Hi dear readers,
Most of the “personal updates” for Q1 2020 have been published during last three months, so this update is mostly a financial one.
[UPDATE: Nope, it isn’t… it’s still a 7k words post 😀 ]
What happened in Q1 2020? Well, maybe the right question to ask is “what didn’t happen”!
- I quit my job.
- Coronavirus outbreak everywhere in the world.
- We entered Bear Markets everywhere.
- Double digits recessions are waiting for us in a month.
Previous update (2019 Q4) has been the longest post by far on this blog, hopefully this one will be much shorter.
Table of Contents
Metrics & Financials
Our Net Worth document is available with live data on Google Drive. I’ve been asked quite a few times to explain the spreadsheet details (formulas, whys, whats, whens), one day I will 🙂
Well… as you can see it’s not been the best quarter so far 🙂
Almost all our investments are in the red, surprisingly on each month of the quarter, even on January. The stocks ETFs are down 20-30% YTD. The only flower on the dung field is BSV, the short term US bonds. Issuing a monthly dividend and even growing in value. Well done!
On the cashflow side we did great, both on the earning and on the spending side. But this has been the “last good quarter”. I quit Hooli on March 31st, and I’m unemployed since April 1st – and that’s not an April Fool.
The overall effect on our Net Worth has been mitigated by both a weak EUR (I measure our NW in EUR), and high savings. In the end we’re down -28k EUR (-2.4%) since Dec 31st. After 3 bad months.
The devil is not as black as he is painted.
NW (in EUR): 1.141M (Delta: -28.2k), worst quarter on record, just slightly worse than 2018 Q4 when it was -23.1k EUR.
It hurts a bit, but why not quote previous quarter update here for completeness:
NW (in EUR): 1.169M (Delta: +85.1k), another all time high. I stare at these numbers with apathy. I should stop and celebrate a bit, but I can’t. In December alone our NW grew by 51.9k EUR. It took me my first 35 years of my life to go from zero to 50k EUR Net Worth. Now it’s a month’s delta. It could have been even better if the USD didn’t tank. In fact, measured in USD our December growth is almost 81k. More than the value of the flat I sold in July!
So we lost a third of the growth we had in the previous quarter. Not bad after all 🙂
And for historical reasons we’re attributing 2019 bonus to year 2019 (as a credit in the “other – CHF” row), while the actual payment happened in January. Cashflow correctly accounts for actual payments, but the impact on NW is mitigated by the fact that 2019 bonus had already been accounted for in our 2019 NW. If I had accounted for it directly in 2020 then Q1 NW delta would have been in the range of -13k, while Q4 more or less +70k.
This is to say that the quarter looks worse than it actually was thanks to accounting details.
Let’s not hide behind a finger though.
It looks brighter than it has been thanks to a weak EUR compared to both USD and CHF. NW drops in the other two currencies are much bigger.
Plus, to be honest, on Feb 19th 2020 our NW was much higher than Dec 31st 2019:
If we take Feb 19th as reference point, the fall is more painful. It hurts me to see this screenshot.
Everybody complains about March 2020 having been the craziest month on record. On my finances, last 10 days of February have been the toughest ever. I wrote my first Coronavirus Journal just 9 days after the peak. I was feeling bad, mostly for not having seen it coming. Everything looks so obvious in hindsight.
During March, on the other side, I felt more optimistic and purchased a shitload of VT and EM shares. More on this later.
This is our NW Evolution since the beginning of time:
It’s ok, it’s the volatility fee. If you want higher expected returns, you need to be willing to take some risk and accept volatility. I knew what I was going towards!
Now, if Q2 won’t be worse in terms of markets, it will be fun to see our wealth performing better without a salary than with (a huge) one 🙂
Time will tell.
Cash Flow – Income
Total estimated Net Income (after tax and Pillar 1 contribution) for the quarter is: 76.7k CHF.
Estimated Net Income (after tax) by month:
- January: 35.4k CHF. Base salary, 2019 bonus, SRE 20% bonus, and some dividends. Very good!
- February: 14.6k CHF. Base salary, SRE 20% bonus, and some dividends.
- March: 26.7k CHF. Base salary, SRE 20% bonus, pro-rated 13th salary, 14 days of unused vacation days paid off, and more dividends.
Income history and breakdowns:
Income streams breakdown for the quarter:
- Salaries: 80.1k CHF (gross, pre-tax). This includes all bonuses. Good. And also Goodbye.
- Dividends: 3110 USD + 198 EUR (gross, pre-tax). It also includes some interests on idle USD on Interactive Brokers.
- Expected Income taxes: -13.5k CHF. I reduced average tax bracket down to 15%. That’s because I plan to earn a lot less this year.
- Expected Wealth taxes: -342 CHF. I decided to account for wealth tax separately from income tax, since this is becoming non-negligible. How do I account for it? Given our NW range and our Canton, I picked an expected average Wealth tax rate of 0.15% and essentially account 1/12th of it each month. The formula is a bit more complicated, since wealth fluctuates, but that’s mostly it.
- Mr RIP Pillar 2 Contribution: 6063 CHF. Hooli lets us (them) pick a contribution plan among 3. I used to pick the one where I contributed the most because my expected income tax bracket was high. Since in 2020 the expected income tax is lower, I decided to pick the cheapest Pillar 2 contribution plan. Hooli is so generous that their contribution is the same on each plan so I’m not missing their free money.
- Expected Lump sum Tax on Pillar 2: -393 CHF. According to my 6.5% lump sum tax estimation. I raised it from 6% to 6.5%. This assumes I can take all the money out as a lump sum, which maybe won’t be the case if we stay in Switzerland.
- Other Income 518 CHF:
- 300 CHF: Ikea gift card. We made move-related Ikea purchases back in December, and got 20% back as a gift card. Not bad.
