Mebs Intro / Journal (starting to invest, after bootstrap of company)

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Hello folks!

After more than a year reading MPs blog (Awesome work by the way - thank you so much for your meticulous description of how you are getting to FIRE!) and checking out the forum from time to time, I think it is time that I introduce myself in here as well as I want to contribute to and engage more with the community from now on.

I’m a 20-something years old Swiss entrepreneur (IT-field) living in the german part of Switzerland. I’m in love with entrepreneurship and all topics revolving around it as much as most of you are in to the FIRE topic. As I love to work and do not wish to stop that at anytime, I really like to keep control over my income/outcome and handle my finances, private and business wise in a way that gives me the best possible long term outlook. That’s why I really love MPs posts and the discussions here in the forum. I bootstrapped my company, which means that it belongs completely to me. As my business now starts to pay off a decent salary (after 1 year of gratis work and a ~15k investment) I hit my first big goal: Being my own boss and having a small team. I’m really grateful for that.

As the next step I obviously want to grow the company and take my private financial matters to the next level: Starting with investing and optimise expenses where it is possible. Following I describe the actual state we are currently in, knowing that there is still a LOT of potential. There is where I need your help, as I don’t know where exactly to start.

I’m happily married to my beautiful wife, which is also working and owns a big, four-legged domestic animal that is quite expensive. But as it is her true passion that is totally fine with me. We will try our luck with children in 1.5 years. We are donating 10% of our income, which is undebatable.

Following I want to give you an overview over our actual financial situation and share my next steps; I’d love to hear your opinion and tips along the way. I plan to keep you updated in here as a journal as I saw some of you guys doing that as well. Looking forward to the journey with you guys!

Income
Our combined monthly income at the moment: 10800

Budgeted Spendings (monthly)

Fix cost - 4612.16
donations 1081.76
rent 1730.00
health insurance 634.00 (SWICA, with a few well considered additional insurances that just fit our needs right)
life insurance plan (Säule 3a) 150.00 (history mortage that my wife brought into our marriage, due to private/social reasons we can not end that - already tried it. I have to live with it.)
mobile and internet sub 159.00 (too expensive - on my list for improvement)
living cost of the best friend of my wife 700.00 (no it is not me)
food supplements 157.40 (atm I think that it really improves our lives, convince me otherwise!)

Living cost - 940.00
household and food 740.00 (we often need more, as I need to eat out often doing sales for my business. I just started to prepare food, but really could improve there. Would love to hear your tips.)
gas wifes car 200.00 (a car is needed due to wifes BF - she uses it daily)

Fun and free time - 1592.3
pocket money for both of us 700 (350 each, used for individual hobbies, clothes and fun with friends as a weekend trip for example)
weekends together/vacation/date night 839.00 (VERY important to my partner, after countless conversations we met in the middle. atm I can not strip away more here…)
books/newspapers 30.00 (I love to read!)
software and netflix subs 23.30

Long time cost - 1492.76
taxes 1081.76 (we save 10% of our income for taxes and pay them as soon as we receive the check. I was thinking about paying it each month, but was not brave enough to do so yet.)
Serafe 31.00 (@#![=)
travel cost for me (SBB) 100
medical related savings 210.00
energy and contents 70.00

Car - 298.00 (a car is needed due to wifes BF - she uses it daily)
Save for new car 200.00 (maybe we will need to buy a new car, so we need to put away something for it. Would love to hear your suggestions for what kind of car we sould buy.)
MfZ Insurance 40.00
Service savings 41.00
Vignette and traffic taxes 17.00

Miscellaneous - 220.00
gifts 70.00
unexpected stuff 150.00

Savings - 1655
Saving rate 15.3% (compared to your rates I’m not proud of that. I’d LOVE to improve it.)

