April 2017 Financial Update – Quaranta

Hi RIP voyeurs,

April 2017 is gone and hopefully this new wave of winter is gone too. Before jumping into numbers let me explain why you didn’t hear from me for an entire month. April has probably been one the busiest month of my life so far, so many things happened! I had no bandwidth for writing and blogging and several other activities. My “watch later” list on youtube crossed 200 videos and my “read later” bookmark folder crossed 1000 (!!) links, maybe it’s time to declare a “bookmarks bankrupt”?

Anyway, I’m fine with that (for now). My April 2017 has been filled with so many amazing life experiences and I chose to fully enjoy them with no commitment on blogging except for this monthly financial (and personal) update. I don’t see myself blogging much more for the next 2 months given we’re organizing the Italian Wedding and then going on Honeymoon for 4 weeks. I’d be surprised (and very happy) in case I am wrong on this.

Welcome back to my monthly update. As usual, the reference doc is my NW spreadsheet.

Overview

Numbers may not grasp the actual goodness of this month. NW Delta +8,078 EUR may seem not that good but I’m actually very happy!

Major wins for April 2017:

  • Mr Market bullish again, most of my ETFs went up, with the STOXX600 horse (Euro area) running like crazy after France election!
  • Contained expenses. Yes, above 5k CHF this month but more than 1K is extra and one-off (Travel, Wedding, my 40th Birthday party, quaranta anni). We did good after all.

Losses of April 2017:

  • Very strong EUR currency. France elections boosted EUR currency and stocks. I measure my NW in EUR while I own assets in 3 currencies. It means my NW measured in EUR got a bump. Anyway, not a big deal, currencies fluctuate. On the bright side, my NW in USD got a +23.5k, that’s an incentive to retire in US, lol!
  • Naked Hooli salary. No bonuses, no stocks, just my very naked salary this month. Turbo-Sad.

Other Financial Facts

  • I have 13.5K sitting in my brokerage account. That’s my timid attempt to time the market, proven wrong so far. 10K are sitting since a couple of months, 3.5K since the beginning of this month. Market performed well, so wasted opportunity here. Never time the market!
  • We are accumulating cash. Now that both my salary and Mrs’s one are flowing into the shared account, we have a fat cash reserve. This is not an attempt to time the market, it’s more about we should sit together and discuss what to do with money. We have a wedding + honeymoon coming so we’ll need cash. Will think about it in July, after Mrs RIP takes her very deep financial course with an awesome teacher: myself 🙂

Other Facts

  • Theater theater theater! 2 amazing weeks of plays. It’s been a success (for an amateurial company) from every point of view. Attendance satisfied, new friendships built, genuine feelings and whatever else. I found myself biking back home late at night singing and feeling very happy. That’s just the beginning, we’ll soon start planning next show and few summer activities, workshops, etc.
  • Run a relay Marathon. I spent the whole March training for it. I performed way better than expected. I’ve run 12 km in little above 1h. Next step: Half Marathon in September and probably a Marathon next year! Sadly, after the run I had a small calf muscle injury and I’ve not trained much during second half of April, but I’m getting better now and running again 🙂
  • Another Hike Trip, along the Via Francigena with Mrs RIP and a group of 16 people during Easter holidays. It’s my third hike trip in less than 1 year: May 2016 Italy Coast 2 Cost walking alone, October 2016 Via Appia with a dear friend and April 2017 Via Francigena with my wife and a large group. Three totally different experiences. This one was really amazing. From San Miniato to Siena, all in Tuscany. 5 Days walking a total of 100km with backpacks, almost always immerse in nature with no cars in sight. Not a very tough hike but spectacular landscapes and nice group. Made a lot of new friendships and, most important of all, Mrs RIP first hike trip stimulated her. She wants to repeat the experience! Another taste of FI life. Photo gallery at the bottom of this post 😉
  • Visited Rome while Mrs RIP went to Milan. I’m not going to Rome frequently these days. I went after Easter (for 5 days) mainly to give Wedding invitation letters to friends and relatives. Meeting uncles, aunties, cousins and grandparents was fun, but spending a full sunny day hiking in Rome, 28km by foot, covering almost everything a tourist can do in a week was priceless.
  • I turned 40 years old. Since our life is so intense this season I asked Mrs RIP to not do anything spectacular for this special date. No big celebrations. She can’t help, she organised what was supposed to be an informal “apero” at our place and became a 20 people thing with 24 hours of upfront preparation, cooking and organization. But it’s been a very warm and frugal party, I love my wife!
  • Loosing weight took a pause. Intense sport month till Francigena hike, then dropped everything. With an intense life I had trouble keeping up with good habits. Bad weather and a calf muscle problem set me down for a couple of weeks. I allowed myself to overeat and drink a little bit too much during theater nights and travel. Getting back on track in May.
  • blogged ZERO this month. Enough said. I’ll be back.
  • Having hard time keeping up with my waking up early habit. Several late evenings both due to theater and celebrations of various kind. But it’s ok and I’ll be back on track soon.
  • I met MP! Yeah, I physically met the awesome person behind The Mustachian Post blog (and forum)! We met for lunch and we had a 2 hours intense discussion over soooo many interesting topics. We seemed happy like children, like we knew each other since forever. It’s so fulfilling to know you’re understood and you speak the very same language 🙂 I hope we’ll meet again soon, maybe at FIWE?

Numbers & Details

Total Income for the month was 16,770 CHF (cell H40). Base income for both of us. I started putting Mrs. RIP Pillar 2 contributions in our NW and cash flow.

Total Expenses for the month were 5,070 CHF (cell H41). Without Wedding expenses 4,547 CHF (cell H45). More details on my expenses sheet.

Expenses highlights:

  • Wedding. 523 CHF, payments for photo shooting, flowers and make up.
  • Travel. 442 CHF, Francigena expenses like hotel room for the night before starting the trip, in Bologna, and cash expenses for food (and beers) for the 5 days.
  • Groceries. 891 CHF, kind of a lot. We did a bulk grocery purchase in Italy and spent quite a few bucks in groceries for our “frugal” 40 years old Mr. RIP party at home. It’s ok.
  • Transportation. 231 CHF for train tickets, tickets from Siena to Rome (me), Milan (Mrs RIP) and then back to Switzerland for both of us. Probably these should be budgeted to Travel.
  • Dinners out. 102 CHF, essentially we didn’t go out but on the very last day of the month, still on “40 years” celebration mood.
  • Leisure. 547 CHF, Theater, theater tickets I gave to relatives that came to watch me acting, a day in the SPA (40 years old celebration, ok, not so frugal) and Mrs. RIP cash withdraws. We can do better here.

Total savings are 7,953 CHF (cell H42), not too bad after all.

Saving rate for the month is 61.1% (cell H43), excluding Wedding 65.1% (cell H46).

Saving rate for 2017 so far: 69.4% (cell Q43), excluding Wedding 75.1% (cell Q46).

Net worth is 631,502 EUR (cell H17), Delta is +8,078 EUR (cell H18), percent +1.30% (cell H19).

The progress bar changed from 56.28% to 57.01% , with a step of +0.73% toward the big goal.

Forecast for 100% FIRE: 35 months left (+1 months), i.e. forecast Fire Date is March 1st 2020, (cell V10). Uff, the goal is moving faster than us. I knew that since 12 months linear forecast is stil consuming those awesome 2016 months when NW delta were above 20k per month.

Current Monthly allowance: 1,710 EUR (+22 EUR, cell V13).
Current Withdrawal Rate – Real:  8.85% (-0.23%, cell V15).
Current Withdrawal Rate – Ideal: 5.70% (-0.07%, cell V16).
Years of Ideal expenses accumulated: 17.5 (cell V19). If we cash all our assets we can live with 3k EUR per month without the need of any money until end of 2034, assuming no income and no investments. Reassuring, isn’t it? 🙂

Next Steps & Other Updates

  • Prepare myself psychologically for the ~20k Wedding&Honeymoon expenses over the next 3 months
  • Invest these 13.5k I have sitting in my Interactive Brokers account.
  • Keep postponing financial chores (close UBS account, Pillar 3a for Mrs. RIP, Pillar 3a funds instead of saving account for both of us, invest more instead of keeping too much cash)

How was your April? Mine was ridiculously intense!

Enjoy this gallery of Via Francigena’s hike!

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March 2017 Financial Update – Marriage edition

Hi RIP voyeurs,

March 2017 is gone, spring arrived earlier this year in Switzerland. At the time of writing this post it’s 23 degrees and I’m biking to work wearing only shorts and t-shirt!

Welcome back to my monthly update. As usual, the reference doc is my NW spreadsheet.

Overview

A very unusual month and hard to compare with others, mainly for a special reason:

♥ We got married ♥

Yes, Miss RIP is now finally Mrs. RIP. Ok, I previously explained that we’re going to celebrate in Italy later this spring with relatives and friends, but we got legally married few days ago in Switzerland! So yeah, I’m getting married twice this spring. Cool. And turning 40 years old. Less cool.

Ok, back to the finances. From a financial standpoint, getting married in Switzerland means life is split in before and after. We keep as individuals, what we had before. We share what we’ll earn after. It means we now have individual economies and a shared economy. Since almost 3 years we were already contributing into a shared account so we’re used to a shared economy. But we did that just to cover for shared expenses, not to accumulate wealth. Contributions were similar to taxes. Each one had to take individual decisions to manage his/her own wealth.

Now every source of income goes directly into the shared account. We’re responsible together for every new purchase, debt, investment. To make this manageable, Mrs. RIP delegated shared wealth management to me – but I demanded we do monthly reviews together and I’ll also offer some basic financial lessons to her. I’m not ok with being alone understanding our finances.

About expenses, we need approval of both for shared expenses above a certain amount (still undefined) and we allow 500 CHF each for monthly individual expenses with no question asked. At the end of each month we send 500 CHF to our individual accounts.

Net Worth. I used to track my net worth plus the shared one. Since we plan to reach FI together and since I just care that we, together, will reach FU Number, I’m going to merge the NWs and track the sum of them. I know, it’s risky for several reasons:

  • Mine is bigger. I mean my NW is an order of magnitude greater than hers. But we’re together and I don’t care. I’d already be FI if I had to cover just for my personal expenses.
  • I lose a bit of control over Saving Rate and NW: every individual Mrs. RIP expense would impact the saving rate and our total NW. But yeah, that’s true anyway 🙂
  • I lose a bit of control over Asset Allocations: Mrs. RIP has some cash, more than what’s reasonable for a normal emergency fund. She’s not into investments and I don’t want to force her. I’m ok to push for aggressively managing our shared wealth, but not her individual one. Summing our NWs would skyrocket the cash component. Not a big deal, I will compensate as much as I can reducing my own cash reserve and the shared one.
  • I lose expenses trackability: I don’t want to (and I totally shouldn’t!) track Mrs. RIP individual expenses, but I’d like to get a sense of total amount. I’ll keep accounting individual expenses I see on our credit card into their own bucket, but her cash payments are not tracked individually. When she withdraws cash, I just consider it as a Leisure expense at withdraw time.

Given all the above, this month we had an obvious nice jump on total NW, with a NW Delta of +45,331 EUR I’d like to fuzzy a bit Mrs. RIP’s NW so I won’t provide many breakdowns.

