FWIW even with ETP/autosale, you still would have 2y of stock exposure on average for each grant which is already a lot to benefit from the stock rise.
Personally I think total comp (regardless of whether you kept the vested RSUs) is probably what had the most impact on your current net worth (forgot if you shared your level/comp, if it’s something like L8 I think most people on this forum haven’t realized how high this is).
totally agreed, and I have to say becoming one of the best paid job available made it somewhat less fun for me, I have the impression most junior people starting their career now joined tech for the money (similar to how finance/law used to be when it was the best paid job), rather than because they enjoy building stuff.
Getting slighty off topic and into the weeds a little bit, but since I watched the space at Hooli till 2020, let me add some personally observed nuance to your (IMO mostly correct) conclusions.
Depends (or depended) on the grant size. Grant duration at Hooli was always* 4 years.
Selling would be staggered* to yearly (small amount of shares granted), then quarterly, and finally down to monthly (large amount of shares granted). This evolved over time (to favor large grants) IIRC.
The initial holding period was however always* one year IIRC, so with the monthly schedule you’d first autosell after a year, and next after a year and a month, etc.
With the yearly schedule you’d first sell after a year, then after two years, etc.
I was initially on the yearly schedule (probably for close to a decade?) and then on a quarterly schedule (and a fair distance away from a monthly schedule).
Sir, I was just a mere L6 when I left.
Though admittedly, level dilution took place over time: initially, it was L5 (“Senior xyz”) that you aspired to as a mere mortal. Then L6 (“Staff xyz”). A couple of years before I left it was L7 (“Senior Staff xyz”). Maybe it’s L8 (“Director”) now.
However, over time “the system” would ensure that a high performing L(x) almost always did better than a “meeting expectations” L(x+1) - because “high performance needs to be rewarded” - and some people, myself included, noticed and, ahem, took advantage of this. This was even noticed and discussed (at least among managers, probably among individual contributors) over time, too, but by the time I left the company the supertanker hadn’t turned on this yet. Maybe it has now.
Insert your favorite incentives-outcome quote here.**
I would still claim that the dormant RSUs had the biggest effect on my personal wealth outcome (versus total comp, at least in the terms you think of it). My base salary (and initial RSU grant) was, well, base wise a step back, and RSU wise a mere speculation when I started.
In the early years (looking backwards now) the RSUs had an outsized contribution to my net worth, in later years it probably tilts a bit more towards base comp, but looking at my tax statments, the base salary plus bonus never reached 50% of my total comp for any given year, and the equity portion of that compensation grew significantly more due to my complaceny over the years, while the cash received (base salary and bonus) did not.
Please insert another incentives-outcome quote here.
(don’t mean to belittle your observation: I completely agree with you)
* At least with the information I was privvy to at my level. Maybe at higher levels things worked differently, but lower levels certainly didn’t know.
** It’s still mind-boggling to me that a *data driven company" with actual data scientists analyzing comp and benefits data did not take notice of this. I can only attribute it to “big company” syndrome, where the left hand isn’t aware of the right hand, and the person at the top is mainly motivated by their own comp package.
What I mean is that at vesting a given share had 2y of exposure to the stock market on average (due to the grants being over 4y).
(FYI with fractional shares, I think most folks might be on monthly vesting now)
Heh, sorry for having misjudged
What I try to say, is that the total comp (base+bonus+RSU vests) over 15y(?) was probably already a large amount (without looking at the post-vesting appreciation).
(But I suppose you’re right, it could be the the post vesting appreciation was still a significant part of your wealth increase).
(It’s just that I’m on autosale/ETP, and I also feel like stock market changes still have quite an impact (to the point that you can easily have total comp decrease even if your base+bonus+grant have been increasing every year).
Anyway, I’ll stop the off topic. Hope you’re enjoying things outside Hooli
I had a friend at Hooli who asked me to join his team. I declined thinking it was just a small pay bump to my job and seemed too much like hard work to switch from my cushy coasting job.
It was only a few years later that I realised that salaries had gone crazy and he had a 7 figure total comp!
I did fill out my pillar 2 in 2019 and 2020 with my previous employer and got the corresponding tax deductions from an income perspective.
My current salary does not allow me to further fill out my pillar 2.
I’ll find out in time whether my reduced income tax from 2019 and 2020 will be better than my missed opportunity in investing the corresponding funds otherwise. So far so good, time will tell the longer term outcome.
Growing your funds tax free in retirement … sounds great.
I have … well, I used to have: seven figures stashed away tax free in a retirement account (“Freizügigkeitsstiftung”) when I retired from my previous job.
It’s now six figures.
I’m exaggerating a bit: it went from exactly the lower bound of seven figures to about 10% higher to about 5% less than seven figures to now about 2% less than the initial amount put in.
