Editorial note: financial update will become a quarterly event. I’m covering August and September here to align with quarters. Next edition will be Q4 2017 (Oct-Nov-Dec).
Hi RIP voyeurs,
welcome back to my monthly update. As usual, the reference doc is my NW spreadsheet.
You may find that the doc is out of sync with the screenshots from this post and with the previous ones related to financial updates. Two reasons:
- I retroactively added pro-rated end-of-year work-related windfalls (13th salary, yearly bonus, huge Hooli stocks vesting event). I’m considering the pro-rated amounts as “credits”, so they figure in my Net Worth under the “All – Other” category. Why? Cause it sucks to see FIRE date forecasts never getting closer! Yes, it’s a matter of keeping myself motivated. Am I cheating? Well, I wouldn’t say so: the windfall events will happen in December/January and there’s almost zero risks of not getting the money.
- I added few entries in the October column along with a couple of rows for the new Vanguard World Dividend ETF I purchased in October on Interactive Brokers, to keep the investing tab of the spreadsheet working.
I’ll try to keep this update short. [Update: no way I can keep posts short!]
NW Delta +34,785 EUR (August +13,151, September +21,634). Very good! Saving rate close to 70% on both months and spending below 4k in August and over 6k in September, but that’s due to few exceptional events.
Thanks to two years of expense tracking (so thanks to this blog, else I wouldn’t have bothered tracking my expenses) I discovered a pattern: it seems August and January are our cheapest months, both this year and last year. We prefer to go on vacation during June-July (and eventually September-October) avoiding August which is when regular people go on vacation in Europe. Better deals, less crowded places and August here in Switzerland is just amazing!
Wins for August-September 2017
1) Surprisingly positive 2016 Tax return!
I had my 2016 tax declaration meeting with a “financial advisor” (just a man that’s skilled in filling the tax form) in mid September and, well, apparently I should get back 10,000 CHF! Why? 6.7k CHF Pillar 3 buy-in, plus 20k CHF Pillar 2 buy-in, plus having raised my contribution to Pillar 2 to the maximum allowed by Hooli Pension Plan helped.
We also discovered that I’ve paid much more Quellensteuer (tax at source) during year 2016. 10k CHF more than 2015, while 10k is also my gain in gross income in 2016. Anyway, I’m only accounting for 9,000k CHF credit in my NW since I expect at least an extra 1k tax on my ETFs.
Here’s the thing: capital gain is not taxed in Switzerland, profits/dividends are. Accumulating ETFs are taxed based on a fake dividend date and a fake dividend amount. Two (out of three) of my ETFs didn’t have a fake dividend amount yet for year 2016 and the ictax site says “The taxable earnings could not yet be identified and will be determined later“.
My tax advisor said “well, if they reported no dividends it means you pay no taxes” which is totally false! Please take a look at my ETF 101 post for more information.
I expect (virtual) profits in the range of 3-4k CHF taxed at my highest marginal bracket which is… I have no idea, but somewhere around 25-30% so at least 1k extra taxes.
That’s why I accounted as a 9k CHF credit on my NW. If you click on the image on the right you can see some detail.
2) Confirmed 2015 +5,435 CHF positive tax return.
Double the gain, double the pleasure!
Few days after the 2016 tax return I received two letters for 2015 tax return: the Federal one and Canton/City one.
The Canton/City one confirmed I should get back 5,435 CHF and I’m waiting instructions on how to get the money back 🙂
3) In target spending (August).
A month below 4k CHF is a good month. 500 of which for an indulging relaxing and romantic weekend in Italy. Well done!
4) Awesome markets returns (September).
Mr. Market got a couple of bumps but ended up recovering almost everything by end of August. Euro ETF (where I have 180k EUR invested) closed negative for the third month in a raw. Nothing to worry about. Things can (and one day it will) go south in more spectacular ways.
In fact in September everything was back to normal. Too much. All time high.
Losses of August-September 2017
1) My Grandma died at age 89 in September.
My Grandpa (his husband, still alive at age 97) is not in great shape too. A big personal loss, even though it didn’t come unexpected. I want to look at the bright side of this, having to care for my living Grandparents in last year kind of put the larger family close together, and that’s a good thing. I’m communicating with my cousins and sister on a daily basis and that’s good. Their legacy is here, they have been amazing grandparents.
