Please help me develop my plan!

sreese4u · February 9, 2021, 4:26pm

So I was casually looking into investing and what to do with money when it piles up. I found this web site and was reading a bit and finally found Don't underestimate ageism or women over 50 - #49 by Neville.

Now I think I have to put more brainpower into our future in order to avoid poverty when we hit the age of 50. That means I’d need to be financially independent in 13 years (holy moly!). So this is my situation currently.

My wife and me are both 37. We have 2 kids (9 and 7).
I work 100% in IT (cloud stuff) and I make 117k netto a year (before taxes). My wife currently works 60% (as a dentist), she makes 52k netto a year (before taxes).
We are not frugal at all, we rent a new 5 room flat (3.1k a month) and don’t want to move. We’d love to buy a house but don’t have the cash (20% of about 1 million CHF I guess?).
We go on vacation 1-2 times a year. We mostly visit Poland, that’s our home country. With the money we make here, we can book 5 star hotels and enjoy our time.
We are currently able to save about 36k CHF per year and started to max out 3a two years ago.
We currently have about 30k CHF in cash and about 50k CHF in 3a at VIAC (100 global strategy).

So apart from putting our money into VIAC with the global 100 strategy, what should I do additionally? I was thinking about putting between 1000 and 2000 CHF into ETFs (20% CHSPI and 80% VWRL). Is that a good plan?

How much cash would you keep on your account as emergency fund? Is 30k a good amount? I guess we will be able to live about 4 months without a job with 30k.

What else do you guys suggest for us?

dbu · February 9, 2021, 4:22pm

Mate, take a breath and don’t panic so easily.
You are really going to extremes with “It’s either FI or poverty!” black and white.
One person’s experience does not mean the same will hold for you.
I can count another 10+ people in my network alone who have no such issues.
So think statistics too…

Yes, it is still a thing to keep in mind, but also a reminder to keep yourself relevant and valuable as years go by (so that age doesn’t become the only criteria you will be assessed on).

Stick to your plan, keep saving and investing, but don’t go full extreme and forget to live in today because “you absolutely must be FI (in CH) by 50”…

P.S. Yes you should definitely invest more than just in the 3a pillar, if you want that FI before 65.
36k/year leaves ~22k to put elsewhere (2x 3a maxout).

P.P.S. You could probably go and FIRE in Poland with your savings here in 5 years, if you wanted…

sreese4u · February 9, 2021, 4:25pm

Thank you for the kind words. I just wanted to point out that I am far from a panic mode Maybe I made my post sound like that too much. I just want to avoid missing my chance to be at peace in near future because I mismanaged our finances on my way to retirement.

MUFC_OK · February 9, 2021, 5:43pm

Make a budget first, see where you could optimize spending, and then an asset allocation you feel comfortable with and put everything apart from your safety money into that asset allocation. And what‘s your goal? Write an IPS Investment policy statement - Wikipedia

Alvo · February 9, 2021, 6:16pm

I wouldn’t worry too much.
If you’re afraid just switch to consulting and try to be good at what you do. You will work for different customers and build a network. If you do decent work there will be somebody to employ you.
If that’s not for you try regular job hopping every 3 years. You’ll realize when you are not employable that way and you can then do the usual stuff. Learn new technology, try to get involved in long running projects, get knowledge that’s hard to replace, don’t document anything, kiss the right asses and so on.
But I’d prefer to be FI.

I know guys in IT consulting who retired at age 65 and they could get tons of jobs as they were awesome employees.
I also know other guys who stayed at the same company for too long with a outdated tech stack and they were basically unemployable when they lost their job.

And as a dentist… I guess it doesn’t get much safer than that in the private sector.

sreese4u · February 9, 2021, 7:58pm

We redo our budget every year and optimise everything from insurances, through mobile planes up to hobby expenses. I imagine we could push our savings even further but I think we don’t want to. About my goal: I don’t want to have that feeling that I have to perform like crazy because some prick of a boss threatens to fire me at the age of 50 because of my age. I then want to be able to find a job I like or maybe even to stop working at all.

When I assume I live until the age of 80 (quit my job at 50, my wife does the same), I’d need about 30 * 120k = 3600k CHF. I have no idea what part of that I’d have to finance myself and what will be given to me from AHV.

If I’d save 36k per year over 13 years I’ll end up with 468k CHF so I’m far away from 3600k

sreese4u · February 9, 2021, 8:01pm

I want to think that I’m good enough to find good jobs even at 65 but who knows. As a dentist you’re not really safe unless you have your own business.

San_Francisco · February 9, 2021, 8:03pm

Relax and enjoy life.

There are guys that are closer to 40 or 50 than you, earn little more than half of what you do, have no marketable IT skills and whose country of origin is twice as expensive as yours (e.g. me).

1-2 months maximum. Enough time if a salary payment doesn’t come in on time or you lose your job, to apply for unemployment benefits.

Don’t forget that you’ll be able to just sell assets if need be.

sreese4u · February 9, 2021, 8:03pm

So you live in the states? In San Francisco? I ask because I visited San Francisco in 2019 and loved the city

San_Francisco · February 9, 2021, 8:12pm

If I lived in San Francisco, I wouldn’t be writing about the funds I’m investing in on this forum.
I would rather as which assets to liquidate, just so that I could afford living there.

Wolverine · February 9, 2021, 8:25pm

It depends. I’d say most of your needs and those of your dependents should be covered via insurances rather than emergency fund in Switzerland. Mandatory unemployment, IV and second pillar often fulfill these needs but it’s worth assessing if you’re truly at peace with what would happen in case of disability or death when you have dependents (children).

I’d also keep my expenses in check so that the reduced income from unemployment/illness/disability doesn’t immediately threaten my lifestyle or mortgage affordability (if I have one). This should be fulfilled if you save 20%+ of your income.

So, for pure emergency fund, I’d simply go with enough to cover a potential administrative delay, as @San_Francisco mentions. I’d keep aditional cash on the side if I have a specific expense in mind (mine is a car replacement) or a project (downpayment for a home, specific adventure, something happening in the short term in the life on my children in which I want to financially participate).

And I was so sure you were one of those IT people! Talk about fitting people into boxes without knowing them. xD

Barto · February 9, 2021, 9:17pm

Building a 2 minute excel forecast like the following might help you understand where you might land. You can play with the assumptions to see the impact of spending and investment decisions e.g. keeping too much cash which reduces investment growth

Alvo · February 9, 2021, 9:32pm

It might still be a problem if people don’t know you are good and you can’t pass the first cv screening.

I think you are never really safe, especially if you have your own business.
I admit I don’t know how it works in Switzerland but in Germany unemployment for dentists is basically nonexistent. I would be very surprised if the situation in Switzerland is different. Dentist is the most common profession in my family and some of them would like to hire and work less, but they can’t find anybody.

You really shouldn’t worry too much.