(note by @Bojack: double post caused by me, which I don’t know how to remove)
If you can’t reach 100k after 2-3 years in Switzerland i think you have much bigger problems to worry about than some lousy $120/year of broker fees. They are negligible in the long run
100k in 2-3 years may seem like child’s play to some but the sad reality is that not all of us are ramen-eating software engineers with no dependents living in flatshares.
For some perspective, 43% of the population have a gross monthly salary of 4000-6000 CHF (or 48k - 72k yearly). Even at the upper end of that bracket you’ll struggle to save an investable 100k in 2-3 years.
72’000 CHF less approx. 20% for taxes, social security contributions and pension fund - or 14.5 CHF - makes for a net salary of 57’500 CHF. Less 33’500 required savings over a three-year saving period for that 100k target figure gives a remaining 24’000 CHF for living expenses (among them health insurance and health care for an approx. 3000-4000 CHF per year alone).
Can you live on 2000 CHF a month? Probably somehow.
Do you reasonably want to, if you make less than that?
Exactly. So if you find yourself in these lowly percentiles, you have a much bigger problem to solve and with a much higher payoff than optimizing some peanuts on broker fees.
Growing income >> cutting expenses
I eat meat as much as i want (usually from Lidl, tho), drive car, living in own flat and still manage to save >60% of my >120k paycheck.
According to 2016 data from the official statistics:
- Top 10% earned more than 92’078
- Top 2% earned more than 144’552
So yes, salaries in Switzerland are high, but achieving >120k is still not a given by a longshot. Calling a median income “a much bigger problem to solve” just does not cut it. Or by the same standard, why aren’t you a retired multi-millionaire already @pandas?
manage to save >60% of my >120k paycheck
… is not adding anything to the discussion of cost of living and potential savings. If you throw numbers around, at least be specific.
By chance, did you see any explanation if they are referring to gross or net income? Maybe I’m blind, but I didn’t see anything…
The analyses that are presented here are based on the equivalised disposable income. This is calculated by subtracting the compulsory transfer expenditure (social insurance contributions, taxes, premiums for compulsory health insurance and regular transfers to other households such as child maintenance) from the gross income and by dividing the balance by the equivalised household size. This estimate enables a better comparison of the income of people living in different size households. Analyses are therefore carried out at individual and not household level.
Cool. When I get home from work this eve, I will make sure to rummage through my closet to find my big bag of shiny medals and send one your way.
In all seriousness, I think a lot of the flak you are receiving on this thread is related to how you seem blissfully (and, dare I venture to say, arrogantly) unaware of how exceptional your situation is compared to the majority of people (some good stats have been provided by others!).
Thanks a lot @mso! So the numbers refer to net income (after AHV, taxes, health insurance). Makes more sense now.
I should have used the “return to overview” link…
If you can’t refrain from making assumptions on other people’s wages, lifestyles or savings rates you have much bigger problems to worry about
Thanks you very for your precious opinion, I’ll show myself out of this forum in that case. Don’t want to be around poor people anyway.
That was out of line, mea culpa[/edit]
Pandas might be undiplomatic, but he is not very far-off the point: if it wants to reach FIRE in a reasonable time, a Swiss household should be able to save 100k within 2-3 years.
of course there wil be exceptions, such as people already having their stach’ in real estate or what have you. But you still need earning power at the household level, and if not this should be a higher priority than looking for the absolute lowest fees fund.
Let me illustrate my point:
- A Swiss household will likely need between 40k and 50k at least per year to live in Switzerland (if you don’t plan to stay in Switzerland then this indeed does not apply )
- That means with the 4% rule you will need around 1’250’000 CHF of capital to provide for the household’s expenses.
- If the household cannot save 100k in three years, it means it cannot save 33 k per year.
Let’s say the household saves 25k per year, and invests it in an index fund at 10% per year (historic reality is more 7% per year). Then it takes 19 years to reach FIRE (happy to provide the Maths if needed). Most of us are in our mid-thirties, that is just too long to wait for.
If a household is not able to save 33k per year, it has other priorities than looking for lowest fees index funds. Most of the regular ones are acceptable anyway. It should focus on its earning power.
c’est le ton qui fait la musique
why can’t a household do both?
They can, and should.
But it is my experience that on this forum most of the people focus on ETF fees and absolutely not on earnings power.
At the end of the day, the time it takes to be financially independent only depends on two variables:
- the annual yield of your investments
- your savings rate
I see many people trying to optimize the annual yield by shaving 0.05% or so of annual fees (which they should do at some point).
I see less people working on the saving rate, which is (revenue - expenses)/revenue.
There is a floor to your expenses: at the end of the day, if you optimize housing + transportation + food, there is not much lower you can go.
So the biggest impact you can have is focusing on your earnings power if your saving rate is below 50%.
Going from a saving rate of 40% to 50% will have 50 times more impact on your wealth and your financial independence than reducing annual fees by 0.05%…
And this is why i thought that @pandas’s remarks were relevant.
While it is good that people handle the latter, sometimes i wish more people would focus on the former…
I fully agree that increasing income is one of the most powerful and effective ways of getting nearer to financial independence. If possible, it should take precedence over optimising expensive fees or expenses to the last Franc. I’ve have said so myself more than once on this forum. It also goes without saying that 100k is a long way away from financial independence.
It might have just been a language thing… but I was honestly a bit taken aback just by the phrasing of 100k to be “not much money”, or failure to save that amount within 2-3 years as “bigger problems to worry about”. An amount that a majority of people doesn’t even earn in a whole year is, frankly, “quite some money” to me. Though again, maybe that’s just me.
Last but not least, optimising brokers fees is relatively straightforward and painless. It can be done relatively quickly and easily - so I don’t see why one shouldn’t (side note: that goes for brokers fees, I still don’t think one should solely focus on lowest fund TERs). Enhancing, let alone changing careers paths, on the other hand, is often costly in itself and not without risks - if realistically feasible at all.
Exactly. There is a lot to discuss on this forum about financial products, life optimisation, real estate, investment strategies, geoarbitrage, brokers, etc. But career progression is an extremely industry- and person-specific thing. Unless this is to devolve into a career advice forum (let’s be honest…probably just for software engineers), then I think the focus on this forum will continue to remain on general optimisation of finances.
Also, while maybe the panda dude had a point, the issue was that he came across to many as an arrogant asshole in his comments. This forum has lots of awesome contributors providing really useful information and interesting points of view. And it is very civil and constructive - let’s keep it that way.