- 160 CHF: Migros Blue Coupons. On January I purchased a laptop (goodbye corporate hardware… wait, I still have it!) and optimized for cashback at Migros. Purchased an Acer Aspire 5 A515-54G from MElectronics for 999 CHF (it was on sale), using a 10x, a 3x, and 2x multiplier coupons. Got back more or less 130 CHF from this purchase only.
- 58 CHF: Mrs RIP sold some baby stuff.
Not bad, not bad.
Sadly we have say goodbye to these numbers, probably forever 🙁
I don’t know what the future will look like, but I don’t think I’ll ever earn like this again.
Cash Flow – Expenses
Here‘s a link to our expenses sheet.
Here’s a better view:
I know our expense level is what makes my readers scream the most, especially those who don’t live in Switzerland, but I’m pretty happy with our February and March expenses! There are few one-off expenses related to our December flat move (ouch, I’m so behind with that post!) and without them we’d be below 5k per month. This is the good side of self quarantine: it’s pretty cheap 🙂
Total Expenses for Q1: 20413 CHF. Average: 6804 CHF/Mo.
Expenses per month in Q1
- January: 8387 CHF. Ouch. 2500 CHF for rent, common charges, and utilities, plus roughly 900 CHF for the flat move (purchased few furniture, consumed the 300 CHF Ikea gift card, paid for some minor damage on the old flat), 1k for grocery (!!) because we had two trips to Italy and we made some bulk purchase. It feels so strange to say “trips to Italy” now. Almost regular medical expenses (864 CHF, out of which 690 CHF are for insurance premiums) and Baby Care (951 CHF, out of which 924 go to the KinderKrippe). In the category “things that don’t exist anymore” we spent 523 CHF for travel (plane tickets to Rome, train tickets to Milan, and hosting the in-laws), 100 CHF in eating out, and 148 CHF in public transport. In the one-off categories we spent 1123 CHF in “leisure”, mostly on my 999 CHF new laptop. The huge amount of 158 CHF in fees is mostly (148 CHF) my 1 year hosting renewal for this blog with BrownHost, my shitty hosting platform. I will get rid of it before end of the year. So, out of 8.4k CHF expenses, I think more than 2.5k are one-off, non recurring. I’d like to say “not bad”, but… well… it’s 8.4k CHF of expenses, holy shit!
- February: 5854 CHF. Below 6k, awesome! We didn’t quarantine much in February, but it was obvious that maybe we should wait before making vacation plans or buying flight tickets. It has been a very good month expense-wise! Mind that on day 3 of each month we’re already 4.2k CHF down (rent, utilities, health insurance, child care). Excluding the fixed costs, on February we spent 542 CHF on groceries, 294 CHF in transport (my monthly pass and Mrs RIP HalbTax), still 103 CHF in eating out and 100 CHF in Travel (we hosted Mrs’ brother and his family… right before Italy locked down their region). The only category out of control has been Leisure: 509 CHF, out of which a new phone for me (goodbye corporate phone, welcome Samsung Galaxy A40, 199 CHF) and the yearly Zoo family pass (210 CHF), perfect timing!
- March: 6172 CHF. This month has been even better than the previous one expense wise. Yes, we actually spent more than 6k, but we had a couple of “real one-off expenses” like a new Sofa for our living room, paid 1100 CHF. We purchased it used. It was a design sofa (don’t remember the designer name, Mrs knws for sure), 5 years old, originally priced 8k CHF. The seller wanted to sell it at 1700 CHF. We negotiated down to 1300, and then some extra more on the pick up day, which was close to self quarantine deadline. The week before we found another one for 900 CHF but we lost it by 5 minutes (another buyer reacted quicker than us). Mrs RIP was pissed off and started compulsively refreshing tutti.ch, ricardo.ch, facebook marketplace and so on. In the end, the Sofa we purchased is much much better than the other one, and for a price below our 1500 CHF budget for it. Another one-off expense has been 365 CHF for Serafe (ex Billag), i.e. TV and Radio yearly tax. That’s essentially it. Plus, half of March Krippe costs are going to be reimbursed for the Coronavirus situation. Excluding the one-off expenses we’d be below 5k! Fixed costs plus groceries. Social distancing is very cheap 🙂
Cash Flow – Savings
Total Savings for Q1: 56.2k CHF. Saving rate 73.4%.
The last good quarter…
Well, it’s reassuring to think that with a 75% SR a quarter of work can pay for a year of life 🙂
Investments – Analysis
A lot of good expensive lessons learned. I’ve been sharing with you my strategy and my concerns with the strategy itself for almost 4 years. I’ve told you many times “I’m doing this but I’m not sure why”, or “It seems to me that X is irrational but nobody talks about it”, or “few smart people say X, but everyone else say the opposite and they get more attention”. And, most importantly “I know X is inefficient but I’m doing it anyway, because <sentiment>, <confirmation bias>, <irrationality>”.
It’s all easy when the markets go up, it’s a costly experience when things don’t go the way you would like.
What am I talking about? Well, a very good fraction of my investments sucked more than necessary during this quarter.
Let’s start with stocks.
I simplified a lot my stocks portfolio back in November/December. It’s now composed by 4 ETFs:
VT: World ACWI all caps.
This is the Ultralazy portfolio. All in one, very low TER, negligible transaction fees, high AUM and low spread. World is not performing very well, but that’s not something I can edge against if I want the reward. I must pay the volatility fee and I’m ok with that.
EIMI: Emerging Markets.
This is a duplicate. EM are already in VT (~10% of it). I originally planned to get rid of it, but then I purchased some more in October 2019 so I had to hold it until April 2020 to meet the “6 months holding period” to not risk being classified as a professional investor by Swiss Tax Authority.
