Fire in Switzerland, too good to be true?

#1

Hi everyone,

Since I discovered the FIRE community, I have not stopped thinking about it. Is it real? Is it too good to be true?

Here is my situation:
Family: 31M + 33F + 2 kids
Cash: 110k€ + 35kCHF
Net income: 82kCHF
Expenses: 50kCHF
Saving rate: 40%

When I crunch the numbers with a ROI of 6% and a SWR of 4%, this gives me that I could FIRE in 16 years. I just wonder if there is a catch? My girlfriend is looking for a job at the moment, so we would roughly double our income, therefore decrease the time for FIRE. There are so many promises/scams on internet on how you be rich staying at home doing nothing… So when I read again and again that I can retire in only 16 years without much change in my life, I need to be suspicious. But after 6 months of reading many blogs and forum, I guess that would be a huge and smart scam.

As a noob in the index found investment, from what I read, I have understood that I should invest most of my cash in VWRL with IB. Are you ok with that basic strategy?

When I do the math, I see that VWRL gives approximately 6% per year with the assumption that VWRL perform the same way as the last 5 years. But that 6% is without taxes, if you consider taxes, the 6% are eroding, isn’t it?

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#2

You almost said it: The “catch” that seems to good to be true might be the assumption of 6% yearly ROI going forward.

The latest boom in world indices can largely be attributed to the performance of U.S. equity - which constitutes the biggest portion (roughly half) of world market capitalization. Whereas with other big indices (for example Japanese Nikkei), you could have gone for 20+ years with negative annualized returns.

I am somewhat new to this “scene”, so don’t know much about other’s opinions. For me at least, financial independence is not necessarily about “staying at home and doing nothing”. It doesn’t even mean one should or must quit his job, etc.

The bigger share of that is not dividends but capital appreciation - which (luckily) Switzerland, unlike some other countries, usually does not consider as taxable income, for non-professional investors.

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#3

Hi Mr B. If you are domiciled in Switzerland, then I would recommend to invest in the US-domiciled VT, instead of the Ireland-domiciled VWRL. It’s mostly the same thing, with a few minor differences that make up for a sizeable difference over 30 years. Some people will argue that with VT there is the unresolved issue of US estate tax, so you may as well stick to VWRL.

I would say that your expenses are quite low for a family of 2+2, good job!

Regarding your question, I perceive FIRE not as a sharp line, but as a fuzzy area defined by probabilities. Your return is not fixed, your expenses can also vary. But for sure with each saved $ you’re getting closer to being independent. Quitting your job on your FIRE date and never going back to work could be a risky plan. But reducing your workload and having a more relaxed attitude to whatever your boss tells you, that’s the goal for me.

And you may think FIRE is a scam or it’s “too good to be true”, because most people in your situation would spend 82k, i.e. all of their earnings. Or as soon as they saved some, they would take mortgage, buy a new car with leasing etc. It’s very hard for many people to postpone consumption. It’s also quite funny to hear people complain that they only earn “4000 on hand” so they can’t save and then you read on this forum about some people who earn much more than this, but still only spend 3000.

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#4

Could you please expand on that statement ? What are the difference and why it’s beneficial ? lower TER?

#5

It’s all over this forum: Lower TER/costs, supposedly lower (average) tax burden for Swiss investors*, lower spreads.

*though there’s just been a thread of people having issues to realise these.

#6

Wow! how do you do that?
Where do you live, can you brake down your expenses?

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#7

I would be curious about this as well.

#8

Have a look at these budget proposals: https://www.frc.ch/wp-content/uploads/2019/04/10_19_WZ_Familles_2_enfants_4750-5500.pdf

Outside of city centers 50k to 55k is manageable

#9

other examples are here: http://www.budgetberatung.ch/Budgetbeispiele.19.0.html

#10

Here is our expenses:
Income tax: 7365
Housing: 16200
Childcare: 7780
Food and consumables: 6000
Telephone and internet subscription: 480
Electricity: 400
Billag: 365
LAMal: 8745
Household waste tax: 200
Car tax: 500
Car insurance: 465
Gasoline: 1200

