re unfortunate enough to have to work remotely and enjoy to spend more time with your children. It is such a double win: more time and more money!!!
Even though it’s not really like one more day of retirement per week, it’s really a very good taste of it!
I had some issues at the beginning as I tended to take a nap with my children too easily while people were expecting me to be available…
It clearly needs some time to adapt to this new way of working. For myself, but also for my colleagues and family.
What I started to do was to optimize my time spent during commute and workday so to leverage every minute spent outside of the house. This way, I work a bit longer during office days and work a bit less while working remotely. Again, it’s all a matter of organization.
The benefits listed above are almost all intangible except for the daycare bill. But for me, it isn’t possible to put any price tag on these as they are like a piece of freedom you offer yourself every week.
As of today, I wouldn’t return to a five workday-week!
I would nevertheless keep the home office ratio at a maximum of 40%, because I value team work and collaboration a lot.
That was a goal I did set to myself a long time ago and that I know is possible thanks to my company policies. Also, in Switzerland, this is common practice to work 40, 60 or 80%. It’s totally different than France for example, where you have as options either part time (50%), or full time (100%).
So I keep in mind this 80% employment rate as my target goal once it will fit with our early retirement and financial freedom plans!
Until then, home office for the win!
Are you working part-time or doing some home office? For which reasons? Was it hard to setup or get used to it?
In case you think it is impossible for your kind of job, don’t hesitate to still post a comment so that we can brainstorm together about other options. Things like working 100% on a four days workweek for instance.
There are always alternatives solutions if you are ready to change your routine!
Overall, February was similar to last January with its bunch of expenses, although they were of different kind.
Groceries’ bill was very reasonable after last month big refill.
We also met our oldest friends when back to our hometown, which led to some extra outside food expenses, but it was damn cool and so worth the money! Some things in life doesn’t have a price tag!
Due to February bad winter weather here in Switzerland (rainy and cold vs. sunny and snowy we hoped for), children got sick and we had several medical outflows.
On the more fancy and luxury side, we renewed our dishes set which was broken here and there.
Also, we bought a new gadget: an iPhone car charger as we are often on the move with these battery suckers… The good point of this purchase is that it will reduce our future Canada holidays expenses as we won’t rent a GPS with our car, but instead we will use our iPhone with a cheap prepaid data plan.
I also renewed shoes as the others were getting worn out.
Finally, I took the time to order some very nice books at Amazon to learn new things, including the ones needed to achieve my yearly goals!
Still, we agree that these explanations are no excuses to our totally non-vital spendings!
As with the weather, life came with its bad news (loss of a loved one). The funeral increased unexpectedly our gas monthly consumption.
I naturally tend to find positive sides in each and every situation: for this specific one, it reminded me of how our lifetime on Earth is short and that we need to enjoy all of our loved ones as long as we can - and forget a bit (or more) about iPhone notifications, work emails, etc.
Children daycare fees were a bit under the average as I took some days off to enjoy kids. It was so cool! I just love to stay at home, take them to school, write some stuff on the blog while they are napping, play games with them afterwards… I can’t wait for the spring and summer to come back so that we can get outside more often!
Finally, I will need to analyze my phone plan consumption as I tend to pay more than the planned CHF 30/month. I suspect last issues with our Internet provider and other problems with our property management to be responsible of the unusual costs.
Once again, if you take a close look at our 2014 history, I can proudly tell you that we set a new record with 61% of savings rate!!! reached a decent savings rate of 46%.
Kinda unbelievable but I double checked YNAB (referral link) reports, and here we go!
But don’t get used to it, we unfortunately won’t get 13th salaries and company bonuses every month…
I think next month will be back to normal with a 30-40% savings rate - except if we get some reimbursements we’re waiting for.
What about you guys and gals? How was your savings rate looking last month?
ERRATUM UPDATE 04.04.2015
On the super luxury side, we got charged for our Canada holidays booking after I computed the February savings rate. This got our so-called February 2015 record to be null and void, unfortunately…
A rent decrease is one of the opportunity you could miss if you aren’t aware about specific Swiss policies. And you could lose a lot of money over the years!!!
The decrease has to be asked by the tenant to the owner. Meaning that the owner isn’t forced by any law to inform the tenant that a rent decrease is possible. Welcome in Switzerland!!!
When you own a property, you are free to rent it, with some regulations about the price you set. One of these regulations is called the “reference mortgage rate”. Since 2008, this rate is unified at the country level. It is based on the average mortgage rate delivered by banks.
In order to follow the national financial situation, when the rate is going up, rent can be increased. When the rate is going down, rent can be decreased.
The Swiss Confederation revises the rate at the end of every quarter.
When we arrived in Switzerland some years ago, we didn’t know about this process and it is only one year and a half ago that we learnt that you had to ask for it to get it.
Unfortunately, you can’t ask to be reimbursed retroactively so we lost quite a bunch of cash due to our ignorance.
On the other hand, the surprise was bigger as we switched from a 3% reference rate to a 2% reference rate which means a rent decrease of CHF 152/month.
On a ten years scale, this invested amount will use the compounding effect to reach a saving amount of CHF 28'544!!!
The good part of this trick is that you don’t have to fill hundreds of administrative forms neither you have to wait two years to see the cash getting in.
You just need to write one mail to your property management and your rent will be decreased the month afterwards!!! That’s it!
One thing to take into account is that the owner can counter this decrease request by the raise of your rent charges if he can justify that he has more costs to support.
So far in my neighborhood, we all asked for decreases year after year and we only had once an increase in a five years period - which I think the owner would have asked for even if we wouldn’t have claimed our money.
You can use the template letter (French) from Comparis to ask for your own decrease (also available in German here).
An English version is available here.
UPDATE 24.11.2023: the Comparis notification tool doesn’t seem to exist anymore… so I recommend that you set a calendar reminder by putting this URL in the event title: https://www.bwo.admin.ch/bwo/de/home/mietrecht/referenzzinssatz.html (German) or https://www.bwo.admin.ch/bwo/fr/home/mietrecht/referenzzinssatz.html (French) (official Confederation website).
What if you could receive an automatic email every time that the reference mortgage rate decrease (or increase…) so that you could ask your owner to lower your rent (or be prepared for the raise…).
This is possible thanks to the awesome Comparis automatic mailing tool. Simply enter your email address in their form and voilà!
Also, share with us your own experience of requesting a decrease - and if you got a rent raise afterwards or not.
]]>Assuming that you’re a new reader, or that you came over this blog randomly, I will need to explain first the meaning of both acronyms.
“YNAB” stands for “You Need A Budget” and is a personal finance software to manage your budget.
“MMM” stands for “Mr. Money Mustache” and is a blog talking about frugal living while stashing cash. The term “Mustachianism” was invented there as far as I know.
These acronyms are preaching two methodologies that are very complementary.
When combined together, they are taking you, your budget and your wealth up to the next level.
If I compare our situation before using these secret recipe with what happened last year, the computing tells us that we saved six times more money than we were doing previously.
It does feel magic, but the best part is that you can also achieve it.
This all started because of a simple piece of software (including the blog you’re reading)! Being from the IT world, I’m still amazed at how technology can bring positive things to our world!
YNAB (referral link) became such an essential and evident part of our household life that I had to think twice about why I like so much this application!!!
I know it is something I couldn’t live without anymore but let’s analyze why so much love!
I won’t go through the 4 steps of their methodology because this YNAB introduction video explains it way better than I would.
Instead, I will focus on what this software and methodology brought as benefits to our household.
Before, we were the kind of people who live paycheck to paycheck. As Switzerland salaries allow for a lifestyle which is more than correct, we were simply spending (almost) all of the money that we were earning.
Want to go out for dinner? Let’s go!
Want this new shiny Mac that just got released? Just get it man, my next (Swiss) salary will pay it in one shot!
Want to visit family abroad next week-end? Let’s pack up, fill the greedy car tank with some fresh gas, and there we go!
This can sound like usual lifestyle to some, or completely surreal to others. At that point in time, it was our way to deal with our finances.
What changed with YNAB is that at the beginning of each month, every cent we make gets a specific task to do. Every. Cent.
That way, we plan how money gets out of our pocket, instead of letting it be randomly spent depending on the events, the weather, etc.
This first point alone helped us save tons of money as you don’t see any remaining money that you could spend. Everything is used for something and it removes completely the temptation of using some left alone cash!
Once you experienced it, you just wonder why no one taught you that in school instead of some useless fancy math algorithm that you’ll never use!
The second fantastic thing is that you know exactly where you are regarding your money. You don’t have to login to your e-banking to get your balance, then remove what you think you will spend this month for groceries, for your mother’s birthday, for your bike repairs, etc, etc.
Because every cent has its own category, you can plan in advance your yearly expenses such as insurance bills, or also Christmas and birthdays.
Thanks to this expenses categorization, you gradually discover how much on average you spend on what.
That’s when the magic happen: you can then look at your own future and make plans based on real data and facts, instead of just guessing.
When I say plan, I talk about big things/dreams that are now reachable as you just have the data to plan for them. Things like buying your first home, replacing some big stuff such as a car (by another more frugal but still a used one, right), and even the financial independence graal!!!
A whole new different world is now at your fingertips.
Until recently, I still had (too) many bank accounts as it might be the case for you too.
One thing that YNAB doesn’t take enough pride in is how it hides any complex banking setup you can have. It may sound crazy to you but I’m going to my e-banking about twice a month nowadays. Before the YNAB era, it was more like twice a week or even more.
The tool makes it so simple: all your accounts centralized in one single place. You enter your incomes and expenses as soon as they happen, that’s it!
It removes all the hassle of having multiple logins and browser tabs opened in the same time together with your calculator and homemade physical or digital spreadsheet! Even if old school methods are usually the best ones, trust me that it is not the case for personal finance management with YNAB!
The hidden benefit of not going often to your e-banking platform is that you don’t see all the possible cash cushion you stashed. So you’re not tempted to use it!
OK, for this one, I don’t ask you to take my word because you really need to experience it in order to trust me!
I already see you laughing out loud: “Yeah MP, you’re so funny! Are you really serious that you are excited and take pleasure in paying your bills?!? Like seriously?”.
Indeed this may seem weird to the first comer.
But you are just so happy when you see the balance of your budgeted yearly insurance/taxes/younameit hitting “0.00” perfectly! It’s a mix of feelings between control and power on your own money.
And don’t worry, these rejoicings aren’t happening once or twice a year but more like several times a month when you see your budgeted amounts getting closer to the balance amounts.
Budgeting begins suddenly to be a game. And when you start to see it as a game, you want to win it. That’s the start point of yourself becoming rich.
“Fair enough MP, your perfect match may work for you but what about us, humans with life full of unexpected events?!?”.
Thanks mate, but unfortunately, I’ve got a life with its load of unplanned things that happen every month. It wouldn’t be fun else actually.
Thankfully, YNAB was also built by humans and is completely flexible regarding this aspect.