But I’m also (irrationally) predicting that EM are undervalued. They were so before the Coronavirus thing, and I bet they still are. The virus is impacting the developed economy more than it is impacting the developing one, but EM dropped 24% in Q1, while VT only 22.5%.
I’ll keep betting on this lagging (since decades) horse in the near future anyway. I’ve paid for my “irrationality” and I’m willing to keep paying more.
VYM and VYMI: High Yield Dividends stocks, (US and exUS).
They dropped 24.5% and 29.1%. And cut dividends by a lot. Who would have expected? Answer: smart people. I’ve shared so many Ben Felix videos about the irrelevance of dividends, and Big ERN articles on the yield illusion/delusion (29, 30, 31). Guess what? They were right, and all the wannabe blogger economists were wrong! Who would have guessed!
I’ve always been on the fence, still holding high yield dividends stocks (in an attempt to benefit from exposure to value factor, the wrong way) and I’ve paid for my inefficiency.
So my overall stocks portfolio performed much worse than the legendary dead investor (shame on me).
Luckily, stocks were only 26% of my NW on January 1st.
My bond portfolio is a random ragtag.
Apart from my uninvested Pension Pillars, that I consider as bonds even though it’s not true, I hold several ETFs and other products:
Buoni Postali: Italian 20 years duration bonds.
Purchased in 2004-2005 I guess (so only 5 years of maturity left), they’re yielding 6.5% gross per year. There’s no secondary market where I could sell them, so I’ll hold them until maturity.
WING & IEML: High Yield bonds (fallen angel corporate, EM government).
Purchased to experiment with them, almost as a joke with Mr VCF (Italian ex colleague at Hooli, part of the Hooli Italian investing group, and a very close friend of mine), they are losing 11.6% (WING) and 17.5% (IEML).
And cutting dividends of course.
Another pricey lesson.
High Yield bonds suck! Who would have guessed?
IEAC & IBGS: European bonds (corporate and governments)
Both bonds have – with current interest rates – negative expected returns.
I expected them to raise during a market crash thanks to extra interest rate cuts, but I guess European countries have already lowered their rates to the bottom.
While IBGS lost “only” 0.4%, meeting its expectations (not mine), IEAC – corporate bond – lost 6.4%.
I am dumb money.
BSV & FLOT: US bonds (short term government and high quality corporate).
BSV saved the game so far. It’s the only ETF which is in the green in Q1 (+1.9% plus dividends).
This is mostly due to the FED interest rate drop of March, which means lower expected returns moving forward.
FLOT -4.3%. It didn’t look like this when I took a reader suggestion:
Nope, bro, my USD didn’t enjoy that vacation.
Of course I don’t blame my reader. I did my research (based of course on past data and a flaky future interpolation) and decided to invest a bit in FLOT.
Another pricey lesson.
Morale: high yield bonds are cool when things go well (but less cool than stocks) and perform bad when things go bad (still less bad than stocks).
In the end, if you want (like I do) your bond portfolio to provide stability and not a lot of volatility, stay away from high yield bonds.
In the meantime, I got some dividends, paid withholding tax (that I should recoup in 2019 Tax Declaration), earned some interests on idle USD cash on IB (zeroed now).
Investments – Actions & Plans
Original plans for 2020 were to reinvest most of the cash I had after I chickened out in November 2019. I planned to Dollar Cost Average 20k USD per month into VT and (holy shit, thanks Covid for having stopped me!) VYM and VYMI.
Of course plans have changed.
First, I’m not going to buy more VYM and VYMI. I’m holding on those positions for now because I hate to sell at loss.
I know, it’s another irrational behavior. I could sell them and buy more VT, but I feel like I’m improving the quality of my irrationality 🙂
I also planned to sell EIMI in April, but I purchased 2 more lots of 500 shares each in March, increasing by 50% the number of shares I hold. This is my “active investing bet”, and I’ll hold it.
Maybe I’ll be wrong, time will tell. Rationale is: EM were undervalued before Covid (take a look at EM CAPE ratios), and they are getting out of the crisis stronger than developed countries. China is an Emerging Market. South Korea is another one. I bet EM will outperform Developed countries in the next 5 years.
So I’ve put my money where my mouth is: 74k USD on March 31st are currently invested in EIMI, plus the EM share of VT, which is 10%, which means another 29k USD on March 31st. It’s more than 100k USD on emerging Markets stocks. Wow, didn’t realize that… plus the EM share of Pension75 and Pension100… plus IEML bonds… ok, maybe I’m dumb. Don’t try this at home 🙂
On the bond side I plan to hold on IEML and WING because I hate to sell at a loss, and then get rid of them. And this is another irrational behavior of mine! RIP, you never learn!
I also plan to hold on corp bonds (FLOT and IBGS) because they are at a loss, even though it’s a small one. The bet is that once the economy recovers prices will get back on track. But then I’ll sell all this shit and only hold stable bonds, even at lower (but positive) expected returns.
I plan to sell European government bonds (IBGS) because I don’t like expected negative returns. I’d rather open 10 bank accounts and deposit cash on each one below the threshold for negative interest rate.
I’d use the proceeds of bonds sale to buy more stocks.
I’ve switched my Ideal AA to 60% stocks / 40% bonds again, after having been on 50%/50% for a while. I’m talking about ideal AA here. Actual AA has been more like 40% bonds, 30% stocks, 30% cash for few months. So I still have a lot of money to be moved from bonds&cash to stocks.
What have I done during Q1?
I’ve bought a lot of stocks. Accelerating the execution of my plans, while also changing them.
Catching the falling knife in all its majesty!
I’m here for the long term, and my bet is that before 5 years VT will see new all time high. Probably even earlier, maybe much earlier.
If VT will reach its all time high (83 USD / Share) in 5 years, purchasing it at 60 today means 7% annualized returns. Plus dividends. I’m in!