My only regret is that they couldn’t come at my wedding in June. Anyway, RIP family took a plane on the day of the event and attended the Funeral. That’s the 800 CHF entry for this urgent trip to Rome.
Other financial facts
1) Neutral currency fluctuations.
CHFEUR has been stable over the whole period. At least the CHF stopped losing terrain compared to EUR. Regarding USDEUR, at one point in August, after North Korea playing with bombs over Japan, the USD dropped below acceptability but ended up recovering pretty much everything.
2) Gave up with a 3k EUR family loan.
I loaned money to one of my family member few years ago and I kept accounting those 3k as credits in my NW. Let’s be realistic, I’m not going to get this money back. I’m sure the person who asked me money will do their best to repay the debt but I’m not expecting this to happen.
Even though it’s a financial loss I didn’t put this item in the “loss” section since I consider that a gift. And a gift is not a loss 🙂 I suggest you approach friends&family loans with the same approach, as wonderfully explained by Trent Hamm here.
3) Sold all the shares of my Tech ETF.
Already discussed in last post.
1) Had a relaxing 3 days vacation in Italy.
We used Mrs. RIP’s family car for a while here in Switzerland and we needed to bring it back to Milano and come back to Switzerland with the train. We stayed 3 days in a WWF Oasis in Parco di Montevecchia, close to Como lake. Relaxing, eating healthy, hiking everyday. Wonderful!
2) Two trips to Innsbruck.
Sadly our best friends here in Switzerland (he’s been my wedding witness on both my weddings this year) moved to Austria. We went visiting them twice in September. First time as a surprise with other Italian friends, second time planned and just me and Mrs RIP. We miss you Mr. DIP!
3) Experimenting Vegetarianism August 2st – September 30th.
Yes, I did it. I didn’t touch meat and fish for two months. It’s been so easy, really. I didn’t miss it at all. Ok, barbecues and social events (and restaurants) are tough, mainly due to lack of alternatives, but I must admit it’s been much easier than I expected.
Vegetarian, not Vegan. I love dairy products. Cheese, milk, butter, ice creams, eggs. I can’t get rid of them, sorry. How do I compensate for lack of meat? Ideally more veggies and legumes. So far it’s been more cheese and desserts… need to fix it.
“But RIP… why?”
I don’t know. I was eating way too much meat. I’m experimenting. I don’t know if I want this to be permanent. It’s a mix of ethical and healthy reasons. I love animals and I was living a hypocrite life eating them. I know dairy industry is as evil as meat industry but I’m not here to save the world. If giving up 1% of my pleasures makes me more aligned with my values I’ll do. Giving up with dairy products would be more like 50% of my pleasures 🙂
Anyway, I’m omnivorous again in October. It’s been an experiment, I wrote an analysis doc (in Italian, intended for friends only, not going to translate)
4) We didn’t go to FIWE 2017.
I felt disconnected from the community and I needed time and space for myself and my family. Plus I need to focus more on my job for a while. I’m sure if I’d go to FIWE I’d quit my job the day after. I’m sorry friend, we’ll have more opportunities to meet in future.
5) I ran a Half Marathon!
Goal was to do it below 2 hours, I failed for just 34 seconds but I’m so happy anyway! Wanna keep up and run a full Marathon “one day”.
6) Back to 100% at Work.
Yes, starting October 1st I’m back full time after 9 amazing months working 80%. It’s not been an easy decision but I made it. Why? Was working 80% a failure? Absolutely not! It’s been amazing, really. I loved my Fridays alone. I loved that feeling on Wednesday afternoons of “the workweek is almost gone…“. So why did I come back full time?
- I loved so much personal time alone that this motivated me to retire as early as possible. 80% looks like still working. If I were condemned to work my entire life I’d aim to 80% or even 60%. I think 60% is the perfect work-life balance, if work must be part of the balance. Even Keynes, father of modern capitalism, predicted a future made of 15-20 hours workweeks. Anyway, more money helps reaching my perfect work-life balance, which is 100% Life. Each extra day I go to work pays for 10 days of Life (uninvested). Let’s rush these last miles!
