April 2019 Financial Update

Hi RIP friends,

Welcome to the regular(??) RIP monthly update. April has been another incredible month for our finances thanks to Mr Market’s fourth consecutive extraordinary month. S&P500 reached new “all time high” values, fully recovering the 20% loss in Q4 2018. That means our NW growth in the first 4 months of 2019 has been much bigger than the entire growth for 2018! If measured in Swiss Francs, it’s almost double than last year growth! It’s kind hard to wrap my mind about this fact, since we’re still earning nonstandard salaries, and so far NW growth has been driven mainly by savings than investing. It feels strange, like sailing the ocean with a small boat and facing huge winds and waves. Even relatively small market movements now counts more than our salaries in defining financial success or failure.

Ok, let’s get started! Here is my Net Worth spreadsheet.

Financial Metrics

Net Worth

Measured in EUR: 983.0k EUR.
Delta: +23.0k (+2.39%) this month, +131.2k (+15.40%) so far in 2019.

Measured in CHF: 1.123M CHF.
Delta: +50.6k (+4.72%) this month, +165.1k (+17.23%) so far in 2019.

Measured in USD: 1.102M USD.
Delta: +23.7k (+2.20%) this month, +126.0k (+12.91%) so far in 2019.

Here’s a graph of last 12 months growth:

Net Worth Graph of last 12 months
horizontal lines are 10k steps. We’ve been jumping 3-5 steps at a time this year!

We’re breaking records on every currency, with CHF overtaking USD. Which would be good if I plan to live in Switzerland long term, but it’s actually bad since it means the CHF is getting weaker and my income is mostly in CHF.

April has been a regular income/expense month with no stocks/bonus (but a regular 64% saving rate, i.e. 10k CHF regularly stashed away), so the delta is mainly due to Mr Market’s performance.

Anyway, this is not going to be the norm, and first days of May have already broken the spell!

If the markets “just hold“, we’d break the Million EUR mark by June, when 25-30k USD of Hooli stocks vest. If May turns out to be another good month, we could break the wall this month (it seems not to be the case so far, but you never know).

Income Streams

Income for April 2019: 18.6k CHF gross (expected 15.2k CHF net).

Another flat month, no special major income event happened, but we received monetary gifts for BabyRIP’s first Birthday (Happy Birthday my love!) that I consider as income.

April income breakdown:

  • Salaries: 14653 CHF gross. My base salary, Mrs RIP unemployment benefit. A regular month. Actually I received some extra money for having been on call for few days. And Mrs RIP some extra money from unemployment as reimburse of work-related travel expenses (attending an unemployment mandatory course).
  • My Pension Pillar 2: 2642 CHF gross. Standard.
  • Dividends: 94 USD gross. VB Q1 dividends landed on my account late. 15% has been withheld by the IRS as usual, will come back at tax declaration time next year.

  • Other Income: 35 CHF + 1050 EUR.
    • Migros Blue Coupon: 25 CHF. Regular bimonthly Migros blue coupon reward. This is 1% of what I spend at Migros stores, plus 0.33% of what I spend with my Cumulus credit card, plus all the multipliers (2x-40x) I use on specific products.
    • Coop Gift Card: 10.40 CHF. I was able to spend some of my Superpunkte as money during April. It ain’t much but it’s honest work 🙂
    • RIP Mom’s gift to BabyRIP: 1000 EUR. My mom gave a generous amount of money to us for BabyRIP’s Birthday. My father did the same in February. That’s their way to show love to their granddaughter. This is the third gift of this size we received from them this year. For now we’ll keep handling the situation using spreadsheets. I don’t know yet if I want to “invest” the money on her behalf, or use it for some big purchase for Baby. Don’t know yet.
    • RIP Aunt’s gift to BabyRIP: 50 EUR. One of my aunties also gave some money to BabyRIP. Same as above.
  • Expected income tax: -3245 CHF. Based on my 22% effective expected tax rate.
  • Expected lump sum tax on Pillar 2: -159 CHF. Based on my 6% lump sum tax assumption.

May will be another regular month, roughly ~1500 CHF worse than this one since I don’t expect unusual monetary gifts and another on call shift.

Here’s income graph and breakdown since 2016.

Expenses

Expenses for April 2019: 5456 CHF.

It’s a bit above what I’m comfortable with, but I was expecting a much worse scenario. I knew bills were coming our way, and in the end it still was a controlled month.

We had condo fees for my Italian flat, yearly Swiss TV&Radio fee (SERAFE), some medical bills, a smartphone replacement and a couple of extra dinners out this month. More details will follow.