Actual savings
Our actual savings in cash (without the money that is allocated to other goals/purposes): 12400.00

Used tools & banks

  • YNAB (using it for more than one year now - loving it! served me really well, we would not have been able to save 12.5k while starting a business without it)
  • bank account by Zürcher Kantonalbank (benefited from student discount up to this year)
  • credit card by Zürcher Kantonalbank

My next optimising steps

  • I’m just switching bank account to Zak
  • I’m just switching credit card to Cumulus & Revolut
  • Switch mobile/internet sub to a cheaper provider
  • Cancel food supplement subscription added@12.11.19

Actual plan
As a financial advisor told me, we should stash three times our monthly income in cash for security reasons before investing in a Säule 3a plan or investing something on the stock market. What is your opinion on that?

At the moment my plan looks like this (assumed that our income does not change, which will happen soon; thanks to my business)

  1. Get these cash savings up to 30000 (stashing cash for 10 more months)
  2. filling up both of our Säule 3a via VIAC (11852, as 1800 get deducted because of wifes insurance plan) per year (7 months)
  3. use the remaining 5 months of the year to invest in index fund VT via DEGIRO (because I have nothing invested so far, so <100k)

What do you guys think of that? What would you change / improve?

Looking forward to discuss and implement changes.

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US ETFs like VT aren’t avalaible on Degiro.

IBKR is also worth it with assets below 100k, IMO.

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Hi! So you would recommend going straight to IBKR? One question there is, why most of you guys only transfer your savings to IBKR/Degiro once a quarter. Is that somehow fee related?

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It’s fun that you don’t mention what’s your wife best friend. Call it a dog… or maybe it’s not a dog and you are scared that we understand who are you in real life ( Salvador Dali had an ant eater. Do you have one as well?) :slight_smile:

How can we help if we don’t know exactly what you mean? IMHO food supplements can benefit, but 157chf worth of food supplements seems too much or you take something I don’t know.

It’s kind of weird that you dog eat almost like you 700chf vs 740.(if that 700 is only food. I suspect it’s not. Probably your “dog” is 150m tall and love to be ridden… :horse: )

Seriously I don’t know where you can save… you might actually spend a bit more since your expenses are more on your wife’s hobby/bff.

What is this?

Maybe you should split a bit more the cathegory “fun and free money”

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There are a couple of advantages with IBKR:

  • You don’t lose 15% on dividends because you can get it back over DA-1, translating to ~0.33% better performance.
  • You are able (atleast as of today) to invest in VT with 99% market cap (8200 equities) and only 0.09% TER. European alternative would be the FTSE All World with 90% market cap (less than half of equities of VT) and 0.22% TER. Much better ETF with again ~0.13% better performance.

This will compound over time, but that’s not all:

  • IBKR charges 2 CHF for FX change and 0.35 CHF for buying an ETF (basically 0.0035CHF/share if it’s more than 100 shares). These fees will be deducted from the 10CHF/month fee if you have less than 100k assets.
  • Degiro does auto-fx for 0.1%. It’s easy but might also end up costly if you rebalance or switch an ETF.
  • Degiro charges 1 € per dividend payout and 3% on the amount. With 50k in 1 ETF it’s already 37€/year.
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Can you talk more about this. I think either you’re overspending on this, I should start taking more supplements if it’s really make life much better.

Clearly, this could be optimized. I think things should fall either into some meaningful hapinness-genereting category (“socializing”, “hobby” or something like this), or go away.

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There’s a thread about it. I personally think that my bond/cash allocation and my credit cards limits are good enough emergency fund. No need to stash another pile.

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Salvador Dali had an ant eater. Do you have one as well?) :slight_smile:
It’s kind of weird that you dog eat almost like you 700chf vs 740.(if that 700 is only food. I suspect it’s not. Probably your “dog” is 150m tall and love to be ridden… :horse: )

Well let’s say she owns a ridable ant eater that eats ants not thaaat often :ant::racehorse::blush:.

Actually these 700 include food and shelter for the ant eater (which is btw quite cheap compared with other places).