You will manage it by taking the missing money of the overbudgeted category from another category. Two clicks, that’s it!!!
Thanks to its laptop (Mac and PC), tablet and mobile apps (iOS, Android and Windows Phone), you can log your expenses wherever you are. Everything is synchronized and works like a charm.
The expenses logging part is I honestly think the most reluctant part of budgeting. Ideally, I would like my banks to push any expenses I make to my YNAB database.
But I prefer to see this drawback as a way to improve my ability to build habits. After few weeks of usage, it has become an automation. As soon as I get my credit card out of my wallet, I take my iPhone as well.
For the little story, I discovered MMM blog not long after I started to use YNAB (referral link).
I found it was such a great source of early retirement information that I took up the challenge to read every single article so to develop my frugal knowledge as fast as possible. This took me few months if I correctly remember, but I really recommend you to do the same as it will opens your eyes regarding various lifestyle aspects.
Combining these two acronyms was what really put my money on steroids!!!
This benefit is I think the favorite of my wife who tends to worry as soon as we get a money issue.
Good news: she didn’t worry about cash since more than one year!!!
Thanks to MMM, we analyzed all what could go wrong financially speaking, mainly because of insurances lowered at the minimum. Then we wrote down this final amount of cash as a goal in YNAB, and we started to build our cash cushion.
Now that we are fully covered since months, it’s so amazing how we don’t care anymore about unexpected bills or events. Got the iron broken, unplanned week-end abroad, laptop broken.
No more worries. Always sleep well. We are ready to face those potential problems!!!
From all MMM blogposts, I preferred the ones who talked about optimizing every damn lines of your expenses report.
Step after step, one YNAB line after the other, we downsized the following:
Last 2014 was the first complete year I tracked all of our incomes, expenses and savings. It was also the first complete year where we enjoyed the total results of all our optimizations.
Computing the final number, I can happily tell you that our household put aside nothing less than CHF 37'000 in a single year!!!
And honestly, we don’t feel restrained. Even though we still have plenty of decluttering to do, we enjoy less useless stuff and more valuable (often free) moments.
I truly think that every country of this world should provide personal finance mandatory courses so that children aren’t depending on the randomness of (maybe) finding out someday that there is another way of living than consumerism, debt and paycheck to paycheck.
As Mark Cuban said: “While money can’t buy happiness, it can sure make life a whole lot better.”
So now, if you’re interested by the idea of becoming rich and build wealth, here are your next steps:
Let me know in the comment section below what you managed to achieve! You can do it!!!
YNAB and its founder Jesse are such an amazing company that they accepted to give away one free YNAB license (worth 60$) to one of MP readers!!!
Two simple rules to participate in the game:
The winner will be announced the 16th of March 2015 so stay tuned ;)
UPDATE 16.03.2015
And the winner is…Aki!!!
Congratulations to you! For both the YNAB license and Swiss chocolate!
Please private message me your contact infos so I can organize the sending.
Overall, it was quite an expensive month.
Groceries’ bill was higher than December as we had to do a big refill coming back from Christmas holidays.
We also visited the beautiful Lucern city here in Switzerland where we spent a very nice lunch and dinner outside. This goes with additional unusual gas costs.
As we were there, we couldn’t miss the most visited museum of Switzerland: the Swiss Museum of Transport, that we can only recommend you as it was such a great time with children!
All in all, this family week-end was really awesome and worth any cents we paid for it! Who said frugal living prevents any pleasure in life?!?
On another topic, we had to replace our iron which decided to die in the beginning of the year… Too bad but this unexpected expense was covered without any financial worries thanks to our cash cushion.
On the yearly fee side, we only had our car tax bill that came in. This one is somehow still a pleasure to pay after that we took the smart decision to switch our V6 engine for a frugal Toyota Prius! It’s so cool to save 75% of cash thanks to its low CO2 emissions!
Our savings rate could have been even bigger if we wouldn’t have paid two months of taxes in once.
Let me explain you why: in 2014, we were paying our taxes the first day of the month (e.g. 01.11.2014) for the previous month (e.g. October 2014). In 2015, we wanted to follow YNAB philosophy even more closely by paying our next month taxes (e.g. January 2015) with the salary of the previous month (e.g. December 2014). For this to happen, we had to pay double the amount at some point. Which is now done!
Finally, the last unusual expense was my yearly sport subscription. As I see health as an investment into my future, I had no issues to pay this bill neither!
Looking at our 2014 history, it seems we managed to set a new record with 58% 59% of savings rate!!! This is good to start 2015 in a great mood!
I will nevertheless temper this positive news as a big amount of the saved cash is budgeted in YNAB (referral link) for our summer holidays. This means next month expenses will rebalance the yearly average rate.
But whatever: “Champagne!”. No one knows what will happen in some months, and at the moment, the cash is still in our pocket!
What about you? How was your savings rate looking for January?
]]>No, I’m kidding! I checked at my new BCV bank and noticed that their rates (1 euro = CHF 1.0260) seemed correct in regard to what the FOREX was claiming for (i.e. something around CHF 0.99 or so).
The first interesting point to note here is: BCV offers better exchange rate if you withdraw money directly at their ATMs instead of going through their over-the-counter. I didn’t check how much percentage they take more, but it must be true as they advertise it themselves on their mobile app.
Next, I went to the CFF office which is known to provide foreign currency exchange services.
Below CHF 2'000, they were at something like 1 euro = CHF 1.04. And above CHF 2'000, the rate was lowered to 1.0375 or so.
“What? Really? Banks are the cheapest this time???” was I wondering.
I moved to Crédit Suisse and UBS and their price were equal to their supposedly premium quality: 1 euro = CHF 1.05.
It’s only a few cents difference, but for the CHF 5'000 I wanted to exchange, by just choosing one door instead of the other, I was getting approximately 100 euros more - one more hotel night in Canada for free!!!
I learnt later on from colleagues that Swiss Cantonal Banks are usually the cheapest regarding currency exchange rates - between all banks.
By chance, I often pass a small currency exchange office close to the Lausanne main station and I wondered what they would offer in such a tiny-not-so-nice-looking exchange point.
I entered the next morning and asked their rate.
“How much do you want to exchange?” he asked.
“CHF 5000” I said.
“1 euro = CHF 1.005” told me the cash-exchange guy.
“Sorry? Are you sure? Can you repeat” did I asked.
“CHF 1.005” he confirmed.
“Deal!” I told him.
So, to make it short, by entering the correct door and not let yourself be attracted by shiny Swiss bank buildings, you can save a lot of money.
In my case, I feel like two hotel nights of our next Vancouver trip are paid off. Just because I choose the small ugly office instead of the magnificent one.
Since I discovered Mustachianism, this advice proved to be true in so many cases: from our M-budget Internet package that doesn’t look as nice as what Swisscom would propose for instance, to our new awesome car that doesn’t have a Ferrari exhaust sound, neither the looking!
And actually, I really think there is more beauty in what these things - because they are only things/stuff - are able to give you in regards to what you invest in them.
I’ll stop here with philosophical thoughts, although I would be very interesting to know what experiences do you have in the world of “awesome return on investment even if not so nice looking”?
Also, more related to the topic, what is the best place to exchange currency in your own canton / country?
]]>I got the blogging virus since the beginning of 2014. Although I love writing, I struggled so far to find enough time for it. There is always priority work to do, children to play with, fun with friends to have, etc.
In order to not let the daily business ruin my publishing rhythm, I decided that 2015 would be the year where I will put at least one blogpost online per week. I find nothing more boring than a blog which gets updated once every two month. Hopefully you will like it!
I set this objective in order to support the goal #1 above. There is no better way to build a new habit than to decouple it into small chunks.
I’m using the amazing Swiss public transports every morning and evening (always in time, no matter what) so I commit to use part of this commuting time for building this writing habit!
To complete the list of painful things of a blog, we could add the absence of RSS feed. Thankfully, the reader @pldrnt reminded me that earlier this year and I already added the RSS feed to the top right of every page of the blog.
Here is the direct link if you didn’t subscribed already: https://www.mustachianpost.com/feeds/all-en.atom.xml.
I want your reading experience to be as comfortable as possible, hence I want to offer you to receive automatically new Mustachian Post blogposts right into your mailbox, so that you never miss any freshly published Swiss made post!
Being a lazy person myself, I find this way of subscribing very handy as I then use my mailbox as a reading list. You just have to be careful to not register to too many of them in order to not start getting spammed.
Hope you like this feature once it’s live!
A cool thing I like a lot as a reader is to have the possibility to win something as part of the readership community. As I’m now a blogger (that’s weird to write that actually), I want to give back what others did in the past on websites I read.
I have one idea that’s already validated by a sponsor and another one which is still under discussion. Stay tuned!
And yes, I promise (remind me if I forget), I will add a Swiss chocolate box in the reward package!
Just to make it clear, it won’t be something useless or some hidden advertising. Only useful stuff, tested and trusted by myself.
People like NMW know my wish to see Financial Freedom / Early Retirement take off here in Switzerland. I thought I would put as a goal to find (or convince) at least one person amongst the 8 millions swiss citizens to blog about this topic I like so much.
While writing this blogpost draft, I had the chance to see this 6th goal already checked thanks to RetiredAt50 who started his blog about Early Retirement in Switzerland the 2nd of January this year!!! And he is even from the French speaking side!
I’m looking forward to sharing with you mate!
As you might have notice the page, I plan to write and release an ebook about Early Retirement in Switzerland.
I’m at the very beginning of the process and I can tell you that this goal is by far the most challenging one I set for 2015. We will be able to validate it if the book is advanced enough to be proofread by early subscribers.
As I want it to be as complete as possible, I’m afraid to not reach this objective but at least, this public commitment will for sure make me go further than if I wouldn’t state it!
Wish me luck!!!
What about we talk about some money, numbers and figures?
Last year, we managed to average 34.5% of savings rate. You can’t imagine how great this number sounds to us who where starting from almost 0% one and a half year ago.
But we don’t wanna rest on our laurels in 2015; that’s why we decided to take our family savings up to the next level and try to reach 40%.
I’m very excited to kickstart this goal as we will have the data for the whole year compared to 2014 where we missed January.
Finally! Some real figures for you Mustachian readers!!!
In order for our household to buy our first home here in Switzerland by January 2017, we will need to reach CHF 122'000 of savings by the 31st of December 2015.
As you can see on the graph below, we have stashed less than we should as of today.
Last year we saved about CHF 30'000. If we want to fix this in 2015 and be back along the pink line, we need to save about CHF 45'000 in the next twelve months. That can sound pretty tough but some quick rough calculation shows that it’s feasible:
There we go: CHF 45'000!
And this is without taking into account the growing surrender value (“valeur de rachat” in french) of our 3a pillar.
Idem, our 2nd pillar value will grow as well with the money stored in it during 2014.
Can’t wait to be the 31.12.2015 to check where we stand!!!
