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 
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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.
[edit]That was out of line, mea culpa[/edit]
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@romzzz and @pandas : Please keep the tone cordial. What started as people disagreeing does not need to evolve into ad hominem and denigration. First and last warning.
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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.
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c’est le ton qui fait la musique
why can’t a household do both?
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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…
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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.
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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.
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[Splitting topics to have more visibility]
And yet I reiterate: focusing on saving rate is what moves the needle the most, so it should be talked about more often. And if someone tells you that to achieve FIRE in a reasonable delay you should focus on being in a position to save more money, i see it as a welcome wakeup call, even if the tone is rough.
Let me illustrate my point (people allergetic to Maths can skip this section and go directly to the table below).
Assuming that you start from scratch and you will use the 4% rule (i.e your target capital is 25 times your annual expenses) then the time it takes to reach fire can be easily calculated.
Let:
- r be the annual yield of your investments
- and s your saving rate defined as savings/revenues
Then the time it takes to reach fire, N, in years, is worth:
N = LN(1+25 * r *(1- S)/S) / LN (1+r).
If you create a table of N as a function of r and S, it is very instructive:
I have highlighted the line where r=7%, which someone using index funds should expect over the long term.
Let’s try to describe the average guy on the forum (if such a thing is ever doable):
- it is likely that at some point it will be in a household, with partner and kids
- with such a configuration i haven’t seen many people having less than 40-45k CHF of annual expenses. (taxes excluded, you can add 10k of taxes)
if such a houshold is unable to save 100k within three years, it cannot save 33k within a year, so let’s say they save 25k per year, their saving rate is 25/(45+10+25)= 30%
The table say it then takes 24 years to reach FIRE at such a saving rate. Now if they focus on boosting saving rate to 60%, the time needed to reach FIRE is now 11 years: you save 13 f#*#g years!
As lowering expenses has a point of diminishing returns, there is only one alternative: increasing revenues.
I mean, i don’t know that is more eye-opening that gaining back 13 years of your life. If someone is a little bit rude saying that you should save more money, knowing this table, it should be a wakeup call for many.
Yes, it is hard to change job/career. But it is certainly worth it.
The fact that someone leaves in Switzerland does not automatically grants the right to retire early if the saving rate does not follow. it surely makes the game easier than in France (for instance). But still, at some point we have to eat the broccoli and do the hard thing. 13 years of life is worth it.
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Your point is well made, but I would hope that anyone who signs up for this forum would have already read one of the hundreds of articles on the web that state exactly what you just stated (you’re probably right that this is not the case).
To further spice up the conversation, I would add this question for discussion…
Why don’t people find a job/career that they actually enjoy enough not to consider “13 fucking years” of working in that domain as being a horrible prospect?
Edit: I should add that this enjeu is actually something that I have personally considered… I have a PhD in an engineering domain, and probably spend about 40% of my week programming. I have seen some of my colleagues with very similar skillsets go off to work developer jobs… I do not think they are happier, despite the salary boost. I actually think that they are far more stressed and get to spend much less time with their kids and/or doing other activities they enjoy.
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Hi @Julianek,
True, but the assumption of Pandas was considering that this one person would put the 100k saved during 2-3 years into the IB account to reach the reduced fee levels… versus running with Degiro until a latter date.
It is a big and wrong assumption that someone would like to invest all his/her/their 3 years saving on the same position and not on RE, P2P, Business, Morgage, etc…
I’d like to believe it as well, but if they had read it and really gotten the gist of it, we would have many more questions on these topics 
Fair question, and I will answer with my particular case rather than an improbable generalization.
I have been working for almost 9 years, and will probably continue to work for 6-7 years before reaching FIRE. Married with one kid, i have a job that has certainly a lot of advantages:
- a salary that is high enough so that my wife can stay at home to spend time with our child
- if i do my job (which i do) i am out of the office by 4 pm every day, so i have substantial time to enjoy family
- i can work remotely as well several days in the week
- and i have nice and interesting colleagues.
So all in all, many factors that in general people would find enjoyable.
And yet, i am getting tired of it. Tired of having someone telling me that i have to work from this hour till this hour at this place. Tired of my industry (i had joined it as a naive, i am now frankly disappointed). Tired of bureaucracy. Tired of not doing things on my own terms.
I have wondered if i should switch, but I will not. I will escape in 6 years. I could have created instead a business (which would have an uncertain outcome) but even if it was successful it would take as much time to make me wealthy. So i bite the bullet.
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Congratulations for building this life for yourself. Out of curiosity, what do you do?
I see that I missed out on a heated discussion! Thanks for splitting the topic @Julianek. I took the liberty of merging even more posts into this one.
Technical moderator rant: sorry if the topic looks a bit messy. When I merged additional posts, they did not appear in chronological order! I had to move them to a temporary topic and then back here…
Back to the topic. I get why people get offended by “100k is not a lot” etc. But looking realistically, you will need 3000 CHF per month when retired, that means 36’000 CHF per year, so a wealth of 1’000’000 CHF. And 100’000 CHF is only 10% of that. 2-3 years is rather ambitious, but if you’re seriously thinking about FIRE, then you need to find a way to save at least 20-25k per year.
And cutting fees should not be the main focus at that stage. I can give my example: until I got 30, I was focused on improving my skills and getting a better job. I had no idea about stocks and brokers. And only after my net value crossed 100k I thought: man, I need to invest this money somehow.
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I’d say it’s not hard, it’s insanely difficult. It’s basically blood and tears over couple of years. It’s a subjective thing if somebody values FIRE that much to take these risks. Some people might prefer to focus on richer standard retirement and live their life calmly. What’s worth all the money in the world if you’ll make yourself miserable?
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Sounds like you have a really balanced work-life set-up (which is an extremely important factor in general happiness in my experience). But I can totally understand the desire to do things on one’s own terms.
For myself, I know that I must beware of the grass-is-always-greener-on-the-other-side mentality. With age (and kids), I am getting better at recognising more objectively when certain situations in my life are great or terrible.
Obviously if someone can earn more without increasing stress and losing work-life balance, then he/she should do it, but often there are big trade-offs. In the context of FIRE it then becomes a question of better life today vs. better life tomorrow, which is a hugely personal choice. I’ve always been someone who believes that youth is temporary and that one should plunge head first into gaining the most diverse experiences possible while young, albeit with an eye on the future. In my mid-30’s, I’m happy with how this has played out, even if I will probably end up FI in my 50s rather than 40s.
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I agree. I personally work 80% to spend more time with my kid and let my wife work part-time, Even tough it will extend my journey to FI by couple of years. I consider this forgone income as an investment into good family life (i.e. happiness). I personally believe it’s not only about the aim, it’s also about the journey.
On the other hand, it’s easy for me to say that as I’m Software Engineer with a good salary, like this arrogant anti-social youngster who started this heated discussion.
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BTW. For most FI-seekers in Switzerland, I’d seriously recommend considering moving to cheaper country to boost their FI date. It might be easier than changing careers.
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How much would you need if you would just travel the world till you die? Would 60k/year be enough?