Two Doctors in CH, financial pants down, any comments welcome!


#1

Hi Everyone,

I’ve been reading your posts for a while now (soooooo happy :smiley: to find this community!), and was wondering if you could look into our little story. Definitely not catastrophic but, well, we only discovered Mustachianism via MMM a few months ago.
I’ll try to be brief and hopefully not too much of a mess:

We are both 42 year-old non-Swiss physicians, although applying for CH passport as we speak, after having lived in CH for 16 years. My background is Greek, my husband’s is German, and we nowadays work part-time in Switzerland and live part time in Greece, so are already applying geoarbitrage in our own special way. We never actually meant to do this, haha, and thought it was just a stroke of luck.

Our actual income nowadays is FAR lower than it used to be, due to the VERY part-time nature of our work in Switzerland - we only work a few days every month and now have a combined income of around 75k CHF per year. We’ve always been relatively frugal (always had a low-cost rent and never possessed more than one rather economical car which we kept for years, very reasonable spending on clothes, children, fun etc).

The concept of working towards “Not HAVING to work for money" but “having enough to cover our basic needs while being free to do things that interest us and perhaps earning some money on the side” has been an absolute, amazing, and insane revelation for us. We had never ever heard or even conceived of the possibility of ER until a few months ago, so have made loads of changes (budgeting with EveryDollar {this has helped a LOT}, changed phone plans, health insurance, life insurance, kids’ activities and other recurring costs) and have markedly improved our saving ability in the process.

We have no debt and only ever once paid off a new Toyota Yaris 15 years ago. Very proud of this in retrospect. Not so proud of how much we paid for our wedding - having the knowledge we do now, we would have chosen a much cheaper wedding and honeymoon and invested the money, also spent far, far less on holidays and trips. Live and learn, right?

Having said all that, we are not complaining about how we did financially, having brought up two children over the past 14 years.

Here are our ASSETS, both held at Credit Suisse a.k.a. Big Bank (feel free to laugh all you like, we only discovered the absolutely humongous fees once we started actually hunting for this information. It is actually provided by the bank, just hidden nicely.)

Account 1 (CHF):
100k in cash
200k in different single stocks (my husband has done this, obv have fallen quite low these days but we have seen nice profits and growth over the past 10 years or so)

Account 2 (EUR):
25k in cash
140k (30k of these are in index funds we bought in the last few months, about 110k in single stocks)

Pillar II: 68k for me, 132k for my husband
Pillar III: 70k for my husband (recently transferred into VIAC)

So, all in all 735k, not too bad in our early 40s, right? Most of our colleagues are living in style and spending most of their salaries, which are larger than ours, and usually only have Pillar II savings besides their AHV/AVS. We are already semi-retired and really, really feel it. In our massive free time we have recently started a blog about natural therapies for children are even teaching some of this online, earning a nice little side income.

INCOME (family of 4, one dog, 2 budgies, 2 stray cats we take care of)

  1. Both part-time incomes combined: 75k
  2. Side income: 13k
  3. Dividends: 4k

SAVINGS RATE:
about 20% (this is slowly rising, as we are making improvements all the time)

Our general GOALS are:

  1. Continue working our part-time jobs as now for the foreseeable future - our day income is great, considering how few days we work every month (8d/month)
  2. Grow our side income, for which we work far more (22d/month) than for our regular income, but we just got started a year ago --> this is to improve our savings rate and ultimately make us independent. It also helps many, many more people than we can help working as regular physicians.
  3. Buy a plot of land in 8-10 years, build a smallish house on it and start a tiny permaculture farm (my husband’s dream)
  4. Become financially independent so we can travel the world and visit our children for extended periods of time when they are older and studying or have families or whatever (my dream)

Our QUESTIONS/REQUESTS to you are:

  1. Please don’t laugh (too hard) about our low savings rate or the fact we trusted a big bank - we made most of the financial decisions, not the bank, despite their best efforts.

  2. We definitely HAVE to move our stuff away from Crédit Suisse, even just because even despite the money we have there, we are still treated like 70% idiots and constantly invited to ask for their expertise in what to do with our savings. We would much prefer YOUR Mustachian expertise, SO: if you were us, and had stocks and index funds held for exorbitant fees in a big bank, HOW would you technically do it?

A) we have read about CornérBank and Interactive Brokers, and would like to diversify our risk by opening accounts at both these banks and transferring all our securities -
I don’t know, what with Brexit and so on, if we transferred everything to IB and they went broke or something? Am I being paranoid?
Do we just open accounts online?
Is there anything special like e.g. special type of account we should be opening? Private account? Broker’s account? We have no idea.
Do we then just nicely ask Crédit Suisse to transfer our securities to these institutions? Will they do it or fleece us in the process? We do NOT want to be selling ANY stocks in any way with the stock market as low as it is now, we don’t need the money and it would be stupid anyway.

B) should we even be considering paying more into our pillar II? Or again start paying into our pillar III for tax reasons? We are paying very very little in tax right now, around 2% or so. Or just put everything into index funds?

C) biggest question: once we do transfer all our securities, WHAT TO BUY? We do realise that the 125k we have in cash right now are a lovely opportunity to buy with markets falling, but … buy what? Bear in mind we would like to keep money in both currencies (CHF and EUR) for the future - no idea yet where we will be living.