Anyway, as usual, here are the major wins for March 2017:

  • We got married. It’s a win 🙂
  • Mr Market got a cold mid month but he’s back on track! My Euro Stoxx600 ETF, where I invest ~150K EUR, went up 3%. Both Emerging Markets and Pacific went up 2.5% – 3%. US market ETFs stayed stable overall, with Tech (again!) covering for Small Caps’ losses.
  • I’m the new swordmaster! I did something unprecedented (well, I’m not sure) in Swiss history: I contested a medical bill and got a reduction! Well, not much, just 16 CHF from 354.40 to 338.60 but believe me it’s a great feeling. The story is: understanding Swiss medical bills is impossible, they have hundreds of complex entries. Even though my German is not very good, it’s good enough to understand that they charged me ~40 CHF for a “phone consultation” of three 5-minutes blocks, i.e. 15 minutes. What actually happened is that they call me to tell me “your blood exams are good, let’s meet again end of March, bye bye“. I went thru my call history and I found the call to be 2 minutes and 9 seconds. I walked in their building ready for a fight and I obtained a 5 minute block cut from our “phone consultation”. Plus I canceled the checkup visit.
  • Hooli stocks vesting. Extra money. I sell them automatically as soon as they vest. The proceedings are sent to my IB account ready to be invested. I have vesting events in March, June, September and December. June and December are major vesting events, March and September are minor ones.

Losses of March 2017:

  • Too many expenses. Dangerously close to 7k CHF. Ok, there are one-offs here, like 2170 CHF Wedding related, 830 CHF travel related, the above mentioned 340 CHF for the medical bill, but there will always be one-off expenses every month (hopefully not wedding related after July!).
  • Stronger EUR currency. Since I measure our NW in EUR and we own assets in EUR, CHF and USD, having a strong EUR means our NW performed worse. The USD was losing 3% till few days ago, it eventually recovered most of if.
  • Naked Hooli salary. No bonuses, just my naked salary this month. Sad.
  • Having hard time keeping up with my waking up early habit. Several late evenings both due to theater and celebrations of various kind. But it’s ok and I’ll be back on track soon.

Other Financial Facts

  • Changed Target Safe Withdrawal Rate (SWR) to 3.25% after a very deep dive thru the incredibly amazing Ultimate Guide to Safe Withdrawal Rates, on earlyretirementnow blog. Everyone who’s planning to retire on investments should definitely read all their posts! Previous target SWR was 3.33% so it means we’re playing it safer and we’d require a bigger FU Number.
  • Increased Target monthly allowance to 3000 Euro per month. Another safety margin at play here. Another FU Number increase. I don’t know if it will be the last one, I may play with monthly allowance more in the future. Anyway, these two factors pushed FU Number to slightly more than 1.1M EUR.
  • I’ll Track Saving Rate (SR) with and without Wedding Expenses. Wedding is (hopefuly) one-off. We’ll face wedding expenses till July (Honeymoon) and forecasts are north of 25k EUR, including Honeymoon. My principles say that I should save at least 50% of my take-home pay and I want to measure it against standard expenses, not extraordinary ones.

Other Facts

  • I lost weight. How much? Roughly 5 kg. How? A combination of few things worth a post on his own 🙂 Here’s a teaser trailer: strong motivation (getting married in June in Italy, want nice pictures), accountability (signed up for a half marathon happening in few days, a 5 days hike trip in Italy with Mrs. RIP during Easter and a triathlon in August) affirmation (got inspired by Tim Ferriss Show episode with Scott Adams, anyway, more on this in its own future post), mindfulness eating and tracking. I’m not done. I plan to keep going till end of the year and hope these new habits will stick and become the new normal.
  • Theater Acting Intensified. I’m on stage these days. 2 weeks of plays. We spent most of March doing rehearsals even during the weekends. I love this kind of life. That’s another taste of FI. I remember back in 2002 when I started (ouch, 15 years have been passed, how old am I??) I was close to quit my studies to go all-in with theater acting. Good thing I didn’t, but at the time I wondered “what if…”. Well, reaching FI means I can discover “what if”! I’m really craving for it. I look forward to having more time to play even more intensely. That’s yet another reason not to go out for dinner or spend money on happinessless things.
  • I blogged almost ZERO this month. Too many things on my plate. But I’m way happier thanks to increased physical activity, more outdoor time and theater acting, so I don’t actually care. But yes, I have a new series (and several dozens of new post ideas…) for this blog coming soon. Stay tuned!

Numbers & Details

Total Income for the month was 16,770 CHF (cell G40). High income due to Hooli stock vesting and Mrs. RIP salary. I’m not counting Mrs. RIP Pillar 2 contributions yet.

Total Expenses for the month were 6,932 CHF (cell G41). Without Wedding expenses 4,765 CHF (cell G45).

More details on my expenses sheet.

Expenses highlights:

  • Wedding. 2,167 CHF, some payments for rings, dresses and a luxury lunch with close friends here in Switzerland.
  • Housing. Italian condo fees 120 EUR.
  • Health. 338 CHF for the doctor visit and the phone consultation I mentioned above.
  • Transportation. Good month here. Few trains tickets purchased for Mrs. RIP’s family to come to visit us beginning of April (to see me acting) and no monthly local pass for me. I bike to work with this nice weather!
  • Travel. Paid off our 5 days hiking trip with Mrs. RIP along the Via Francigena during Easter (in a couple of weeks!) and purchased some gears for it, mainly hiking shoes (mine wore out after more than 10 years).
  • Leisure. As I said, Mrs. RIP cash withdraws go here.

Total savings are 9,838 CHF (cell G42), not bad, above the acceptability threshold.

Saving rate for the month is 58.7% (cell G43), excluding Wedding 71.6% (cell G46).

Saving rate for 2017 so far: 71.4% (cell Q43), excluding Wedding 77.4% (cell Q46).

Net worth is 623,424 EUR (cell G17), Delta is +45,331 EUR (cell G18), percent 7.84% (cell G19). As I said, these numbers are kind of meaningless this month since we joined our NWs.

The progress bar changed accordingly, from 57.81% to 56.28%, with a step of -1.53% toward the big goal. This is because we moved the target away.

Forecast for 100% FIRE: 34 months left (+4 months), i.e. forecast Fire Date is January 1st 2020, (cell V10).

Current Monthly allowance: 1,688 EUR (+136 EUR, cell V13).
Current Withdrawal Rate – Real:  9.08% (-0.44%, cell V15).
Current Withdrawal Rate – Ideal: 5.77% (+0.00%, cell V16).
Years of Ideal expenses accumulated: 17.3 (cell V19).

Next Steps & Other Updates

  • Not closed UBS account yet, too busy. Will April be the month?
  • Not made any decision about Pillar 3a investments for both me and Mrs. RIP with PF yet.
  • I have 10K CHF and soon 3.3K USD sitting on my Interactive Brokers account. Need to think what to do with them.
  • Not planning to invest shared money in April, even though our cash reserve is higher than planned. Keeping cash for Wedding & Honeymoon expenses.

How was your March?

Mine was veeeeery intense 🙂

February 2017 Financial Update

Hi RIP voyeurs,

February 2017 is gone, it’s been incredibly warmer than average here in Switzerland, it really looks like spring already!

Welcome back to my monthly update. As usual, the reference doc is my NW spreadsheet.

Overview

This was a strange month. First of all, lowest saving rate since started this blog, 50.9%. Ouch. Few unexpected medical expenses, some expected wedding expenses and lowest salary ever since joined Hooli made it. I guess next 3-4 months won’t be better, with wedding date getting closer. Second, very high NW Delta of +19,496 EUR. How is it possible? Last month we saved 23k and NW went up by 6k… this month we saved 5.5k and NW went up by almost 20k, am I cheating? No, it’s simply that cashflow is not the same as net worth. NW growth is affected by savings, investments growth, and (in our complex 3-currencies life) currencies fluctuations.

Anyway, as usual, here are the major wins for February 2017:

  • Market’s doing incredibly great! I’m here, sitting on my chair, waiting for the market crash, the apocalypse and all the things and nothing happens! Why? All my ETFs are up at least 3% during February. I’m so tempted to time the market
  • EUR is weaker compared to both CHF and USD. I’m tracking my NW in EUR and I’m exposed a lot to both CHF and USD. EUR/CHF moved a little while EUR/USD a lot. Both in the right direction. Does it seem odd to aim for a weaker reference currency?
  • Slightly greater than expected 80% salary. February is one of those boring month where I don’t have 13th, yearly bonuses or stocks vesting. So I can finally see what’s my regular salary about. My base net salary is ~86% compared to a base one from last year. Cool. 80% work, 86% pay 🙂
  • Miss RIP got a raise. A small one, still better than nothing. This raise in not visible here, since I’m not tracking (yet) her NW and we keep contributing in ratio 3:1 to shared economy. Wait… now that I work 80% and she got a raise my net salary is no more 3 times hers so we should change internal taxation! Nevermind, starting next month we’re going to join future incomes.

Losses of February 2017:

  • Expenses over 5000 CHF. I set 4k CHF as “we did great” threshold and 5k as “we should be worried” threshold. We went above the second one. The good news is that base expenses were ok. If we exclude wedding expenses (1141), unexpected medical expenses (364), book-in-advance-to-save-money train tickets (~200) and once-per-year expenses (165, Miss RIP’s Half-Price Card) then we are below 4k. It’s a weak excuse though, our life is so complex that it’s normal to have unexpected expenses. It’s kind of… expected!
  • Saving rate slightly above 50%. The minimum since blogging. Why? Because of both a base 80% salary and high expenses. At least it’s still above my acceptability threshold of 50%.

Other facts:

  • Invested more money. Sold Hooli stocks and invested the whole 14k from proceedings. Why did I sell them? Am I not being loyal to my awesome employer? No, it has nothing to do with loyalty. It’s about differentiation. I’m already exposed a lot in Hooli and in IT in general because that’s where I work. What happens if Hooli bankrupts tomorrow? I’d lose my job, my immediate ability to earn a lot of money AND my stocks. Differentiate for the win.
  • Another round of rebalancing, according to my IPS. When I wrote my IPS I defined what my ideal asset allocation strategy would be. My actual investments were not aligned with my strategy back then. I’m aiming to my ideal allocation without having to revolutionize all my investments (which would generate huge trade fees).
    my investment sheet

    So, here follows this month’s steps: sold another 20k of Tech US ETF (SWX:XLKS-USD). With 34k available (20k from selling Tech US and 14k from selling Hooli stocks) I purchased 17k of a Pacific ETF (SWX:CSPXJ-USD) and 17k of an Emerging Market ETF (SWX:CBMEM-USD). According to the investment sheet on my NW spreadsheet I’m almost good. The sheet is not in sync with my IPS though. I may tweak a little bit my IPS to include a 15/5/5 split of US exposure (large/tech/small) instead of 20/5 (large/small). Need to think about it.

  • 80% life kicking in. I’ve been able to enjoy 4 amazing 3-days weekends, the last of which have been spent entirely with Miss RIP, like a small 3 days honeymoon at home.
  • Got a credit card. Why? Wasn’t I showing off by claiming I never had a debt?? Well, keep these complains for next post about “my credit card experience” so far 🙂

Numbers & Details

Total Income for the month was 10,797 CHF (cell F40).

