A journey of a 1000 miles begins with a single step

Hello fellow mustachians,

I only discovered Mustachian Post recently, but read a lot of the blog posts already. It’s great to have someone blogging about his personal experiences while trying to reach FI in Switzerland.

I’m 36 years old, originally from the “Big Kanton” (for those of you who don’t know: that’s Germany), living in Basel since nearly two years now. Since I was a child, I had the frugal mentality. If I got some pocket money from my grandmother, I made sure to at least save 50% of the cash (even if it wasn’t that much).

I’ve been working in the IT area since more than 10 years (if you count job years), but have been doing IT since mid of the 90s (coax cables, administrating WIN NT machines, fixing problems for relatives). The good old days. Ok, maybe not…

Anyway, I’ve been living a frugal lifestyle for most of my life. When still in Germany, I had a decent salary for the region where I was living, but nothing special in fact.
When I received the job offer from Switzerland in 2017, I was shocked (positively) at first. You could make so much money, just for doing the same things I’ve been doing for years??

I think I’ve been telling people that I’m going to retire way before the official retirement age all my life. Read a lot of books about financial topics, and theoretically I already knew back in 2013 that investing in large passive index ETFs is the best option to invest. BUT, I’m a perfectionist, hence I always wanted to read more and more, waiting for the perfect time before investing my hard earned money. Stock markets had recovered quite well from 2008, so I was hesitant. Btw, I also knew back then that market timing doesn’t work, but still it’s hard to believe if you think you can influence all other things in your life…

Additionally, I also read a lot of blogs. MMM, german blogs from the FIRE movement. Again, all nice to read, but still didn’t invest. Instead, I saw the cash grow on my bank account (slowly, but steadily).

Long story short, here I am now. Still reading a lot of stuff, but finally managed to open an account at DEGIRO, transferred 10k there and bough three ETFs:
75% Vanguard FTSE All-World (IE00B3RBWM25) in CHF
15% iShares Core MSCI Emerging Markets IMI UCITS ETF (IE00BKM4GZ66) in EUR
10% SPDR® MSCI World Small Cap UCITS ETF (IE00BCBJG560) in EUR

I decided to add more EM to the portfolio due to All-Wold only having 10%. The SmallCap can be debated. For me it’s a bet to gain more Alpha.
I still have a lot of cash lying on the bank account, which will be invested within the next weeks and months.

First question I have: does it make sense to spread the ETFs in CHF and EUR? In my case it was the spread, which was better at EAM than at SIX. I don’t plan to retire in Switzerland. Still, the bet is on which currency is more stable in the coming years. I know that the underlying currency is USD.

Second question: would it make more sense to switch to IB directly? The fees at DEGIRO were pretty good, but from what I’ve read IB is the better place to hold your portfolio

Third question: would it be better to buy funds like VT directly in USD? VT has more stocks, including small caps, afaik

Fourth question: I read the nugget thread about taxation, but I don’t get it. Is it better to hold funds in USD to save taxes in Switzerland? Or can I also hold Irish domiciled ETFs?

Fifth, and final question: regarding the 60k threshold for US funds. MP writes that the situation is unclear, and if you die (as a non-US citizen) everything above 60k is taxed fully. I read several threads in this forum, and there I’ve read that the threshold is 5 million if your country has a tax agreement with the US. Which one is true? I’d like to invest in VT, but I have mixed feelings about the 60k threshold.

For the sake of completeness: I don’t have any 3rd pillar so far, because this money is blocked until your retirement. I don’t like my money being blocked, so I did not invest any cash there yet.

I guess that’s it for (thanks for reading until here). Don’t hesitate to ask if anything is unclear. Of course you can also point me to other threads, if my questions have all been answered before. I read a lot of threads already, but sometimes you don’t see the forest for the threes…

BR FIREstarter

You shouldn’t really mix FTSE with MSCI indices, as they are not the same when it comes to classifications of developed and emerging markets. A better choice would be a MSCI World ETF such as Xtrackers XDWD or XDWL or the Ishares SWDA. All three are actually cheaper than the VWRL you’ve chosen.

Yes, it would be more cost and tax efficient to invest via IB, but most important for now is that you made the first step. Congrats!


It doesn’t even matter if the underlying currency is USD, it matters in which currencies the cashflows of the companies are made, and usually it’s a mix. It doesn’t matter in which currency you purchase your ETF.

If you would have an account at IB, you can exchange currency practically for free. So buying VT instead of VWRL would have a few benefits, at least as long as you’re domiciled in Switzerland and only have to pay 15% withholding tax.

How to put it in a nutshell… First of all, you write USD, which is a currency and has nothing to do with taxation, I assume you mean USA. USA levies 30% of withholding tax on dividends. If your country, like Switzerland, has a deal with USA, this tax goes down to 15%. Ireland also has the deal, so the Irish ETFs also pay 15%. But then comes the final difference. If you own American stock directly, you can reclaim the withholding tax paid in USA from the Swiss tax office. But the Irish ETF cannot do that, this 15% is forever lost.

