Congratulations!!! Really nice work you have done here. I Think i still ned like 7 Years to reach 500k. It depends how the Market Grows… i will be 35 by then.
Could you show us how did your Savings / Networth Growed by year? It looks always interesting to see how people get there. 500k seems so fare away…
THanks
Some countries have the principle that only income inside your the country is taxed. Therefore, any income outside of the country is tax free, especially if it is hold in a country where they apply the resident principle to the relevant asset class.
Examples are Belize, Costa Rica, Panama, Portugal to a certain degree etc.
BTW they are also countries where it is absolutely tax free for natural people (example Monaca, some French oversea territory, Pacific Islands).
Here a wikipedia link which sums it up.
Cheers.
I think he meant this:
The places with “territorial taxation for foreigner” are interesting. I wonder how it works with ETF like VT though.
Ah ya, sorry about that.
As far as I can tell, it seems the domiciliation of the fund is the determining factor. But not 100% sure about that.
Yeah that’s true, but I guess that’s the great thing about the mustachian FIRE movement. It’s achievable for many people, even on an average income if you have enough discipline and know your priorities. I don’t need the internet to know that somebody who got 5 million in an IPO can retire. But if you learn about the basics like compounding and withdrawal rates and see other people are able to do it with smaller budgets it gives you way more confidence you can achieve it yourself.
You are right. People often don’t realize how ridiculously cheap Germany is.
Our costs for two people in Germany are like this:
| Position | Amount | Total |
|---|---|---|
| Rent | 420 € | 420 € |
| Utilities | 180 € | 600 € |
| Groceries | 300 € | 900 € |
| Car | 300 € | 1’200 € |
| This and that | 600 € | 1’800 € |
If we marry income tax and health insurance are basically 0 when a part of the income is taken from capital already taxed in Switzerland (stocks I own when I move back). Downside: dividends and capital gains would be taxed with 25% or as income.
Not 100% accurate but that’s about the budget per month we lived on for three years with two persons. In a SHTF scenario we could cut our expenses to 1’000€. You can’t get the same standard much cheaper, even in 3rd world countries.
Imho the main risk with such a calculation is that they change the rules for health insurance and taxes. Or of course that they just decide you are too rich, nobody needs that much money and you can only make that much money by exploiting other people. So they take care of it for you.
Well done Dude. Don’t listen to the life complainers, they’re from Eastern Europe - complaining is in their blood. You achieved something that 99% of people will never achieve. Congratulations.
That sounds great - time will go by pretty fast you just need to stay the course!
I think it’s not that important how I did it as I had a lot of luck.
This is what the plan was:
I started with a perm position and about 120’000 CHF, some fringe benefits and about 10’000 per year in the 2nd pillar. My net income after taxes was about 8’000 CHF. 3’500 per month were my expenses so I could save about 4’500.
A 3% raise per year and 5% return on the invested capital would mean 585’000 CHF in 8 years. Even more with the 2nd pillar.
This can be done by so many people, maybe you have to get a better qualification or take some risks but guys - it’s worth it!
This is what happened (simplified):
My costs were as expected pretty much 3’500 over the last years.
Year 1 and 2 went as planned.
I earned about 8’000 after taxes (+fringe benefits and 2nd pillar) and saved 4’500 CHF per month.
I didn’t invest any significant amounts as I planed to buy real estate.
In year 3 to 4.5 I worked as a contractor.
My average earnings after taxes (Moved from Zurich to Zug) raised to about 15’000 per month and my costs stayed at about 3’500. So I could increase my savings significantly to about 11’500.
I also started investing in VWRL with a target asset allocation of 80/20 stocks/cash.
The amount that didn’t came from savings is returns on VWRL and a bet on RCL and CCL in March.
I would have to look up the exact numbers at different places as I didn’t really track a history. I didn’t track or budget much in general for the last three years since the numbers always stayed pretty much the same. I estimate it was like this but take it with a grain of salt. I used a conversion rate of 1.08 as I normally track in EUR.
| Year | NW in CHF (with 2nd pillar) |
|---|---|
| 0 | 17.000 |
| 1 | 81.000 |
| 2 | 145.800 |
| 3 | 302.400 |
| 4 | 469.800 |
| 4.5 | 567.000 |
That is the part that eludes me: we’re obviously working on different fields (civil engineering, here) but I keep switching employers for a nice self-made raise as they seem to keep thinking that a yearly 0% raise is a great deal, even after we negociate and I make it clear that this means I’m open to new job opportunities elsewhere as a result.
Do you guys/gals negociate your raises and how do you do it?
This is crazy, dude. Your work history, spending and savings match up with mine pretty much perfectly! I started in 2015 with 120k salary (spending 4k saving 4k) and in 2017 went into contracting (spending 4k saving 10k). I just didn’t move to Zug 
Regarding Zug, you moved there just to save taxes or do you work there? How do you like it so far? I never considered moving, because for my gf it would be a 45+ train ride to work and we both like Zurich, not so big on Zug though.