Income highlights:

  • ~7,900 – my Hooli salary + a spot bonus and some extras (base 80% salary ~7.5k).
  • ~1,900 – my Pillar 2 contribution.
  • 1,000 – Miss RIP contribution to shared economy.
  • 15 CHF – Migros Blue coupons.

Total Expenses for the month were 5,300 CHF (cell F40). Expenses detail on my expenses sheet. There are 10 CHF untracked from my new credit card that should show up in next few days. I’m going to backfill expenses once the issue is solved. Here on the right a screenshot of 2017 expenses so far. Click on it for details.

Expenses highlights:

  • Wedding (1,141 CHF), not counting several train tickets we purchased which are because of the Milan wedding.
  • Health. I got a tooth repaired in Italy for 170 EUR and I few exams in Switzerland for 183 CHF. Still waiting for another doctor bill expected in the range of 200-300 CHF.
  • Transportation. Purchased a lot of trains tickets (~200 CHF) for March, April and May. Successfully experimented blablacar twice! Here’s the story: it used to be simpler to find cheap train tickets to Italy on Fridays and Sundays. Sadly, it’s no more true unless you purchase them months in advance (that’s why we did some planning and crazy shopping for the months to come) and it’s hard to find discounted tickets on Sundays. We had to go to Milan a couple of weekends ago and there were no discounted tickets. Buying tickets full price (with half price card) for 2 people (round trip) would have costed ~220 CHF. A lot. We used to pay 10 or 20 each ticket (40-80 total). Just before I was going to buy the pricey tickets mumbling and complaining with “the system”, my beloved Miss RIP proposed “why don’t we try carpooling? Like Blablacar?” We tried, we spent 15 EUR per person per ride (75 CHF total considering blablacar fees and currency conversion), we had nice and comfortable experiences and we met great people! Strongly recommended! We’re still missing few tickets in our trips plan for the next 3 months, but we’re completely relaxed since we have a new default option!
  • Restaurants and “food outside house” above 300 CHF. A lot, I know. We indulged a little bit, but that’s a category that gives us a lot of value so it’s ok. Fondue with friends? I’m always in!
  • We went to an overpriced SPA with friends and spent more than 100 CHF for 4 hours. Nice experience but too expensive.
  • Several IB Trade fees (52 CHF) for investments.

Total savings are 5,497 CHF (cell F42), too little saved this month. Saving rate for the month is 50.9% (cell F43), barely acceptable. Saving rate for 2017 so far: 77% (cell Q43), declining too quickly to normality 🙁

Net worth is 578,093 EUR (cell F17), veeery good! Delta is +19,496 EUR (cell F18), percent 3.49% (cell F19). Good, thanks Mr Market and Mr USD!

The progress bar changed accordingly, from 55.86% to 57.81%, with a nice step of +1.95% toward the big goal. We’re almost back in the 2% monthly jumps world 🙂

Forecast for 100% FIRE: 30 months left (-3 months), i.e. forecast Fire Date is August 1st 2019, (cell V10).

Current Monthly allowance: 1,552 EUR (+54 EUR, cell V13).
Current Withdrawal Rate – Real:  9.52% (-0.23%, cell V15).
Current Withdrawal Rate – Ideal: 5.77% (-0.20%, cell V16).
Years of Ideal expenses accumulated: 17.3 (cell V19).

Next Steps & Other Updates

Money & Investing

  • Everything is ready to close UBS account, probably doing it in March.
  • Still thinking about a better Pillar 3a with PostFinance, like PostFinance Pension 25/45/75. TERs are high, considering that they are funds of funds, and market diversification is very low. They invest in Switzerland stocks, essentially 3 stocks (Novartis, Nestlè, Roche). I know there are better options out there but I’d rather stay within PF, my financial life is complicated enough and I don’t want to make it more complex. Plus, Pillar 3 constitutes less than 5% of my total wealth and I may want to withdraw it within next 5 years. Keeping my money into a saving account at 0.2% interest may still be ok.
  • What about a Pillar 3a for Miss RIP? We’re getting married and next year we’re going to join our tax returns which means we might want to save taxes on those 6.7k she could set aside. In that case there will be too much money sitting at 0.2%, funds become more tempting.
  • Extra rebalance to adhere to my IPS. I’ve done a good job moving money around and investing more in Jan-Feb with limited friction (115 CHF total fees). As mentioned before need to think about 15/5/5 split between Large US, Tech US, Small US vs 20/5 Large/Small as mentioned by my IPS. Technically it’s the same stuff. Tech US are large companies. Problem with current split is that I’m triple exposed with Tech US: I work for them, I invest in Large US (most of them are tech anyway) and I invest in Tech US. Home bias is hard to die!

Wedding

Wedding is coming! We’d get officially married in Switzerland in March, and then we’ll celebrate it with a big party in Italy in June. March will be an interesting month! From a financial point of view, the default in Switzerland is that we, individuals, keep whatever was ours before the marriage while whatever we make as a couple after the marriage is then shared. If you want something different (sharing everything or keep finances separate) you need to sign a contract in front of a notar. Anyway, since we’re planning to reach FI together I’d add Miss… pardon, Mrs RIP NW to mine. Expect a nice jump forward in March 🙂

About the wedding budget… last time I took a look at the spreadsheet it was dangerously coming close to 25k…

I need to find a way to account for monetary wedding gifts too. Both my parents and future in laws are going to give us money, several thousands. I expect some of the invitees will too. I don’t want to consider it as income nor I want to don’t consider monetary gifts at all. Need to think about it.

Blog

February has been my least active month on my blog and on the communities (forums, other blogs,…) since I started blogging. I’m not losing passion, it’s simply a too intense period of my Stardew Valley farm life.

Anyway, good news:

  • book featuring me has been published!
  • Financial Independence Week Europe (FIWE) 2017 has been announced! I’ll be there for sure during the 3 main days and probably few days more to hang out with bloggers and participants! Follow the link if you want to join us! We’re going to Timișoara (Romania) in September 2017!

How was your February?

January 2017 Financial Update

Hi RIP voyeurs,

January 2017 is gone. It’s been freezing cold here in Switzerland with temperatures below zero all the time.

Anyway, new year new spreadsheets! 2016 monthly reports have been very long full of boring details. I want to simplify from now on. The main NW spreadsheet for 2017 has been simplified and assets in the same class collapsed (except stocks/ETFs investments).

Overview

Before we start, here’s a note about 2017 Net Worth: I won’t take into account virtual earnings, i.e. “vesting” stocks, 13th month, yearly bonus. I used to consider them, a fraction each month. I have quarterly, by-quarterly (semesterly?) and yearly vesting stocks. I used to put into my NW respectively 1/3, 1/6 and 1/12 of the “vesting stocks” each month. I used to account for 1/12 of expected net 13th month and yearly bonus each month. Now I don’t. Those are not guaranteed until the money is on my checking account and the stocks are in my brokerage account.

What does that mean? While NW growth due to earnings used to be regular, it will now be spiky. March, June, September and December will be stellar months while the other eight will look poorer. In the end the yearly delta will not change.

The only credit I allow myself is the yearly bonus credit: issued in December and paid in January. Once issued it’s guaranteed unless you quit the company or get fired between Christmas and end of January. Not a wise decision to quit in January. That’s why January is not a stellar month given that paycheck contains yearly bonus. That’s why I expect December 2017 to be ridiculous in terms of NW delta: 10-12k net vested stocks (4 stocks packages, at today’s stock price), 7k base salary, 6k 13th month, 15k yearly bonus. All net, not gross.

This month NW delta is +6,624 EUR. Not that bad given that the USD dropped 2.5% compared to EUR, and US – where I invest a good portion of my wealth – has been downgraded to a Flawed Democracy.

Till the European morning of January 30th the delta was in the 5 digits world but then Muslim ban’s market reactions, dollar dropped and, yeah, 4K burnt to ashes.

Here are the major wins for January 2017:

  • Market’s still doing good! Well, I started drafting this post before The Psychopath signed the Muslim ban, right before market dropped. Anyway, all our ETFs went up, gold medal being the Tech US ETF (+2.77%). That’s to remind me that I did a stupid move last month by selling 40K of it. Never try to time the market again.
  • (Expected) Ridiculous saving rate, 87.3%. 2016 Yearly bonus + January salary = very high income. As I said, if you wonder why NW delta is small (+6.6K) given 23.8K CHF absolute savings and a favorable market, I already accounted for my 2016 yearly bonus under the “Other” (row 13). Expected 17K net, probably received a little bit less (I can’t tell exactly, but salary + bonus + extras = 24K).
  • Low expenses, less than 3500 CHF. A month below 4K is a good month! Well, there are some wedding expenses not included here, like Miss RIP’s wedding dress (she paid with her account but we will share total expenses). Actually there will be several wedding expenses in the following months that mess up our finances, but that’s how life goes.
  • Another small bonus at Hooli. 500 CHF to be credited in Feb for my amazing performances, cool!

Losses of January 2017:

  • Lower than expected net salary. 26K gross bonus + 10K gross base salary + unknown extras (complicated and boring to explain) = 24K net salary. Who said Switzerland is the land of low taxes??
  • USD dropped 2.49% compared to EUR (and 2.77% to CHF).

Other facts:

  • Wrote my IPS. Took time to write down objectives, strategies and asset allocation.
  • Invested more money. 13th month and Yearly bonus went straight to InteractiveBrokers! I’ve sent 35K CHF to my brokerage account and extracted 10K EUR to my Italian EUR bank account to cope with wedding expenses. A nice side effect of using InteractiveBrokers is the amazingly low currency conversions costs. I can buy EUR on the market at its price (actually buying EURCHF currency pair) and pay between 1.50 and 2.50 CHF trade fee. No costs on deposits to IB and no costs on your first withdraw each month from IB. Beat it if you can!
  • Rebalanced my investments according to the IPS. I didn’t fully adhere to my newly written IPS since it’d require a lot of trades. I’d like to aim to perfect balance with time, with new money being invested in assets lacking funds rather than selling current assets and buying new assets. The more money you move the higher you pay in trading fees. With 40k USD cash sitting on my brokerage account after the sale of half of my Tech US ETF and the extra 35k CHF invested I purchase 50k EUR worth of STOXX600 ETF and 15k USD worth of SWX:CSUSS-USD, an ETF tracking the MSCI USA Small Cap index. Extra 10k have been sent to my Italian EUR bank account as previously explained. My portfolio looks better to me but still not perfect.
  • I started a healthy routine of waking up early. Still not at it’s final permanent stage (and I skipped a morning), but waking up early in a consistent way is bringing more quality time into my life.
  • Free Fridays. 80% is here and it’s awesome! I don’t work on Friday anymore and the life balance of a 4 days workweek / 3 days weekend is a step toward acceptability. I guess 3 / 4 would be even better but in my “Hard Accumulation Phase” working 60% would unacceptably slow my FIRE journey.
  • Health emergencies in both Mr. and Miss RIP family. Both RIP Sr. and Miss RIP’s brother had surgery in Italy. We had to travel at the very last minute to visit our relatives. They’re ok now, but they have both seen better days. So yeah, January nomination to “first month without international trains or planes since I-don’t-even-remember-when” had to be withdrew.
  • Wedding budget finalized. It won’t be a frugal wedding and I’m not happy with that. What makes me happy is that Miss RIP cares about a perfect wedding and I’m doing my best (not much though, just avoid complaining too much with pricey extras) to make her happy. I won’t put many details here, like individual wedding related expenses, because few close friends of mine read my blog. I’m ok with throwing totals here though. Initial budget was 20k EUR, current forecasts say 23k but I guess we’d end up above 25k. It’s a shitload of money, I know. I don’t feel comfortable with it. I made the mistake of showing Miss RIP my yearly bonus… Anyway, wedding expenses will mess up our finances this year. Regular monthly cycles no more apply in 2017 and bills will come at random till June. Combined with spiky income months, I expect expect negative saving rate when the stars align.
  • Finished reading the Healthy chapters of Tools of Titans (Tim Ferriss). Want to blog about it. It’s awesome. It’s very inspiring.
  • Mr DIP found a job and he’s no more unemployed! I guess he needs a new nickname now 🙂

Numbers & Details

Total Income for the month was 27,227 CHF (cell E36).