In Switzerland, we have a pension system which allow you to own a private pension. The good point of it - versus investing this money in some diversified ETFs - is that you can get tax deductions if you choose to save money this way.
Every year, the third pillar maximum annual contributions grow slowly but surely. In 2015, you can deduct up to CHF 6'768. For this amount, you usually get around CHF 1'000 of money back!
I will dive deeper into this big topic in a future blogpost but I must precise something right away: never make the same mistake as I did and don’t get your 3rd pillar from an insurance with their useless life insurance package! Get it from a bank or another financial organism, but never ever take it packaged with a life insurance.
Since some years, we take care of maxing out both of our pillars in order to maximize our tax deductions. We will do the same this year.
After the easy and funny financial objectives, let’s continue this series with more studious stuff. I really have a hard time to focus on reading books. I always add these to my work yearly goals so to ensure I will finish them. I’ll do the same in 2015 on the blog!
Since I started to dive into personal finance, I always wanted to read something more complete than a series of blogposts.
Depending on your comment, I will choose one or the other as my financial book reading of 2015.
What do you think? With which book would I learn more stuff? Which one would you advice me to read first? If you are persuasive enough, I might take the challenge to read both!
Once I will have finished one of the two books, I will make sure to write a review here to let you know what I thought about it.
I stumble upon this book reference on Pat Flynn’s “Smart Passive Income” blog. I really like these kind of productivity/priorization readings that make your life better, simpler, richer.
Same as above, book review will be published. Stay tuned.
Same as goal #12, I discovered this book on Pat’s same article. “Productivity before 8am” is a concept that attracts me a lot. Hopefully it will help me to sustain this blog publishing rhythm. Review to come.
Since I left high school where sport was a mandatory activity, my regularity in practicing a sport was like stocks during a stormy period: up, down, up, down, down, up, etc… Do you see what I mean?
Since this year (i.e. three weeks ago…), I decided to be consistent and stick to a training once a week. I write it down here even if it has nothing to do with finances, because I’m sure you will put pressure on me by asking where I am with this objective during our quarterly reviews! I rely on you for this one!
Gosh, what a lengthy list! Hope you didn’t fall asleep? I might be a bit crazy to have opened so many challenges at once but well, no risk no fun! Right?!?
I’ll keep track of my goals on this page so that you can follow my progress.
What about you? Did you take up some new challenges for the awesome 2015 to come?!?
]]>In case you don’t know how I allocated my savings in 2014, below is a short reminder:
ETF | ISIN | Symbol | Percentage of portfolio |
---|---|---|---|
iShares Core CHF Corporate Bond (CH) | CH0226976816 | CHCORP | 50% |
iShares Swiss Domestic Government Bond 7-15 (CH) A | CH0016999861 | CSBGC0 | 20% |
iShares SMI (CH) A | CH0008899764 | CSSMI | 10% |
iShares MSCI World CHF Hedged UCITS ETF | IE00B8BVCK12 | IWDC | 20% |
The percentages are combined in a way that this portfolio supports my goals and particularly the one that is to buy our home in approximately two years.
Some of you may wonder why I’m choosing ETFs that are hedged as they cost more. Weird on a so-called frugal blog, isn’t it?
Well, actually, there is a good reason to that: as I live in Switzerland with its very own currency, the Swiss Franc (aka. CHF), and that I want to have a diversified portfolio so to not have all my money invested within my country only, I hereby must invest in companies abroad, hence in foreign currencies.
Unfortunately, the currency market isn’t what we can call a stable place. Even more during the last decade where the CHF got in troubles and that the Swiss National Bank had to introduce a floor rate.
As I plan to withdraw all my investments in the short-term (i.e. in less than five years), I must get a protection on these savings. I will get rid off this insurance as soon as our home is bought because afterwards, we are going to invest for the long run where hedging doesn’t bring you any extra security.
Thanks to some of you who took time to comment my previous article on the topic, I checked new options that could apply to my situation.
What about buying some “UBS ETF (CH) - SMI (CHF) (CHF) A-dis” (ISIN = CH0017142719) instead of my current “iShares SMI (CH) A (CH0008899764)"?
That good point led me to find out that UBS reduced its TER some months ago (sorry but I can’t find the article where I read about it) and that almost all their ETFs are now lower than those of iShares. This UBS ETF for instance has a TER of 0.20% while my current iShares has one of 0.35%.
On the other hand, there are three reasons that force me to stick with iShares until we buy our home:
As I plan to withdraw all my invested money in the next two-three years to come, even a TER difference of 0.15% isn’t enough to make me switch my SMI ETF tracker as when I will need to sell, all the three exposed points above will support me to do it quickly and with the less loss possible.
As always with the market, everything is depending on your situation. Once our home will be acquired, I will definitely go for the UBS ETF for my long-run investments. But for now, I’ll stick with iShares.
And what do you think about “iShares Core SPI (CH) (CH0237935652)" with a very low TER (0.10%)?
Although its TER sounds interesting, the fund size isn’t that big - lower than CHF 1 billion.
From what I learnt recently from a friend in the financial field, these ETFs have more chances to be cancelled or merged, leading to fees for the end customer.
I then decided to not purchase this ETF.
A last one that could let you be exposed to some more risks but also more opportunities to make money: “iShares Global High Yield Corp Bond CHF Hedged UCITS ETF (IE00B988C465)"?
On the advice of my friend from the financial field, this ETF should bring some good yield with a moderate risk.
I want to try at least one new thing in 2015 with my portfolio and I chose this junk bond so to see how it behaves during the upcoming year.
I will keep its impact low anyway by allowing it only 10% of my savings.
This how my investment portfolio will look like for the 2015 year:
ETF | ISIN | Symbol | Percentage of portfolio |
---|---|---|---|
iShares Core CHF Corporate Bond (CH) | CH0226976816 | CHCORP | 40% |
iShares Swiss Domestic Government Bond 7-15 (CH) A | CH0016999861 | CSBGC0 | 20% |
iShares Global High Yield Corp Bond CHF Hedged UCITS | IE00B988C465 | GHYC | 10% |
iShares SMI (CH) A | CH0008899764 | CSSMI | 10% |
iShares MSCI World CHF Hedged UCITS ETF | IE00B8BVCK12 | IWDC | 20% |
I didn’t understand one year ago why there wasn’t one rule that rules it all in the investment world.
But last year was full of readings which helped me get the most important point: it all depends what your situation and future plans are.
Once you know that, the rest is quite easy to figure out thanks to all online resources available.
On your side, what situation led you to to which portfolio for 2015?
]]>It’s 01:48 AM and I actually can’t believe that I’m still typing stuff late at night on the same blog than the one I created one year ago!
I’m really proud of that as I often started or wished to start blogs but never managed to keep them up on the long run.
I actually figured out why: it’s because the previous topics I talked about weren’t interesting/motivating me enough to write every now and then about it.
In case you want to start a blog, my advice would be that you really take some time to figure out if you would like to still talk about this topic in 1 year, 5 years, or even in 10 years. Because really, you need to have hundred(s) of blogpost ideas in mind. You need to wake up during the night with the idea that will make you featured on rockstarfinance.com. You need to open up Things while on the toilets to write down your next task to improve your readership reading experience with some nice graph tool you just discovered! I will stop there and keep Evernote and my other secret productivity + blogging tools for a future blogpost!
Something that got me to start this blog was actually to document stuff in CHF for people living in Switzerland and willing to reach early retirement / financial freedom. I think you got that here we talk about chocolate, luxury watches, and a weird foreign currency where you put the symbol before the figure!
I really hope this will inspire some people to start saving money to reach early retirement / financial freedom here in Switzerland!
As said above, I’m amazed to be able to say that I’m actually a blogger. For real. And one that survived his first year of existence!!! Champagne! Long live mustachianpost.com!
Although I kept this blog alive, I hardly reached fifteen blogposts in a year. That’s a bit more than one blogpost per month. Let’s say it’s not too bad for a start and that I actually preferred to focus on quality rather than quantity.
I will surely increase that in the awesome 2015 year to come!
I already hear some of you telling me that a SMART goal can’t be “almost checked”. And you’re right!
But I’m actually so surprised and proud of this number, that for this time, I will allow myself to have a goal “almost checked”!
I never thought that one optimization after the other would lead our household to average 35% of savings rate over 2014.
So trust me, if I could achieve it, you definitely can as well!!!
This one I can’t flag it as “ALMOST CHECKED” because we are currently lacking about CHF 8'000 to be on track.
See below the nice graph update that I pictured lately:
In case you want to save money for a specific goal, I can only recommend you the method of pinning a chart in a place that you can’t miss everyday. Like your bathroom or your fridge in the kitchen. I tend to prefer the bathroom as it’s kept more secret to all people who visit us.
Oh yeah, this is checked!!! Special thanks to Jesse from YNAB (referral link) who helped me hop on the investing train back in February 2014.
Although Swissquote does its broker job (while pumping too much fees out of my savings), I can’t wait to see the <a href=https://www.mustachianpost.com/blog/exclusive-interview-with-bartosz-burclaf-ceo-of-moneyvane/">new low-fees Swiss broker MoneyVane opening its beta during this Q1 2015! I’ll definitely keep you posted as soon as it launches!!!
When I remember our old bills reaching CHF 325 per month, this makes me laugh (nervously)… Thankfully, we applied simple yet very effective tips and tricks to our communication habits which helped to reduce our household monthly spendings to CHF 105 per month!
This one was very interesting because I always dreamed to fly for free like these serial travel hackers. My dream ended suddenly once I crunched the numbers and realized that the American dream wasn’t working in Switzerland…
Nevertheless, this investigation helped me to reduce my overall banking fees and get some real cash back instead of these dummy bonus points you usually win.
For this one, I clearly saved money during the December’s challenge but I must thank my wife for the help she provided me when I was too tired in the evening to cook for our next day lunch.
I definitely need to keep this habit, and over all to learn new recipes because my current list isn’t the most advanced one!
I can’t remember who said that one should have the lowest number of bank accounts to keep it simple so to not lose time managing them all and instead, to use this time to do more relevant and valuable stuff.
I followed this advice and leveraged the opportunity to optimize our banking setup, ending with way lower fees.
Now, we are having only one bank and it feels really less complex. No more transfer between this savings account to this check account for that transaction! We just use YNAB to budget everything which is stored in our single bucket, easy!
I also closed some accounts we had in France earlier last year. I kept them mostly because of the good interests they provided. But it was painful to transfer this money, always waiting for the best currency rate to happen. And since I learnt how to invest, I didn’t want to let the real interests going into the bank’s pocket!
Although I tried several times amongst my small amount of posts, none of them was ready to be featured on this financial-blogger-grail website.
I will continue to improve my writing skills and keep bringing as much value as I can to the FI/ER community during the year to come - while hoping secretly to see a peak into my Google Analytics one morning!!!
While starting a blog is the easiest part, it gets complicated when you try to get people actually read what you write!
