The ‘impot foncier’ I considered as a cost factor, so the 30k remaining is after impot foncier is paid. The 20% part sounds reason able; the 30+7.5 hmmmmm – does it matter if you file as a couple?
(Anyway, taken care of by a ‘comptable’, so I hope all fine).
edit, just checked… Declared income 34 979 – tax 7 941
I think it’s a good post tax yield.
3.2%
You most likely also have a bit of impact on your Swiss income due to this income (abroad) but still 3-3.2% post tax yield is reasonable.
By the way. Are you accounting for annual maintenance costs ? In CH, it’s recommended to account for 1% of property value. How is it in france? Maybe a bit cheaper
The maintenance costs depend a bit on the type, the three or four places we have which are a bit more expensive (all relative!), have maintenance costs a bit below 1%. However, the cheaper places – not surprisingly rented out to people a tad lower on the social ladder – it is closer to 2%.
We are upgrading some apartments this year, which definitely increases to the maintenance cost, but should also increase rental income and reduce long term maintenance costs.
The Swiss 1% seems excessive to me, after recent housing price increases. Doubling of the value did not lead to a doubling in maintenance costs.
That’s what I used to think, but this is a long term figure. People often forget that things like the roof will need replacing, the heating system, the pipes, etc.
Also labor and parts increase in cost too. I think 0.75 to 1% is sensible although you could argue that during the lifespan of a roof (40-50 years) or heat pump (15-25 years) the house should, in a perfect world, increase in value and the replacement costs can be paid with a mortgage increase.
Based on data available , I see that average rental yield in Switzerland is 3.3%. Hopefully this is enough to cover for following and hopefully something is left
Capital appreciation from 1970 to 2023 is approx 3% annum at country average level.
The use of debt to finance the home ownership or maintenance is more of a balance sheet and tax optimization problem. But the numbers should make sense regardless or else this would make no sense for investors.
New to the forum (which appears to be very useful!). Wanted to start with an intro here in this thread.
50 years
I’m in between jobs right now so only my wife is working which means less capacity to expand our assets. It’ll be a nice test for us to live just off of her salary coupled with me sweating the 3M stock portfolio and 1M in cash.
I make that sweat by
Once I am employed again all that income (div / options) will go into savings again and we’ll also be able to save from our combined compensation as we really would not be able to spend our combined salary unless we do crazy things. Target is for me to retire at 55 (so 5 more years), my wife will probably work until 50 (so 15 more years). At that point, we do not want to eat into our assets, we want it to be fully funding our lifestyle just from passive income). Don’t want the hassle of buying / renting out real estate.
I’ve got the large cash amount due to a severance and keeping cash on hand for a downturn as well as the use of the cash to support writing cash-covered puts.
Regarding my 3M CHF stock portfolio - that’s 60 positions and I’ve concluded I want to trim that down to 40 (just sticking to high conviction stocks). I rarely buy stocks direct - prefer to write cash-covered puts so I can get them at a discount (or pocket the premium). Intend to also - for peace of mind and simplicity - gradually during the coming years (once employed again) build a similar amount in ETF’s - was thinking of initially month by month dipping into 2 Vanguard funds focused on non-US stocks (incl. a high div yield ETF) and after the upcoming crash (whenver it comes) taking a substantial position in a Russell 1000 Vanguard ETF to get growth exposure. Should add that my 60 current positions do include a tech ETF and a semic. ETF. Am not into bonds - just don’t have the natural sense to understand those.
The 1M in cash - while I hold that, does anybody have a recommendation on how to hold it safely AND generate income (even if 0.5%) AND have flexibility to dip into it for other purposes?
Re pillar 2, I’ll be opening a Finpension account (2 in fact) and still need to select which ETFs to put the $$$ in. I expect to be employed again in 3 months time or so, so this will not be a long term thing. Any advice?
Ultimately, I will stay in Switzerland for the rest of my life (my wife is Swiss). Life is expensive here but life is also just perfect. If I could design a country from scratch, it would look an awful lot like Switzerland! Hopefully, by the time we both are retired our networth will be around 15M+.
For the 1M cash, I think you can consider money market funds or 3 month fixed deposits which are offered by few banks. In addition , different banks offer different interest rates on saving accounts, so shop around
Anything else would come with some sort of volatility or duration risk (like Medium term notes from Cembra)
Congratulations for an awesome progression with your asset accumulation journey. Seems you are comfortable with active stock selection and are not easily jittered by market shocks.
Only think to consider would be to look into your portfolio and ensure it’s diversified enough.
Actually if it’s just 3 month things than you need to choose the least volatile strategy. Maybe interest strategy.
Reason being if you invest in Equity and market crashes at the time you need to transfer into your new employer’s 2nd pillar, then you would have to realise the loss and most likely won’t be easy to recover.
So unless your new employer offers flexible 1E plans where you can reinvest in similar allocation, using equity ETF might be a risk
Impressive. Are you aiming to build generational wealth, or why the fat fire target?
Regarding your cash question: I read that you want near 100% security, and therefore money market ETFs are not an option because of the current interest rate uncertainties? And with your trifecta of requirements a simple savings account doesn’t do it as well (though you would find at least 0.25% with full flexibility at willBE)? Then the only option in the middle is term deposit. You can have a “call” term deposit with a few banks (as strangely as this sounds), or you could lock-in only a few months at a time and if absolutely necessary use a lombard credit line until maturity. Here from Swissquote as an example.