Income highlights:

  • ~24,300 CHF my Hooli salary + 2016 bonus. Expecting less taxes but it’s ok.
  • ~2,000 CHF my Pillar 2 contribution.
  • 1,000 CHF Miss RIP contribution to shared economy.

Total Expenses for the month were 3,448 CHF (cell E37). Nice one! Anyway, I’m trying to change the way I report expenses. I added an expenses sheet to my NW spreadsheet. I won’t go into details here, take a look at the sheet if you want.

Expenses highlights:

  • New health insurance, costs went up from 426 to 490 CHF.
  • Several Trade fees (64 CHF) for investments. roughly 0.08%of capital moved (70k) plus some currency conversions.
  • Milan condo fees 120 EUR. We pay condo fees in Milan 5 times per year in July, September, November, January and March.
  • Paid 180 EUR as deposit for our next group hiking trip along the Via Francigena! It will be 5 days during Easter with Walden Viaggi a Piedi, an italian social trekking company. Both I and Miss RIP will take this break right after my theater plays and before turning 40 and getting married. Yes, it will be a pretty intense Q2 2017. Anyway, this trip will be a super frugal group hiking with a guide and seeking for hospitality in hostels and monasteries. Have you ever heard about Via Francigena? Canterbury (UK) to Rome? It’s our Camino de Santiago! Well, we’ll just walk 5 days in Tuscany, from Florence to Siena, first time together (I’m used to hiking trips). looking forward!

Total savings are 23,779 CHF (cell E38), very good. Saving rate is 87.3% (cell E39). Do not worry, we’ll be back to normal in February.

Net worth is 558,597 EUR (cell E15). Crap. Delta is +6,624 EUR (cell E16), percent 1.20% (cell E17). Very bad. As explained above it’s mainly due to USD drop and lower than expected net salary.

The progress bar changed accordingly:

With a small step of +0.46% toward the big goal. We were used to 2% jumps, it’s ok. There will be better months. And worse for sure! If Mr. Market will get irritated w may end up reusing some of the old logos…

Forecast for 100% FIRE: 33 months left (+1 months, calm, breathe), i.e. forecast Fire Date is October 1st 2019, (cell U19). What the hell! A month has passed, net worth increased by 6.6K and FIRE date moved away from us by 2 months? Just for fun I tried to play with linear forecasts. What if our NW increased every month by 6.6K EUR during 2017? We’d be doing steps toward FI, I expect to get closer to the goal. Let’s take a look at the FIRE date:

Whaaaaaaat?? If our NW increased by 6.6k per month in 2017 we’d end the year with 56 more months to go. How depressing 🙁

What if it increased by 5 digits per month from now on?

Holy sheet, 10k NW increase per month and at the end of the year we’d still be 34 months far from FI? Carrot and stick. Actually 10k per month is above my expectations for 2017. I don’t think the Market is going to positively surprise us in 2017 and let “exponential growth” or “compounding magic” happen.

All forecasts are linear forecasts over a 12 months window.

Current Monthly allowance: 1,552 EUR (+19 EUR, cell U25). It represents how much I could withdraw indefinitely per month (at my desired WR) in case I decided to call myself FI today.

Current Withdrawal Rate – Real:  9.75% (-0.35%, cell U28). This represents the WR I need to support current spending regime with today’s NW. It got better this month because we increased our NW and reduced yearly expenses compared to previous forecast.

Current Withdrawal Rate – Ideal: 5.97% (-0.05%, cell U31). This represents the WR I need to support my desired spending regime (lower than current, since I plan to retire in Italy and not in Switzerland) with today’s NW. When this number will meet the desired Withdrawal Rate (cell U10) we’ll be FI.

Next Steps & Other Updates

Investing

  • I have extra money to invest in February, roughly 13k USD from Hooli stocks sale. Need to finish rebalancing my investments. I may sell another portion of Tech US (17k) to kick off Emerging Markets and Pacific.
  • Since we’ll do joined tax declaration in 2017, I’m thinking about opening a Pillar 3a for Miss RIP. She holds her Swiss savings in cash, what a waste of money. She’s totally not into investments and I may consider suggesting “safe” investments to her.

Wedding

This wedding project has been so far the most complex project we’ve been involved together. So much effort for “a single day”. I’m talking about the wedding day here, not about the fact we’re starting a family and the long term project. Just the wedding day.

Miss RIP is handling roughly 90% of the details, while I take care of bureaucracy. She’s doing an amazing job with location, invites, hotel for guests, transportation for guests, menu details, church details, flowers, rings, photos, videos… I’m just caring about my dress, whose hunt didn’t start yet while she’s already purchased it.

Anyway, expenses are coming. A lot of trips to Milan are coming too. In February we’ll purchase tons of train/plane tickets to Rome/Milan to cover until end of June 2017. Purchasing in advance lowers ticket costs by up to 90%.

Theater

That’s going great! I’ll be on stage end of March – beginning of April with at least 7 performances. The theater company is amazing and I already love all my new friends! I took over minor IT responsibilities and now maintain the company website and Facebook page. Feb & March will be super intense with full weekends of rehearsals and then it will be “on stage” again!

Milan’s apartment

I was (again) close to rent my apartment starting February but the tenant declined (again) at the very last minute. It’s getting really depressing.

Blog

January has been a page view record month. After few stable months PVs spiked! That’s not due to an “awesome day”, just the daily basis kind of doubled and… it feels good 🙂

Engagement followed the same pattern: more people interacting, commenting and it feels good too! I’m active in Rockstar Finance Forum, which probably helped a little.

Ah, I’m also on Twitter now 🙂

I technically have more time to blog so I may end up writing more. I still love writing but I’m thinking about kicking off a coding project with my free time that might erode time to my beloved blog. I don’t know. No, I won’t switch to full time Stardew Valley farming, do not worry 🙂

That’s all!

How was your January?

December 2016 Financial Update

Hi RIP voyeurs,

December 2016 is gone. Well, the whole 2016 is gone.

What a year! Half of the singer/actors died, terrorism and wars are everywhere and populism is slowly destroying the human species.

Sorry, I can’t help but share the cutest image ever, as a sign of hope for an amazing 2017. Here’s a kitten with a froggy hat.

Anyway, sad episodes apart, this 2016 guy has been incredibly good for RIP’s economy! I don’t know if we’re inside a (tech?) bubble or not, but everything went well beyond the most optimistic expectations!

Let’s not rush and follow the steps: as end-of-month routine I’m here showing my detailed numbers and getting positively surprised by them. That’s another over the top month, where along with an expected very high saving rate we achieved yet another gargantuan NW increase.

The reference document for the following considerations is my Net Worth spreadsheet. I’ll post a screenshot every month in these financial update posts.

Overview

Last month, we got the third comma (in Italian Lira), a round number I dreamed about when I was a kid! Apart from breaking walls, we increased our NW by ~22K and I thought that this trend was going sooner or later to reach an end.

Not today! December 2016 went actually better, NW increased by 23.8K EUR!

Here are the major wins for December 2016:

  • Good investments’ performance, especially the STOXX600 fund! Go Europe go! Actually, just before Christmas things were even better, with investments peaking and EUR weaker compared to CHF and USD. Delta NW was close to +28K, doomed to decline to a modest ~+24K 🙂
  • (Expected) Amazing saving rate, 83.4%. Mainly due to thirteenth salary and stocks vesting. Anyway, these factors were already accounted for in previous months (rows 11 and 34).
  • Greater than expected yearly bonus at Hooli. Expected 20-22K, got 26K. This bonus will be credited in January 2017, and that’s the 17K you can see in row 34. In November we had ~18K credits, part of it was the 13th month, part the expected bonus (lower than the actual one). Now I’m putting in 17K, which is the (pessimistic) net expectations for the 26K gross bonus, while the 13th has been cashed. That’s a nice contribution to NW increase.

Losses of December 2016:

  • Close to rent the Milan apartment, potential tenant declined at contract signing date. I hate my failure-remembering apartment. I’d rather sell it and put a big stone on this.
  • Unexpected medical bill for an October Miss RIP’s doctor visit we forgot. 437 CHF. We’d been below 4K without it. We received a suspiciously low bill of 134.50 CHF in October and here is the “remainder”.

Other facts:

  • Pillar 3 Buy in of 6,768 CHF done. Started a new Pillar 3 with PostFinance.
  • 80% part-time request at Hooli approved! I’m starting in January 2017. Sadly, first 2 Fridays are already gone for a trip to Rome to visit RIP Sr. which is in hospital for some heart problems. Anyway, being able to go to Rome 4 full days (Thu 5th evening to Mon 9th evening) without having to take vacation (just trade the following Friday 12th with Monday 9th) is one of the aspects that makes this life closer to what I expect FI would be. I can be there to help and support instead of being at work.

Incomes

Income for the month was 26,547 CHF (cell O57), second best month of the year, second to January when I received 2015 yearly Hooli bonus. This very high salary was expected, thanks to 13th salary and huge stocks vesting.

  • ~15,500 CHF my base net salary + 13th month. As you can see it’s lower to twice regular salary because (1) money got taxed more (2) my 13th salary was prorated by ~90% – I worked 90% this year – and (3) some benefits are not doubled, like health insurance contribution and transportation allowance. Anyway, very good!
  • ~7,700 CHF stocks vesting.
  • ~2,250 CHF Pillar 2 contributions.
  • 1,000 CHF Miss RIP contribution to shared economy.
  • 15 CHF Migros blue coupons. Yeah, I consider them income.

Total income in 2016: 191,250 CHF (cell P57). As expected, above 190K. I’m talking about net income. Actually, net take-home pay that includes everything injected into our Net Worth that doesn’t come from investments appreciation, dividends, interests etc.

Average monthly income in 2016 is 15,938 CHF (cell R57).

2017 Target is 170K CHF. I know, it’s conventional to set a target higher than last performance cycle, but I’m going to work 80% and that’s going to make a difference. I’m cutting 10% to 2016 income and let’s see if it works. I don’t plan (for now) to have a worth-mentioning side gig or other passive revenues.