My first focus was initially Twitter and the forums of YNAB and Mr. Money Mustache which helped me spread the word that the Mustachian movement trend is having at least one supporter here in Switzerland, hopefully not the last!
As we talk about this, I also thank all my Twitter followers who reached a new record today by being 400 persons willing to know more about financial freedom and early retirement in Switzerland! Thanks a lot, this really keeps me motivated!!!
Even if I’m not a big fan of Facebook myself, I recently tried to open a page to notify you when a new blogpost is published. I hope it helps some of you who are more familiar with this media than the blue bird!
Last, in order to be part of the FI community, I enjoyed commenting on interesting articles from all around Europe such as on the NMW’s blog from Belgium, Weenie’s blog from UK, and TFS’ blog from UK too.
As I got more and more into the FF/FI/ER topic, I had to face one rude reality which is that most innovative trends or ideas are first coming from the US… And so was it also true for Financial Freedom.
But thankfully, Europe is taking off and dozens of blogs have emerged. So I decided to dedicate a specific page to find them more easily.
If you should be but are not in there yet, please let a comment with your name and blog URL and I will add you right away!!!
I hate lists with thirteen items (thank you superstition), so I chose this easy goal. I say easy because when I discovered rockstarfinance.com, no other blog in CHF currency was present on this website. So I just had to create a net worth page and link it there.
By the way, a good news on this front is that our household should reach the CHF 100'000 step during this 2015 year!!! I simply can’t wait for it to happen! Of course you will be the first noticed ;)
Pheeew! What a long article we’ve got here!
I hope to not have lost you around. Thanks for reading anyway and hope to see you back here during this year!!!
Don’t forget to let me know what you managed (or not) to achieve in 2014 in the comments section below!
]]>Back to numbers: again, we were on diet with children daycare fees thanks to family coming to visit us and taking care of the two little monsters - or how to combine fun family time with building wealth! Who said money and budgeting was boring for people caring only about their wallet.
The other income source came from the tax administration. I love this end of year period where all bills I budgeted for via YNAB (referral link) are paid in one click via the ebanking. It’s just a pure pleasure for the budget geek I am to see that balance hit perfectly the CHF 0.00 and that we are back on track to start an awesome new year, with all bills paid! No worries, no cold sweats; just peace in the household financial world.
Thanks mainly to children daycare expenses and 3rd pillar investments, we got back CHF 2'264.50 of tax deductions that helped us to finish building our CHF 10'000 emergency fund. Hooray, right in time before 2015!
These two main factors raised the savings rate above the 50% psychological barrier for the second time this year! To be accurate, with all our December incomes, we did hit 52% of savings rate!
Short note about <a href=https://www.mustachianpost.com/blog/savings-rate-for-november-2014/" target="_blank">my November 2014 savings rate report, I actually didn’t setup a record because the real one is 53% and was reached earlier in June 2014. I just checked my spreadsheet too quickly last time…
I anyway hope that you already enjoyed once being on the other side of the first 50 percents - it feels so good!!!
Talking about you, how was you December? Hopefully you had good times with your family and friends for Christmas and New Year Eve.
Did you reach some savings rate record for the last month of 2014?
UPDATE 14.06.2019
And now it’s the turn of our banking setup. Bye bye BCV! I let you discover our new Swiss bank choice in this article (special welcome-cash code included for MP readers).
There we go, we finally made it! All bank accounts moved to one single low fees bank! Simplify while reducing your costs! What a nice motto!
When we arrived in Switzerland, I asked a friend who was born here about which bank we should choose. Back then, we were in 2009 right after the big crisis implying big players such as UBS and Crédit Suisse.
He explained me that those players were strong enough that I shouldn’t bother with the current news at the time. He also pointed out that Cantonal Banks were a good choice too due to their huge network all across Switzerland.
In the end, we were planning to visit both Crédit Suisse and BCV (Banque Cantonale Vaudoise) but we first went to Crédit Suisse and the feeling with the bank advisor was good and reassuring that we eventually opened our accounts there straight away. No need to mention that back then, I wasn’t in optimizing my contracts, neither into Mustachianism.
Fast forward five years later: optimizations of all my contracts (from <a href=https://www.mustachianpost.com/blog/optimize-your-swiss-car-insurance-policy/" target="_blank">car insurance, to <a href=https://www.mustachianpost.com/blog/toyota-prius-switch-what-a-great-decision/" target="_blank">gas consumption, and <a href=https://www.mustachianpost.com/blog/unlimited-internet-and-mobile-subscription-for-chf-50-yes-in-switzerland/" target="_blank">Internet and mobile subscriptions) on the way, I then start focusing on how to reduce these damn banking fees.
Before the switch, my wife and I were paying CHF 15/month each, for 2-3 accounts and two credit cards. Even before finding our new bank, I was thinking that this was very stupid of us to have about 7 accounts (including our joint accounts) and nothing less than 5 credit cards and 2 debit ones…
I started googling and looking at comparis.ch but I found their comparisons complex to read. Then I stumbled upon this awesome website of the Fédération Romande des Consommateurs where I found two very interesting PDFs comparison factsheets:
In summary, for us, digital natives, the choice was to be done between the BCV and PostFinance. We chose BCV because of their debit card which seems to be accepted better out of Switzerland - even if we have to pay it CHF 2.5 per month.
Of course we don’t pay any of their fees as we are always above the 10k limit thanks to our cash cushion.
Also, our joint account being already opened there, this drove our choice too. And after some talks with friends being at PostFinance, it seems that their new ebanking solution isn’t that nice to use. At least the one from BCV is lean, and fairly easy to use. Plus their new mobile and tablet apps are the best out there in my humble opinion (way better than the new ones from Crédit Suisse or UBS).
In the end, for our household situation, this means we are saving CHF 300 per year. Only because we switched banks!!! What a damn great optimization for a good start into 2015!
We end up currently with five bank accounts: one checking account and one savings account each. And one joint account.
I must say that we could live well without the savings account as there is YNAB (referral link) and all of our savings go directly to our investment account. But my wife is still not completely onboarded onto this little piece of software…
We could also discuss the fact that a couple could live on a single account for the whole household but that’s not fitting our way of living.
As we seek financial independence, we also wanna keep our own independence financially.
If you checked the FRC documents above, you’ll see that these focus only on the bank accounts. But they also did the same with this credit cards comparison document (in french).
As I found out earlier this year that <a href=https://www.mustachianpost.com/blog/travel-hacking-does-not-work-in-switzerland/" target="_blank">travel hacking isn’t working here in Switzerland, we then decided to go with the Migros Cumulus MasterCard (referral link) for the following two reasons:
We have a setup with three credit cards: one for our joint expenses, one for my wife, and one for myself. This allows to prepare birthday and Christmas presents without losing any surprise effect ;)
The joint expenses card is in fact the additional one on the same account as my own credit card. And my wife has her own.
We linked all the cards to our single common Migros Cumulus account so to get all the cash back on one account.
For the record, we get approximately CHF 165 per year of cash back money + the yearly fees we don’t pay anymore.
I really like this kind of optimizations as they are so simple and effortless to setup. And once it’s done, the cash you save is forever, and not just a one shot.
I’m glad that these frugal (and qualitative) options exist here in Switzerland as usually, we’re not that much lucky - see telecoms for instance.
In order to thumb our nose at banks, we created a dedicated “Holidays” fund in YNAB so to see our money grow there - and not in the bank’s pocket!
What about your setup?
Which bank did you choose to store your money?
What about your credit cards?
My only regret with this new record is that I’m still <a href=https://www.mustachianpost.com/blog/how-to-make-money-on-the-swiss-stock-and-bond-markets-chf-only/" target="_blank">stuck with Swissquote while my money could grow even faster at MoneyVane.com. I can’t wait to see this <a href=https://www.mustachianpost.com/blog/exclusive-interview-with-bartosz-burclaf-ceo-of-moneyvane/" target="_blank">new service go live!
Some teasing for the next December savings rate post: we got our taxes’ deduction reimbursement infos and it’s surely going to help us set a new record in a row! Stay tuned!
I plan to create a dedicated page for my savings rate evolution, with a fancy graph. I’m sure it will motivate me even more, and hopefully inspire some of you too.
I’ll keep you posted once it’s live!
What about you? Was November good or bad due to Black Friday and Christmas presents?
]]>Before we start, you are maybe wondering what’s this MoneyVane about?
In one sentence, it’s basically the Swiss equivalent of Betterment, the famous US-based low-fees investment tool.
If you trade in Switzerland, you’re either stuck with your expensive bank solution, or stuck with a service a bit-less-expensive like Swissquote. Either way, you are stuck and paying too much fees!!!
Thankfully, a guy named Bartosz Burclaf got the guts to fight all the Swiss banking regulations, raise funds, and be ready to launch very soon the Mustachian’s best friend investment tool!
Because he’s kind of a Mustachian himself, he will reveal you exclusive infos on how his great online service will work.
Hi Bartosz! You know, you’re realizing my own dream by doing what I don’t have time to build: Betterment-like in Switzerland, by Swiss people! Congrats and thanks! What a nice Christmas present you offer us!
Hi MP. Thanks for the invitation.
In Europe (end especially in Switzerland) it is not as simple as it seems. We were struggling a lot with regulations, external brokerage etc.
I am happy though that thanks to interested people – like yourself – we can keep the work going, so thank you :)
My first question then. Your project could have been mine as I’m so sure it will take off quick and big. As you were first, I’m left with investing into your company. Can I? What’s the Business Angel entry level ticket price?
I am afraid that we are currently closing the first round of funding already. Entry level is minimum 50k CHF. But if you or one of your readers is willing to invest, ping me and we would see what we can do.
Thanks. Will keep you posted on this one as I have other <a href=https://www.mustachianpost.com/blog/revealing-my-financial-goals/" target="_blank">investment priorities at the moment. Next question: in your last mail, you talked about a private beta. What are the steps and requirements to get in?!?
For the private beta, we will most probably require an initial investment of 12k as we still depend on an external broker :(
We can accept investments of as low as 5k CHF but only with more aggressive profiles as otherwise the fees would devour your earnings.
For the production version, we will have an offering giving probably the first 15k for free,
so that we avoid this cliff and you will be able to start with as low as 5k.
As soon as we will prove the market, we will boot up the process of getting our own securities dealer license (we will register with much higher capitalisation) and then we will be able to waive every fee which is currently forced on us by the broker.
You caught my interest here. You mean that up to 15k, there won’t be any fees - or what?
Yes that’s the idea - we are working on amounts, so that it makes sense from the business perspective.
On top of that, as we cannot afford a huge marketing campaign, we want to introduce a referral programme which will manage additional 5k CHF for free for each referred user who will fund his account with MoneyVane with the minimal required amount.
This free 5k will be for both of users, so 5k for the person who referred and 5k for the referee.
Just to picture it. You start an account with 15k managed for free. You refer 3 friends. So in total, all of you will have is 15k managed for free + 3*5k for free for referrals = a total of 30k managed for free!!!