Anyway, point being: your funds in tax sheltered accounts won’t necessarily grow as projected. Over a long enough period of time they’ll probably grow? Over a short enough period of time they might shrink.
Even if they’re tax sheltered.
Of course it all depends on how you allocate your tax sheltered funds.
I thought I’d earn more outside it; the returns in it were crap (1%-2%)
I wanted easy access to the funds just in case
But then offerings such as VIAC and Finpension are now around, so:
I can invest with stock market returns (no guarantees, but then no guarantees in taxable accounts either)
Income from bond funds can be received tax free and compound tax free
Whole account is sheltered from Wealth tax (a huge consideration in Basel-Land) as well as for AHV wealth basis calculations
Since I bought a house, access to the funds in an emergency could be done via mortgage payment.
Of course, I have to suffer crappy returns for 4 years until I get them into VIAC/Finpension, but I’m happy to take that gamble given I’m compensated via reduced tax and current market valuations are toppy.
It’s also a sneaky way to lock myself into retirement (the longer I do OMY/FMY, the more the under-investment drag will push me to retire early!).
You seem to be repeating this number all around.
Rarely is it that bad, several shared results here over the past years have been significantly higher.
Why so pessimistic, was your 2nd pillar really so poorly performant?
Maybe I have to double check but that was the annualized return for the years 2009-2012. I was shocked since they were such good years I was expecting high double digit performance.
I changed employer after 2012, the new funds earn about 2% each year (basically interest only) for the mandatory part. The 1e which is partly invested into stocks, so you hope would do great, the first 3 quarters are 2023 (last time I checked) earned <2%. EDIT: I just looked up the performance since inception of the fund (2015) and it was 13.28% cumulative performance so around 1.57% annualised.
The good results reported here seem to mostly come from the banking and IT sector? This website has an overview of some 2nd pillar funds and is probably more representative for the average person, the 5 year average seems be around 2%:
In my case, I can report an amazing 1.2% (5 year average)…
However, it still makes sense to me to maximize the 2nd pillar towards RE, I just see it as bonds allocation and part of a ‘bonds tent’ strategy + tax benefit.
I believe that bad is the “norm”, and I’m also of the opinion that these shared (great) results are more likely the outliers, maybe not of the people on this forum, but of the general population.
Mine? Yep, crappy 1-2%, not so rare IMO.
Here’s my numbers:
KMU 2005-2010
Obligatorisch = average of about 2.5%
Überobligatorisch = average of about 1.5% (some years with >3%, but also 2 years simply with 0%)
KMU2 2010-2015
Obligatorisch = average of about 1.5%
Überobligatorisch = probably same, I don’t have separate numbers
Big SMI company 2015-2023
Obligatorisch = average of about 1.8%
Überobligatorisch = average of about 2.5%
(since the CHF amount in Oblig was about 6x the Überobligatorisch amount, the average on the whole amount was <2%)
However same as @ChrisL & @PhilMongoose , I still buy-in in the last years before RE, for the tax savings, to have money tax-sheltered and can then put in Finpension for decent returns, if ok with the risk of that.
There’s a huge lag compared to the stock prices, first the PK had to recover to a decent Deckungsgrad, coming out of the great recession.
Then came double-dip around 2012, and then the many low-interest years, where all the PK’s started reducing their long-term returns estimates that they use to cover long-term liabilities , causing another hit to the Deckungsgrad. So stocks and Immobilien rose but Deckungsgrad didn’t do much, and returns to the client were, well, limited.
This is my opinion and simple understanding of what I saw, but I’m no expert, so may be too simplistic. Happy if someone corrects me!
Actually, seeing the bad 1e performance made me angry. We have crappy options to choose from (the one I chose with highest equity component did the best!). Out of the handful of choices, the others were worse or even negative.
I’ll be speaking to the PK representative to understand why we have such crappy offerings.
How is the money handled when I buy in 2nd pillar when I‘m married? Will it be clear, that the money is allocated to me in case there is a divorce later if you have gütertrennung? Dont want to end up with the worst case where you fill up the pillar with my savings which are then going to be spilt.
(dont want to start the general discussion about whether it is fair or not we have already discussed previously)
A few seconds of googling yield this (as expected):
“Freiwillige Einkäufe in die Pensionskasse können hingegen vor dem Splitting des Vorsorgevermögens abgezogen werden, wenn nachgewiesen ist, dass der freiwillige Einkauf aus einer Erbschaft, einem Erbvorbezug, einer Schenkung oder aus vorehelichem Vermögen (= Eigengut) stammt. Eigengut ist unter dem Güterstand der Errungenschaftsbeteiligung von der Teilung ausgenommen.”
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