Expenses

Total expenses for the month were 4,376 CHF (cell O58). Wait, before you say “Ha-ha you didn’t make below 4K as you planned!” I can explain the difference. We received an extra bill for a forgotten Miss RIP October doctor’s visit of 436.90 CHF. Without that we’d make it. In Christmas month, with two trips to Italy and huge and expensive dinners with friends and relatives. It’s totally ok!

Hey RIP… ha-ha you didn’t make below 4K as you planned!

-.-

Here’s the detailed list of expenses (in CHF):

  • 1443 – Flat rent (1278) and condo fees (165). Business as usual. I figured out that the actual split is 1278 rent and 165 condo fees. Just saying.
  • 863 – Health.
    • 437 – Doctor’s bill. Unexpected. From October.
    • 426 – Insurances (213 each one). Lower than the other months since we removed Miss RIP’s accident insurance. Next month on, this expense will grow into 490 CHF per month, since we changed provider and all providers are raising their premiums by 10% at least. Apparently healthcare costs are raising, that’s the second year in a row. And they say inflation in Switzerland is below zero… If you wonder how does healthcare work in Switzerland, there’s enough complexity that I feel time has come for a post about it.
  • 674 – Groceries. What the hell… We spent more on groceries during this month than the previous 3 combined! I had to do the math twice to be sure. Well, we’ve organised (and paid for) several huge dinners during this Holiday season. Plus we’ve done some convenient grocery bulk purchase in Italy and returned 100 EUR to Miss RIP’s dad for a grocery bulk purchase done in November.
  • 532 – Travel & Transportation:
    • 251 – Mexico trip. It seems so far away now, but yes, we returned on December 4th.
    • 101 – Local Transportation. My local monthly pass and few Metro tickets in Milan. I could and should have biked this month. The weather has been nice and it never rained. January looks way cooler and I can’t stand below zero biking, for now.
    • 85 – Flight tickets to Rome. Told you I’m using my first 2 Fridays to go to Rome: Jan 5th to 9th. I purchased last minute tickets using my Miles&More miles and got a nice offer. 15K miles for the “fare” portion of the ticket, i.e. 200 CHF. They offered me to pay the 85 CHF taxes and “fuel surcharge” with another 15K miles but I’d rather keep them and optimize their value. Btw, why there’s still a fuel surcharge when oil price is at its minimum?
    • 43 – Gas. Twice in Milan, used Miss RIP’s family car. Yes, I know, I bragged about being car free since 2008 but we’re going twice per month in Milan for secret project X and we need to be surgically fast and time efficient.
    • 42 – Trains. We paid for December train trips to Milan in advance, so this expense is for January Miss RIP’s solo trip to Milan.
    • 10 – Tolls. Italian highways.
  • 217 – Dinners Out. Christmas time, friends time and 100 EUR associated to Project X here.
  • 172 – Gifts. Miss RIP is unstoppable. Considering it’s Christmas time, I see this amount as acceptable. And btw, did you check out our reciprocal Christmas gifts?
  • 125 – Leisure. Few items purchased. In this category I also put 50 CHF for Theater Acting! The news is that after too many years without acting I’m back on stage 🙂 The financial news is that I joined a self funded company and at subscription time you have to pay a one-off entry deposit of 500 CHF. They say when you leave you get the money back, assuming shows tickets will cover costs (which they claim it happened for 20 years out of 21 since the company exists). To be safe, I’m assuming I won’t get my money back. I don’t wan to call a 500 CHF expense for December, so I’d keep an asset in “Other – CHF” (row 36) which will depreciate by 50 CHF per month for the next 10 months, generating 10 monthly expenses of 50 CHF. If I’ll get back my money when I leave the company (hopefully very far in the future) that would be a nice unexpected small windfall.
  • 111 – Taxes. Extra property tax on Milan apartment…
  • 100 – Cleaning Lady. A single 4 hour visit this month.
  • 75 – Utilities & Phone.
  • 63 – Fees. Half of it is Interactive Brokers fee on 40K sale of my Tech ETF. More on this later. Then bank fees and Project X fees.
  • <5 – Not tracked.

That’s ok, that would have been below 4K without the unexpected late medical bill. We could have saved on groceries and maybe some dinners out, but it’s Christmas, that’s essentially why we’re getting a thirteenth salary: to spend it on stupid useless things! Or, in my case, to ‘stash it entirely!

Total expenses in 2016 is 59,740 CHF (cell P58). Below 60K, cool. Above last month’s ambitious target of 59K. It’s ok.

Average per month: 4,978 CHF (cell R58). Finally below 5K per month.

2017 Target is 70K CHF. Whaaat? Less income and more spending? What’s wrong with you RIP? Well, Project X will cost a lot. It would involve some math and there will surely be some positive financial consequences too, but still expenses will skyrocket.

Savings & Saving Rate

Total savings for December are 22,035 CHF (cell O59). That’s… fun!

Total savings in 2016 is 131,510 CHF (cell P59). As expected.

Average monthly savings are 10,959 CHF (cell R59). Boom! 11K saved per month! It’s more than I earned in 2006. Earned, not saved. In 2006, not December 2006. That’s amazing!

Saving rate for December is 83.4% (cell O60). Out of every 6 CHF earned, 5 have been saved. Enough said.

2016 saving rate so far 68.8% (cell P60). Big jump toward 70% but not enough. We should have spend less than 2200 CHF in December to get the platinum badge! Anyway, I’m temporarily in first position but I heard that Oliver at Frugalisten will break the wall. Good for you mate! 🙂

Target for 2017 is 60%. Can’t cheat with Math. Less income, more expenses… 60% is actually hard to achieve.

Net Worth

Net worth at the end of the year is 551,973 EUR (cell O41 or P41). More than expected! Thanks Mr. Market!

Delta for December 2016 is +23,712 EUR (cell O42). Again, best month in 2016!

Delta Percent December 2016: +4.49% (cell O43).

The logo of this blog changed accordingly:

With another big jump of +2.37% toward the big goal.

Here’s a GIF that shows progresses (and my poor graphic skills) since June 2016, when I started blogging

Net Worth Delta in 2016: +169,459 EUR (cell P42). Being a high income FIRE seeker, most of it is due to savings. Still roughly 38K EUR come from investments, though. Not bad!

Net Worth Delta Percent in 2016: +44.30% (cell P43). Last year we achieved +53%, which is ok since all of it came from savings and the starting point was lower while earnings were similar to 2016.

Net Worth Target for 2017 is 670K EUR: expecting a 8% returns on investments (optimistic, given that we’re at all time market high) and lower savings.

FIRE

Forecast for 100% FIRE: 32 months left (-4 months, again), i.e. forecast Fire Date is August 1st 2019, (cell T20). Forecasts are drugged by these incredible months where I’m cutting 4 months each month and it just can’t keep up forever. I’m also going to slow down in 2017, so I guess I’ll need way more time.

So far I’m forecasting using current year’s data. To avoid getting depressed by an eventual bad 2017 start I’ll keep using a 12 months window. Plus, I think I’m going to review the Million EUR goal soonish.

Current Monthly allowance: 1,533 EUR (+66 EUR, cell T26). It represents how much I could withdraw indefinitely per month (at my desired WR) in case I decided to call myself FI today. This month I created another 66 Euro per month, forever!

Current Withdrawal Rate – Real: 10.10% (-0.51%, cell T29). This represents the WR I need to support current spending regime with my today’s NW. It got better this month because we increased our NW and reduced yearly expenses compared to previous forecast.

Current Withdrawal Rate – Ideal: 6.04% (-0.27%, cell T32). This represents the WR I need to support my desired spending regime (lower than current, since I plan to retire in Italy and not in Switzerland) with my today’s NW. When this number will be equal to the desired Withdrawal Rate (cell T11) we’ll be FI. Getting closer…

Next Steps

Investing

  • Pillar 3a. Opened an account with PostFinance and moved there 6,768 CHF, i.e. maximum Pillar 3a contribution for year 2016. I’m letting the money sit into a Pillar 3a saving account. PF allows you to invest part or all the money into some Pension funds with high stocks component, like Pension 75. I’ve been thinking about it for a while, but these funds are kind of crappy: high fees and the stocks are mainly Swiss stocks, which are not performing well. I can change my mind anytime, so no need to rush. Plus, we may be forced to cash it out when we leave Switzerland so we may lack the required long term horizon for a stocks-based investment. I’d also like to close the UBS 3a position (3 years of contribution, ~20.5K CHF) and move the money to PF. I don’t know if it’s possible and how much it would cost to me though.
  • Stocks & ETFs – Strategy. I didn’t set up time in this crazy December to write my Investor Policy Statement (IPS), redefine an assets allocation strategy and study which investment tools are better for my situation. Anyway, I’m giving myself room for corrections, i.e. I’m hoarding cash and differentiating by currencies. I’ve sold roughly 40K of Tech US ETF (sell price per share 116.51 USD, price now is 116.35). I’ve converted USD from the ETF sale to EUR, roughly 40K EUR (USDEUR price was 0.954, it’s still 0.954). I’m keeping cash, I’m expecting another ~35K CHF cash coming by end of January (Hooli stocks sale and 2016 yearly bonus). I plan to rebalance my portfolio by end of month, and I’ll need a strategy by then!

Simplifying

I didn’t start the process of getting rid of UBS account yet but I changed all the electronic bills and direct debit instruction to PostFinance shared account. I’ve also opened a personal PF account.

Missing: move salary over the new personal PF account, close Pillar 3a account (and ideally move the money to my PF Pillar 3a) and get a non UBS credit card. No need to rush but I’d like to get it done early this year.

Installed access apps for my banks and few mobile payments apps. Bye bye access card readers! On the downside, I’m even more bound to my phone. It’s the single most important thing I own, and not for its value but for the data you can access from it. If I lost it or it gets stolen I’m ruined.

Project X 

Most important pieces are defined, details (tons of them) need to be resolved, but that’s the fun part of the project!

Hey RIP, you think you’re funny? You want to grow a hype around this project none cares about? Just tell us what it is, who cares?

You’re rude! Not now, be patient!

Tax credit for 2016

We do taxes in March but with a click you can postpone tax time to September and that’s what I usually do, as a first class procrastinator. Not this time, though! In 2017 I want to file my taxes as soon as possible.

Like last year, the Pillar 2&3 buy-ins will likely generate some tax credit that I want to add to my NW asap (look at the +5,366 CHF entry on cells K36:O36, it’s about 2015 taxes). Tax credits and debts are resolved in 3 fiscal years, so in 2017 I expect to have to pay 2014 tax difference of 784 and be left with 2015 and 2016 huge tax credits. I’m not sure 2016 tax credit will be huge, since I’d need to pay taxes on ETFs dividends even though my ETFs are accumulating and not distributing, i.e. I received no dividend, the fund itself reinvests them. The Swiss tax authority has a list of dividends payments by fund and you’d better check it out before buying shares of a specific fund: if yours is not in the list, the whole capital gain (normally not taxed in Switzerland) will be considered dividend!

So, assuming 2% yearly dividend on my 250K investment basis we’re talking of 5K taxable, which means 2K taxes. I still expect to get back more than 3K. Good.