- Hooli is a highly competitive workplace and even though part time working is totally accepted, it’s hard to get promoted. At my level of tenure it’s expected to grow, so I better get my sheet together and push on the pedal. Get promoted, get more money, and then maybe unplug a little bit. Eventually I might switch back to 80% after a promotion, will see. It may take one or two years to reach next level.
Numbers & Details
Don’t want to go deep here, if you care about that take a look at my NW sheet and the tabs with expenses, investing,…
Trips to Montevecchia, Rome and Austria (1843 CHF)
Yearly public transport pass for Mrs RIP (807 CHF). We’re trying Mobility for car sharing, added 25 CHF on top of the yearly pass price to have a Mobility account.
Eating out too much, above 300 hundreds per month since July. We have a lot of friends. When we came back from honeymoon everybody wanted to have a dinner with us to get updates. We love to spend time with friends, but weekends are not enough to satisfy all our social needs. Did I tell you Mrs RIP is a social beast? Well, I’m the one who pushes for having dinners at home with friends (the famous RIPPizza!) but it’s not practical during the weekdays. So we went dining out more than expected. I guess this is going back to normal in October.
New running shoes for just 50 CHF!
Wait, I gotta tell you the whole story 🙂
I’ve ran my half marathon with shoes I felt ashamed of. Here in Switzerland everybody is visibly rich. Very rich.
They spend tons of money on everything. Sports make no difference. And it’s not that reasonable thing like “I’m getting good at Squash, let’s upgrade my entry level racket to an outrageously expensive and professional one!“. No, they go directly with cutting edge equipment.
It means that at the race everybody was wearing shiny new 500 Francs shoes and I had a pair of broken old Adidas, close to cutting themselves apart. Yes, you can see them in the picture. Probably you can’t see the not matching socks though, let me help you with another pic.
The shoes were falling apart but I’ve been running with them for last 3 years and I didn’t feel comfortable getting new ones just before the race. I decided to run this race and them let them go (with a bit of sadness).
Early on the following week I went shopping for shoes, a thing I hate hate hate. I set up a budget of 100 CHF and… wtf… after having visited few stores I discovered that here in the rich Switzerland you can’t buy decent running shoes for less than 150 CHF. I was close to give up when I found a dusty box on a shop with “on sale” on it.
Last pair left, size 12 (my size) US, Nike Zoom Pegasus 33 Shield. Price Tag: 60 CHF. I googled it and checked the suggested price was roughly 120-140 CHF, trending down since they just launched the Nike Zoom Pegasus Whatever 34. I didn’t care about the new model, I tried the shoes, I loved them (they’re also good for a heavyweight like me, with extra softness on the heels), I decided to buy them.
Not fully satisfied, I googled for Hooli discounts and discovered that we, Hooli employees, have 10% off for purchases on that shop. Would it work on top of the 50% sale? Yes it did! The clerk at the shop: “ok… 60 CHF… minus 10%… ok, give me 50 CHF“. Yes, final price was 50 CHF for my new shiny running shoes. I feel so good when I find such bargains 🙂
Income: 32,369 CHF – Expenses: 10,105 CHF – Savings: 22,264
Saving rate for the two months is 68.8%
Saving rate for 2017 so far: 61.6%. Excluding Wedding: 73.9%
Net worth is 687,399 EUR, Delta for the two months is +34,785 EUR
FI% jumped to 62.06% (delta is not meaningful since I backfilled)
100% FI Forecast: 34 months left.
FI Date Forecast: July 2020.
Current Allowance: Year 22,340 EUR – Month 1,862 EUR – Day 61 EUR
Current Withdrawal Rate: Real: 10.44% – Ideal: 5.24%
Years of Ideal expenses accumulated: 19.1
That’s all folks!
“RIP… you promised this time it would have been shorter…”
screw you 🙂
Have you rented out your flat in Milan yet?
No, the flat in empty and in bad conditions 🙁
Hi Mr. RIP, I’d like to sign up but your jetpack is not taking off.
What do you mean? I’m kind of not webmastering much these days
“well, if they reported no dividends it means you pay no taxes” which is totally false!
What happens if the fund is not on ict admin.ch or doesn’t communicate the dividend to the Swisstax administration later ?
