Intro + request advice on how to change my portfolio in my new situation

Share your story
1

Dear Mustachian community -

Apologies for the wall of text / TMI, but please bear with me as I try to share all the information I felt might be relevant.

About me:

  • 38, single, no kids, living & working in Switzerland since 2019. Prior to that I lived & worked in USA for 10 years. Working in FAANG / MAMAA.
  • I’ve been working towards FI and originally planned to RE when I hit 40. My (rough) FIRE target was 4M & I’ve reached that as of June 2024.
  • I’ve been following MP for many years but first time in the forum.

Current Portfolio

  • Cash: 0.5M CHF (spread across CHF & USD)
  • Interactive Brokers: 1.1M CHF (more detailed breakdown below)
  • Pillar 2: 0.5M CHF (AXA, additional contributions made on an annual basis)
  • Pillar 3: 0.04M CHF (VIAC, finpension)
  • US 401k: 0.46M CHF (pre tax)
  • RSUs: 1.3M CHF (only vested)
  • Real Estate (undeveloped land): 0.2M CHF (cost price, not considering increase in value)

In summary, I have retirement assets of 1M CHF that I do not intend to touch until actual retirement age. Real Estate land will also be held for the long term as its in a developing country.

I realise I have too much in cash. There’s a reason for this and I’ll explain more below.

Breakdown of ETFs in IB
Background: I started investing in 2019 for the first time as lumpsum investments as I had sold property in California after moving to Switzerland. I ended up buying at peak and diversifying into too many ETFs.

All below numbers are current holdings:

  1. Individual stocks: RIVN, TSLA & WBD: ~5500 CHF (RIVN & WBD are significant unrealized losses)
  2. VEU: ~109K CHF (sold about 50% when it broke even a month back, now its back in unrealized losses
  3. SPICHA: ~3000 CHF (unrealized loss)
  4. JETS: ~7900 CHF (breaking even right now)
  5. REET: ~22K CHF (breaking even)
  6. VWO: ~20K CHF
  7. SPEM: ~26K CHF
  8. VEA: ~44K CHF
  9. CHDVD: ~36K CHF
  10. VSS: ~40K CHF
  11. VXUS: ~25K CHF
  12. VNQ: ~53K CHF
  13. VYMI: ~94K CHF
  14. AVUV: ~6500 CHF
  15. CHSPI: ~12K CHF
  16. VYM: ~57K CHF
  17. SMICHA: ~16K CHF
  18. VT: ~32K CHF
  19. VOO: ~344K CHF
  20. VB: ~28K CHF
  21. VIOO: ~15K CHF
  22. Asian ETFs: ~148K CHF (significant growth here, do not intend to sell)

My situation:

  • I’ve been dealing with burnout since 2021 and it’s taken a toll on my mental and physical health. I can’t take it anymore.
  • I am in the process of planning my exit strategy and would like to request this community’s feedback on how to setup my finances for the future.
  • I am currently residing in a low tax canton and intend to move to Zurich asap in 2025. While this does increase my tax expense, its a better option for my social life & future job opportunities.
  • I have a C permit.
  • My current annual expenses (post tax) range between 60K to 70K CHF per year. Rent accounts for 40% and travel is 20%. Those are the two categories I would reduce once I quit my job. But I do expect discretionary expenses like eating out, activities to increase a bit - for e.g. a GA card.

Why cash heavy?
Given my current pay check, its quite challenging to find an apartment with rent below 2000. I obviously need to find a new apartment before turning in my resignation. One alternative is to find a shared apartment but this is not my first preference. My preferred option is to purchase an apartment in Zurich in the 1-1.2M CHF range. I intend to use about 400K CHF as downpayment (& fees) and thereby reduce my monthly mortgage to below 2000 CHF.

Financially speaking, I am well aware that this is not the best use of the cash I have and I could earn more if I invest in the market. But it would give me a safety net in case my break turns into early retirement – thereby never having to be concerned about finding a rental apartment without a pay check. When I need to renew my bank loan after the initial loan duration runs out, I can of course decide to payoff the loan by liquidating if the bank refuses to renew my loan (in the case of early retirement).