Just from the tax perspective, I pay 60k in Zürich, would pay 50k in Kilchberg and 40k in Zug. My gf pays 16k and would pay 10k. So we could save 26k on taxes, but for it to make sense, we would need to live just next to the Zug train station (could be expensive), otherwise it’s too much commuting (or at least she would need to switch jobs). Seems like a lot to tackle but the potential savings are big.
Don’t want to search through all posts to check, but did you mention your line of work? Are you a software developer? If so, what kind of software?
Oh, and why VWRL and not VT? What’s your broker of choice?
Disclaimer: I’m no expert on German social security law and have minimal personal experience with it. Take the following with a grain of salt and only as basis for your own research. Having said that, this is how I understand it, after a few minutes of research:
I’d rather calculate with 300€ to 400€ (for two people) a month for health insurance.
While it is true that health insurance premiums will not be charged on capital income under normal circumstances - that is having a job as main occupation and source of income, or receiving benefits due to unemployed (which you aren’t in early retirement) - you will be charged health insurance premiums at rates around 15% in case of early retirement and living from savings. Your insurance premiums will be assessed according to a minimum income of €1061.67, translating to health insurance premiums of 150 to 200 EUR a month (the latter amount including “Pflegeversicherung”).
I just did the math. Was also getting 2.5% p.a. on average for the last 12y without even asking.
0% for me. I got perks, but if I have to give them a price, it’s mostly below that value. Maybe 3% in almost 10 years…
:*(
But at least I can sit here and write this on an internet forum.
…but so you do…
The first company I worked for in CH said: we give you a good salary from the start, because we expect you to show full dedication from the start, but don’t expect big salary raises in the coming years. Only if you get extra responsibilities.
And for me that was fair. The were able to lure in better candidates with immediate salary and not a promise of a perpetual raise. Since I switched to contracting, I had the same rate as well. So it’s not like everybody gets a raise 
If I get a raise I try to negotiate. I didn’t do it at my first job, some shady things happened and I felt scammed.
If I wouldn’t get a raise I would switch jobs so the 3% are just a estimation, but pretty conservative and more realistic than 8 years without a single raise.
From my experience people respect you more when you know what you are worth and you have the self confidence to negotiate. Already having some money can help here as well.
.
It’s as easy as that. If your boss knows or feels that you could find a new job easily and he cannot afford to lose you, he will give you a raise. My gf also gets raises, although she works at the same place since 15 years. It’s always a tough discussion, since she would be very afraid to switch jobs. IMO she’s quite underpaid for the kind of turnover that she brings, so the boss throws her a bone every now and then, so that she stays content. But her profession is a niche, with little availability on the job market.
I moved just because of the taxes but it’s really nice. Me and my girlfriend are both working in Zürich.
As it’s remotely SAP related I usually write SAP but that’s not my core skillset. I’ll write you a pn.
My main broker is IB, but I had some trouble with my bank account some time ago and since then I’m afraid it might happen that I don’t have access to my accounts. That’s why a part of my portfolio is at a german broker where I don’t really buy, so it costs about 1€ per month and I’m willing to pay that for the added security.
VWRL just because I think it’s simpler. I don’t have to sell when I can’t buy VT anymore because of protectionism or when I go back to Germany. Ireland has some good taxation agreements and I don’t know how much of a total world portfolio will be US based in the future (See Japan in the past). Fees are a little bit higher, but the tracking error is basically 0 so I’m not even sure if it is more expensive than VT after security lending, front running and so on. I couldn’t have VT at my German broker and I also don’t like to deal with US authorities.
VT might be a 98% solution while VWRL is just a 97% solution (not even sure it’s not really transparent), but I guess it’s good enough for me. I’m sure there even is an even more complicated 99% solution, but I’m not willing to invest more time investigating this.
I know this is a hot topic here, but I think it’s such a small detail and not my priority anymore. 
How is the daily commute, is it bearable? Not many Zugausfälle? Not much crowdiness? Do you live far from the Zug Bhf? How much is your rent? (lol sorry for the interrogator mode, I just like to be down to the point)
I really like your approach, I am also looking for simplicity and peace of mind in my life. And yeah, it’s not an easy calculation to see how big the difference actually is. However, simply looking at the withholding tax that is not possible to be reclaimed (sources say 10%) we’re looking a a potential loss of:
2% (dividend) * 10% (withholding tax) = 0.2%
So I would say that if VT is a 7% solution, then VWRL is a 6.8% solution.
Put $1m for 30 years, you get $7.6m vs $7.2m. 400k lost just on this. Of course, if that 0.2% difference is really there.
Yeah, would be nice to scrap IB altogether, but I guess for this we will need Switz to abandon stamp duty.