April Financial Update – When 2 become 3 :)

Hi RIPvoyeurs,

Yeah, I know, I said I would post quarterly financial updates… but so many things changed this month, and I wanted to give you an update 🙂

Main update: on April 21st our first daughter babyRIP was born! ♥♥♥

She came more than 2 weeks earlier than expected, but we’re all super excited and in love with our beautiful little princess!

Guiltily letting my proverbial frugality behind, I impulsively spent ~300 CHF on a photo set directly in the hospital the day my two girls came back home 🙂

So far it’s been better than expected, probably because I expected my life to end, my sleeping time to end and my finances to come to an end too. Stoicism taught me the importance of negative visualization and from Dilbert Buddhism I learned the tyranny of expectations.

Given my low expectations, the experience so far has been terrific! My priorities are shifting so quickly. I’m reconsidering my numbers, my goals and the meaning of life. I’m more convinced than ever that I need to reclaim my time back once and for all.

I can’t think of wasting my life in an office while my daughter grows.

Midlife FIRE crisis is very tough, I hope you’re coming to FIWE 2018 in June, there will be a full session on the topic!

“Every man should be forced to take his fortieth year off.”

– Nigel Marsh

Anyway, let’s move on!

April has been a good month overall, even though expenses have been fastidiously high 🙂

I’ll pass thru metrics fast, if you want more details take a look at my Net Worth spreadsheet.

If you’re following me in my financial updates, you may notice that I’ve done significant changes to my spreadsheet, even compared to last month.

Some (but not all) of the changes:

• I added a lot of rows to make room for new ETF I purchased after the recent April spring cleaning.
• I gave up with the new expenses model (monthly + yearly) and returned to the old one (just monthly). Deciding for each expense if it’s a regular or an exceptional one was too complicated and too arbitrary.
• I added Swiss FIRE metrics! More on that later.
• I retroactively changed some numbers. For example: we’ve discovered that Mrs RIP Pillar 2 is lower than expected due to risks and administrative costs charged on her, while Hooli covers the risks costs for my Pillar 2. It sets us back by 2k CHF.

Sorry, no screenshot this time, the spreadsheet is becoming too big.

Instead, here you have the entire spreadsheet embedded 🙂

Metrics

Net worth: 781.3k EUR (935k CHF, 944k USD). Getting close to Millionaire status is both CHF and USD! Will we reach “the million” in CHF or USD first? Or will a market crash send us back in the 800s?

NW Delta: +25.2k EUR. Bigger growth in April than the previous 3 months combined 🙂 In CHF our net worth grew by a staggering 45k thanks to a weak CHF. That’s not good, since I’m earning a CHF salary, but that’s shortening the time to reach “the million” in CHF so I’m ok 🙂

Income: 14386 CHF.  Just base salaries, pension contributions and expected taxes. Ah, and we got some amazing monetary gifts for babyRIP that I like to consider as income.

Expenses: 6036 CHF. I guess this is the most expensive “normal” month since I started the blog. I mean, excluding the months where wedding or big trips happened. That’s sad, but I have an amazing list of excuses! more on this later.

Savings: 8350 CHF. Yeah, still fine I guess.

Saving rate: 58.0%. Regular earnings, high expenses. Anyway, it’s still above 50% so it’s ok.

Saving rate for 2018 so far: 74.5%. Good, still very good! I’m aiming to 70% this year, i.e. I want to be Platinum badass saver on MustachianPost Bloggers Saving Rate Index for 2018

FI%: 65.11%. What a jump! Almost 2%!

100% FI Forecast: 35 months left. I changed the way I run my forecast. I now take exactly the last 12 months of NW delta. When some bad month is rolled out forecasts jump wildly. April and May 2017 were below average months so I expect another nice jump next month 🙂

FI Date Forecast: March 2021. Getting closer 🙂

Current Allowance: Year 27,347 EUR (+882) – Month 2,279 EUR (+74) – Day 74.92 EUR (+2.41). Can we live with 2279 Euro per month? Then we would be FI today.

Current Withdrawal Rate: 5.38% (-0.17%). Say we want to call ourself out today and claim to be FI with our strategy, i.e. withdrawing our ideal expenses every month forever, inflation adjusted. That would correspond to a SWR of 5.38%.

Years of Ideal expenses accumulated: 18.6.

Success Rate at Current WR, 40 years horizon, 75%/25% split: 46.73% (based on cfiresim).  Say we want to retire today and withdraw our ideal expenses forever,  5.38% SWR. What would be the odds of making it? almost 50%! We could quit today, being very short in our plan and still be fine in 50% of cases! Well, we all know it’s not true and that if we take high CAPE into account we won’t have 50% chances, but it’s still fun to play with numbers!

