I’m pretty close to FIRE, still employed 50% this year and possibly 10% exclusively with remote work starting next year, but maybe also completely without a job in a couple of months (and currently no intention of getting another one).
I plan to live off dividends as my portfolio size and composition allows for that and as I also feel much more comfortable with this approach than having to live off capital gains (and deal with withdrawals at the time of capital losses).
In theory, it shouldn’t matter much, in practice, I personally can’t comfortably wrap my head around constantly withdrawing from my nest egg.
No property and thus no mortgage.
I irregularly and opportunistically rebalance my portfolio, i.e. when I see positions getting so overweight that their dividend yield gets close to 1%. E.g.: sold some Broadcom in July 2024 at USD 173.70 and moved the capital gain into higher yielding companies.
I focus on US companies with a side of Canadian and GB ones. Just because those countries seem most shareholder friendly and tax treaties with Switzerland work fine. No stock picked Swiss companies, but (plenty) via ETFs in tax sheltered accounts (aka pillar 2 and 3a) and some via VXUS in a taxable account.
I see my liquid assets increasing over time, with a few bumps here and there, e.g. dipping a little as work income decreases significantly next year or even goes to zero, increasing a fair bit as I lump sum withdraw from pillars 2 and 3a.
Definitely separate accounts for daily use versus investment related. Cash reserves can be at either place.
My cash reserves are on average about half a percent of my liquid assets. This works for me because I see those dividends come in very reliably every month – I feel they’re more reliable than my work income. YMMV.
Also, should I suddenly need a fair bit more:
- in good times:
- I’m sure there’s almost always some company that is overvalued in my portfolio – perhaps not as overvalued that I would sell without the need for cash – but in a dire personal situation I’d shave off a bit.
- I guess there’s also the option of a margin loan or Lombardkredit, though that would be my last resort.
- in bad times: I also hold a bunch of highest-grade bonds that I’d sell a portion of. Usually bonds go up during bad times (though in the most recent crisis, bonds went down as well as the Fed started to hike rates due to inflation …).
Tax payments: the withholding tax and the taxed-at-source reimbursement after I’ve filed taxes allow me to mostly pay my taxes. The rest I fill up with money from dividend income.
No experience with issues due to having FIRE’d.
I live in the city of Zurich.
Pillar 2 and 3a still wait for me turning 60 to collect them (lump sum, as mentioned).
Liquid assets are about CHF 3.5M.