First, have a pie 🙂

April Expenses Breakdown:

  • Housing 2392 CHF: rent + condo fees 1385 CHF, Italian flat condo fees 250 EUR (ouch), cleaning 225 CHF, TV&Internet 99 CHF, Serafe (Swiss TV&Radio fee) yearly bill 365 CHF (ouch!), Others 32 CHF. Expensive month in the housing category, but still way cheaper than the average Swiss friend, given our small apartment – that’s starting to be really tight for the three of us.
  • Health 1321 CHF: A lot. Mutuel insurance premiums 718 CHF. A doctor visit for me 164 CHF. Mrs RIP medicines 157 CHF. RIP’s blood exam 282 CHF. I didn’t expect tat much for a blood test but… welcome to Switzerland RIP!
  • Groceries 773 CHF: Above average! And for the first time Coop overtook Migros (388 vs 368 CHF). Other shops (Spar) 19 CHF. Coop is closer, and more convenient for daily purchases. We didn’t do any big bulk grocery purchase this month, which ended up increasing our monthly expenses (and visiting Migros less often). I hope things will get back to the norm once we overcome current stressful life situations.
  • Leisure 425 CHF: Still a lot of money here. Let’s break it down. Tech & Gadgets 231 CHF. one day at the end of the month Mrs RIP came home almost crying because she broke her smartphone. It fell on the ground and the screen was gone. Maybe we could have it fixed somehow, I don’t know. I didn’t even look into that. The phone is still functioning and at the time of writing this draft (May 8th) Mrs RIP is still using the old broken phone instead of the one we purchased as replacement. Which phone we bought as replacement for her Huawei Mate 10 Lite? A Huawei P20 Lite for 231 CHF from microspot.ch. The amount included taxes, shipping and a cover for the phone. It’s first time we broke a phone, it’s ok. We’re both sleep deprived and life is intensifying a lot these days. Shit happens. Mrs Learning 100 CHF: she rented a room for her first teaching activity. She’s excited to help other moms improve their baby bonding! I hope this generates some money, but even if it doesn’t… who cares? 🙂 Mrs Leisure 85 CHF: cash withdraw for Mrs RIP and a haircut. A friend of us cuts Mrs hair at exceptional rates for Switzerland. Other 9 CHF: a couple of photos printed and 1.90 CHF spent on my side on a mobile game. I don’t usually do this, but this game is giving me much fun and I wanted to spend 9.99 CHF on it. Luckily I had 8.09 CHF of Google Play credits thanks to Google Opinion Rewards, as I already told you few months ago 😀
  • Eating Out 238 CHF: a couple of restaurants and my relatives (mother and sister) visiting.
  • Transport 182 CHF: A good month. No monthly/yearly pass, but we spent 92 CHF on local transportation for us and my relatives that came visiting us. Very good. The remainder is a long Mobility car sharing usage of 58 CHF and a Uber ride of 32 CHF.
  • Fees 48 CHF: mainly our Betreibungsauszug (debt collection extracts) for 34 CHF. We applied for a big apartment in a Baugenossenschaft (cooperative). Double the size of our current one for a rent at least 1k below market price. We didn’t make it, there were more than 50 applications for the same apartment. The remainder 14 CHF is postal/bank fees.
  • Baby 29 CHF: Ok, I think I’m not itemizing baby food expenses anymore, and maybe some of Mrs RIP’s cash (leisure) expenses are directed toward Baby stuff. anyway, it’s amazing. Maybe we’ll allow ourself to enjoy a kind of expensive (for my standards) swim course (First Flow) somewhere this summer.
  • Clothing 25 CHF: A couple of items in H&M for Mrs RIP.
  • Travel 22 CHF: Some expenses relative to relatives visiting (no pun intended).
  • Gifts 0 CHF: Whaaat? Really? In April we celebrated both mine and babyRIP’s Birthday… Mrs RIP, what happened? Should I be worried?

It was not a cheap month, but we had medical bills, Serafe bill, Italian condo fees and other extras.

May won’t be cheaper, since I’m expecting other medical bills for doctor visits I’ve already taken. in hindsight, we should have both reduced our health insurance deductible this year…

Savings

April Income: 15.2k CHF, expenses: 5.5k CHF –> savings: 9.8k CHF * (Saving Rate: 64.2%).

Not bad! Almost 10k saved 🙂

Let’s put expenses and savings (for this month) in perspective:

May savings will be lower for sure. I expect a smaller income (1.5k less than April) and expenses more or less on the same range of April, if not greater (medical bills are coming, and maybe vacation planning). 

Income and expenses so far in 2019:

FI Metrics

As I’m saying every month: FI metrics are becoming meaningless to me. 

Here’s a screenshot of our current FIRE metrics:

81.92% FI (according to imaginary expenses and an obsolete FIRE model), 14 months left.