Probabilistically speaking, very very low inventory in Zurich city for 1M - 1.2M range. So in all likelihood, I’ll end up having to find a shared apartment. Hence plan to search for both options simultaneously.

My plan:
Turn in my resignation in Jan 2025 and find an apartment to move to asap. I intend to take a career break of 6-12 months and then either go back to working 100% or part time in Switzerland (no more working for an American company). Given the Swiss job market, I am sure that my accumulation phase is at an end and anything I earn in the future will be zero or significantly lower than today. I’ve made my peace with that.

My passive income through interest & dividends fluctuates annually between 8000 to 12000 CHF. Not enough to sustain me through my career break. Hence I will need to start withdrawing from my cash reserves and RSUs to fund my break & likely beyond in the worst case scenario of no future income. Once I hit retirement age, I would start dipping into retirement accounts. My IB account would be the backup option to fill in any gaps if needed.

My ideal scenario is to stay in Switzerland long term & retire here. But if in 5-6 years I feel I am running out of money, I do have the option to return to my home country with low cost of living.

I have not gone into a lot of detail about what I plan to do during my break. This is because I know my plans here with a lot more certainty. I have few hobbies I already pursue and a few new ones that I’d like to pursue in the future. The challenge here will be sticking to a budget.

Looking for help & feedback in the below areas:

  1. I would like to simplify my ETF portfolio. In general the advice seems to be at max 3 ETFs. Which three would you recommend? What’s the best strategy to sell & buy? I am familiar with BogleHeads strategies and do believe in “time in the market is better than timing the market”. But as a risk averse person, I struggle with the fear of making a mistake & have a lot of inertia. Please feel free to poke holes with my current portfolio.
  2. I’ve tried to read up a lot on how to prepare for RE & set up accounts to sustain different phases between early retirement and death. But I still feel very uneducated on the nuances & my plan seems too simplistic. What else can I be doing or planning for?
  3. I’ve diligently tracked my expenses for 15+ years but none of that gives me a lot of insight into how my expenses will shape out once I don’t have a full time job. This is an area of concern for me.
  4. Anything else I should be doing to reduce the risk of burning through my capital?

EDIT / UPDATE to add additional details based on responses so far:

  • I do not have a US Green card or citizenship. I was subject to US taxes until 2022 but am no longer a US tax person.
  • I do not owe any capital gains taxes to the US on RSU sales.
  • Zurich is where I see myself living for the next 5 years at least. Depending on whether I have income or not will determine whether I can move to a lower cost of living location within Switzerland.
  • Regarding the large RSU bucket - I do intend to liquify slowly over the next 12 months but still leave about 0.5M as RSUs. I felt its better to simplify my ETF portfolio and based on that reinvest the RSU sales.
  • I have about 70K CHF in Crypto, which I am not counting towards my NW.
  • I have not explored gold as an investment, will research on it.
3 Likes
2

Welcome and congrats on your accumulation. Mental health is a precious thing and I hope all goes well for you in the future.

Are you subject to US tax (more specifically, would you pay any capital gain taxes by selling any of your stocks/ETFs)? That would have to figure into the equation of what to do with your current assets if it applies.

Your planned move to Zürich involves future job opportunities as one of its reasons. Would that be your place of choice to FIRE too or would you potentially move elsewhere. This matters as you state not having to search for something to rent while FIREd as a reason to buy an appartment and as you have noted, the price of real estate in Zürich City is rather high compared to other places in Switzerland.

Edit: @magpie112 additionally and in order to have a hollistic view of your situation, what is in your 3a and 401k? At minimum broad allocation (stocks vs bonds vs others), at best funds or what they track if indexed.

You’ve got a lot of funds in your IBKR account, some covering similar assets (SPEM and VWO, for example, or VXUS, VEU and VEA+SPEM/VWO, or VOO + VXUS/VEU/VEA+SPEM/VWO vs VT, or SPICHA vs CHSPI, or VB vs VIOO). What was your thesis when you bought them?