Time will tell.
I also pushed on the pedal around the point that’s been the bottom so far, and decided to invest all my idle cash on my Pillar 3A account (31.2k CHF) into PostFinance Pension100, their 100% stocks fund. So I now own both Pension75 and Pension100.
I know, VIAC is more efficent and PostFinance sucks. One day I’ll switch.
Was that timing the market? Yes it was. But it’s still in line with my strategy of getting back into stocks during 2020. I’m just changing the time frame, but I’m doing what was planned anyway.
I joined Pension100 at price 77.77 CHF/Share. since it’s a mutual fund I could only issue an order and wait few days before it was executed, and share price happened to be the worst in a 3 days neighborhood. Coincidence? I hate that, long life to ETFs!
For the same reason (they’re mutual funds) I’m holding both Pension75 and Pension100. I’d like to switch to 100% into Pension100, but selling Pension75 and buying more shares of Pension100 will take days, and I’ll miss positive or negative returns. I don’t want to leave it to “luck”.
In my spreadhseet I account for Pension Funds in a weird way and probably you noticed. I add expected taxes at withdrawal time, and I try to distribute their underlying assets into the corresponding buckets in my investments sheet for rebalancing purposes.
About future actions: here’s a screenshot of my investments sheet
My investments sheet says I’m only 10k EUR above my desired cash cushion, so I should take a full breath and either lower that or just rebalance among asset classes.
I have bonds to sell, and more stocks to buy. I want to wait a bit now. if the markets won’t crash again, I’ll wait few months to reach ideal AA, essentially getting back on track with previous plans (DCA over the entire 2020).
If markets crash more, and reach new bottoms, I’ll keep buying with cash, rebalancing from bonds, and maybe reducing cash cushion to 100k.
Yes, I’m trying to be “smart” and maybe I’ll pay for another pricey lesson! I hope you get the lessons for free by using me as a guinea pig 🙂
My NW document has a section on Taxes which is growing a lot.
I’m still waiting for final 2017 and 2018 bills, plus I need to do my 2019 tax declaration and we’re already in year 2020 so I have expected taxes for this year. Plus, I paid withholding taxes in 2019 and in 2020.
It’s a mess.
At the end of March, I have more or less -40.3k EUR of taxes due (yeah, I aggregate in EUR).
The “cash cushion” in my Asset Allocation takes taxes int account. It’s actually “cash, taxes, and other credits/liabilities”
I think most of those estimates are pessimistic, i.e. I’ll receive a better than expected bill and my NW would jump in the right direction once it happens. Let’s see.
I’m also accounting for negative 0.5% interests on taxes due.
I plan to pay some 2020 taxes in April.
Irrelevant FIRE Metrics
Just for fun 🙂
On February 17th we crossed the 100% “Italian FI”. It lasted 3 days 😀
We’re back to 95.08%, but as I said several times we don’t care about that for now.
We’re not planning to move back to Italy now. We have a plan I called StupidiFI, which we’re still sticking to. We’d move back to Italy only when a certain condition is met, hopefully never (unless we really desire to do so).
How far is Ravenna?
It’s still 115k EUR far…
Strangely, I’m feeling better today than I was three months ago. In last update I wrote:
Other Financial facts
Vested Benefits Account
Hooli Pillar 2 representative told me to pick a Vested Benefits Account within 90 days of my departure, else they’ll open one for me.
I should be devoting a lot of energies to this, since we’re talking about 270k CHF, out of which 226k are extra mandatory and I would like to avoid mixing together the two things. In case we leave Switzerland we should be able to take with us the extra mandatory part, while having to wait until pension age to take the mandatory one.
I know for sure at least a friend (Mr DIP) who made a mistake and now he has the entire second pillar blocked until pension age, even though he also had a good chunk of it being extra mandatory.
I don’t want to do the same mistake, but I’m procrastinating on this “important but not urgent” task.
Let’s see if VIAC will offer a VBA solution within a month, else I’ll switch to panic mode.
I’ve had unpleasant experience with PostFinance, as explained in last post. I plan to try both Zak and Neon, as suggested by many readers, and conduct some analysis before jumping on a different boat. Stay tuned 🙂
I’m moderatly in love with my Revolut account, but it’s not a valid replacement for a bank: no Swiss Iban, no e-bills. I’ll keep it, but just as a USD & EUR credit card (thanks to very low currency conversion fees).
For my CHF purchases, I’m sticking with Cembra (Cumulus Mastercard).
I’ve deposited the full 2020 maximum amount into Pillar 3A in February: 6826 CHF.
Even though the expected highest marginal tax bracket will be lower in 2020, I think Pillar 3A is still worth maximizing. Since I don’t know if I’ll be allowed once I don’t have a job, better to do is asap.
I switched to Wingo as mobile phone plan. Mrs RIP will follow as well.
I purchased a “Wingo taste and buy” promo from Digitec, and I’m paying 10 CHF for the first month. Then maybe I can get another 2 months for free… then I will need to pay 25 CHF/Month but I have unlimited calls, unlimited Data in CH, 2 GB data in EU.
So far, I’m a satisfied customer.
Pride & Fear
Verbatim, from my journal:
March 12th: Market is crazy. My account is down 47k today. VT is down 10%, EIMI 12%!
I feel scared. The market crash is hard, it will take years to go back to normal. I was not prepared to experience this right after having quit the job. But I’m receiving a lot of calls and messages from friends and readers who are more scared than I am. A lot of people are relying on my suggestions, and I’m proud of it. I should lead by example.
It means I owe you, my readers, a good fraction of having been steady and in control of the boat during the worst crash I’ve ever experienced.
Well, I’ve shared many things during last three months. I thought I hadn’t had much left, but after reviewing my notes, and after taking a look at last update for follow-ups, here we are. A lot of things. Enjoy!