Where does MP write that? You know, the amount got updated some time ago and now it’s 11 million already.


If you judge by TER alone, you’re right that MSCI World ETFs are cheaper than the All-World from Vanguard. Still, I Vanguard is paying back the lending incomes to the share owners, so last year the cost of VWRL was basically 0 (at least that’s what I read in some other blogs, would need to search for the links though).

I know that MSCI and FTSE have different classifications (basically it’s South Korea in EM or Developed). I just chose the MSCI EM due to the higher number of stocks and the larger volume (instead of Vanguard EM IE00B3VVMM84). I’m ok with having a small overlap, or also missing out on one country.

I don’t find the option to use citations :-/
Thanks a lot Bojack for answering my questions!

Regarding the 4th question: I think we both mean the same. I can only buy VT in USD, that’s why I was referring to USD (not USA). Cool, now I get the reclaimation part. So it’s better to directly hold the fund.

Regarding question number 5: it’s prominently shown here: https://www.mustachianpost.com/etf-portfolio/ ( [Vanguard FTSE All-World UCITS ETF](for money above 60kCHF))

For the broker: I’ll open another account at IB then.

MSCI World tracks 1600 companies from the developed markets, FTSE All-World (index for VWRL) tracks 3200 including emerging markets, so you’re not comparing the same things here.

That’s interesting actually. I would like to see how fund providers actually work, because when I compare the return of VT and VWRL or VOO & VTI then it’s hard to spot the difference. TER means “TOTAL expense ratio”, so why would they advertise an expense ratio of 0.25% if they would actually reach 0%?

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you highlight the fragment of someone’s post and then you see a context menu “quote”

Cheers! It’s different in every forum :wink:

I’ve read way too many blogposts on the way to invest the first 10k. Let me search again for this piece of information. I guess they advertise the TER for the “bad years” as well, so nobody can sue them in case you have to pay those 0.25%. TER is also not always correct. I think I read in the wertpapierforum (German), that the TD (tracking difference) is more important and funds with higher TER can indeed by cheaper than some with lower TER.

Anyway, I’ll check regarding the payback of the lending.

Being obliged to state a high TER for legal reasons is understandable for me. But they should be more transparent about their actual cost for the client for each year. It’s hard to comprehend just from the factsheet.

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I know it’s not the same. It just seems wrong to mix VWRL with EIMI, where the country classifications don’t match, and one includes small caps while the other doesn’t.

As to NAV, the XDWL I recommend appears to beat the benchmark as well (scroll down to performance chart)

By the way there’s a cheaper alternative, the Ishares IUSN with 0.35% TER.
Still this is far more than Vanguard US Small Cap funds (VB is 0.05% and VSS is 0.13%).

@_MP is wrong in that case.

I chose this one because it had a large number of stocks. I know that the TER is not optimal.
I think I’m not able to buy VB and VSS at DEGIRO, that’s why I chose the SPDR one.

The factsheet of VWRL

If I read this chart correctly:

  • The benchmark is the FTSE All-World index. Question: does this return already take US withholding tax into account?
  • Gross of expenses is the annual return of the fund. Question: Why do they call it “expenses”?
  • Net of expenses is the annual return minus the TER. So it seems like effectively it was 0.27% since inception, but even the Net return is still better than the index.
  • In the last year, the TER was even only 0.22%, but the net fell below the index.

That’s interesting! Maybe someone should give him a hint :wink:
So even if you die (as a non-US citizen) in a land which has a tax agreement (like Switzerland), you only get taxed if your funds have more than 11 Mio USD? That would be fantastic.

I would then buy VT instead of VWRL.

MP writes about this in detail here:

I have invested up to 60kCHF in the famous VT ETF from Vanguard.
Why 60kCHF? Quite simply because I still haven’t managed to get a 100% official answer regarding the estate law in the US which potentially taxes you at a 40% rate at your death on assets exceeding 60kCHF invested in this country. There is a US-Switzerland treaty which, after several (re)readings, is still incomprehensible (if you, dear reader, are a lawyer, don’t hesitate to enlighten us!). Even the tax department of the canton of Vaud couldn’t answer me (or maybe they didn’t understand the question…)

So did you, Mr @1000000CHF get a convincing confirmation somewhere, that indeed, you can sleep relaxed?

According to factsheets its 3344 holdings for the Ishares and 3190 for the SPDR fund. Fairly close.
You can’t buy VB and VSS on Degiro anymore because of the MIFID II. You can buy them over IB though.

As I said: I’m currently searching where I got this information from. I know it was a german FI blog. Atm, I have 20 tabs opened. Still didn’t find it yet.

Of course you should not take anything for granted, and also don’t only rely on one piece of information.

Thanks for the hint! Somehow I didn’t find the iShares one when composing my choice of ETFs. I only found iShares Small-Cap 600 Value (IE00B2QWCY14)