And what is your current thesis (Market weight vs country/regional tilt vs sector tilt vs factor tilt vs stock picking)?

3

This is the elephant in the room if you ask me. Why are you keeping so much vested stocks of your company?

Given that you are single and don’t need a large place, if you are content with a not super central/posh area, then I think there are options out there. But yes, not many and it’ll take time to find something that fits you.

2 Likes
4

+1 that’s quite a lot of risk, I assume you did very well with that bet but it’s very risky…

1 Like
5

Personally, unless you have a very good reason to believe your current portfolio will beat the market, I’d strongly suggest to liquidate and go all in on VT or similar (UCITS world if you prefer).

(You seem to have a very active portfolio management profile, is this based on very strong convictions? maybe just invest and forget instead? e.g. the fact something just went up shouldn’t be a strong reason to keep the position)

I’d definitely start with the 1M+ single stock position, that’s a very risky allocation.

You can do that over a few month if it’s easier psychologically (e.g. 300k at a time or similar).

1 Like
6

Thanks for sharing. Looks like you have plenty of assets, some of it still untaxed. Part of my strategy would be to get it into the liquid part of your wealth. Personally, I don’t think it’s worth to own Real Estate at these prices. A flat share might keep you sane and social for 1000-1500 CHF per month.

You may need some serious tax consultant though. Renouncing US citizenship or undoing the US person status to avoid being taxed by them might be something to consider once you have obtained another nationality.

From your liquid wealth just buy into stocks with dollar cost averaging over an extended period of time. No mistake possible there as long as you stick to whatever strategy you choose.

If you believe in BTC or gold, get some as insurance against any debt crisis that might be coming.

Your annual expenses sound very reasonable. You can easily find another saner job in Switzerland to cover that. Then you could stay fully invested with your wealth and reap the benefits in 20-25 years. RE is overrated unless you have really good ideas what to do with your time.

7

This part surprises me. Why is it hard? Sure, you probably won’t qualify for a subsidized 4+ room flat, but if you go for 2 rooms you should find options, no? Overprized for the squarefoot you get, but if you can afford 2k and prefer living alone that should be doable.

Have you experienced being rejected because of the salary being too high? I would assume there are dozens of more important reasons why one doesnt get a flat in ZH (speed, connections, moonphase,…)

1 Like
8

Mental health is a precious thing and I hope all goes well for you in the future.

Thank you, Wolverine.

Are you subject to US tax (more specifically, would you pay any capital gain taxes by selling any of your stocks/ETFs)? That would have to figure into the equation of what to do with your current assets if it applies.

No. I am not subject to any kind of US tax on capital gains. I am not a US citizen or tax person. I am of course subject to US withholding taxes for dividends, but that’s the only extent.

Your planned move to Zürich involves future job opportunities as one of its reasons. Would that be your place of choice to FIRE too or would you potentially move elsewhere. This matters as you state not having to search for something to rent while FIREd as a reason to buy an appartment and as you have noted, the price of real estate in Zürich City is rather high compared to other places in Switzerland.

I am likely being optimistic in assuming I’ll find a job in 2026 or 2027 once I feel mentally strong enough to re-enter the job market. Hence Zurich is where I see myself for the next 5 years at least. Beyond that, I’ll have to reevaluate – but at that point, in all likelihood my cost of living will stay the same or go lower (relocate within Switzerland to a lower cost of living area or move back to my home country).
I do think there’s very low probability I’ll find something in the next couple of months to purchase, but keeping the option open :slight_smile:

Edit: @magpie112 additionally and in order to have a hollistic view of your situation, what is in your 3a and 401k? At minimum broad allocation (stocks vs bonds vs others), at best funds or what they track if indexed.

My 401k is 90% stocks and 10% bonds. Its a Vanguard target retirement fund account.
VIAC is Global 80 (80% equities, no bonds, rest in interest bearing cash account).
finpension is individual strategy (99.1% stocks)

You’ve got a lot of funds in your IBKR account, some covering similar assets (SPEM and VWO, for example, or VXUS, VEU and VEA+SPEM/VWO, or VOO + VXUS/VEU/VEA+SPEM/VWO vs VT, or SPICHA vs CHSPI, or VB vs VIOO). What was your thesis when you bought them?