Soooo, if you play a little mental game and I told you: you have 125k to buy everything your heart desired, where would you put it and what ETFs would you buy? VTI? iShares? VWRL? Other Vanguard stuff? I went on the Swiss website for Vanguard and did not understand a thing (I’m probably stupid, despite my PhD).
We also consider our AHV/AVS and our Pillar II to be like our “bonds” so only looking for ETFs, index funds etc, as low cost as possible.

We welcome any and all comments and advice, and are VERY grateful for it in advance!! If the way I explained things is too messy, I’m happy to clarify anything.

Best regards and a happy, creative 2019!

Susanna


#2

It’s kind of low to show off for 16 years of work, when some doctors make 750k here a year


#3

Hahaha :joy:, never even made even a fraction of that, I think the maximum we ever made as a couple was around 210k before taxes and so on, and we started out at 100k (combined income, when we were still starting our specialization). But still these numbers still seem huge compared to what we earn now that we are down to super-part-time…and loving the time with the kids, dog, and assorted animals and friends.


#4

Let’s not talk about the high wages of doctors here… we all hate health costs and here comes two easy targets…

Apart my issue with the health sector (:slight_smile: ), my 2c for you are:

  1. If you feel like a newbie, just stick to the easiest solution the forum more or less agrees: VT on IB/CT and see how it feels. I suggest to grow it slowly instead of a single lump sum, especially now that it’s not clear where everything is heading.
  2. Why not work a bit more than 8% so that you can reach your goals earlier?
  3. Don’t put more money on the Pillar 3a if you don’t pay a lot of taxes.

#5

Hello @ma0 and thanks for the consideration - I’m a pediatrician and my husband works night shifts - we earn less than almost everyone we know. The 8% is not quite correct, it’s 8 long workdays/month - still very little but not 8%, and is the end of a long, long story. We could certainly work and earn more, but have decided to stick to this for the next 10 years or so if possible, as long as our kids are at home. We hardly saw them when they were younger and we were working 120 hour weeks for much less money, so are very happy as it is right now, also helping my parents in Greece.
Also, re: working/earning more - we are in no huge hurry to leave the workforce, we like many aspects of our work and it’s not killing us anymore the way it was years ago. If we were to reach FI we would probably still continue working like we do now, but it would be wonderful to have options especially if my parents or our children need us more.
So yes, we feel like total newbies outside the “I have all funds sitting in a big bank" frame. Is VT the same as VTI?


#6

VTI tracks the US market, VT covers US + foreign markets
Here the complete list


#7

Thanks @weirded (what a nickname :-)), that sounds great. Will have to navigate around opening the account and then getting Credit Suisse to transfer securities somehow. I’m so surprised to be getting answers in this peri-holiday time, was expecting ppl to read this in the new year!


#8

Hello @Susanna,
Thanks for sharing your story!
Regarding the transfer of securities: you should check with Crédit Suisse and the receiving broker, but I would expect them to charge a large fee for the transfer of each position.
Depending on the cost of each transaction (both ways), it may be worth selling everything, transferring cash (should be free), and buying again at the new broker.


#9

Hi @_name, I was afraid if this. Well, we won’t be selling anything anytime soon, that’s for certain, with markets where they are right now. I’ll look into the transfer of securities. Considering we’re paying 1000CHF+ yearly to CS, it might still be worth it. Thanks for the response!


#10

I understand that you’d like to hold on to your positions. But selling and buying right back (1-2 days later at most) achieves that, minus the brokerage fees.
This can be done at any time, as long as the market doesn’t rise significantly by the time the cash reaches your new broker.

(I am not aware of the tax implications of this).


#11

Haha, of course - honestly we feel rather intimidated by this entire process - it might not seem scary to anyone else in here, and we have held stocks for a number of years and done quite well, but it all felt “safer” when everything was just sitting in a big bank. We are pretty much amateurs and never even realised that the stock positions are probably not even held in our name but in the bank/broker’s name. Anyway, we are taxed in the Kt ZH so essentially only pay the wealth tax which is v low, plus income tax on dividends. If we sell and quickly buy back, the tax implications should be small to none.


#12

Since Credit Suisse won’t do you the favour of transferring securities for free (banks do nothing for free, in case noone noticed!), your best next alternative is to minimise stock market risk, as follows:

  • Decide which chunk of stocks/indexes you want to transfer, try to work in batches.
  • Preload a good chunk cash (say, 5000CHF) where you will have a buying position (fi. IB)
  • Ensure you have direct control of both buy & sell operations, at the same moment.
  • Fire the orders at both ends at the same time: your risk will be low, you’ll pay transaction fees
  • Reload 5000CHF from the sale act via a bank transfer (ugh, that could be the pain) and refire.

Working piecemeal, it should be possible to transfer your capital will very little stock pricing risk, but you’d rather want to keep an eye on transaction fees. 5KCHF is indicative, adjust as needed!


#13

Thank you very much @kefalonia, we did all that, just in bigger chunks than 5k (it would have taken ages, we were surprised at the amount of days it takes for cash to “settle down" in the IB account - it took days and days, we probably did something wrong).

And yes, haha, even though we knew theoretically that banks never do something for free, it was a bit of a revelation to actually dig a bit and find out just how much they were charging just for our Depot to …sit there. We were naive enough to think we were being smart to not accept their “investment advice” and make our own investments. Well, live and learn, right? We are closing our Credit Suisse Depot as we speak, so the good news is, we will probably no longer receive calls from “investment advisors”… one thing less to respond to.