Others

I was close to rent my apartment starting January but the tenant declined at the very last minute. His current landlord demands 3 months notice to leave the apartment. I don’t understand if he started this process though. I’m not sure he’s assuming I’ll wait till April, without any signed agreement. I don’t know, I’m losing hope here.

On the bookkeeping side, I’m planning to simplify these reports: there are too many details here and information is too spread. I’ve set up the spreadsheets for 2017: a fully detailed one (the master, maybe not shared), an aggregated one with less information and cool to share, an expense-centric one and a dashboard one (cool graphs are coming).

I’m also going to stop including work credits, like “vesting” stocks or portion of 13th and bonus each month. It will lead to greater variance between months and in general smaller NW growth, since I’ll only add credits when they are 100% guaranteed. For example in case I’d lose my job the bonus and not vested stocks won’t happen. They are not guaranteed, so I don’t want to consider them until the money physically sits in one of my accounts.

Blogging Update

The year is gone, I’m 6 months into this blogging thing and I’m still ultra-motivated and want to write about so many things that it feels frustrating not to have enough time. Winter’s weekends are perfect for writing, but on each December weekend I’ve been busy traveling or hosting friends.

I only published 4 posts in December, one per week, and 52 posts since the beginning (i.e. 2 per week).

Readership is slowly growing and it makes me feel good. I’m not doing anything special to make it grow. I don’t set growth goals, I’m not selling anything and this blog is ads free, ideally it will be like this forever. It’s rewarding to see readership growth, though. It’s a morale boost!

I think with 3-days weekends I’ll have more time to write but I can’t commit to that. Several weekends will be spent with my Theater company, preparing our next show (8 dates between March 30th and April 9th).

From the networking side, I’ve been mentioned by the legendary Joe Udo in his Early Retirement Blogs list, that’s great! I’m also becoming more active on Rockstar Finance forum, which is the coolest place on the internet, thanks to Jay Money 🙂

That’s all for this month!

How was your December? What about your 2016?

 

What?

Project X…

Uff… ok, you’ve been patient enough. I and Miss RIP are getting married in June 2017 🙂

It’s an Italian traditional wedding so it will not be as frugal as I would have liked. I set up a budget of 20K EUR but I may overflow to 25K… Probably half of it may come back as gifts. Moooore on this in another post: the non-frugal wedding of the RIPs!

Happy new year!

November 2016 Financial Update – I’m Billionaire!

Hi RIP voyeurs,

relaxislaNovember 2016 is gone. Typing these words from Isla Mujeres in Mexico, with a sheetty internet connection but an amazing view and ~30 degrees Celsius. We’ll be back in Switzerland in few days where the only thing that won’t change will be the 30 degrees. Just… Fahrenheit!

As end-of-month routine I’m here showing my numbers and I’m really (positively) surprised by them. I thought saving rate would be bad this month and progresses would be minimal but, luckily, that was not the case. The market reacted incredibly well to the Joker election in the Divided States of America and our Mexico unplanned expenses are being low.

The reference document for the following considerations is my Net Worth spreadsheet. I’ll post a screenshot every month in these financial update posts.

Overview

november2016

Last month, despite a bad saving rate, we grew by a solid +13.3K EUR. I was wondering for how many months can we keep growing in the 5 digits world. The market is going to crash, the dollar is going to depreciate, my not yet nicely balanced portfolio is going to show its weaknesses et cetera.

No, November 2016 is the second best month on record by NW increase: a staggering +22.3K EUR! For the records, best month so far has been January 2015, when Switzerland unpegged the Swiss Franc from the Euro.

More important of all… I’m billionaire!

itleurok

In Italian Lira 🙂

…But apparently not for Google.

itleurono
Whaaaat?? Please, can someone fix gugol?

Reasons for this amazing performance? Here are the major wins for November 2016:

  • Euro dropped, Dollar skyrocketed again (pure luck).
  • Great investments’ performance, especially the S&P500 fund (facilitated luck).
  • Low expenses both in Switzerland (first two thirds of the month) and in Mexico (last third of the month). Almost 70% saving rate (merit).
  • I got another unexpected550 CHF bonus at Hooli! Nice! It will be credited in December (merit).
  • Another taste of freedom, traveling and relaxing in Mexico – more on this will come (planned).
  • Few potential tenants are interested in my Milan apartment. I see high chances of finding a tenant during December and having it rented out by January (luck).

Losses of November 2016:

  • I don’t see any. Well, Mexico trip was simply awesome and I’ll write about it soon-ish, but [Spoiler Alert] getting robbed, breaking a tooth, losing a flight and a luggage… well, that could be considered a loss!

Other facts:

  • Pillar 2 Buy in of 20K done.
  • 80% part-time request at Hooli is ongoing. Filled all documents, got manager and director approvals, need to wait for HR. Requested to start in January 2017. Let’s cross fingers.
  • Switched health insurance provider for next year from Assura to Mutuel. From “Family Doctor” model to “Telmed”. Assura raised our insurances premiums and it’s no more uber-cheap. Given their sheetty service I’d rather spend few CHF more and get some quality. Plus, let’s experiment the telmed model, where you should always call their on-call doctor before physically going to a doctor. I think I’ll write a dedicated post about Swiss Health Insurance System (added to the infinite TODO list).

Incomes

Income for the month was 16,729 CHF (cell N55), an above average month essentially due to stocks vesting.

  • ~9,000 CHF my base net salary.
  • ~4,500 CHF stocks vesting.
  • ~2,200 CHF my Swiss pension Pillar 2 contributions.
  • 1,000 CHF Miss RIP contribution to shared economy.
  • 50 CHF Sold a used Machine Learning book to a colleague. I’ve plenty of valuable books that I don’t want to own anymore. I may sell them all. Is anyone interested in the whole Game Programming Gems series? 🙂

Total income in 2016 so far is 164,839 CHF (cell P55).

Average monthly income in 2016 so far is 14,985 CHF (cell R55).

Forecast for the end of 2016 is still ~190K CHF. Thirteen month, stocks vesting and bonus are coming in December! Expected ~25K CHF. No impact on NW forecast, since I’m already accounting for these credits (row 32).

No target set by end of year.

Spendings

Total expenses for the month were 5,211 CHF (cell N56). Not that bad! Wait… I know it’s A_LOT but I thought I’d be above 6.5K, considering Mexico trip third tranche of expenses (Hotel in Isla Mujeres and all the food/gifts/tips/other expenses for the two weeks).

Here’s the detailed list of expenses (in CHF):

  • swantowel2613 – Travel & Transportation (Local, Trains, Planes):
    • 2390 – Mexico trip. Major expense here is 1609 CHF for the luxury hotel in Isla Mujeres. 7 nights, roughly 230 CHF or 220 USD per night. Very expensive. But you get swans out of towels… What’s left (~800 CHF) is for food, beverages, some entrance fees, tips, gifts and money stolen. Total Mexico trip expenses so far are ~6.8K, spread over 3 months. Expected close to 10K, so I’d say it’s ok.
    • 176 – Local Transportation. 165 of which are for my Swiss Halb-Tax abo renewal and 11 for local trains/buses/tram. I was covered by last month delayed monthly pass till Mexico trip and Miss RIP switched to annual pass. Very cool!
    • 32 – Gas. We used Miss RIP’s car while in Milan, for secret project X.
    • 15 – Tolls. Italian highways…
  • 1440 – Flat rent (1300) and condo fees (140). Business as usual.
  • 442 – Health Insurances (mine 213, Miss RIP’s one 229). As I said, we’re switching to a new provider and it will cost us more. In the range of 240 CHF per person (current raised our premiums to ~225-230 CHF). Good news, we lowered Miss RIP premium (it will be same as mine) from December on, due to accident insurance covered by her employer. We should have done that several months ago though…
  • 126 – Utilities & Phone.
  • 113 – Grocery. Ridiculously low grocery bill. We consumed what we had sitting in our fridge/pantry and survived with few grocery trips.
  • 100 – Cleaning Lady. A single 4 hour visit this month.
  • 100 – Clothing. I purchased a pair of high quality winter shoes I planned for something like… 2 years?
  • 99 – Dinners Out. There’s actually no dinner in this list. A brunch, few visits to fast food while in Italy and an expensive Raclette & Fondue cheese purchase for a special dinner at home with good friends. I consider them in this category rather than “grocery”. Raclette and Fondue are awesome. I love them!
  • 91 – Housing. Condo fees in Milan apartment.
  • 55 – Health. Few medicines.
  • 15 – Leisure. Few small purchases like videogames & post cards.
  • 12 – Fees. Mostly bank fees.
  • 3 – Gifts. Finally a month with almost no gifts. Gifts expenses in Mexico are not included here though.
  • <5 – Not tracked. Almost perfect.

Without Mexico we’d be below 3K, which is my “perfect expense amount” given current conditions. Awesome!

Total spending for 2016 so far is 55,364 CHF (cell P56).

Average per month: 5,033 CHF (cell R56). Still above 5K per month but I guess December will bring us below.

Forecast for End of year: 60,397 CHF (cell S56). Not scared anymore. We’ll make it for sure below 60K.

Target for End of the Year: 59,000 CHF. Let’s be aggressive. to reach 59K we have 3.7K expenses left for December. We have already paid for the December train tickets to Milan (16-18 and 24-27). We don’t plan having other extra-large expenses. We’re not going anywhere for end of year (friends will come visiting us). We can make it.

Savings & Saving Rate

Total savings for November are 11,518 CHF (cell N57). High income month, not very high spending… wow, 11K saved!

Yearly savings so far are 109,475 CHF (cell P57).

Average monthly savings are 9,952 CHF (cell R57). Getting back close to 10K per month, next month we’ll destroy that wall!

Forecast for end of year say 119,427 CHF (cell S57). But I bet on 10K more than that 😉

Saving rate for November is 68.9% (cell N58). Back on track!

2016 saving rate so far 66.4% (cell P58). Small improvement respect 66.1% of October. The platinum badge in Mustachian Post’s ranking of bloggers saving rate indexes is still far but not technically impossible.

Target saving rate for End of the Year 70%. To achieve that we should spend less than 2.5K and earn more than 25K in December. It’s a 90% saving rate, pretty tough. Spending ~4K with the same earnings would result in a 69% Yearly saving rate. Anyway, let’s aim for the stars!

Net Worth

Net worth at the end of the month is 528,261 EUR (cell N39 or P39). I had less than 400K at the beginning of this year… Wow!

Delta for November 2016 is +22,293 EUR (cell N40). Best month in 2016!

Delta Percent November 2016: +4.41% (cell N41).

The logo of this blog changed accordingly:

from

riplogo50-60

to

riplogo52.83

With a long jump of +2.23% toward the (cheated) big goal.

Net Worth cumulative 2016 Delta so far: +145,747 EUR (cell P40). It was last month’s forecast by end of year!

Net Worth cumulative 2016 Delta Percent so far: +38.10% (cell P41).

Forecast end of year 2016 Net Worth: 541.5K EUR (cell S39), +159K EUR, +41.57%.

Target for End of Year: ok, I’ve reached my Billion Lira and there’s still a month left. USD and Mr Market will surely crash… let’s more or less stick with the forecasts. 540K EUR.