We are in transition this year because we had our second child, I guess our expenses will rise a bit in the next year. We are living in Marin-Epagnier in a 70m2 flat. We can do everything by foot: go to work, childcare, go the mall center, enjoy the lake Neuchâtel. We could reduce our expenses by getting rid of our car, but it allows us to enjoy to go easily where we want with the kids, hiking, go shopping in France… My girlfriend is currently looking for a job, if she was not, she could take care of our children, reducing considerably our expenses. At first, we were doing our shopping only in Switzerland, but then realise that we could improve significantly the way we lived by shopping in France, so now most of our food and consumables are bought from France and then we get a tax refund (around 10% of what we spend). For the telephone subscription, we have two subscriptions with a french provider: Sosh, that cost us 9.99€/month with everything unlimited, 50go of data for Europe; in Switzerland that mean that we can use 50go of data with the 3 networks available (Swisscom, Sunrise and Salt), so this is great. For the internet subscription, we have a 4g box with Salt that cost us 19,99.-/month that give us an a data-transfer rate of 80Mbps and acces to Zattoo HD, all of that is more that enough for us.

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#11

10% refund on taxes only on consumables. Food should be waaay lower (aka doesn’t make sense).

Is Salt giving Zattoo HD for free?

#12

what do you mean? I spend more for food that he does with his own family. Why “should” it be lower. I think everybody can spend their money on what they want, all that matters is that they are satisfied with their financial situation.

Not for free, but it’s included in the mobile abo etc. I have a mi-fi router from them with a 2nd SIM card and Chromecast and I can watch Zattoo on the TV. Although the quality tends to get really band in the evening.

#13

ahahah. If you quote half of my message I agree with you. If you quote both sentences instead:

This shitty could of sentences should be:
10% refund on taxes only on consumables. The taxes on food should be waaay lower. etc etc…

Poorly worded sorry.

Salt doesn’t mention Zattoo anymore from what I’ve seen.

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#14

Thanks for the breakdown. How do you manage to keep food+consumables for 2 adults + 2 kids to 500CHF/month, especially when your restaurant budget is 0CHF? Are you buying in bulk in France often? Using cloth nappies? Living on a diet of lentils? Because even shopping exclusively at Lidl/Aldi/Denner, I find getting below 600CHF nearly impossible for a family of 4…

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#15

Hmm, you’re right. It seems that they don’t offer it anymore. Also their mi-fi router looks more basic than what I have (no display). OK, enough of this offtopic :stuck_out_tongue:

#16

I am buying in bulk in France twice a month, we cook everything, that cost me between 500.- and 600.- with a tax return between 50.- and 60.-. My kids are 3 years old and 6 months old so they do not cost me a lot in food. I try to take advantage of any special price. For example, diapers do not cost much at all, I buy a lot of diapers when there is an action on it, we can find Pampers at -70%, and the 70% are cashed on your fidelity card so you get also the tax return of the initial price.

I understand that it is hard to imagine, but prices in France are way lower than in Lidl/Aldi/Denner. I have seen some documentary on the topic where reporter compare the price and find only 10-15% difference between Switzerland and France at the supermarket… But the differences are higher than that.

#17

May I ask what kind of childcare this is? and how much of it?
Thanks!

#18

Also, do you not have any public transport costs? no vacation costs? do you do all car maintenance by yourselves?

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#19

7 months at 440.- + 5 months at 940.-.
440.- was 90% of the time for one kid and then 940.- full time for the 2 kids.
As my salary is considered quite low, the city take care of the rest of the cost for childcare.
My kids are in a day nursery, I am quite happy with it, my oldest kid has many friends and do lot of activities.

Almost no public transport costs, we use the car when we have to move, in the end it looks like it is much cheaper. No vacation cost included last year as we only had vacation in Winter in the family, in the summer we had exchange of house with friends, and then we enjoyed the beauty of Switzerland, so the gasoline was the only extra cost. I do all car maintenance that I can and had no problem with my car last year.

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#20

Ah OK, yes, I get it now, the key is buying things in France or Germany or Italy or Austria (but probably not in Liechtenstein).

For example, we make our own meals 98% of the time too (and shop mostly at Lidl/Denner/Aldi + public markets for produce), but our costs for food ends up being 700-900CHF / month for a family of 4. Add in consumables (toilet paper, diapers, cleaning products, beer/wine, etc.) and we easily hit 1000CHF.

I haven’t owned a car in 10+ years (and love being car-free), but I always wonder if doing most shopping abroad can end up offsetting the entire cost of owning a car. Unless you live in Geneva or Basel or similar, shopping abroad almost requires one.