Busyness of Life, Family, and Parenting
How’s the quarantine going? How’s life in the new flat? Am I getting bored without a job and in quarantine?
It’s funny how people think that I’ve a lot of time available now!
I always feel like I didn’t accomplish much on any day, and at the same time I don’t have a minute to relax!
One of the best post I’ve ever read on the internet about this subject, even if my situation is different, is Done Detoxing by Living a FI. I’ll write a full post sooner or later on my own “detoxing” phase, with parallels with Living A FI like I did when I left my cushy job.
Today I just want to mention his detoxing enemy: TFB (Too Fucking Busy).
My own TFB is really trying hard to not let me relax, and circumstances are not helping as well.
Life is Too Fucking Busy these days.
I’m working on unemployment duties, which means talking to my “unemployment assistant” (read: dictator) getting spammed by recruiters, sending CVs, and doing interviews. And given my “amazing CV”, there’s no application that doesn’t end up in a long list of calls with recruiters, with hiring managers, and coding interviews.
Last one right yesterday morning (ok, April 7th, not Q1). After a call with a recruiter and another one with a hiring manager next step is… a 5 hours long technical interview! I have 10 days to do it, but still a 5 hours uninterrupted time block is tough to find.
On the other end, I’m liking my coding interviews so far 🙂
I’ve been coding much more in the last week than in the previous 2 years! And it’s fun on its own! Solving coding interview problems is fun. It’s just that you’ll never ever do anything remotely similar while performing what’s expected for your job title. I’ll write more on this in the following days… maybe!
I’m also devoting a lot of time to my blog. I’m writing a lot, but I don’t have a clear plan. A vision. A goal for it.
I’m helping the family: Baby is not going to Krippe anymore since March 14th. She’s a lovely 2yo baby who simply wants to destroy everything she can put her hands on. It’s a lot of work, and my wife can’t handle all of that alone. We’re taking turns. Well, Mrs RIP takes 80% of the duties, but trust me: the remaining 20% is a fucking lot!
Our days go more or less like that: trying to be productive in the morning (blogging, interviewing, reading, writing, journaling), then taking Baby out for 2 hours early in the afternoon (2-4pm) while she usually sleeps, then spending late afternoon with the family, all together on our amazing balcony, playing with whatever Baby wants to play with. It usually involves a lot of water, flowers, colors, and paper.
It usually starts like this:
And ends like this:
Then 6-7pm we play some music, dance together, sometimes we do a workout routine (mostly pilates/stretching) while our daughter humiliates us with her elasticity. Routines that don’t last more than 10 minutes before Baby starts doing crazy things that either make us laugh out loud or jump to rescue her before a disaster.
7-8pm dinner, maybe calling grandparents, reading books to Baby, playing “one last game” for 10 times.
8-9pm we split: while Mrs RIP makes Baby sleep, I take care of the kitchen, grab the sparse toys on the floor, fill and run the dishwasher (but sometimes I do dishes on my own… old habits die hard), and I pass the broom on the floor.
9pm+ life resumes without Baby around (not all the times though). It’s either “romantic time for the two of us” or, if we have many tasks to take care of, we split again and do our own stuff until we’re too tired and go to sleep.
We’re finding that most of the time, even if we split, at around 11pm we meet again at our new (used) sofa, in L shape, to read a book or some printed articles (I printed almost all Living a FI posts, and I’m binge re-reading them!)
We usually last 15 minutes, then we fall asleep.
That’s almost how we spend… each day! including Saturdays and Sundays. Except once per week, where we clean the house and do grocery shopping. But we don’t have a fixed day for that, and we’re actually grocery shopping less frequently than once per week.
We’re so glad we moved into a bigger flat back in December. We wouldn’t be so comfortable in our old small flat. Absolutely no regrets!
We’re really enjoying the time we’re spending together, and there’s no room for boredom, no urgency to connect more, and no space for individual leisure! I’d love to binge watch a dozen of series, and binge play few videogames though.
Few days ago Mrs RIP, which is a more social person than I am, said “Uhm… you know… maybe we were doing too much before. We should live a slower life even when the quarantine ends.”
I love you my dear, but we both know that this is the same thought you have the moment you pass an exam that you binge-studied for a week, nights and days: “Uh… I love this topic! I want to keep studying it even after I pass the exam!” and then you never ever ever touch the books again in your life!
It’s so pleasant to not have to think about “traditional work”. To not dread Sunday evenings. To forget which day of the week it is. To not miss a thing of my previous life. March 31st feels so distant today (April 8th).
So… while there’s a lot to do – and if you ask me I’d like to have 40-hour days to do all I want to do – my subconscious is trying to tell me that everything is ok, and quality of life is significantly improving.
- I sleep much better.
- My knees don’t hurt anymore.
- Bronchitis, Pneumonia, heavy coughing… gone! In your face, Covid!
- I restarted running, with some interesting result after months of no physical activity. Though I have some stiffness on my back, but that’s because I’m lazy and don’t want to do stretching.
- I’m spending a lot of time with my family.
- Pessimism & Helplessness is mostly gone. I’m feeling good and full of options now 🙂
- Nervousness is reduced to a minimum. Ok, not totally true. I get easily pissed off (by RAV, PostFinance, and sometimes by Baby RIP). And I’m still complaining that I can’t do all the things I want to do, I need peace, I need infinite time… but this is on a much smaller scale (I’m my own TFB monster!).
- I’m blogging more, which I don’t know where it is heading to, but I enjoy it and that’s what matters most right now.
My bet is that this amazing sunny weather is playing a role here, but I hope there’s more to that.
Or maybe Naval was right:
But I’d also say my health has improved a lot since I decided to quit Hooli.