I didn’t have much of a thesis when I started and went overboard with diversification. My current thesis is not fully baked or confident. I mainly intend to be in equity. Max 50% in US, rest split between emerging markets & World minus US. I suck at stock picking so definite no to that. Like I said, its not the best.

1 Like
9

Thank you, Giff

Regarding the large RSU bucket - I do intend to liquify slowly over the next 12 months but still leave about 0.5M as RSUs. I felt its better to simplify my ETF portfolio and based on that reinvest the RSU sales.

True, I am looking for something about 15mins commute from Zurich HB but not posh by any means. I just don’t have much of a time window as I would need to be employed to be eligible for a mortgage loan. Will try as much as possible :slight_smile:

10

Thank you, nabalzbhf

Well, I am not sure I would say I did well with it. I sold a lot of it for the downpayment on my California apartment and lost out on significant growth in RSUs. Then I liquidated in 2020 & 2021 - again lost a lot of RSU growth.

I am very unsure about liquidating more but definitely understand I have more than 25% of my eggs in one basket - so not liquidating is not an option.

I’ll do so slowly over the next 12 months but still leave about 0.5M as RSUs. I felt its better to simplify my ETF portfolio and based on that reinvest the RSU sales.

No strong reason or intuition - just a newbie judgement error.

I hear you.

11

Thank you, dom.swiss.

I assume you are thinking of US taxes? Those don’t apply to me - not a US Green card holder or citizen. Not a US tax person either. I do not owe any capital gains taxes to the US on RSU sales. If you meant something else, please clarify.

Possibly - its scary to go back to sharing flats after a decade of living by myself :sweat_smile:

Absolutely - I am at the stage of figuring out the strategy and looking for help there.

I do have about 70K CHF in crypto and did not count that in my NW. I don’t have any gold investments, but that’s one place to look into.

This is ideal, lets see what the world has in store for me in the future!

I’ve actually been working in some form or the other since I was 21. The longest proper break I’ve had is 3 weeks when I changed companies in 2010. So honestly, I don’t know how long of a break I’ll be able to take before I feel panic and jump into the job market.

I am hoping a well thought out financial plan will help limit the panic. But time will tell.

I do have a lot of good ideas on what to do with a full year of a break and don’t have concerns about keeping myself engaged. My worry is more that my burnout / depression has me with very little motivation to get out of bed these days.

12

Thank you, almi

Yes. When I first moved to Switzerland, I applied at so many apartments in Zurich and none of my applications were accepted. Some agencies told me they rejected my application as I was earning more than 3x the monthly rent and they are obligated to reserve apartments in the < 2000 CHF range for those with lower income than mine. I absolutely understand their policy and appreciate the system that considers these things.

I would look for something in the 1.5 to 2.5 rooms range if renting by myself & in a 15-20 min commute from Zurich HB.

13

Still too much in a single stock IMVHO.

TBH, given your wealth, and if you put down enough capital, I believe there could be banks that would finance you anyway.

1 Like
14

Oh, I never heard of that. I always assumed the higher the income, the better.

15

Thanks for your open answers.

Diversification isn’t a function of the number of funds we have in our portfolio but of the underlying assets. VT has global diversification, including EM and small caps. It’s possible to apply a tilt to it but you would need to know the reason why you are doing it for it to make sense.

As it happens, your VEU+VXUS+VOO+VIOO+VB+VYMI+VEA+VWO are basically VT (that is, all-world, all-cap), with even pretty close weighting.

Currently, the ETFs part of your stocks is roughly 65% VT equivalent with:

~18% dividends bia
~15% Asia bia
~5% Swiss bia
~3% EM bia
~1% US Airlines bia
~1% small cap value bia

I would follow @nabalzbhf’s advice and consolidate it all into VT or an equivalent of your choice.

If you want to allocate your holdings differently through your accounts for tax purposes, you can explore the work made by @Dr.PI on the topic. I’m linking a recent message but the whole thread is worth reading: Splitting the world: creating tax-advantaged global stocks portfolio using funds in 3a account - #17 by Dr.PI?