That’s awesome. I can’t wait to move my money from Swissquote to MoneyVane!!! And thanks for the info about the referral program; I forgot to ask about it.
It looks incredible to me! Readers, be ready to have a referral link on this blog as soon as the service is live ;)
So what about security. As I will entrust you a lot of my money, could you give us more details about what’s written on your website: “Your investment is protected up to 500’000 CHF.” How does this protection works? Insurance?
This is a generic SiPC guarantee for the cash equivalents which will reside on your account.
This activates in case of bank’s bankruptcy or broker miscarriage.
Please be advised that on your account we will only store ca. 5% of liquid assets. Rest will be invested and it is like your property (you have all ownership certificates).
This guarantee will of course not protect you from market downfalls etc.
Regarding our misconduct, i.e. if our system would malfunction, we are finalising a separate insurance for up to 3M CHF per incident.
Thanks for the clarifications. I think we are safe on this one. Still on the “where is my money topic”, can you tell me a bit more about this sentence: “Your assets are deposited on an account registered on your name at a third party custodian bank.” What’s the name of the bank?
We are working with Interactive Brokers in Zug. They are cooperating with hundreds of banks all around the world, but your account will be stored in Frankfurt at the CitiBank.
Fair enough. Back on the investing topic itself.
Reading http://moneyvane.com/, you say things like “We build your portfolio, we invest for you and our platform makes sure that your investments are properly rebalanced and cost-efficient.” Can you confirm us that “we” means a machine. Like not a human doing some active investment right? All the way passive as we Mustachians love it, isn’t it?
All the way passive - yes.
You reassured them, thanks! So how can we start?
Basically, as soon as we will be live, all what you will have to do in order to start investing is to follow these 5 simple steps:
Whoa, pretty straightforward! Can I adjust by choosing the ETFs I want? Even if not aligned with your proposed portfolio?
Currently we do not support this as we are putting tons of effort to analyse and build the investment strategy so that it is as low cost as possible, risk-adjusted and tax-efficient - i.e. Switzerland has a very peculiar law regarding equity income, so it is better to trust us not to loose too much on taxes.
Interesting. Can’t wait to get the private beta invitation mail!!!
While we all wait for the golive, can you tell us more about your company?
I started executing the idea on November 2013, but the company was officially registered in April this year.
We currently have 6 people working on the project. We aim to cover the whole Swiss market, so don’t worry, Romandy will be part of it ;)
Thanks Bartosz for your time.
All Swiss Mustachians are now checking their mailbox hourly to see whether they are invited to the private beta!
I’ll make sure to do a proper review of MoneyVane once I played with it.
Good luck with the final pre-golive tasks.
Thanks, let’s keep in touch once we have it live!
UPDATE 08.12.2014
Breaking news from Bartosz today: expected golive date of moneyvane.com is planned early 2015! Looking forward to it!!!
All in all, we ended up October with a savings rate of 26% of all our incomes. Still twice the amount of what the Swiss average household saves each month.
But hey! Do we Mustachians really wanna compete with the Swiss average? Not really, right!
MP’s household current monthly target is at least 35%. We aim to increase more and more this number as time goes on. One of the simple rules we follow to help us saving more is that any of our future salary increases goes straight to our investment account. No discussion nor re-calculation: got a raise? Champagne! Then setup the automatic transfer to Swissquote (soon replaced by MoneyVane hopefully)!
Looking at the current situation as of mid-November, the next report looks bright! But let’s wait the very end of the month to get the real results and let’s not start gambling ;)
That’s it! What about you? What rate did you reach in October?!?
]]>Some years ago, I eventually ended my studies and entered the professional world. As you might have experienced it (or not yet), after being a student, you usually jump into the working life with all his good and bad sides… You get a salary, you get to learn and do what you like (if you are lucky), you meet new colleagues that become friends over time.
One of the bad points is that you switch from a life where money is absent, to a life where money is abundant! And one of the first thing you tend to do is to spend this money to experiment the joy of not being restricted anymore!
So when it gets to food, you have two choices entering the working life.
Option 1/ You’re a chef by nature and cooking isn’t an issue because you can’t eat McDo nor industrialized pizzas. Or your parents educated you well on this topic and cooking is an usual (awesome) habit you got to practice. So you get to continue cooking and eating your own healthy food. Fine.
Option 2/ While being a student, it was painful to prepare your own food or to eat everyday at your campus cafeteria but you hadn’t the choice so far because of money. Then you get to know what it feels to have a salary and paying this few amount everyday sounds like nothing. Let’s spend this easy cash! It will be back next month anyway!!! Sounds familiar, doesn’t it?
A lot of people are going to end with option 2 because personal finance lectures aren’t taught in any University nor any other fancy expensive schools… Quite the opposite actually, we keep repeating you that if you want a “good” life, you have to work hard so you make an high wage…implicitly meaning that if you need this much cash, it’s that you’re gonna spend it!
So you get out of school. You know how to make money. But no courses were teaching you on how to spend this money wisely actually…
Thankfully, your human nature enters in, and make you spend any penny you make, as fast you earn it! Or even faster…
And you get hit by something that can be life changing either in very positive manners, or in very negative ones. This something is called: habit! You get used to be lazy about preparing your own food, you get out for lunch with colleagues, and out for dinner with friends or wife/family, or you order it.
You see where I’m heading right? ;)
When I started to dive into the ER/FI topic, I was the guy between choice 1 and 2. I wasn’t eating often in restaurant for lunch, but I was still buying almost everyday some cheap and not healthy food. I must admit I’m still buying some nowadays as it so easy to be lazy!
Nevertheless, I crunched the numbers between one person who gets out for lunch everyday at work, compared to one who cook and gets his own food for lunch. Figures are somewhat crazy!
Imagine that you can make CHF 20 1 per 10 minutes. Wouldn’t you like such a job? If you know any work or investment with such a ROI, please let me know! I quit today!!!
If you’re not impressed, let’s scale up a bit: that’s CHF 400/month, or almost CHF 5'000/year!
Still not? In 10 years, by cooking your own food everyday, you would end up CHF 80'000 richer (with 8% compound interests).
Combine that with some <a href=https://www.mustachianpost.com/blog/unlimited-internet-and-mobile-subscription-for-chf-50-yes-in-switzerland/" target="_blank">telecom hacking and you might have enough to buy your first home sooner than you thought.
Isn’t that tempting?!?
The solution is dead simple! Cook your own food. Everyday.
How we usually do it is that we prepare bigger meal portion so there are some left for both of us the next day. Or we just cook two differents meals at a time: one for the evening and one for the next day. It’s damn easy. It takes not more time that normal. And usually it’s more healthy.
And there are two other side effects:
So I ask you: what the hell are you waiting for?!?
For 10 min per day invested you’ll get: life long skills learned, more cash invested, and your sex appeal going up like crazy!!!
What about you stop eating out everyday for lunch, and start cooking at home. Like, starting tomorrow!
I propose you to start the first 30-days-challenge of this blog: let’s build together some habit. I’ll add anyone who wants to participate (ask via comments) in the table below.
The rules:
Date | MP | Your name here? |
---|---|---|
10.11.2014 | x | |
11.11.2014 | Failed 2 | |
12.11.2014 | x | |
13.11.2014 | x | |
14.11.2014 | x | |
17.11.2014 | x | |
18.11.2014 | x | |
19.11.2014 | x | |
20.11.2014 | Failed 3 | |
21.11.2014 | x | |
24.11.2014 | x | |
25.11.2014 | x | |
26.11.2014 | x | |
27.11.2014 | x | |
28.11.2014 | x | |
01.12.2014 | x | |
02.12.2014 | x | |
03.12.2014 | x | |
04.12.2014 | x | |
05.12.2014 | x |
I’m looking forward to getting richer with you!
This assumes you average CHF 25 per lunch, to which you substract around CHF 5 for the ingredients’ price of your recipe. ↩︎
Long time planned and awaited Swiss fondue with awesome colleagues. Was worth the money, but still, no excuse, I failed! ↩︎
Business lunch I had to pay for. Again a Swiss fondue…so it was worth the money ;) ↩︎
Months ago, I read about travel hacking. I knew there were some Miles rewarding programs associated with credit cards in Switzerland but after some very quick investigations at the time, I thought it wouldn’t be possible to gather that many points with spending that less per year! Hence I never checked it more than that.
I got to think again about it two weeks ago when I read about people being able to fly for free (at least) once a year, so I decided to dive more deeply into the topic. I want to fly for free too!!!
From all the Swiss bank programs, there is one offer that let you accumulate Miles more than the others: Swiss Miles & More credit cards. As you can spot it, it’s the card service from the European program itself.
Once you register, you get two cards: 1 MasterCard and 1 American Express. As I write this, they removed an interesting offer they had until end of October 2014: welcome miles doubled and half the fees during the first year.
Except the welcoming rewards, they propose three card package types:
Classic
1 award mile for every 2 CHF spent (with your MasterCard)
1.25 award miles for every 2 CHF spent (with your American Express)
Annual loyalty bonus of 1,000 miles
CHF 120/year (for the two cards)
Gold
1 award mile for every 2 CHF spent (with your MasterCard)
1.5 award miles for every 2 CHF spent (with your American Express)
Annual loyalty bonus of 4,500 miles
CHF 220/year (for the two cards)
Platinum
1 award mile for every 2 CHF spent (with your MasterCard)
2 award miles for every 2 CHF spent (with your American Express)
Annual loyalty bonus of 9,500 miles
CHF 700/year (for the two cards)
Compared to other bank reward programs, it’s not that bad. Last example I have in mind is Credit Suisse where CHF 2 spent with a MasterCard gets you 0.6 miles, and CHF 2 spent with an American Express gets you 1 mile…
I investigated almost all the offers and it looks like Miles & More offers the best rewards program in Switzerland - let me know via the comments section if you have found a better one!
At that point, I thought about taking two Gold packages and use only these all along the year with my wife so we max out our accumulation on one single account. “Let’s accumulate Miles then! 30'000 with just a signature, and our first European flight for free!”, I was thinking…
One thing you should never forget is to crunch the numbers before getting sold to marketing campaigns such as “Get as much as 30'000 in two minutes by signing here!”.
With our passion for Canada, we decided to run three scenario: first a European flight to Helsinki, a second with Montréal, and a third to Vancouver.
Another consideration before the mathematic formula: we are currently owning a free credit card issued by Migros called “Migros Cumulus-MasterCard”.
It has a cashback program with which you can buy almost anything thanks for Migros retailing groceries, clothes, electronic and even gas.
Their conditions are:
Enter the math based on CHF 33'000 of spendings per year!