Congrats. Sounds like you’ve done a lot of things right financially 
Whats your plan when you retire?
You say the money should last; do you plan to pass it on to kids?
Thanks for the feedback. I definitely need to re-assess my diversification as I am still underweight in tech and US (although now may not be a good time to correct that).
My wife and I may still have children and then building generational wealth will play a role. But aside from that, part of my FIRE focus is also due to ‘trauma’ at a young age. Won’t go into all the details but we were pretty well off financially (despite many other issues) at home until the proverbial shit hit the fan and switched to living in social housing, on welfare, etc. - it made me realize at a young age that there’d be no handouts and I’d have to ‘fight’ for things in life. So was very focused on getting an education and moving up in my career. As a result, I also have been “what if?” modelling in my mind a lot - I’ll take risks by being aggressive on stock selection / weighting, but at the same time have preferred to pay down the mortgage despite this not being tax optimal. It’s my way of ensuring (despite it not being tax optimized) that I have less risk of ‘losing everything’ in case of a catastrophic stock market collapse. I intend to continue to pay down the mortgage probably until 75% or so is paid off.
Looking back, I’ve made some excellent investments (invested in a company immediately post-IPO and this investment went 10x) but also had my fair share of “ouch” moments. What made most impact on my net worth was plain and simple “hard work” and in particular cash and LTIP variable comp from the corporate world.
Which leads me to the last point, the corporate world is a toxic place to be so FIRE for me is also ultimately about ensuring I have the “fuck you”-option. In other words, if at a point I’m completely done with it I’d be in a positon to say “fuck you” and walk rather than having to be a slave just to live. I’ve already noticed that having a good nest egg helps to reduce stress at work and is good for peace of mind. This is even more important as you get into your 50’s and you’re going to encounter a more difficult time getting your foot in the door in a new company if that becomes a topic.
Biggest regret? I should have:
Major help:
Congrats!
Swiss government bonds? Directly or through ETFs.
Also: while you’re in cash, make sure it’s distributed across enough different legal entities that you benefit from the Einlegerschutz of max CHF 100k if one of your banks goes belly up.
BTW, being in Swiss government bonds takes care of that risk as well.
Not sure if that’s already your plan, but when you start working again, move only one of your 2 Finpension accounts to your new employer and “forget” the other one.* When you retire withdraw your pillar 2 money in two tranches i.e. different tax years, lowering your Kapitalbezugssteuer due to lower progression.
* This has been discussed several times on this forum. Some people caution against this, but I’ve yet to hear of a case where the tax office got on someone’s back because of this.
Wouldn’t this more of a case of new employer complaining about it vs tax office? I am not aware of any law where tax office has an issue with this.
Not sure where it’s stated, but you are supposed to move your entire Freizügigkeits-assets to your new employer. I’m sure there’s someone on this forum who can point us to this.
As for the new employer complaining … probably depends on when you join them and how much interest / influence they have over their pillar 2 solution.
When I joined my current employer in 2020 – sub-zero interest rates, anyone remember? – I let my boss/CEO know that I would only move a portion to the company’s pension fund, and not only did he not complain, he seemed kind of happy as at the time it was probably difficult to invest the money in the pension fund taking into account all the constraints (as discussed recently in a different topic).
Aren’t pension funds organised as trusts that are independent of the sponsor company (even if they bear the same name as a large company)? In that case whatever your boss/CEO (of the company) says on 1-1 basis is irrelevant to what the pension fund wants to enforce or not?
Yeah, well, probably … somewhat? See my rant here (2nd half of the post) for how my current company handles this.
Pretty sure this is the case for some other companies: an asset management company will try to have their pension fund invest in products of said asset management company. In our case, it’s part of the agreement.
In, say, UBS’s case, their pension fund probably almost has to invest into some UBS products just for size reasons (not enough large enough institutional investment products available by other Swiss players) if not contractually enforced.
Hello Mustachians,
I‘m also a newbie and wanted to say hello with this first post.
I‘m 26 years old. I struggled for several years to save adequately due to my studies but the future seems to be bright and i hope to get to 1m by 40.
Number six is current 2024. So several months left. I hope to
be around 170k by end of 2024.
Happy to answer any question.
Coming back on the point about not shifting the entire Freizugigkeitskonto to my eventual new pension fund… a few question marks.
After the pension fund has transferred the funds to the ‘vested benefits’ account (in my case: at Finpension), is it then still allowed to make additional contributions to Finpension and then have them be tax deductable… or is this only something that is allowed to be done with an actual pension fund account?
I’ve read many of the threads / comments about not transferring the full Freizugigkeitskonto assets into the new pension fund and I’m a bit ambivalent about that. I’ll share my rationale and appreciate any feedback.
Basically, I understand and to a certain extent accept that the returns with a pension fund will be lower than if I invest it myself. I just do not want all the eggs in one basket and it gives me peace of mind knowing that I have a ‘base’ pension which is conservatively managed. WIth this in mind, my inclination is to eventually transfer all my Freizugigkeitskonto assets into the new pension fund so that I have a more substantial pension which I can rely on. It also ensures I will continue to have the ability to make tax deductable voluntary contributions to my 2nd Pillar - i realize many people do NOT do so but here again a) I appreciate not eggs all in one basket (i.e. me making aggressive stock picks) and b) I appreciate the tax deductability and c) I do have a fairly large pension gap which I’d like to fill at least partially. Am I missing something here?