Swiss FI% (new!): 52.46%.

Yes, I was playing around and I said “what would be my FU Number if we want to retire in Switzerland? I’m not making any judgement here, just adding data. Considering current expenses as yearly target allowance.

Of course current expenses are not final. We may move to a bigger apartment and our daughter may go to childcare one day. If we’re going to stay in Switzerland expenses are going to increase significantly. But that’s a starting point!

You know what? I discovered we’re not that far behind! ER in Switzerland won’t take us much longer than ER in Italy, thanks to the weak CHF and (maybe) to our expected Italian expenses being higher than they should be – which could actually drive down out Italian FU Number, after a deeper FIRE analysis and life goals assessment.

Anyway, Early Retirement in Switzerland has other implications, like pension contribution and investment income taxation in case investments would become our primary income method. So the scenario is not realistic, but it’s still fun 🙂

There are other Swiss FIRE metrics, go check them out on the spreadsheet.

The new progress bar 🙂

Let’s not forget where this blog started from 😉

Major Wins

1) Mr Market came back!

Nice performance of all my ETFs except the Emerging Market one.

2) USD going up vs EUR (and turbo-up vs CHF)

The trend holds in the first week of May too, USDCHF is above 1.0 now! That’s not good news though. My salary is in CHF, which means I’m earning less. But I’m investing a lot in USD, which means my NW in EUR (and CHF) is going up.

3) Exceeded Expectations at Hooli

At Hooli we measure performances every 6 months. I’ve been working very hard recently and achieved good performances. That means bigger bonus at the end of the year and a step closer to a promotion.

Going back to a 100% position after 9 months of 80% has been the right choice for my not-yet-FI life.

But I also almost burnt out.

I had to change team even though I really loved my close colleagues. Changing team means probably I won’t be able to sustain this performance level in this 6 months cycle, learning curve at Hooli is very steep and once you join a new team is almost like joining a new company.

Add to that that babyRIP came visiting us for…ever so I’ll probably slow down a little bit next 6 months. Bye bye promotion!

4) Rent reduced from 1415 to 1385 CHF / month

Including condo fees which include heating, water, cleaning shared areas of the building and few other things. That was planned thanks to reduction in interest rates in Switzerland, but it became effective on April 1st 2018 🙂

5) Managed a frugal birth – to some extent

Didn’t buy many baby clothes, got almost everything from friends.

Didn’t buy a stroller, a pram, a cradle, a car seat. Borrowed from friends. Didn’t buy almost anything.

Hey RIP, I still see 700+ “Baby” expenses in April…

Photos, birth preparation course, milk pumping set (f*king expensive, thanks Medela…) and several pharmacy visits. The bare minimum, given babyRIP premature conditions. Ok, except photos 🙂

We’re being super savers in consumables (diapers, napkins and so on) and buying bulk and/or from Italy. Also joined famigros (migros for families) to get extra discounts and gifts.

So far it seems the expected monthly costs for the baby are in the range of a pizza in Switzerland 🙂

Aaaand we got monetary gifts for babyRIP birth above 1k EUR, even got some from our Swiss neighbors! Essentially it’s been fundraising so far 😀

Major Losses

1) A lot of expenses

Above 6k.

If we exclude wedding and intercontinental trips April has been the most expensive month so far since I blog. Maybe since I was born.

in my defense, there’s been some unusual expense that I hate to attribute to this month. Here the “highlights”:

• 400 CHF for a weekend in Vals. Amazing trip! Vals is a small village in Switzerland famous for the Valser water, the stones, the rich architects that live there and, most important of all, the Vals Therme, considered to be among the best in the world. Friends of us bought a property and we stayed at their place for 3 days/2 nights the weekend before babyRIP was born. Yes, we saved the hotel costs, but… you know… Switzerland… we made our lunches and breakfasts, but still 2 dinners out, 2 entrance tickets for Vals therme and public transportation to reach Vals: 400 CHF. Regret nothing, it’s been amazing and ultra-bonding both among the two (three?) of us and with the couple of very close friends!
• 400 CHF medical bills for Mr RIP. I had two doctor visits in March but the bills arrived in April.
• 170 CHF birth preparation course. It was 320 CHF but insurance covers 150 CHF. Sadly, it was scheduled in last 2 weeks but babyRIP coudn’t wait that long and we had to cancel the course. Maybe we’ll get something back, but I don’t count on it.
• 100 CHF FIWE 2018 Timișoara. Yes, booked the planes to/from Milan. We, the RIPs, are attending a wedding in Italy on June 3rd. We’ll be wandering in north Italy until Thursday when I flight to Timișoara to attend FIWE: Financial Independence Week Europe from Thursday 7th (but the FIWE will start on Friday 8th) to Monday 11th June. I hope to see you there 🙂
• 190 CHF IB Fees. If you’re following my blog you know that in April I’ve spring cleaned my investments. Selling and buying high volume of ETFs cost me 190 CHF.
• 320 EUR grocery in Italy. Parents and relatives came from Italy for babyRIP birth. As usual when they come we ask them to do some grocery bulk purchase for us. It was really big this time, we’re left with no space in our cellar 🙂 Ah, on the side: we were planning to rent some temporary apartment for them but in the end we managed to squeeze people and serialize visits in our ridiculously small flat. ~1500 CHF saved!
• 300 CHF babyRIP photo set in the hospital. Enough said. It’s a splurge, but I don’t regret it 🙂 We’re framing some of the best pictures and giving them as present to our families. Regret nothing!
• 50 CHF welcome back cleaning lady! Yes, I know last month I said that our Roomba would take care of our house from now on, but apparently when a baby comes the house becomes a mess and the robot can’t help much. What a lazy bot!
• XYZ CHF so many pharmacy visits… Some were covered by insurance, some were not.

Other financial facts

1) Investment Spring Clean

Changed asset allocation and some of the ETFs I own, according to my April analysis. As you can see my NW spreadsheet has so many new rows now!

The interesting part is in the investing sheet. I added stocks, bonds and REIT subclasses.

Here you can see that Large EU stocks are over represented in my portfolio, due to a stupid mistake I’ve done last month while executing my plan. I mentioned that in last post if you’re curious.

The low risks bonds are also over represented but that’s due to fact they’re locked.

I also added a “hall of fame” section to thanks retired warriors like SC0C, CBMEM and XLKS for their amazing job in these 2 years and half! Realized (and “untaxed”, here in Switzerland) profits thanks to my closed positions are in the range of 40k EUR!

But… oh crap… I did buy SC0C in November 2017 and sold in April 2018! That’s less than 6 months, holy shit! I may be considered a professional investor in 2018, I hope I won’t 🙁

I didn’t update my Investor Policy Statement yet, since I still need to come up with an updated FIRE plan. Hooli gives us 12 weeks of paternity / baby bonding leave for parents. The laws in Switzerland only allow fathers to take 1 day off or two, don’t remember.

That’s an incredible benefit, thank you so much Hooli! I only consumed a week of paternity so far. I plan to consume another one for friends wedding and FIWE in early June, then I’d love to pack together the 10 remaining weeks and stay out of office for more than 2 months during summer, something like from July 20th to the end of September. That would be the perfect time to draw down our FIRE plan and think about life goals. And finally change the IPS 🙂

2) Waiting to sell my flat in Milan.

A month and half has passed since I accepted a 80k EUR offer for my flat. We’re still waiting for banks and mortgage agents to accept the mortgage. Meanwhile, my realtor doesn’t answer my mail.

Wanna learn something here? Avoid doing any business in Italy if you can.

3) Paid 14128 CHF of taxes for 2018

I’m a C permit holder and I don’t pay tax at source. I get gross salary and then decide when and how much to pay as tax “advances”. The City and Cantonal tax authorities send you “suggestions” and I decided to follow their suggestions. Their suggestion for 2018 is ~42k CHF taxes (that won’t include Federal taxes). Maybe I’ll stay short by 10k. Anyway, I’ve payed first third of their bill, i.e. ~14k. I’ll do the same later in the year.

If you’re wondering: I don’t consider taxes as expenses.

My budget and cash flow happen after taxes. It was easy before, when taxes were paid at source and final tax bill would have been extra income or extra expense. It’s tougher now, since I need to “estimate” actual taxes.

Anyway, paying taxes is net worth neutral: cash becomes tax credit.

4) reduced 2016 Tax Credits from 9k to 8.8k (and moved the line from virtual to other)

2016 Tax return was extremely positive, I was expecting ~9k CHF back from the Swiss government due to overpaid taxes at source. Actual tax return said 10k, but some “virtual dividends” for my accumulating ETFs were not into ictax at tax return time. Now they are in, and they are higher than expected (especially STOXX600, are you crazy??) so I lowered my return estimation to 8.8k CHF.

I also moved 2016 Tax Return from virtual to others, meaning it’s being considered as cash for portfolio rebalance. I did that because I expect the final return to happen later this year, or to be used as 2018 tax payment. Anyway, money is coming.