How can we help if we don’t know exactly what you mean? IMHO food supplements can benefit, but 157chf worth of food supplements seems too much or you take something I don’t know.

The food supplement is in some kind of way a heritage of my family. I grew up taking it and did not stop so far. Writing this I notice that I’m actually taking it without any knowledge in which way it benefits me; due to history I somehow did not feel comfortable to cancel it either. I’ll discuss it with my wife. added to next optimising steps

medical related savings 210.00

What is this?

It is a sum that I set aside each months in case of a medical incident. I pay pharmaceuticals and treatment out of it, as we have our franchise on 2500. What do you think - too high?

Maybe you should split a bit more the cathegory “fun and free money”
Aight - I will update the initial post!

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Can you talk more about this. I think either you’re overspending on this, I should start taking more supplements if it’s really make life much better.

See my answer to @ma0. I actually have no idea if it actually makes a difference. Maybe I’ll cancel it for half a year and see if I feel somehow different. :grin:

pocket money for both of us 700 (350 each)
Clearly, this could be optimized. I think things should fall either into some meaningful hapinness-genereting category (“socializing”, “hobby” or something like this), or go away.

It is. I update the first post with more details.

There’s a thread about it. I personally think that my bond/cash allocation and my credit cards limits are good enough emergency fund. No need to stash another pile.

Nice! I’m just looking for it. How much do you have set a side in cash in case of a smaller ermergency so you do not have to touch your nest egg by a 99% chance?

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  • IBKR charges 2 CHF for FX change and 0.35 CHF for buying an ETF (basically 0.0035CHF/share if it’s more than 100 shares). These fees will be deducted from the 10CHF/month fee if you have less than 100k assets.
  • Degiro does auto-fx for 0.1%. It’s easy but might also end up costly if you rebalance or switch an ETF.
  • Degiro charges 1 € per dividend payout and 3% on the amount. With 50k in 1 ETF it’s already 37€/year.
    Do I understand you right, that IBKR charges a flat fee for each FX transaction while Degiro charges 0.1% of the FX-amount?

Ok, assumed I put my 12000 CHF into a dollar ETF right now it would cost me 2.35 with IBKR (+10 a months), as with Degiro I’d pay 12? That is a major difference in my opinion.
I think it could make sense to pay these 120/y, profit from the other advantages you mentioned and save me the switching cost later.

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I have 20% in cash and (together with my wife) 4 credit cards (2 Swiss and 2 Polish). Plus, we have working parents and siblings willing to support each other in need. Plus, we both have reasonably well paid jobs. I’m actually more afraid about both of us dying in some accident and orphaning our son rather than about my emergency fund and potential shortage of money.

And I don’t actually mind consuming part of my nest egg before FI (except for crises) and work a little bit longer to fill that gap later.

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I see. So it would probably make more sense to hold a smaller amount of that fund in cash (either on the bank or IB) and having the rest in investments (first VIAC, then VT or the like).

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No, as @Cortana mentioned you pay 10/month in total (in your case 2.35 transaction fees + 7.65 account fee)

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Ah shoot, yes - missed that, I’m sorry.
Ok, that makes it even more attractive.

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I hope it’s not Herbalife (or the likes).
If so, cancel it and research a bit on nutrition and start sorting out your own “powerfood” with healthy ingredients.

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Vitamin D3 and Omega 3 are the only things worth taking, IMO. Most of the supps are useless.

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I hope it’s not Herbalife (or the likes).

It is quite similar. I’ll quit it.

Vitamin D3 and Omega 3 are the only things worth taking, IMO

And nothing replaces a varied diet.

Btw good book recommendation regarding healthy nutrition (in german): Amazon.de

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IS magnesium considered a supplement? Add it to the list.
(also Iron for the ladies…if needed)

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Everyone is thinking it, but I will say it. There is a very simple way to increase your savings rate by 10% and thus FIRE several years earlier. And it doesn’t involve selling the horse.

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you actually didn’t say it. :smiley:

1 Like