Globally, you seem to be invested 70% in agressive assets (stocks + part of the real estate, not counting the crypto) and 30% in defensive ones (bonds, 2nd pillar, part of the real estate and cash). You say you are a risk averse person. Were you fine with the behavior of your investments in 2016, 2020 and 2022?

I may be wrong but reading you, I also feel some form of anchoring bia, as you seem to be affected by the past performance of your assets irrespective of a more fundamental thesis for them. This would apply to the Asia ETFs and potentially the 500k RSUs you are planning to keep. It doesn’t require immediate action but it is possible that, while liquidating your RSU’s, you realize that your other assets can do well as well and you are not so attached to them in the end, in which case, I would not resist it and liquidate the last 500k too (which is what I would do myself).

In your situation, I would buy a home only if I really liked it and not for practical purposes only. You may grow into it and decide to stay there on the longer term. Otherwise, a 5 years window seems too short to me for a real estate purchase and you expose yourself to some amount of stress if you want to move out.

That’s not financial advice but I’ve been close to there. Walking helps me to go outside and clear my mind. Even a 5 minutes walk in town/in the city helps as it piles on small but consistent steps toward activity and clarity of mind.

Take heart and take care.

3 Likes
16

I am sorry you’re dealing with burnout, not sure how you managed to sustain and perform for years already. Been there but it was temporary. It’s rough.

You mention going back to your low cost of living home country. Why not make that your exit strategy? I don’t know what LCOL means to you, looking at my own situation, being from Greece and owning property there, with 2000/month sans rent one can live decently well. Upping that to 3000+ starts being pretty comfortable. My wife is Serbian, that cuts the above numbers in half if we were to move there (not that we want to, just saying to give the example of how LCOL fluctuates).

Why stay in CH, basically? It’s a great country, functions better than most, cohesive socially conscious society, lawful, peaceful, beautiful…and boring (for me!). We have friends (other expats who will pack their bags and return to their home countries the second they hit whatever FIRE target they have), but our deep friendships and relationships are elsewhere. 2M liquid invested in tax-free income assets in Greece (capital gains and dividends from UCITS ETFs are 100% tax free there) is comfortable FIRE. Other countries will differ.

Perhaps radical but you asked for opinions: if I were you I’d carefully calculate tax dues, investment taxation, cost of living, and try to weigh the pros and cons of being here vs not being here and seriously consider leaving.

P.S. of course a LCOL country may be corrupt, lawless, dirty, messy etc etc, one can’t have it all!

17

May I ask one question which might not be what you expected?

I am wondering if your burnout is caused by work only or it is somehow related to your objective of getting to 4M by 40 ?

I mean could it be that you focused all your Energy & resources to get to FIRE and that is taking a toll on your mental health.

2 Likes
18

If you’re anyway not going to be working for maybe a couple of years, why stay in an expensive place like Zurich? Why not get a change of scenery and travel, maybe go a bit nomadic in south east asia where cost of living is so much cheaper and you can recharge there.

I guess you could get a very cheap flatshare if you want to keep a base here and then spend most of your time travelling.

You could even work while out there. I know of people working in tech took their high paying USD jobs and relocated to Thailand to live like kings. This was way before covid and now remote working is even easier and more accepted.

Just as an extra thought, if you want to look after your mental health, taking on the extra stress and responsibility of owning property and having a mortgage to service is probably not the right way to go.

2 Likes
19

Hello @magpie112
Good things (possibility to retire) and bad things (burnout) to read from you and wishing you well for the things to come. Interesting discussion here so far.

Here is a very small thought regarding this:

This would mean you could go out all the way to Wetzikon and still be in 20 minutes in the city. You could find apartments to buy for under 1M, closer and faster but likely more expensive would be Uster. Maybe it’s worth checking it out?

20

:laughing: fair enough but one step at a time…I’ll first get to 0.5M CHF

Interesting. I spoke to two banks that I have accounts with and neither said this was possible. If you have a bank in mind, please do share!