Speaking of which…
Of course more posts on this topic are coming (hopefully) in the near future.
Here I just want to say that I checked my notes and found that last time I went to the office was March 5th, and for some reason I went to the old Hooli office (where I started in 2012) instead of the new Hooli office where I was supposed to work.
Maybe I knew it could have been my last time, and like Elephants I wanted to pick where the fuck I was going to (professionally) die!
I know, it’s weird to say but… I miss a proper “Goodbye Hooli”. This can’t be fixed backward, so I have to let it go 🙁
In the meantime many ex-colleagues reached me out to chat. Too many! Guys, I thank you very much, but please come back in 6 months… I’ve little to tell you about “how’s life after Hooli” right now.
I made time for a virtual lunch: one with Mr GFY, one will be scheduled shortly with Faustino, and of course Mr VCF’s family and our family meet regularly on Whatsapp.
Hooli friends, when the offices reopen feel free to invite me for a free lunch 😀
Fear of the Virus
I’m running a Coronavirus Journal series about it.
Just a recap: I switched from being in denial to overreaction to acceptance to, finally, optimism.
We’re doing our social distancing good deeds, and going to grocery store once every two weeks. We’re doing our best, but we’re not overdoing it.
We had close friends who got the virus, and some 70+ years old with preconditions who survived it.
Mrs RIP is more concerned than I am with regard taking the virus. That’s because we’re already operating on a tight schedule with Baby RIP and house chores duties. “What would happen if I get the virus? Who would take care of Baby?”
Uh… why are you staring at me? 😐
We’ve spent few afternoons watching the Swiss Federal Government live streams on YouTube to regularly check new restrictions. First times we watched a live stream was right after Italy went in full lockdown. We were scared and preoccupied. After few of them we now think Switzerland is not going to take any extra freedom away from us, so we’re more relaxed.
At least we got to know who’s ruling Switzerland. After 7.5 years I still knew nothing about who’s in charge of what. Now I can recognize Alain Berset, Simonetta Sommaruga, Ueli Maurer and all the other members of the Federal Council.
Thanks Covid, you’re helping my hypothetical Citizenship application of 2022!
During this quarter of big changes and uncertainty I didn’t lost touch with my craving for knowledge and wisdom.
I’ve fall in love for Roam, a tool for Personal Knowledge Management (PKM), and enjoying their free beta. Hoping pricing at release time will be affordable, or else hoping a valid alternative would pop up. And no, org-mode is not a valid alternative for me.
The more I grow old, the more I perceive the finiteness of my time on this planet. I still spend a lot of time in curiosity rabbit holes, and I don’t really know if it’s a virtuous or vicious endeavor. The relevant metric is “how much do I retain of what I sense?”. Well, a PKM helps me to retain more. Taking notes, writing them down, connecting them, experiencing “a-ha moments”. That’s a step forward in my quest to knowledge and wisdom.
So I’ve spent a good chunk of Q1 in the meta-learning world. An unfinished attempt to define my Note Taking system (to retain more from a single source), Personal Knowledge Management system (to retain more on a broader scale, and connect pieces of knowledge), my Learning Projects (to make curiosity more focused), and my Learning Journal (to quantify my efforts).
I’ve explored the world of Personal Wiki, Zettelkasten, Building a Second Brain, note taking applications, simple text files, a database, and more.
I want to merge PKM and productivity (Projects, Todos, Calendar) and Roam seems to be the perfect tool (lacking a good Calendar though).
But I’m not done with my meta research yet.
SO I’ve been immersed in the “how” and “why” of learning, but of course spent a lot of time in the “what” as well:
- Binge read almost all More To That posts. Gems.
- Almost finished Wait But Why “The Story of Us” series. Holy shit, how good is that?
- Almost Re-read all Living a FI posts. So relatable.
- Following the content of my usual subscriptions (blogs, podcasts, YT channels…)
“Wow RIP, very deep readings!”
…Plus watched all Jelle’s Marble Runs video!
“ -.- ”
I’m an O’Rangers fan since Marble Olympics 2017!
Go, O’Rangers, go!! But what a bad performance in Marbula One 2020 🙁
I don’t know.
I’m in an open conflict with my blog.
I love the connections I’ve created thanks to my blog, and I’m sorry if I’m replying slowly to emails and offers to chat/connect more. Do not worry, once the “bad viruz” goes away I’ll launch Boardgames evenings and Soup-port groups at my place 🙂
I’ve been blogging more in March (and April so far), probably because I stopped going to the office/working. I like to write and connect with people, but I’m switching my writings toward “fintainment”, and my own personal experience, emotions, thoughts, actions…
Don’t get me wrong, I like to be a joker and to open myself to others. But I’m lacking energy and time to focus on more technical posts.
The posts on this blog that received more positive feedback are still my “guides” (Swiss Pension System, ETFs, ETF List, IB,…), and I want to work on more of them. Many are already drafted. That’s what makes content “evergreen”.
“But RIP, you still re-read Living a FI posts, which are not evergreen/technical”
That’s a good point. Maybe evergreen is also a guy’s struggle with life…
Despite my “personal reward”/effort ratio not being at the levels I’d like, the blog is growing and I don’t know what to do with that.
Every month in 2020 would have been “the best month so far”. April looks even better so far.
It’s an organic growth that I’m pleased of. It’s a signal that what I do interests someone, and the feedback I receive are encouraging.
But where am I going with the blog? What’s the goal? If I’m putting a lot of hours in, like it were a real job (an extremely funny and rewarding one), where is it going? What do I want it to become?
I don’t know.
I’m letting spontaneity drive my actions, but like my knowledge&wisdom quest it’s time to give it structure and meaning.
And since it’s also a source of stress – the good one, but still stress – it has to play a clear role in my life.