In order to be conservative, I assumed the following:
1st scenario with Cumulus MasterCard
2nd scenario with Miles & More credit cards
Helsinki flights for two persons
Cumulus credit card
Cashback from Cumulus = CHF 165
Helsinki plane tickets costs = CHF 214 * 2 = CHF 428
Total costs = CHF 263 (= 428 - 165)
Miles & More Gold credit cards
Two gold packages the first year = CHF 110 * 2 = CHF 220 (we would cancel them before the end of the year)
Helsinki plane tickets costs = 1 free flight (including airport fees) + 1 paid ticket at CHF 214 = CHF 214
Total costs = CHF 434 (= 110 + 110 + 214)
Montréal flights for two persons
Cumulus credit card
Cashback from Cumulus = CHF 165
Montréal plane tickets costs = 570 * 2 = CHF 1'140
Total costs = CHF 975 (= 1'140 - 165)
Miles & More Gold credit cards
Two gold packages the first year = CHF 110 * 2 = CHF 220
Montréal plane tickets costs = 1 free flight + CHF 570 of airport fees + 1 paid ticket at CHF 570 = CHF 1140
Total costs = CHF 1'360 (= 110 + 110 + 570 + 570)
Vancouver flights for two persons
Cumulus credit card
Cashback from Cumulus = CHF 165
Vancouver plane tickets costs = 1050 * 2 = CHF 2'100
Total costs = CHF 1'935 (= 2'100 - 165)
Miles & More Gold credit cards
Two gold packages the first year = CHF 110 * 2 = CHF 220
Vancouver plane tickets costs = 1 free flight + CHF 550 of airport fees + 1 paid ticket at 1'050 = CHF 1'600
Total costs = CHF 1'820 (= 110 + 110 + 550 + 1'050)
Note: currently, with the Miles & More program, you can pay airport fees by exchanging 18'000 Miles. But that is only for European flights…
Thankfully, I did the calculation before subscribing to these plastic cards! In 2 of the 3 scenarios, I would get to pay more to get free flights! Isn’t that funny!
Also, one important drawback if you choose to go with the Miles program: you must take a flight from their list. Meaning sometimes (often?), you get flights that last more than 16h with the stops. In case you have a family like me, that’s not practical.
You can calculate it for yourself by customizing the numbers.
It’s clear that if you are either not-yet-mustachian or if you know ways to pay your rent or childcare by credit cards, you might be able to get a benefit to subscribe to such credit card reward programs. So far, I tried to ask but except in stores or on the web, you can’t pay these bills with credit cards.
You can calculate how much Miles you need and also how much airport fees you need to pay on the Miles and More calculator.
Based on this calculation, I decided to drop the pain of having new credit cards, that I would need to cancel before 1 year and re-subscribe to afterwards. We went instead with the Cumulus-MasterCard.
I took mine without any welcome reward… My wife took hers back in October 2014 and got 3'000 Cumulus point (about CHF 15 with conservative calculation).
What they offer is basically always 3'000 Cumulus points, but in different manners. All along during the year, if you get recommended or recommend someone, each of you get 1'500 Cumulus points. Once or twice a year they have this special welcome 3'000 points, so keep watching if you didn’t got yours.
You can use my Cumulus-MasterCard referral link in case the 3'000 points reward isn’t active at the moment.
But we didn’t give up on the Miles program - at least for this year. As we were still having some Miles left from Credit Suisse points, we checked out the Miles & More special offers and I found an interesting deal with getAbstract (website on which you can find business book summaries). I took it via my current employer education budget and got two things: 1 year of learnings and 15'000 Miles more.
All their other offers are mostly with hotel and car rental bookings. I don’t think I will make that much Miles once I got 1 free flight as I don’t wanna spend for the sake of getting Miles. As said, you’re not getting flights for free. You anyway pay for it, in one way or another…
With this setup, we end up with some cash back that we decide how to use, on the flights we want. Unfortunately, we are far away from the US example where there it makes sense to have fun with travel hacking. Here in Europe, the Miles reward programs are all but interesting neither money-savy…
And you, do you plan or are already in the travel hacking game? How do you deal with your credit card rewards? Do not care? Addicted?
UPDATE: until 10.12.2014, you can get 20'000 welcome Miles for a Classic subscription: https://www.miles-and-more-cards.ch/en/credit-cards/classic/ - quite interesting offer if you are still willing to enter the Swiss travel hacking game.
]]>Five years ago, we were coming back from half a year in Canada where we got shocked by the Internet and carrier fees. Originated from France, we were used to all-in-one subscriptions (Internet + TV + free landline calls) for 30€ and about the same for our carrier plans.
So when we arrived in Switzerland, telecom prices were less of a surprise as we got used to how they could be expensive.
That’s when we realized that France was the exception and not the rule…
Follow the sheep
Mobile - Initially, we got to choose mobile subscriptions based on our international calling needs due to family being abroad so we went for Orange Switzerland. My wife and I were having each a CHF 75 carrier plan (although she was often above her plan limits, often reaching CHF 150 per month).
Home package - Regarding Internet + TV + Landline package, we chose the one that everyone was having: Swisscom. The overall price was about CHF 100.
That was when we arrived. Before we got to know more about the other options. And mostly before I got into mustachianism!
Household total telecommunication subscriptions = CHF 325/month
Growing mustache
Four years fast forward when I was trying to optimize every single contract I had.
Mobile - I started realizing that I didn’t need a 4h international talk plan. 1h in Switzerland was way enough, combined with some Skype credit in case I wanted to reach some family/friends not having VoIP softwares. All in all, my new contract was CHF 35/month.
My wife on her side found an Orange unlimited international plan for CHF 100 in order to still be able to call her friends (this one doesn’t exist anywore and his counterpart is way more expensive nowadays).
Home package - After accepting the Swiss expensiveness status quo for too long, I found a nice alternative: Migros M-Budget. For CHF 59.80/month, I could have the exact same package (including the customer care and physical telecommunication cables of Swisscom) except maybe less TV channels (that we don’t watch anyway) and a less fancy box design…
I was really glad to be able to reduce my home package expenses by CHF 40/month! Meaning CHF 480/year more going straight into the investment account :)
Household total telecommunication subscriptions = CHF 195/month
After we had some more discussions and previous bills analysis, we realized that most of my wife’s calls could be done from home over the Wifi network (thanks to VoIP softwares such as FaceTime, Skype or Viber).
She then switched her plan to a new monthly one for about CHF 50.
Household total telecommunication subscriptions = CHF 145/month
Hacking the system!
Mobile and home package - The brighter future (that could be better, but still) lies in Orange CH new mobile pricing plans. You can now have real unlimited data subscription with no bandwidth limit after a certain usage, neither some other hidden limitations. Nothing! Unlimited for real! All that for CHF 35/month compared to the current CHF 15/month for 1Go/month plan I have.
You might be wondering how that’s gonna decrease my spendings.
The answer is: I found the Graal!!! And its name is as cool as “D-Link DWR-921 4G LTE Router”!
Basically, I’m using my mobile 4G data plan as my smartphone and my home Internet. All that for “only” CHF 50/month!!!
Step 1: Get an Orange Me carrier plan
In order to prepare your hack, you need to subscribe to an “Orange Me” plan.
The good news is that with the “Unlimited Surf” plan comes Zattoo HD, so in case you really want to watch TV, you can! More infos here: Zattoo HD with Orange.
Personally, I think we are going to subscribe soon to Netflix which finally made it to Switzerland. But that’s another topic for a future blogpost!
Step 2: Order a D-Link DWR-921 4G LTE Router on digitec.ch
Consider that as the investment part of this Swiss telecommunication hack. CHF 212 in order to reduce your monthly expenses on the long run. You can order it here: D-Link DWR-921 4G LTE Router.
Step 3: Plug the second SIM card in the router, and enjoy!
The magic of this piece of technology is that you can plug a SIM card into it. Then it uses the Orange 4G cellular network and makes the Internet available via a regular Wifi connection to your home laptops. As simple as that!!! Browse the web, download files, play online games, watch streaming series, etc., as if you were on a usual (and expensive) Swiss telecom ADSL plan!
Step 4: BONUS - Enjoy a faster Internet at home
In case you have a slow ADSL connection such as we experience it in Yverdon-les-Bains, then this hack will be a life changing!
The 4G network technology has a bandwidth between standard ADSL and optical fiber. Taking my home as an example: we moved from a download bandwidth of 6Mo/sec to 36Mo/sec. And the upload changed from 0.5Mo/sec to 16Mo/sec!!! Great, isn’t it? And we now pay even less for that!!!
Household total telecommunication subscriptions = CHF 100/month
Summary
The situation is still not ideal when compared to close countries such as France. But I keep optimizing it! I think that’s the main lesson I learnt during this past year. I like to review all my contracts at least once a year in order to discover what’s new on the market.
So far, only for our household telecommunication subscriptions, we reduced our monthly expenses from CHF 325 to CHF 100.
That’s CHF 2'700/year more in the investment account!!!
And you? Tell me about your Swiss hacks! Can’t wait to read them in the comments section below.
UPDATE 01.01.2015
I’ve been so late to get back on track with all my todo regarding the blog these last days… Sorry about this!
I had this update to do since beginning of December and only today I find time to keep you posted about how things went after this blogpost!
When I published it initially, I was in touch with Orange Switzerland in order to get my second SIM card and my subscription upgrade to an unlimited plan. The “was in touch” period got extended from end of October to end of November 2014. I didn’t check accurately but I remind to have waited and get pissed off against Orange employees during about 7h of phone calls in total.
To make the story short, they basically can’t upgrade an existing subscription with the “Duo Pack” also called “Multisurf”. The option must be subscribed to while you renew or register for a new contract. This is due to a bug in their (damn) IT system…
The last option they gave me was: “Just be patient sir, you should be able to subscribe to it in some weeks or months…”. Me: “WTF?!?!”.
Having tried many negotiations with them, they couldn’t offer me a proposal close enough to the deal I had explained you so I gave up and try another option.
As I told you in this post, my contract with Migros M-budget was ending by the end of November 2014. Few days before the deadline, seeing that Orange couldn’t make anything for my case, I called them to renew my contract for another deal. I explained them that I found a cheaper alternative than theirs so I wanted to check with them if they could do a commercial gesture… Of course they always can when you are ready to cancel!
Here is what I negotiated:
We end up with CHF 30 (wife’s Orange plan) + CHF 30 (my Orange plan) + CHF 45 (Migros M-budget plan) = total household telecom budget of CHF 105 per month.
This isn’t too bad, even though our Internet connection is still a bit too slow for my taste. But well, luckily, we also got a new M-budget router which seems to have improved this point!
I feel confused to have posted this hack before having fully tested it. I mean it works as I checked with my dual-sim modem. But I couldn’t test for you whether Orange Unlimited promise was still kept, even after hundreds of Go downloaded…
On the other hand, this reminded me to always negotiate any contract one can subscribe too - even more when the contract period is ending!
Last but not least, I really hope that this blogpost will soon become obsolete with the recent Orange Switzerland acquisition by Xavier Niel, the father of Free in France.
If he doesn’t manage to bring the monthly costs to CHF 29 for an all-inclusive package by next year, I will make sure to update this post with some more experiment on the telecom side - be it with a dual-sim router or some other fancy piece of technology.
