Inspired by @Julianek post, I have decided to also share my current FI plan, the uncertainties I still have, and hopefully get your feedback.
Expenses: (monthly basis)
- flat rent: 1’000 chf (shared with my partner)
- utilities: 200 chf (aka nebenkosten, shared)
- food and utensils: 40 chf x 30 days = 1’200 chf
- health insurance: 200 chf
- transport: 100 chf
- holidays: 300 chf
- total expenses: 3’000 chf
Income: (monthly basis)
- salary: 133 chf x 140 hours = 18’620 chf (I work flexible hours, this is the average)
- after taxes: salary x 86% x 75% = 12’000 chf (estimate, I assume 14% social and 25% income tax)
- savings: 9’000 chf
- saving rate: 75%
- broker: Corner Trader
- VUSA.SW: 70’000 chf (Vanguard S&P 500, traded in CHF on SIX)
- VEUR.SW: 35’000 chf (Vanguard Dev Europe, traded in CHF on SIX)
- cash: 55’000 chf
- I wanted to keep things simple, so I chose Corner Trader. I purchased the Vanguard ETFs on the Swiss Stock Exchange in CHF. I was hesitating a lot, because Interactive Brokers is much cheaper, and the US-based ETFs have much lower expense ratios. I was, however, afraid of the US. It is a different juristiction, there is the estate tax, It was too much for me to handle. I’m still not sure it this was the right choice.
- I would ideally buy VT, but it is not available in Europe. There is VWRL, but with an expense rate of 0.25%. So i went for VUSA (0.07%) and VEUR (0.12%), which anyway cover over 70% of the global market cap. Moreover, when the dividends first came, CT did not levy withholding tax on VUSA, but 20% on VEUR. I don’t get this… How much would they take away for VWRL?
- I still have not purchased any bonds. Bonds are there neither for returns nor for risk reduction. They reduce volatility. People have been discouraging me from buying bonds in the current situation. I might stay 100% stocks and only buy some bonds when I reach FI.
- I have entrusted all my portfolio to Vanguard. I’m not sure how smart is this, I just base on what I read online about them.
- My cash pile has been growing lately, as I hear all around that we are due for a crash. I’m not sure if I should buy more stocks or wait. Actually, I would be happy if the crash happened already, because then I could buy cheap once the prices would reach the bottom.
- I have considered buying real estate in the past, but then I learned that mortgage loan is actually a leverage, which increases your return, but also increases risk. Without this leverage, a rental flat is not so attractive anymore. Plus, there are already real estate companies in the ETFs that I own. Finally, I would not like to have the burden of taking care of a flat.
- That being said, I feel very uneasy having all of my portfolio in a digital form in some ETF, handled by some broker, everything in the cloud. I work hard to save all this, how can I ensure that it doesn’t evaporate? My main worry is not about market crash, it is about a hack or a glitch.
- I am not a Swiss citizen and I would like to reduce my living costs after I retire. I would like to see some of the World, live a bit in many parts of it. I still don’t know how to solve it.
To finish off, I have built my strategy following a series of great blog posts that I really recommend: http://jlcollinsnh.com/stock-series/