It is now my turn to create my journal!
A quick presentation/recap first :
So I am Julien, 30, have been married for two months now to a wonderful polish woman.
We arrived in Zürich at the beginning of 2016, and we were living in Paris before.
I have been now working for 6 years (5 in France, 1 in Switzerland) as a software developer for the financial industry.
However, moving to Switzerland has been really beneficial because, even if i was very frugal in France, I managed to save as much in one year as in five in France
Our goal is to retire in ten years and go to live in Poland. My target is thus 1,2 M CHF, which is composed of the following :
-200kCHF should be (very) sufficient to buy a house there (the average is around 400-500k zlotys, which make 100-125k CHF) but I prefer to have a margin for inflation and small construction projects as I would like to have a small farm.
-1M CHF for our passive income. With a yield of 4%, this should provide annually 40k CHF. Monthly, this amounts in local currency to around 13000 Zlotys, which is more than three time the polish gross salary. So this should be largely enough to provide for a family of two adults and two children.
I know i am overshooting but I still need to take into account inflation and local taxation, which is not clear yet.
So this is the target. Now for our current sources of income :
-I have a annual gross salary of 110k CHF, so that leaves me with a net monthly salary after contributions and Quellensteuer of 7615 CHF
-the current practice in my company is to give an annual bonus of around 20%. I know i should not expect that to happen every year, but even if it happens only half of the years, this should lead at the end of 10 years to more than 100kCHF, so that makes a big difference in my project.
-My wife is currently doing small jobs : her focus is to learn german quickly and it should help her to find a better job. She does that by principally taking care of children. Good thing with children is, they won’t judge you if you make language mistakes and they are happy to correct you, so it accelerates learning! The money she earns allow her to pay for healthcare insurance, her part of food and small expenses.
Now for the main expenses :
-I pay the rent for both of us : we live in a 65 m2 apartment in Zürich with a very nice view on the Alps, and the rent is 1500 CHF, including water and other expenses, which from what i have seen from Zürich standards, is quite low.
-Healthcare : I pay now 340CHF per month for healthcare insurance(*)
-Food : I pay around 250 CHF per month for food (as i said, my wife pay also her part, so that is 250 CHF each)
-Utilities : Internet 40 CHF, electricity around 30CHF. I use my phone as rarely as possible, using Wifi/Whatsapp/Skype whenever possible. So my prepaid 20 CHF phone has not been reloaded since May.
-Transportation : I currently bike, but i am curious to see how the winter will be. I might take a ZVV subscription for the winter months.
(*) As I have mentioned in another topic, I had issues this year with a financial advisor which convinced me to subscribe to several assurances. I already made a topic with the life insurance for 3a pillar. However, at that time, i also subscribed for additional healthcare insurance/home insurances. I have realized lately that these are way overkill ( and also not at all advantageous for the life insurance). However, i also learned the hard way that in Switzerland, i cannot resiliate healthcare/home insurances contract when I want. So this will be regularized this year. I think it is important that i am being transparent with my rookie mistakes.
So that leaves me with a saving rate of around 72%, without taking possible bonuses into account. We can expect to save around 5400 CHF per month. Obviously we have to take into account unexpected expenses every month, so let’s be conservative and say 5100 CHF.
My current net worth is 85k CHF.
With the following assumptions :
-We will manage to save 5100 CHF every month
-I will have a bonus half of the time (which is conservative, given the past practices of my company)
-I am not taking any salary raise into account
=> I need an average annual return of 8% to retire at age 40. If I retire at age 41, it falls to only an average of 6% annual returns.
We’ll see how it goes, but i will consider it a success if I manage to retire before being 42 (the magical number, for those who know the reference )
Plus another thing is my second pillar : If I work until 40-42, i will have saved an additional 80-100k CHF that will compound until i am 65, and will be available then. Even with a small compounding rate, 100k CHF is the price of a nice house in Poland!
I mentioned kids above. We plan to have kids, and we are already looking for how we can minimize kid-related expenses. Facebook and Tutti are full of second hand baby items and this should help. MMM and ERE also have nice posts about how to handle kids while shooting for early retirement.
So this is it for my first journal post, I am open to every comments!