In case you tried out the initial hack, please keep us posted via the comments below! I’m very interested to know whether Orange keeps its promise or not!
]]>Reading was nice and I learnt a lot of stuff. But when starting in the investment world, the hardest thing is actually to start. You will read tons of articles which are always giving you the best tips in the world, telling you the complete opposite advices of what you knew before, hence making your choices harder and preventing you to start acting…
At least that was my case until an awesome guy onboarded me: Jesse Mecham, the founder of YNAB. He did setup a free 10 days course via a newsletter email that started like this: “When You Want to Start Investing…”. During this class I learnt basically all what you need to know except the financial advanced terms that people like because they feel more smart during mundane dinners. You can download the whole crash course here.
I think Jesse managed to transfer the key principle through this course so that you get into the investing game: you need to get started! By any mean, from any small amount every month, the first thing you need to learn is how to start!!!
I won’t try to sum up all what Jesse wrote because it is already well condensed in less than 10 pages. What I’m gonna do is to get you up and ready to invest on the Swiss market because this latter has some specificities not covered by Jesse’s US focused article. So my hypothesis for the rest of this article is that the currency in which you want to invest is mostly CHF.
So, be sure you have about 2.5h ahead of you, grab a cup of coffee, sit down, relax, and…let’s go!
First thing first, we need to define two important variables:
What is your investment plan?
Or in other simple words, do you plan to withdraw your invested money during the next five years? Or after 5 years and more?
How much do you want to invest every month?
Like from today on, do you plan to put aside CHF 50.- ? CHF 100.- ? Or CHF 500.- ? It is completely up to you! Even if it is a small amount, the most important thing is to know it and to start! NOW!
Let’s stop here for five minutes. Take a sheet of paper, and write down your two numbers answering the questions above. OK? Are you done?
Then, we are ready.
Step 1: Read the 10 pages PDF above
You really need to read this PDF now! This will be one of the hours of your life with the best ROI. Once you are over, come back and jump to step 2. Just in case, the PDF link here again.
Step 2: Define your investment ratio
Let’s assume that you are 30 years old. If your plan is to withdraw all your savings in less than 5 years (no matter if it is for traveling the world or buying your first house), then you will need to invest 30% of your savings in shares (the number 30 comes from your current age), and the 70% left into bonds to secure most of your assets.
On the opposite, if your plan is long term investment like 10 years or more, then you will invest 70% into shares, and 30% into bonds. On the short term, you might not have a good ROI, but on the long run it will be the most efficient plan.
OK, great, you got your investment ratio defined. Let’s do some real stuff! Move on to step 3!
Step 3: Open an investment account
That’s actually one of the key points because that’s the one that requires you to take action. If you have read the PDF crash course above, you might have googled about Betterment. Unfortunately, at the time of writing, this service is still for the US market only. On the other hand, except the awesome user experience they provide and the no-transaction-fee policy, all what they do is to invest your money…as you could do it by yourself! And this is the goal of this current article!
In Switzerland, you may have heard about a company named Swissquote. That’s where I have my account opened and where I advice you to do so.
Just go to swissquote.ch and click on “Open account”:
Then choose the “Trading” account type:
Click on “Open an account >”:
Click on “No, I do not have a Swissquote account yet”:
Fill the lengthy form:
After you finished to fill the form, you will receive by post mail a card allowing you to authenticate on the website. Don’t we afraid by the overly complex and complicated user interface at the moment. I will guide you through with screenshots in a minute.
Step 4: Setup automatic transfer from your private account to your investment account
Grab your freshly created Swissquote IBAN from there:
Login onto your ebanking platform (Crédit Suisse, UBS, or whatever is your bank) and setup a permanent monthly transfer so you don’t have to think about it. The more automatic it is, the less you will be tempted to use this money for something else. Also, don’t forget to add the automatic and recurrent transfer to YNAB [2].
Step 5: Buy your first shares and bonds, NOW
Once you received your money on the Swissquote account, you should see it appearing here:
But first, my Swiss portfolio advice. No matter which investment ratio you have, I would recommend you to focus on these 4 ETFs:
Let’s assume your first investment is CHF 1'000, that you are 30, and that you plan to withdraw the invested money later than in 10 years.
You will buy:
Have a look at the screenshot below describing how to buy on Swissquote:
Step 6: Champagne!!! You are done!!!
So, that’s it! Congratulations!!! You just entered the Wall Street world ala Leonardo Di Caprio!!! Was it hard? No? Will you get rich on the long run? If you followed the 6 steps above, then the answer is most likely a big YES!
One last pro tip: there are transaction fees that Swissquote is charging you (about CHF 12 for the ETFs above) for every transaction you make.
For instance, the step 5 would represent 4 transactions, hence CHF 48 of charges.
What I usually do is to buy one ETF type per month so to lower the fees. Then I get the investment ratio balance aligned on four months.
So, now you have all the cards at hand to start building your wealth right now. Remember that your best ally is your youth. The sooner you start, the richer you will be in the end.
Please let me know via the comment section below if you had all the necessary steps listed and described with enough details to get you onboarded.
Notes
[1] Actually these numbers are true for a lot of European countries or in the US. But not for Switzerland… Here the savings account typical interest rate is around 0.5%, and going up to 1% if you have enough cash to put in these Swiss banks…
[2] YNAB is a “personal home budget software built with Four Simple Rules to help you quickly gain control of your money, get out of debt, and reach your financial goals!”
I will soon write an article about why I love it so much! Until there, you can click on the following link to buy it now with a 6$ discount.
So let’s get started with the first idea that I had while reading about the Fully Charged Tesla Model S Tour 2014.
Business Model Canvas #1
YNAB World Tour 2015, 365 days to educate young (and less young) people to have their money under control
Key Partners
Key Activities
Key Ressources
Value Propositions
Customer Relationships
Channels
Customer Segment
Cost Structure
Revenue Streams
Looking forward to reading your constructive feedbacks in the comment section below.
Notes
]]>A Saturday morning like any other, I was reading and browsing the web. While checking my Twitter account I ended on the YNAB website and more particularly on the mobile app features. Being a web developer at first, I got the idea to tweak the URL to see if by any chance some iPad teasing would be available…and YES!!!
You can see the following screenshot at the URL:- https://www.youneedabudget.com/features/ipad. (UPDATE: the page is now removed. Either this is because it was a real mistake for this page to be on production server and they are not ready yet to publish the iPad app on the AppStore; or because they are about to publish it very soon and they want to excite us even more writing article updates like this one!)
Below the future YNAB iPad app screenshots:
]]>Short-term goal
Living in Switzerland is a real chance because we have here a country where one can feel safe. It’s easy to find a job without too much trouble. We are one of the most innovative countries in the world with nice education possibilities. The country also has a good reputation regarding its so called “quality of life”: people are polite and nice, there is nature all over us (Jura, Alps, lakes), and it’s very clean! Not to mention the chocolate, our banks (ergh, really?) and the Swiss watch manufacturers! Finally, salaries are high comparing to the European mean.
Painting this picture could make most of you foreign mustachians willing to move right now to the Swiss confederation in order to get rich quickly. That would be a good plan if we didn’t have to take into account a last factor: cost of living! Having high salaries correlates with high costs of living too, unfortunately - but trust me, it is still to your advantage if you apply mustachian lifestyle.
The hardest costs to face is linked to my short term goal: real estate. My first financial goal is to buy an apartment/house as soon as possible. I’m 28 and following the graph below [1], we should reach the gap when I’m 31; that’s the challenge at least.
Regarding numbers, that means we will have stashed CHF 160'000.- until then. And for the non-Swiss readers, this amount doesn’t represent the overall price of the home we dream of - that would be too easy! This is just the amount of cash that allows you to knock-knock at a bank for a mortgage. 20% of the total house value to be precise. So if you are fast at math calculation, that will leave us with a CHF 800'000.- home.
What we are targeting with this price isn’t a castle though (‘cause you could buy one in France with this money), it is a 3-bedrooms and 2-bathrooms apartment of about 120m2 located in the city center of Yverdon-les-Bains. I precise that what we look for is more a new/recent (vs. old) building. First because we like the new materials quality that are more efficient and better looking, and second because I’m not that used to home construction stuff and all my family who could help me is 300 kms away…
Again, this is somehow cheap if you compare it to bigger cities like Lausanne: there, you get easily over one million for the same kind of home! So yes, Switzerland is expansive regarding real estate!
That’s it for my short-term goal: own my home when I reach 31 with about CHF 160'000.- stashed!
Long-term goal
This goal is more obvious to mustachians and is nothing else than financial independance. Such a target implies numbers that get bigger, and a longer timeframe - unfortunately…
Short recap: we are a 4-persons family. One boy and one girl who will respectively be 4 and 2 by the end of the summer, a wife working 60%, and myself still at 100% (I’m targeting 80% but that’s another story). We live a damn cool life in a small green town counting 30'000 people.
Financially, we are having expenses similar to other mustachians except:
Taking out the childcare costs to be realistic (hopefully we won’t have childcare fees once they are 30!), we are remaining at an expenses level of about CHF 50'000.- per year.
To calculate the total amount of cash that you need to retire and not have to work for money anymore - living on your investment interests - you can use several mathematical formulas but the simplest is to multiply your yearly expenses by 25 (thanks to the 4% rule well explained here).
This means that with our current level of life, we would need around CHF 1'250'000.- saved in various investment account types.
Now, this number assumes that we are going to keep renting the same appartment, but remember, the first goal is to get one bought so these costs should lower with time going on.
Also, by the time we get ready for early retirement, we might move more in the country near Yverdon, or to Canada or maybe to France. Three potential plans that could help decrease our home costs while bring closer the rat race finish line!
But, “What is your early retirement deadline?!?” are you asking! Great question! To answer it, I first need to reveal our monthly savings…which are equal to CHF 3'000.- more or less, depending the month.
This means that we should be able to retire in about 26 years - actually in 29 years as we need to take into account the 3 years period to reach my first short-term goal during which I won’t save money for this long-term goal. Still better than the official Swiss legal age: 65.
But hey! Wait! That’ is a correct result only if:
It is hard to predict the future regarding salary raise, when the children will leave home and - the more impactful - in which country we will live in 20 years… But approximately, this would be it: ending the rat race in 29 years maximum. I actually do set myself the year of my 40 as a challenging target. First because I don’t wanna wait until I’m 57 years old, and second because this keeps me motivated to lower and optimize our expenses, and also to find various sources of income to raise our savings.
So here you go with MP financial goals revealed!
What about you? How does it look like? What are your financial goals? Before, I was living paycheck to paycheck as many people do but as soon as I got a clear objective of what to do with my savings, it got really easy to put some cash aside, seeing the curves going upper and upper.
I would be very interested to read about your story in the comment section below!
Notes
[1] This kind of physical graph is a very powerful tool to help you achieve any of your goals, having them in front of you every day. I find it way more powerful than digital graphs because it is tangible.