FIRE

Forecast for 100% FIRE: 36 months left (-4 months), i.e. forecast Fire Date is December 1st 2019, (cell T20). What? 3 years left? I cut 4 months in compared to last month! Well, let’s be honest: my investments are doing great so far but I don’t expect them to keep running at that pace. Plus, within these 3 years I’d like to slow down at work (waiting for 80%) and maybe RIP family will grow and need more house space. Maybe we’ll also review the actual “Million Euro” FU Number a little bit… Anyway, it’s exciting to track FIRE date and see it getting closer and closer each month!

Current Monthly allowance: 1,467 EUR (+62 EUR, cell T26). It represents how much I could withdraw indefinitely per month (at my desired WR) in case I decided to call myself FI today. This month I created another 62 Euro per month, forever!

Current Withdrawal Rate – Real: 10.61% (-0.35%, cell T29). This represents the WR I need to support current spending regime with my today’s NW. It finally got better this month because we increased our NW more than the actual yearly spending forecast.

Current Withdrawal Rate – Ideal: 6.31% (-0.28%, cell T32). This represents the WR I need to support my desired spending regime (lower than current, since I plan to retire in Italy and not in Switzerland) with my today’s NW. This went down, since ideal expenses didn’t go up but our NW did. When this number will match the desired WR (cell T11) we’ll be FI 🙂

Next Steps

Before the Mexico trip I left few bureaucratic things undone and I’m catching up with them. Things like Italian property taxes, health insurance change, internet provider analysis… Time to tackle bigger TODOs.

Investing

  • Pillar 3a ~6.7K CHF. Need to find the right Pillar 3a where to invest. I don’t want to keep up with my crappy saving account (UBS Fisca). If I can’t find a better alternative I’d go for a saving account at PostFinance, where I have the shared account with Miss RIP and EUR&USD accounts. I don’t like the ETFs based Pillar 3a funds due to purchase fees, high TERs and the fact that they invest mostly in Swiss stocks. Plus, I may take the money out of Pillar 3 in 3-5 years so it may not be worth investing in crappy & volatile products.
  • Stocks & ETFs – Strategy. I need to take time to think about a diversification strategy and, in general, an Investor Policy Statement (or IPS). Fiscal news say that today, in Switzerland, distributing is better than accumulating for funds holding securities traded in the US markets (due to dividend withholding claimable by a DA-1 form). Someone says that “world” based funds are better than manual diversification with few ETFs – but they have higher TERs. Someone says that the more the better (I have a friend that owns a lot of different ETFs). Someone says small caps are better than large caps. Someone says you can’t live without emerging market… A lot of information that needs to be processed and decisions that must be made. Ideally by end of the year. It’s still ok by end of January 2017, since I’ll get yearly bonus and want to invest it heavily.
  • Stocks & ETFs – Numbers. I plan to have roughly 50K available to be invested by end of January 2017. December and January earnings will be huge (25K each). I plan to diversify by investing more, i.e. minimize selling current assets (but I’ll surely cut half of S&P 500 Tech ETF, row 7 of my NW) in favour of differentiating by buying other assets with freshly invested money.

Simplifying

I currently have account on 2 Swiss banks: UBS and PostFinance. I opened a UBS accounts family (a checking, a saving, a rechargeable credit card and a Pillar 3a saving accounts) on day 2 in Switzerland, back in 2012. I went there because they had special offers for Hooli employees. Two years ago I opened another position at PostFinance (a shared account with Miss RIP, a personal checking and saving account for Miss RIP, a USD account and a EUR account). I’m fine with that but I’d rather handle a single bank. Everything would be simpler. I’d like to close my UBS position, since it’s costing 10 CHF per month and providing nothing special. No rush, but I’d like to do that in few months.

Problems:

  • few ebills (health insurance, electricity, phone, internet) go directly to UBS, need to change that.
  • I have a Pillar 3a account with them. Need to transfer that to PF. Not sure how it works.
  • My only “credit-like” card is with UBS. Need to get a card from PostFinance or, like most Swiss do, get a Cumulus credit card with zero yearly costs and a personalized picture on it, cool!

Others

I got contacted by several people interested in my apartment in November. Few of them disappeared but a couple of them are still interested. Renting it out would be great. I’ll invest some time to get this done.

Project X (still secret) needs to be resumed after Mexico, need to invest energies there too.

Blogging Update

I had to slow down with posting in November, too many other things to do (aaaand 2 weeks in Mexico). I must admit I can’t write as much as I would like, for now. Life is too complex these days. I set the goal of writing one article per week (or 2 if I manage to make them shorter).

Anyway, even if I don’t publish I still see traffic on my blog, which is both awesome (people like what I write) and awful (I want to write more and I don’t have time).

I’ve been contacted by people asking for my help, which is what makes me feel so good about what I’m doing with retireinprogress. I had more joy thanks to this blog in 5 months than in 15 years engineering career.

I’ve been added to a monevator list of FI blogs after few people protested for my absence from the first draft. What to say… read the previous sentence about joy. Since then visits to my blog spiked for a while. Again, both awesome and awful. I want/need to do more!

hey RIP, how was your Mexico trip? I just came here to hear about that.

Oooh, I was missing you my friend! Keep following, Mexico trip report is coming next week 😉

That’s all for this month!

How was your November?

October 2016 Financial Update – Nel mezzo del cammin di nostra vita… (halfway done!)

Hi RIP voyeurs,

leavesOctober 2016 is gone. Amazing autumn here in Switzerland, colourful leaves all over the places and still not as cold as expected. As end-of-month routine I’m here showing my numbers with shame, since our spending level is still above my desires and next month won’t be better.

Need to wait till December to see the final comeback of our saving rate. Probably.

The reference document for the following considerations is my Net Worth spreadsheet. I’ll post a screenshot every month in these financial update posts.

Overview

october2016

Last month we had a nice +11.5K EUR, this month we achieved another surprising +13.3K, way above expectations, given market performance and high expenses. This is mostly due to EUR dropping few points against CHF and more against USD. From a USD point of view NW increased by 3K only.

Major wins of October 2016:

  • The EUR lost terrain against CHF and the USD skyrocketed. Since I’m measuring my wealth in EUR, it means a nice increase in our Net Worth.
  • Base salary higher than expected due to September bonus and leftovers from Hooli stocks automatic sale at vesting time to pay withholding taxes.
  • Initiated procedure to switch to 80% “part-time” at Hooli. Well, that’s not a “win” from a financial point of view, but I consider it as such on my FIRE path since my life quality will surely improve!
  • Tasted bits of freedom along the Appian way.

Major losses of October 2016:

  • Market performances have been fastidiously negative, with all my ETFs valued less respect the beginning of the month.
  • Milan’s apartment is still not rented out. Third wasted month in a row. A couple of person showed interest, none of them actually rented it. Thinking about selling it.
  • Still too much money spent, ~6500 CHF. November won’t be better. Mexico trip expenses so far don’t account for a week-long hotel stay (~1500 USD) and other local expenses for food, tickets and other stuff. These expenses will be in November update. Another >6000 month in sight. 🙁
  • Too many expensive gifts. In future we need to switch mindset and give time instead of stuff.

Other facts:

  • Paid off 6,000 EUR of family loan to RIP Sr. Only 3,000 left, planning to kill this only liability of mine in mid 2017.
  • Having redone all the math about my cash flow till January 2017, I allowed myself to invest another 11,000 USD into my S&P500 ETF.

Incomes

cumulusIncome for the month was 13,309 CHF (cell M55), a below average month essentially due to no stocks vesting.

  • ~10000 CHF my base net salary.
  • ~2200 CHF my Swiss pension Pillar 2 contributions.
  • 1000 CHF Miss RIP contribution to shared economy.
  • 35 CHF Migros points redeemed in Blue Cumulus coupons. I consider this an income, since they are technically just money. We go to Migros (one of the top grocery store in Switzerland) for our grocery on a weekly basis.
  • 10 CHF Debit Card points redeemed in SBB voucher. Same considerations as above. Voucher already used for December Milan’s trips.

Total income in 2016 so far is 148,110 CHF (cell P55).

Average monthly income in 2016 so far is 14,811 CHF (cell R55).

Forecast for the end of 2016 is still ~190K CHF. No surprises here. Actually, the linear forecast says ~177.7K but I explained that December will drastically be nonlinear.

No target set by end of year.

Spendings

moneycryTotal spending for the month was 6,526 CHF (cell M56). Another over the top month. Next expensive trip I’d like to book all at once and have a single bad month instead of splitting costs of the Mexico trip over 3 months. It looks like a death by thousand cuts.

Here’s the detailed list of expenses (in CHF):

  • 3151 – Travel & Transportation (Local, Trains, Planes). Yes. Unbelievable. Let’s break it down:
    • 2291 – Mexico tour. 2320 USD (2×1160) a week traveling from Cancun to San Cristobal, including an internal flight, hotels, entrance tickets and a tour guide and car rent with a driver.
    • 563Appian way. Lodging and food for a week. Cheap. It’s Italy. Actually I could have lowered this expense a bit, but I offered to pay for lodging to help my friend who came with me who is financially struggling.
    • 168 – Trains. 2 December trips to Milan, mainly for Project X (and Christmas). We purchase tickets in advance to pay them as little as 21 CHF each one (2 people, 2 roundtrips: 8 tickets).
    • 96 – Local Transportation. I biked to work till mid October and then took a monthly pass till mid November (then we go to Mexico). Next month I expect almost no local transport costs.
    • 33 – Gas. We used Miss RIP’s car while in Milan.
  • 1440 – Flat rent (1300) and condo fees (140). Business as usual.
  • 442 – Health Insurances (mine 213, Miss RIP’s one 229). We’re both insured with the cheapest insurance in Switzerland (Assura) and with the cheapest model (Family doctor + Pharmed) and highest deductible (2500 CHF). For the third consecutive year they’re going to raise premiums in January. I have time till end of November to change insurance company. We need to take action here. Variables are: which insurance, which model (telmed instead of family doctor), which deductible (probably lowering it to go to doctors more frequently) and accident coverage or not for Miss RIP (should save this extra 16 CHF, since she should be covered by her employer’s accident insurance).
  • 364 – Gifts. A lot. Too much. This is a category that we should cut a lot, but Miss RIP is so much into gifting friends for everything: birthdays, having kids, kids’ birthdays and other events like friends moving into new apartments. She’s so southern! 🙂
  • 289 – Groceries. I guess that’s ridiculous that we spend more on gifts than groceries.
  • 200 – Cleaning lady. every other Friday, 4 hours per Friday, 25 CHF per hour.
  • 200Project X. Yes, a secret project! We spent roughly (not all have been tracked and few expenses in the context of Project X have been categorized differently) 200 CHF but we think we’re going to spend a couple of zeroes more on this project from here to next summer.
  • 175 – Dinners Out. Not bad, considering that the most of it has been a single 102 EUR, four person amazing dinner in Milan to thanks a couple that’s helping us with Project X. Well, now that I think about it, this expense should be debited into Project X category.
  • 135 – Health. Miss RIP visit to doctor and blood analysis.
  • 70 – Utilities. Television, Internet, Phones. Energy’s missing here since they moved bills a month later. I’m paying my usual 55 CHF energy October bill in November.
  • 31 – Fees. 11 USD Trade fee on Interactive Brokers, 10 CHF for banking fees. Other minor fees .
  • 14 – Leisure. Flowers for our apartment. Miss RIP loves them 🙂
  • <15 – Not tracked. Good.