Crossed 60% (62.08%) Swiss FIRE. This is slightly more grounded since it’s based on actual expenses, even though expenses are expected to grow by A LOT if we stay here: bigger apartment (1.5-2.5k CHF more per month), childcare (1-3k CHF more per month), and probably much larger child related expenses. And if we want to have a second child? 100k CHF/Year won’t suffice.

Here’s a graph showing real expenses vs ideal expenses vs “monthly allowance”, i.e. my SWR applied to my NW.

The blue line represents actual monthly expenses in 2019. The Yellow line represents ideal expenses (if we move outside Switzerland). Note that ideal expenses are expressed in EUR, so I had to normalize the number to CHF here. The red line is our monthly allowance (Net Worth * Safe Withdrawal Rate). When the Red line will cross the Yellow line, we’d be 100% FI according to our “Italian” plan (which is obsolete). When the Red line will (will it ever?) cross the Blue line, it means we’d be 100% FI in Switzerland.

Cool graph, meaningless though for both plans:

  • Meaningless for the “Italian” plan because it is obsolete both in applicability (we don’t know if we want to mover back to Italy) and in planned expenses (3500 EUR gross per month, I forgot how to count that low)
  • Meaningless for the “Swiss” plan because expenses are necessary going up in few years, and we can’t invest as we wish all the Tax Deferred Accounts, making same SWR of the Italian scenario not feasible for the Swiss one. Plus, current expenses in Switzerland are after tax, while the “Italian” ideal expenses include taxes.

Meaningless but beautiful and energizing 🙂

I will (one day) extend the graph back in the past to see progresses and milestones.

I added this graph and many more in my “2019 Exp” sheet in my NW spreadsheet. Go check it out.

Financial Facts, more or less in chronological order

Didn’t happen much during May, except that every day has been “a good market day”. 

Decided to move REIT into “stocks” in my AA. Changed Ideal AA from 5/30/65 (REIT/Bonds/Stocks) to 35/65 (Bonds/Stocks). Before the move of REIT into stocks, real AA was close to Ideal AA. Since I gave the extra 5% to Bonds, after the move there is a big mismatch between real and ideal. Real is close to 30/70, while ideal is 35/65. I plan rebalance and buy more bonds later this year.

Rejected money (100 USD) for sponsored link on an old article on this blog. It was easy money. Just add a text/link on an old article (I already rejected dozens of sponsored post offers). This one was very tempting. Just add a backlink and cash 100$. The link was about a US mortgage calculator, not anything really bad (even though not something I or my readers need or use). I was close to accept. Then they asked for an entire paragraph that was completely out of context in my post, so I said No thanks. I should really write a page about “how to work with me”, that would simplify my inbox management 🙂

Sold 7.5k CHF PostFinance Pension75 (Pillar 3A) as minor rebalancing action, i.e. to reduce stocks exposure. And a first step to get rid of PostFinance Pillar 3A solutions and move toward VIAC. Even though I’m not fully convinced about VIAC. Their fees still look too high to me.

While hosting my mother and my sister during Easter for BabyRIP first Birthday, my mother decided that on top of her generous Baby’s gift she would also repay me for her own (and my sister’s) flight ticket to/from Rome. I tried to refuse but she insisted several times. That was an expense that happened in March. That means that I retroactively changed our NW sheet and March became a <4k month, hurrah!

As I said, this was a tranquil financial month. Didn’t buy ETFs this month, even though I (automatically) sent my monthly 2.5k CHF to IB. I have 13k sitting on IB. I’m waiting to complete my study on ETFs before moving money.

Financial Future

The month has been intense for many reasons that I’ll explain in my “personal update” post, so not much time to think about money and future moves.

I want to finish my study on ETFs, but right now I’m not making progresses. Life these days is really ruthless. I wasn’t able to write much, but better days will come for sure.

So… that’s all for now 🙂

14 comments

  1. Hello Mr RIP,
    Thanks for the post. Would you consider to do an article about why you think VIAC is a viable option for storing pillar 3 compared to other services? What would be the considerations, pros and cons, etc.
    Many thanks for all your posts, I am learning a lot! 🙂

      1. Nope, piecharts are the worst! Quite unreadable if you want to see differences between slices, and to see the part of the whole there are other solutions as well.
        Nothing wrong with your numbers though, just from my job experience I have a personal hate against piecharts 🙂

        1. I kind of like them for these one-off things. They’re not good for time series and many other visualization goals… but for monthly spending I think they’re perfect! 🙂

  2. Hi RIP,

    ready to help here with some ideas. I have published 10+ articles (in german) on saving & investing in the 3rd pillar on our blog at smolio.ch You’ll find 2-3 articles on VIAC there as well, where I moved my 3rd pillars to last year.

    Cheers, Thomas

    1. Picked the highest deductible for both me and my wife. And I bet we’ll both just land 1 CHF below the deductible at the end of the year 🙁

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