The target is to be always on track with the pink line (or above!) if we want to own our home in 3 years. I do update our stash amount every month and this is great to see the black curve trying to keep up with the pink one.
If you have read the previous posts, you have seen that I like cars, and particularly the ones with nice noisy engines… But in September last year, I took a gap and switched from a nice 200 HP V6 car to a smaller 1.5L hybrid Toyota Prius. Well, it didn’t happen in one day. I had to get punched into the face several times by MMM in order to get my decisions driven by rational facts and not by emotional feelings.
I have the chance to live in an lovely town named Yverdon-les-Bains where we can do everything by walk or public transportation. Same thing for my current job, I can get there by train, thanks to the excellent and efficient Swiss railway network. Hence, before the switch, we were using our car only for visiting friends or family, here and there in Switzerland or France. So, while it was a pure pleasure to enjoy the V6 engine on french motorways, it was still less than a couple of hours per month. On the other end, the money I had to pay for that fun tiny moments was getting out of my wallet every single minute: car depreciation, car insurance, car taxes, gas, car repairs, car parking, etc.
I checked what would change from a financial point of view if I would switch to a hybrid car:
All in all, even without taking into account the car depreciation factor, that led us with a possible savings amount of CHF 210.- per month, in exchange of 10 min of fun “lost”. Mathematical fact was here: we decided to switch to the awesome Toyota Prius!
At the time, I had no idea about the hybrid car market prices as I was more in the opposite side previously. I knew that my budget was roughly CHF 10k max because my own car was worth about CHF 8-10k. Comparative search on autoscout24.ch shown me that I could get a Prius of year between 2006 and 2008, with mileage from 80'000 to 100'000 kms [2]. I found a lot of them which were meeting my requirements [3].
Next step was to sell my actual car.
It was no way that I go for a leasing neither any credit (as I did this mistake once in the past - that’s another story) for a car of this price.
Unfortunately, even if the Eurotax online calculator was telling me my C5 was worth about CHF 7'000.-, I got to know the Swiss market realities: french car brands are seen as cheap and prices are undervalued. Also, nowadays a V6 engine in Europe isn’t what the people are actually looking for, quite the opposite actually.
But I had one big ally in my quest to sell my car: time!!! I wasn’t stressed at all because it was not a question of running out of money soon. So I patiently sent emails and made phone calls to Prius resellers and even other garages during about 3 months. I got to refuse funny offers as low as CHF 2'500.- to which I said “No thanks! Bye!”. You must be patient and not give up!
And finally, I found one Citroën garage close to home (Monthey, 84 kms from Yverdon), giving me an honest quote for my car, and having a Prius to sell at a correct price, including the GPS option and 4 winter tires - important here in Switzerland! The guy was simply quoting his selling and buying prices based on the Eurotax, without trying to scam anyone. After a small negociation, we got the deal closed and I went back home with an awesome car! And the funny thing is that with this kind of car, you tend to try to always make new records of gas comsumption, hence I happen to have even more fun than with my previous car. Not to mention the double win when I checked my YNAB (link containing a discount on the software) car category getting down!!!
So what about you? Did you recently made a car switch that happened to make you richer and your life funnier?
Notes
[1] You can calculate your car tax amount for the canton of Vaud here: https://www.vd.ch/themes/mobilite/automobile/taxe-sur-les-vehicules-automobiles/voitures-ou-vehicules-de-lt-3500-kg/. By googling you can easily find the car tax calculators for other cantons.
[2] My father owning a garage, I was more used thanks to his advices to always buy cars between 40'000 and 60'000 kms as that’s where the depreciation is the biggest while the sanity of the car remains very good as these vehicles are usually first-hand or second-hand cars. But the Prius in this range were more around CHF 12-14k which was out of my budget. Thanks to the Internet massive knowledge database, I found out that Prius model is one of the most reliable car in the world even if it contains super-complex-electric-and-electronic stuff. I read somewhere that taxi cabs love it because it can easily go up to 500'000 kms mileage while only needing to change brake pads and tires from time to time.
[3] My main requirements were: not too flashy nor ugly color, GPS, reseller not too far from home to not loose time and money while going to check the car (and also in case of warranty repair claims), and finally a professional reseller to not have any surprises and to have some legal entity behind the sale in case of any future problem.
]]>Anyway, I remember that I was reading on my way back home the “insure yourself and stop to pay useless insurance fees” MMM article when I switched safari tab to get onto my car insurance online calculator.
At that point, I was paying CHF 1680 per year - thanks to my darling respectful age. That was for full car insurance (French: “casco collision”, German: “Kollisionskasko”) meaning I could be crazy and dumb enough to crash my family and myself onto a wall, I would get my fancy car reimbursed! Yeah, what a reassuring feeling!
In Switzerland, you have two main choices [1] when it comes to find an insurance for your car:
Basically, if you own a CHF 30-40k (or more) in leasing mode, you are better - and anyway forced by leasing companies - to get the full insurance to not be in trouble in case you are the 1 unlucky person out of 24'500 who crashed himself on his own fault (see Comparis).
But between you and me: SELL THIS CAR ON LEASING RIGHT NOW!!! If you can’t buy it cash, then simply don’t buy it at all!!!
A better and less stupid reason for you to be fully insured would be the case where you own a 5-10k car because you don’t have any other choice (really?!?), and that you can’t already get self-insured in case of an accident happening. That case would be valid during six months to one year maximum, until the time you get enough cash cushion in your ‘stach, right?!
So, after reading MMM’s article, I discussed with my wife about her thinking regarding the fact that we had children, which was making us driving even more safely than before (hrhr… OK I was one of these speed addict younger).
We also checked what it would cost us to buy an used and big enough car in case we would crash our car due to our fault: that was around CHF 5k which was some money, but a small enough amount to be paid within few months of salary.
In the end, we decided to take the leap and switched from full insurance to partial insurance.
We got from CHF 1680 to CHF 743 - a CHF 940 difference per year.
Bring that back on a 10 years scale and the savings go up to around CHF 10k [2], just by driving carefully and not buying fear advertisements published by car insurance company (yes these guys also have marketing department!).
So if you don’t know what to do now: look for an used car costing less than CHF 10k on websites like comparis.ch or autoscout24.ch.
Then insure it a with a reasonable partial car insurance, and drive safely - while also riding your bike instead of the car more often, so that you decrease even more your accident’s chances.
And please, never ever buy again a car on leasing. That should be forbidden in our so called “civilized countries”!!!
Notes
[1] Actually there are three choices. I will detail the third one (liability insurance only) in another blog post because I need to dig into its mathematical implications before presenting it to you.
[2] These are the most pessimistic calculations, implying you would be crazy enough to keep this money under your matress instead of investing it into some index funds.
While searching and exploring various money-making ideas, I came accross another way of thinking: start looking for savings opportunities instead of always looking for more money to come in. Thanks to the blog of Mr. Money Mustache, I changed my mind completely. Modifying your spending habits is bringing you so much more benefits like more wealth, more health, more happiness, that I tend to prefer this way of getting richer than the former one. You should really give it a try!!!
At the time, I was owning a Citroën C5 V6 which was very pleasant to drive and big enough for our family travels here and there in Europe. For the non-European readers to whom Citroën doesn’t sound familiar, this car brand is well-known for its very comfortable vehicles (not that true anymore with their latest releases, though).
Being young and new to Swiss administrative stuff, I trusted - with too much ease - my insurance advisor when he told me that a CHF 10'000 car was worth a full insurance as I didn’t have too much reserve ‘stash in case I would splash my car onto a wall.
V6 engine and full insurance made it to a nice CHF 2'250.-/year - reading this figure more than one year after having done the change makes me yelling!
After 1.5 years of paying that much, I started looking into possibilities to lower this amount - as I wasn’t ready to switch to a more efficient and less powerful car at the time (like one of these).
While I was analyzing my insurance’s competitors, I needed to know my various contract details to compare it and see the differences between insurances’ policies so I dove into my folders.
Doing this research and dissecting each line, I noticed that I was over-insured like many people. Why you ask? Because of a tiny tickbox for a - useless - parking insurance coverage… like seriously, who gets his car scratched on parking places here in Switzerland?!? Result: un-ticked and already a few CHF saved per year! Next!
By comparing my own contract and the one of my wife’s previous car (that we sold after realizing how stupid it was to have two cars - especially in Switzerland), I found out that my other half, being 2.5 years older than me, was having more bonus. Ergh? Really?
I got back to my own insurance online calculator and I chose my car specifications, unticked the useless parking insurance, and then entered my wife info - birthdate and driving license obtaining date being the decisive ones for the bonus calculation.
All in all, that made a decrease from CHF 2'250.-/year down to CHF 1685.-/year!!! Yes, you read it well, it made a CHF 565.- difference!
Just by using my wife respectful age power (and switching the car ownership to her name of course)!
And thanks to some money-god sympathy, it happened that I renewed my contract online, which at the time was rewarding you with a free Swiss motorway sticker (French and German = “vignette”) for the following year, worth CHF 40.-.
The lesson learnt: if you got lucky enough to be married, moreover with someone older or younger by some years, check your car insurance policies. That might get you richer in the end of the day!
This advice can actually work in a lot of areas such as: mobile phone plan, special rate on bank savings’ account, car rental, special discount on certain plan/product for female people, etc.
As Mr. Money Mustache says here: “Practice Constant Optimization in all areas of your life”; don’t get to think that everything you subscribed months or years earlier can’t be changed, or shouldn’t. With all the technology tools we have at disposal these days, you can very easily compare, unsubscribe and re-subscribe somewhere else, within few minutes and some clicks. If you happen to just arrive in Switzerland, you must check the best Swiss comparing tool: Comparis.
Note: if you live in Switzerland, instead of optimizing your car insurance policy, your best choice would be to sell your car NOW and use the awesome public transport network we got here. Future blogpost to come to dive more into this topic. Stay tuned.
]]>I’m an almost 30 years old Swiss guy, working in the IT industry. I’m also the proud father of two kids. And a very happy & lucky husband.
Why am I blogging?
I actually love to write stuff. I love it even more when it is useful to someone else. From that point, I thought that the topic (see point below) discussed here can be such a life change for anyone, that I started this blog to share my experience. I’m also blogging for myself in order to keep track of all the steps I’m going through while dealing with this topic.
What will I be blogging about?
I’m going to talk about money!
More precisely, I’m gonna blog about financial independence and the path I’m currently getting through to get there because I aim to have my life self-financed when reaching my 40.
I will also cover budgeting since that’s the mean to track how well I’m getting close to my early retirement.
Life hacking will be a big part of my writings, presenting how I hack(ed) parts of my life to improve various spending areas, in order to save more money.
All these points will have in common Switzerland since that is where I live. And also because I found a huge amount of blogs about financial independence focused on US use cases - sometimes on Europe. But definitely too few talking in CHF ;)
How can you reach me?
The best way to contact me at the moment is via Twitter @mustachianpost.
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