If we don’t consider travel (Mexico, Appian and Milan) expenses it would have been an acceptable month for our Switzerland standard. Expenses would have been ~3.5K.

Total spending for 2016 so far is 50,153 CHF (cell P56).

Average per month: 5,015 CHF (cell R56). Ouch, we are above 5K per month. Shame on us again.

Forecast for End of year: 60,184 CHF (cell S56). That critical 60K number…

Target for End of the Year: 60,000 CHF. Next month will still be above average, expected another 6K expenses (Mexico second week Hotel – 1.5K USD – and other extra expenses while in Mexico, like all the dinners). December might be cheaper in theory, but Project X may kick in brutally and bring our spending level unboundly high. Anyway, if nothing unexpected happen, we can still make it below 60K. We have ~10K margin for 2 months.

Savings & Saving Rate

Total savings for October are 6,783 CHF (cell M57). Low income, high spending and still ‘stashed 6.7K. It’s totally ok.

Yearly savings so far are 97,957 CHF (cell P57).

Average monthly savings are 9,796 CHF (cell R57). Ouch, below 10K. This is the month we broke few numeric walls in the wrong direction.

Forecast for end of year say 117,548 CHF (cell S57).

Saving rate for October is 51.0% (cell M58). Again, shame on us.

2016 saving rate so far 66.1% (cell P58). Goodbye platinum badge in Mustachian Post’s ranking of European bloggers saving rate indexes.

Target saving rate for End of the Year 70%. We won’t make it though. December’s income would be stellar due to thirteen month and 3 stock vestings together but yearly bonus will be credited in January. 70% is unrealistic. Maybe something like 67-68% is achievable.

Net Worth

This month we crossed the 50% mark! Let’s celebrate!

moneyrain

Net worth at the end of the month is 505,968 EUR (cell M39 or P39). I’m half millionaire! How does it feel? Nothing special.

Delta for October 2016 is +13,313 EUR (cell M40). Better than last month!

Delta Percent October 2016: +2.70% (cell M41).

The logo of this blog changed accordingly:

from

to

riplogo50-60

With another steady jump of +1.33% toward the (cheated) big goal.

Net Worth cumulative 2016 Delta so far: +123,455 EUR (cell P40), just a Euro below a Full Straight in Maxi Yahtzee!

Net Worth cumulative 2016 Delta Percent so far: +32.27% (cell P41).

Forecast end of year 2016 Net Worth: 530K EUR (cell S39), +148K EUR, +38.73%.

Target for End of Year: ok, if the market doesn’t crash dramatically (which is kind of happening) or the Euro doesn’t sink (which is kind of happening too) reaching the Billion Italian Lira (516,456 EUR) may happen in November. Let’s set the ambitious goal of “meeting forecasts”, i.e 530K EUR.

FIRE

Forecast for 100% FIRE: 40 months left, i.e. forecast Fire Date is March 1st 2020, (cell T20). In line with previous data. Last month we were 41 months far from ER.

Current Monthly allowance: 1,405 EUR (+37 EUR, cell T26). It represents how much I could withdraw indefinitely per month (at my desired WR) in case I decided to call myself FI today. This month I created another 37 Euro per month, forever!

Current Withdrawal Rate – Real: 10.96% (+0.11%, cell T29). This represents the WR I need to support current spending regime with my today’s NW. It got worse this month (again) because we increased actual yearly spending forecast more than we increased our NW.

Current Withdrawal Rate – Ideal: 6.59% (-0.18%, cell T32). This represents the WR I need to support my desired spending regime (lower than current, since I plan to retire in Italy and not in Switzerland) with my today’s NW. This went down, since ideal expenses didn’t go up but our NW did. When this number will match the desired WR (cell T11) we’ll be FI 🙂

Next Steps

I moved enough money to my debit card to pay for Mexico trip remaining expenses (hotel and food, I hope that 3.8K CHF will be more than enough) so there’s no need to account for it with my checking account.

Project X just started and I guess till January won’t bring many unexpected expenses. Anyway, for now it can be covered with the ~3K EUR I have on my Italian checking account.

According to the investing tab of my NW spreadsheet I have too much cash sitting on my checking accounts. Apparently, 12K more than the planned “emergency fund”. There are 3 options here:

  • keep cash “because the market is going to crash tomorrow” (which is kind of happening).
  • invest in ETFs as usual.
  • Invest in Pillar 2 and/or Pillar 3 (Swiss pension funds) that I consider similar to bonds.

The Pillar 2&3 decision needs to be taken independently before end of year, so I need to decide whether it’s worth or not. Let’s break this down:

Pillar 2 analysis:
Pillar 2 is employer pension. You and your employer contribute each month to this plan. At Hooli we have a generous plan which is: Hooli contributes 8.5% of my insured salary (yearly salary + bonus) and I contribute a variable amount of my choice. I used to set it at its minimum (4.5%), I switched to maximum (8.5%) starting in 2016. This is pre-tax money, exactly like a 401K for the US friends.

For those who didn’t start contributing to this pillar at legal working age (17 in Switzerland, if I remember correctly) there’s the opportunity to fill in the gap via voluntary tax-free contribution.

Money in the Pillar 2 fund grows via interests. My pension plan currently offers a guaranteed tax-free interest of 1.25%, probably going down to 1% next year.

At age 65 you can withdraw your money as a lump sum or ask for an annuity or a mix of the two. Money withdrawn as a lump sum from pension Pillar 2 will be taxed by a tax bracket which is 20-25% your current tax-bracket.

Withdrawing before age 65 is possible in 3 cases: buying a primary residence (not just a property), starting a company with at least an employee and leaving Switzerland (bingo!).

… but you can’t withdraw voluntary contributions before 3 years. You can’t throw in 100K the day before leaving Switzerland and withdraw it the day after to pay less taxes!

So, the actual cash flow for my Pillar 2 voluntary contribution of X would be:

  • instantly save tax on the top X portion of my taxable income (tax bracket: ~30-35%). Well, not “instantly”, but I’d get back this money roughly after 2 years with 1/1.5% interests.
  • Earn 1% on this amount for the following N years (N>=3) before leaving Switzerland.
  • Pay ~5-6% at withdraw time after N years, probably because leaving the country.

Is it smart to do a buy in? Of which amount?

Well, it depends on what else I could do with the same amount, i.e. what’s the opportunity cost of X. What return should I expect from throwing X into the stock market?

Another factor that matters is: when do I expect to get this money out?

I’ve added a sheet to my NW spreadsheet to do some math:

pillarbuyin

This analysis shows 3 scenarios under few assumptions: tax saving is in the order of 33% (I should move to Kanton Schwyz…), taxes on lump sum at withdrawal time will be 5.3% and interests on Pillar 2 will stay at 1%.

In all three scenarios I compare two investments of value 100: one on Pillar 2 and one on the stock market. In the buy in investment I assume the tax saving (coming cash at the end of year 2) will be invested in the stock market.

Pillar 2 buy in is awesome in the short term thanks to initial big tax savings. Then, unless stock market returns will be asymptotically lower than the Pillar 2 fund’s interest (1%), there will be a moment in the future when the stock investment will perform better than the Pillar 2 buy in.

buyinvsstocks

How far in the future is the break-even? It depends on the market performance, obviously. In the return range considered for this analysis (5-9%), the break-even happens after 4-8 years. It means that if I do a Pillar 2 buy in and expect to take my money back within 4 years (buying a house, leaving Switzerland or hiring YOU, my friend) I’m good to go. If I expect to need this money before the 3 years (end of 2019) or at age 65 I’m better off not doing it.

Ideally, if I plan to get this money back in 2020 I’m better off doing this buy-in thing.

Wait… did I say 2020? When does my forecast say I’m going to hit FIRE?

Bingo! Let’s do it!

How much? Well, the more I invest the lesser percentage I save in taxes. This is because the first CHF I deduct from taxable income would be at my highest tax bracket, probably the second and third CHF too… at one point I’d be deducting money in some lower tax bracket. Ideally I should invest an amount I’m comfortable with that doesn’t fall into a low tax bracket. My target is 20K, like I did last year.

Pillar 3 analysis:
Pillar 3 is an individual volunteer pension contribution. It’s pre-tax and it’s capped at a fixed amount per year, which this year is 6,768 CHF. It’s been at ~6.7K since I moved to Switzerland. While Pillar 2 plan is employer driven (you can’t pick one of your choice), Pillar 3 is free market and you can go talking with banks and other financial institutions to check their Pillar 3 investment options. By law, they’re not allowed to offer investments that have more than X% on stocks… I’m not sure about it, need to investigate more.

Same rules apply for withdrawing the money: either leaving Switzerland, buying a house or starting a company (or reaching age 65). But there’s no 3 years waiting period after a buy in though.

That alone would make investing in Pillar 3 a better option for your first 6.7K CHF. My problem with Pillar 3 is that I opened a shitty one with my bank. It all happened back in 2012, on my second day in Switzerland, and I had no time to investigate more. Since I’m lazy, I kept investing 6.7K per year in 2013, 2014 and 2015 and now my account is ~21K (cell P15). Interests on this account are ridiculously low. Something like 0.25%.

Either I find a better option for Pillar 3 and invest there 6.7K (and the rest into Pillar 2) or I invest the whole 20K into Pillar 2. I’ve seen some interesting Pillar 3 funds, the problem is that they have high TER and they are mostly based on the Swiss stock market. Not exactly the hottest one.

I think there’s enough on this post about Swiss Pension system that it deserves its own post asap.

Action Item: explore Pillar 3 opportunities and take final buy-ins decision.

Ok, what about investing more into stocks/ETFs?

I think I need to first come up with a better plan and a better balance in my portfolio: I need to write my IPS first. I expect an amazing cash flow in December (a lot of stocks and thirteen month) and January (yearly company bonus, at least 15% of yearly salary, i.e. at least 22.5K gross). I want to invest heavily in January, according to my “coming soon” IPS.

Blogging Update

You still here? I can’t believe… we’re getting close to 3000 words and you’re still here with me!

Ok, this blogging thing is really one the most fun and useful activities I’ve done this year! I’ve met new friends, had skype calls with them, got “suggestions” (actually got scolded) on my Asset Allocation, had a guest post and an “interview“, joined a Swiss FIRE forum and fought against facebook

I’m so behind with reading new blog posts. I have so many post ideas and so little time to actually write them down.

But…

But…

…a new project is coming! A FIRE podcast is coming! It will be in both Italian and English, hosted by me and Andrea (incassaforte.com). We don’t have an E.T.A. but we’re experimenting with technologies, collecting ideas, looking for the podcast name and thinking about few guest star we want to invite!

More on this will follow 🙂

And I know I’m behind with the “investment” series. I hope to finish my ETF 101 post in November. The draft is very very veeeeery long and November is so short (Mexico, we’re coming!).

That’s all for this month!

How was your October?