I’m taking it easy for now, because that’s what I wanted to do in the first weeks/months of life after Hooli, but Mr TFB is knocking on my door, and he demands clarity of intent 🙂
I could try to seriously monetize the blog, but I don’t know… as you can see my ethic is inconsistent: I’m ok milking a company for more stocks, or the government for unemployment benefits, but I have problems putting affiliate links to BrownHost, Sminkios, Scammora, Dumbasses and all the shady companies out there who would love to hire me as a salesman.
The only 100% ethical way to make money thanks to my blog would be to help people solving their own problems.
Speaking of which…
Season 1 of my career and financial coaching project is almost over. I’m conducting last meetings these days. I’ve been trying to help 6 people with 3-4 meetings over the last 3 months. I’ll do a full post about that soon-ish.
In my opinion it’s been a productive experience for both me and the persons I’ve coached. I learned a lot from them, and according to the “customer satisfaction surveys” I sent to them I’ve done a good job. At least nobody blamed me for having encouraged to invest right before the end of the world 🙂
I’m taking a break now to evaluate future coaching projects, but I’m sure I’ll launch something later this spring.
I’m thinking of offering different type of support: personal finance, investing, career, and “how to crack a coding interview”… and maybe some actual “programming course”, if I find time to record a course 🙂
But this time, sorry, it can’t be free 🙂
To quote myself from few months ago:
The entire blog effort in 2019 is financially equivalent of me taking a dump at Hooli while scrolling Facebook.
And I don’t think this is ok anymore.
“RIP, now if you’re invited at Hooli for a lunch you can take your dump for free as well 🙂 ”
Oh shut up 🙁
Plans for the Future
“Hey RIP, what are the plans in terms of productivity, creativity, curiosity, spirituality, socialization, family & friends… and how do you think you’re going to make money in the future? Are you really going to stay in Switzerland forever without a job?”
Please, give me a break!
I don’t have plans. I want to fix the basement of this house before adding another floor.
I’m focusing on the here and now, on the basics: what makes me happy. Physical activity, family, creativity, curiosity, spirituality, financial stability (even without a normal job).
“… Yes, cool, but what are the plans?”
I don’t know yet, and that’s not the time to make plans.
I’m doing what I have to, and a lot of what I want to.
I’m trying to let go some of the productivity pressure (for a while).
Ask for my plans 3 months from now 😉
And have a nice day 🙂
P.S. I want to publicly say “hello” to a nice idea from a fellow FIRE seeker friend: Firedating. Claimed to be the first dating community for FIRE seekers, very mustachian (meaning:
all man free at the moment and not meant to be a money milk), and an idea that I myself had in the last couple of years. Someone took initiative and implemented it, in a nice way! Good luck bro!
P.P.S. I don’t have any affiliation with them (I make no dinero, señor). I’m just shouting it out as a courtesy 🙂
For vested benefits account (2. Säule) I would check out Liberty
As far as I understood there is an annual fee of 0.45% per year and then you can invest in a lot of different ETFs with annual fee´s starting from 0.07% (if you have at least CHF 250´000) . Additionally the bank is located in Schwyz, meaning that the withholding tax once you leave Switzerland is quite low (approx. 5%).
This is a very good solution!
Well, 0.45% extra expenses is not cheap, but I’ll take a look.
Thank you so much!
P.S. do you know if they understand the concept of “mandatory vs extra mandatory”?
I´m (still) working, so I have no personal experience with Liberty.
According to their hompage they offer the possibility to pay out extra mandatory benefits when leaving for EU/EFTA, and all benefits when leaving for other countries.
I would ask them directly however what that means in practice. If you have an investment return of 10% within their accounts for example, how is this split between mandatory and extra mandatory. Is it perhaps best to move mandatory and extra mandatory benefits to two separat foundations? Don´t know the answers unfortunately. I´m looking forward however, to see how you solve this.
Thanks, will ask directly to them 🙂
” Well, Mrs RIP takes 80% of the duties, but trust me: the remaining 20% is a fucking lot!”
Why not 50-50?
We’re trying to maximize our overall happiness, which means:
– we would like to stay in Switzerland.
– My wife has incredible skills and passion for child care: she’s been working with babies for 9 years while in Italy.
– I like to spend time with my daughter, but I have different levels of patience. After a while both I and my daughter prefer a different company
– My wife hasn’t worked since the birth of our daughter, which means they’ve spent a lot of time together and have a stronger relationship. I tried but can’t put her to sleep yet.
– I’ve demonstrated skills and creativity that could generate the money we need to stay in Switzerland.
– In order to put these skills at work again I need to recharge and have unscheduled time for me to focus on creativity and detoxing from corporate life.
– We, as a family, are much better off if we allocate resources that way. I’ve said 80/20, but it’s more like 60/40 in house chores, and 90/10 on baby duties. I still change diapers and spend some time alone with Baby, but I’d say no more than 10-15% of the overall Baby time is on me. Well, it’s wrong actually. We spend a lot of time BOTH caring about Baby. I’d say 30% of the time it’s the three of us together, the remaining 70% I’d say it’s 60-10 so I don’t know how you would count that. If you allow for overlapping we’re at 90/40 (130% total). So it’s not exactly 80/20. If you sum things up we’re at 150/80, which is more or less 65%/35% of the overall family duties.
tl;dr: if you have Buffon and Ronaldo and have to pick a goalkeeper and an attacker you don’t do 50-50.
I hope I answered your question
The best tl;dr: I’ve ever read.