They may decide to consider the entire capital gain as profit and tax it
Hi there RIP,
Stumbled into your blog via the FIREeu project and found lots of interesting points that I am going to dig into later on. I see you mention “Italian specific aspects of FIRE” and since I am an Italian national and currently I live in Italy that kind of sparked some additional interest in me… I cannot see your Portfolio, maybe you don’t post it publicly, but I’d be curious to know more about your strategies and choices, although you live in CH and that means that taxes are going to be different especially on the dividend side. Anyhow you have a new reader from now on!
Hi Stalflare, welcome to RIP 🙂
I knew your blog, thanks to Andrea at incassaforte.
i’m not very active these days but I’m coming back!
You should be able to see my portfolio: just go on my NW spreadsheet and go on the “investing” tab (link: https://docs.google.com/spreadsheets/d/1ilL6rBdzIQ6yRotqOKLUKI7KXFxu5_cZ5FQgdYTSHJk/edit#gid=895474569)
Now I’ve got it!! Good to see that you know the blog, although I seem to post only monthly updates… I need to start writing about something different too!
Your PF seems to be focused on Funds only, am I reading it correctly? Are you investing with monthly instalments?
Anyhow now I have you on my read list! 🙂
Just discovered you nice blog. Very interesting.
Not sure your approach would suit me though. I would prefer working longer during my life, maybe not full time.
Greeting from yet another Italian working in Switzerland for an American Company (since 2011).
Hi LightQuantum, thanks for stopping by 🙂
Well, we’re also considering a solution where we work 60% for a while.
I mean, Italy is sinking and Switzerland is flourishing… retiring in Italy would be cheap but what about quality of life?
Early retiring in CH is pretty expensive though.
Working 60% can be a nice trade-off for the mid term.
Thanks for the information RIP, your blog is one of the best findings I made this year.
Couple of questions I would be interested to see your approach:
Real Estate. I know about your (shitty) flat in Milan. Here in Spain the real estate situation is pretty much the same as in Italy -high prices that remind the bubble scene in 2005 and ramping rent prices due to airbnb effect. So my question is: what would be your approach regarding real estate once you reach the FIRE situation? Rent till the end? Or would you buy a house using part of your savings? Do you save separately for this matter? In my case I just started my thirties and whilst savings keep growing, I cannot think in using them in a FIRE strategy without first having a place to live that FIRE…
Kids. This is obviously a very personal aspect, but I recall having read that you would like to have. Any comments regarding how to handle it along with FIRE strategy? Do your calculations take into account the possible expenses that can generate the kids? (please excuse the expression, never meant to consider my kid an expense, but you know what i’m talking about)
Hi Garbatella, thank you again and welcome on my blog 🙂
Real Estate: well, this is the Elephant in the room. I’ll probably devote on this topic a full post when I’ll clear my mind. I’ve already hit a wall with my crappy flat in Milan and I’m scared of doing another mistake. In the meantime I see friends investing all their financial lives to buy apartments, paying mortgages forever, feeling entangled and unfree to do whatever they want. A couple of our friends invested way more that they were able to afford to build a “dream house”. Actual costs went 70% above planned, they’re deeply in debts and now that the house is almost done (but only 20% furnished) he got forced to relocate to another country or get fired. The house is unrentable and they feel like sheet.
I see real estate nightmares all around me.
Still I guess I’m not going to rent forever. My personal opinion is that if you plan to stay at least X years in the same place you should buy. X really depends on local real estate market and extra buy/sell fees (notars, bureaucrazy, agencies, taxes). In Switzerland X can easily be infinite or at least 8-10 years (which is a good approximation for infinite!). in Italy maybe X = 5.
Anyway, I’m not saving separately for it. My target FU money already accounts for it. I’m planning to need 3500 EUR month at 3.5% WR –> 1.2M EUR. In case I’d buy a house (no more than 200-250k EUR worth, probably cash or very low interest mortgage) I’ll have less money invested but I’ll definitely need way more money per month (no rent needed). In case I’d rent, 3500 EUR accounts for a rent of an equivalent flat (700-1000 EUR/Month). So the math won’t change.
About children.. well, I suggest you read my latest financial update 😀
I’ll adjust my numbers, probably. I’ve already done (3000 –> 3500 EUR/month).
But I don’t have enough data right now. Everybody says “kids costs a lot” but I’m here trying to demonstrate it’s not necessary true.
Hey, fun to read your blog!