5) Deposited 6768 CHF on Pillar 3A Postfinance saving accounts for both me and Mrs RIP

Pillar 3A for 2018, done. Checkbox checked. Pillar 3 is my favorite tax saving strategy. We’re still not investing Pillar 3As, just holding them in 0.25% interest rate saving accounts. Except my 5k March Pension75 purchase. Still need to decide if it’s worth to invest more/all of our Pillar 3As.

At least I opened for myself a second Pillar 3A account with Postfinance. Since Pillar 3A accounts cannot be withdrawn partially, it’s better to have multiple accounts so that one can apply a tax efficient withdrawing strategy once needed, for example after leaving Switzerland.

Someone says you should open a new Pillar 3A every 20k. I went a little bit above, almost 35k.

6) Moved prorated 13th salary from virtual to other

Whatever happens, even if I get fired, I’ll get the prorated 13th salary from Hooli. It’s a real credit and it goes in “other”.

The difference between “other” and “virtual” is that “other” goes into investing budget as cash while virtual is not considered in my cash reserve nor in my investable base.

I still keep prorated expected bonus and unvested stocks into virtual because if I ragequit or get fired I won’t receive a Rappen.

7) Created a recurring 5k monthly deposit to Interactive Brokers

That’s what I expect to send to my IB account each month. Plus vested stocks, plus bonuses, plus 13th month.

Plus, of course, extra savings if any 🙂

Sending 5k CHF each month to IB is my implementation of “pay yourself first“.

Other Facts

1) This blog is becoming popular

One of my last post about market timing got popular. It’s been tweeted and shared by Big ERN, ESI Money, Physician on Fire and many other great bloggers!

I’m so proud of that!

I tried to submit it to rockstarfinance but it didn’t make it yet. I thought it would, given the banality of some of the recent featured articles. But anyway… I’ll stop trying to get featured by them, it seems they reward clickbait-ish titles and american content: “5 ways to kill your student loan while maxing out your 401(k)“. Or simply my English is not good enough, English is not my main language.

FYI May traffic will reach July 2017 level by end of the day, and today it’s Sunday May 6th 🙂

Must admit that watching site metrics is a little bit addictive, but I’m even more proud that I accomplished all of this with no advertisement, almost no networking, no SEO, no catchy “call to action” to make you subscribe to my blog and no “753 tricks to write successful blog content”, no clickbait articles (but click here if you want to know 42 secrets to save 0.99$ on your grocery shopping each week!)

I’m doing my thing, not following any rules, and after almost 2 years people seem to like it. Recently celebrated 500th comment on the blog and monthly pageviews are approaching 5 digits. Thank you my readers, your feedback is what makes me make time to write even though life is batshit crazy these days 🙂

Yeah, that’s fox-and-grapes-ish RIP… and you wanna make us believe you’re proud of NOT wanting to improve yourself?

Wait wait wait, I don’t want to stop improving! I spend something between 6 and 8 hours each day reading, writing, learning. I’m neglecting physical health and some family time to learn learn learn. It’s just that I don’t want to learn how to “blog more successfully”, or “follow tricks to better position myself on search engines”. I’m focusing on fundamentals, not on methods!

And yes, that’s fox and grapes with rockstarfinance, I admit it 🙂

2) Falling in love with Stoicism

Consuming a lot of resources, mainly from Ryan Holiday. I’m currently reading “The Obstacle is the Way” and “The Daily Stoic“. I also own a copy of “Ego is the Enemy“. I’m consuming Ryan’s online resources: dailystoic.com, thoughtcatalog, ryanholiday.net.

Ordered Marcus Aurelius “Meditations“, expected to hit my door in few days 🙂

Still I don’t understand how people can get bored with their life.

Future Actions

1) Expecting high expenses for next few months

We’re attending 2 weddings this summer. Both weddings are of very close friends. In June wedding I’ll be wedding witness of the bride, while in July Mrs RIP will be wedding witness of the future husband.

We need wedding dresses, hotel accommodations, transportation (both weddings are in Italy) and presents (cash).

There’s little to do here. I need a dress, I’ve been surviving 10 years without a suit (rented mine for my wedding) but time has come. And two weddings justify the purchase. Mrs RIP also needs a dress. She’ll still be after-pregnancy and regular dresses won’t fit.

Plus babyRIP will surely find her way to destroy our finances 🙂

2) Expecting FIWE 2018 to be awesome

My first Financial Independence conference!

3) Survive Parenting

Yeah, that’s the tough one!

That’s all for April 🙂

EDIT: 4) reduce smileys in future posts, it’s unprofessional and would fuck up SEOs 😀