Thank you for your amazing blog. I wonder if you have read books by Nassim Taleb (or similar) that are focussing on “Fat Tails”? He or people like Mark Spitznagel recommend to use 1-3% of your portfolio each year to hedge against rare events with strong negative outcomes for your portfolio. E.g. you could have been 97% stocks, 3% spent on a Put Option far out of money and you would not have lost a dime now. Now you balanced the draw down risk in your stocks with a high portion of bonds and some others use gold but they all ratzer they linear. In the sense that for a well placed put option a 3% investment would have covered all your losses (i.e. a 30% drawdown in a 97% stock portfolio, so quite a convex payout) whereas in your 50-50 portfolio the bonds where not able to cover the losses in your stocks (linear payout). Nevertheless they obviously helped reducing the drawdown and volatility of your portfolio.
But this makes me wonder if I and probably you too, are building our portfolio wrongly. Recommendation by Taleb is a barbell strategy which has two meanings. First is to have a lot of safe assets and invest a little in super risky investments that have a high upsidr potential. So that would be e.g. 90% AAA bonds short duration and 10% invested highly speculative (individual stocks or other bets). The second meaning is that you can be invested almost a 100% in something like stocks but, like you have a liability insurance or health insurance or whatever else to hedge potential ruining events even though they are rare, invest a little in an insurance that covers your downside risk.
This goes hand in hand with an observation that all people advocating “our” investment strategy empirically optimize for the arithmetic mean, whereas it might be more clever to actually optimize for geometric mean (return of a portfolio) which is equivalent with optimizing arithmetic mean of the logarithmic returns. (See Kelly criterion).
Having myself read a lot by and invested according to people like Kommer (German), Boglehead or Bernstein this makes me think if we are actually following the right path. Especially when we are talking about safe withdrawal rates and shrinking investment horizons once retired I think some kind of hedge makes absolutely sense to limit downside risks.
Another aspect I would like to mention is the ageing population in countries such as Italy or Switzerland which is largely ignored in current investment theory. There is a guy called Peter Zeihan (I absolutely recommend his new book Disunited Nations), who is not a finance advisor but a geostrategic adivsior. He has some simple yet thoroughly founded opinions on the future development of the world as a whole. But one thing which I found interesting is his idea that capital costs will increase largely with the Boomer generation retiring in the coming decade(s) which in other words means lower stock market returns and higher interest rates. I find this idea quite plausible knowing that a lot of capital will be drained from financial marktes (especially the bond marktes) with people retiring everywhere in developed countries. Now I don’t know how large this effect will be but looking at age distributions in Switzerland and other countries this will be substantial (not only for our investments but for life in general and all our presently known social security systems like AHV and health care). I think no one really thought this through what it means for our investments. Especially since all empirical research in the last has occured on populations where the age distribution was still a pyramid (like evaluations of long term stock returns etc).
I wonder what your thoughts are on this? If you haven’t so far I would really recommend to read a book or two or three by Taleb and the one by Zeihan to get an idea about this. I would be curious to discuss these hypothesis or read a blog article of your thoughts on these ideas.
Take care and stay save.
All the best
Hi Nicholas, very interesting comment, thanks for stopping by!
First, never read full books by Taleb, even though I have three of them. Started reading Antifragile, but I find his language a bit tough, and interest dropped after few pages. Maybe I’ll take it back one day.
Anyway, the “Fat Tails” idea seems interesting, but I’d like to understand it better.
I’ve never run the math on options as an edge so far. I have some intuition that they’re too expensive. In your example, can you elaborate how you’d spend the 3% on a Put Option?
Which expiration date? A year from now? Then you have to pay 3% next year. Every year. It’s not cheap.
Ten years from now? At which strike price? same as today? Then well… it wouldn’t help much, would it?
I’m just running things in my head, I don’t even know how options really work. It would be great to have a concrete example, with realistic prices and a reasonable scenario where I want to earn X% per year for the next N years.
The Barbell strategy is another thing I don’t like – again, on an intuitive level. AAA bonds are going to yield 0% now. Yields are this low everywhere in the world. Having the remaining 10% invested in a leveraged short Crypto&Tesla fund doesn’t make up for the same compensated risk that a world stock fund would expose you to. For the same reason I’d bet the Ray Dalio “All Weather Portfolio” is going to suck this decade. Bonds are yielding ZERO now, unless we’re betting that interest rates will go to -5%. Which helps instantly boosting up already emitted bonds, but would kill any new bond. Live with it.
The optimization by geometric mean makes sense, good point. But I don’t know how to obtain it.
The problem of ageing is another interesting one, that I’m not caring much about. I’m not counting on any social security / first pillar, and that’s my pessimistic approach to a future where these obsolete systems won’t be there supporting me when my turn comes.
The impact of ageing population on the market is not as predictable though. Productivity will drive the economy anyway, and retirees won’t get their pension money out all at once. And world population is still growing and it will keep doing so for the foreseable future. Plus, automation impact on productivity is far greater than human factor. Anyway, I don’t hold strongly my positions. And you dropped a lot of interesting material that would require a deeper analysis.
Thank you a lot for your contribution!
May I ask why do you used to auto sell your Hooli stocks? I know you sold them to invest more on etfs and because you felt that you didn’t want all the eggs in the same basket. I’m not asking literally.
Is having a few percent of your portfolio on a stock of a global company that has outperformed the world index or sp500 that bad? Are you afraid that it can go down and hurt your returns?
I’m seriously asking because I’m in a similar position, but I don’t feel like selling those stocks. Thank you.
It’s a matter of diversification.
You work at Hooli, and you hold Hooli stocks. If Hooli goes to zero tomorrow for some reason, you lost your job and your money.
I’d rather sell Hooli stocks and buy Pineapple or Rainforest stocks with the same money.
Maybe you don’t see how Hooli stocks getting cut in half or less is even possible, but so did the Turkey before Thanksgiving.
Hi RIP, we are missing you ad your posts!
Haha, I’m enjoying life a bit 🙂
But I have many unfinished posts I need to work on these days.
Stay tuned, I’m not going anywhere 🙂