On this blog, you already heard about inflation. And if you follow other personal finance blogs, you have probably heard a lot about it. But do you know exactly what it is? And especially, do you know what causes inflation and what it does to your personal finance?
Inflation is caused by many things, it can come from the economy, from the government or for simple demand and supply effects. It can even be negative, something that is called deflation. And it has several effects, the biggest of which is to make you lose purchasing power over time. You need to protect yourself against inflation.
In this post, we are going to look in details at all these causes and effects of inflation. And we are also going to look at some examples of inflation in the past.
Continue reading “What is currency inflation? How to fight it?”
We have seen recently that we may lose access to U.S. funds in Switzerland in 2020. DEGIRO already cut access to these funds. And it is highly likely that Interactive Brokers do the same next year. So, we need to be prepared for that eventuality. The alternative to U.S. Exchange Traded Funds (ETFs) is European ETFs.
You can also use mutual funds, it is almost the same thing. However, it is much more flexible to invest through ETFs in Europe. The main problem is that European ETFs are inferior to U.S. ETFs in many ways as we are going to see in details. Unfortunately, we may not have the choice to use them. The alternative of not investing at all would be much worse!
In this post, we are going to go through the multiple steps of designing a new portfolio. First, you need to decide the allocation of the different parts of the portfolio. Then, you need to choose between different stock market indices. Finally, you need to choose the best ETF for each index. I believe it is an excellent exercise. However, it is not trivial and should not be taken lightly.
Continue reading “ETF Portfolio with European ETFs”
Have you ever heard of lifestyle inflation? You probably have. I have already talked a bit about that since I fell into this trap myself. However, it is now time to delve deeper into this subject.
Lifestyle inflation is happening when your spending is going up and up. Many people when they get a raise or some extra income, they simply go with spending it all. They do not only do it for one month, but they also do it the next month as well. And the following time they get a raise, they do exactly the same. Some of them can afford it, but some people go into debt in that vicious circle.
The main problem is that most people do not consider everything there is to consider when getting extra income. For instance, they do not consider that they will have to pay more taxes when they get more income. And they do not consider the upkeep costs of some of the things they buy. Moreover, they also do not think of their retirement. The more you spend each month, the more difficult it is to retire.
In this post, we are going to see all about lifestyle inflation. I am also going to talk about a few rules you should consider if you want to avoid, or limit, lifestyle inflation.
Continue reading “How to avoid lifestyle inflation?”
Recently Swisscard announced a new offer for credit cards: Swisscard Cashback. They offer an American Express (Amex) and either a MasterCard or a Visa. They already offered several cards in the past. But these new Cashback cards are really interesting.
First of all, all these cards are free! This is very important because unless you spend a lot of money, a little fee will render your cashback totally useless. But these are not the only free cards in Switzerland! What is very interesting is that they are offering 5% cashback in the first three months. After that, the cashback bonus becomes 1% on the American Express card and 0.2% on the MasterCard and Visa cards.
A cashback of 1% is more than other free cards in Switzerland are offering! Of course, you need to be able to use the card as much as possible in order to use that extra cashback. This may be difficult since American Express cards are not as well accepted as Visa and MasterCard, especially in Switzerland.
In this post, we are going to see if this offer is really interesting and if it is worth ordering a new Swisscard Cashback credit card.
Continue reading “Swisscard Cashback Credit Card – Free and 1% cashback”
Compound interest is a subject that you can read about on most personal finance blogs. In fact, I have already talked a little bit about it. But I never delved into it. It is now time to cover compound interest in details.
Many people will tell you that compound interest is like magic! However, I do not consider it magic, it is only math. But how can we calculate compound interest? Even if it is not magic, its effects are really more powerful than it seems at first sight. The effects of compounding are what makes investing in the stock market so interesting. But does the stock market really compounds? Let’s try to answer these questions in this article.
I really think that compound interest is not correctly understood by many people. I hope that this article will help you understand exactly what is compound interest and why it is great.
Continue reading “What is compound interest? Is it magic?”
If we compare our expenses with the FIRE community, we are not really frugal. In 2018, we spent about 5330 CHF per month. This is far higher than what most people trying to reach for FI are spending. I often read personal finance blogs where people claim to be living below 2000 CHF in Europe. We are being careful about our budget. And we are optimizing it to reduce it month after month. It is already much lower than before. And in 2019, one of our goals is to spend less than 5000 CHF per month. We will see if we can do it. However, we should also compare with the average household in our country.
I do not think we are spending too much. When I compare with most people I know, we are alright. But I wanted to compare with more data with the average Swiss household.
So, in this post, I am going to compare our current level of expenses with the average Swiss household. I have been able to find official data from the Swiss bureau of statistics. And I was able to compare in details how we fare against the average Swiss household. It is really interesting to do! If you can do the same for your own level of expenses and your reference average household, I would strongly encourage you in doing so!
Continue reading “The Poor Swiss versus the Average Swiss Household”
Today, I want to discuss one question that has been on the back of my mind for a while. Can we retire early without a successful blog? The personal finance community is full of bloggers who retired early or want to retire early. However, some of these retirees are getting a hefty income from their blogs. Their examples may not be very easy to follow without such an income in retirement.
In fact, I believe that there are three problems together in this situation. First of all, as I said, can we retire without a blog income? We are going to try to answer this question.
Second, and probably more important, you should be wary of some blogger examples. Due to the high income they get, some bloggers do not use the 4% withdrawal rule that they advertise. That means that you cannot compare your situation and their situations since they are still investing after having retired. Their net worth keeps increasing after retirement. This is not because the 4% rule is working. This is because they do not have to withdraw from their principal. And this is not a common case for most people who try to follow the path to Financial Independence (FI).
Finally, I believe that you should sometimes be careful about affiliate links. They may be here mostly because the blogger wants the affiliate money and not because it is a really good product in which the blogger believes. This is not directly related to early retirees. But this is entirely related to how bloggers are monetizing their blogs.
In this post, I want to discuss these three problems in details. I think it is really important knowing about that. I went a bit overboard with the length of this post. But I think it is an important subject that deserves more coverage.
Continue reading “Can you retire early without a successful blog?”
If you have been following personal finance blogs or the news these recent weeks, you have probably heard a lot about yield curve inversion. But do you know what it really is? Should we panic and sell all our shares? Is a recession starting?
Before we answer these questions, it is important to know what is the yield curve. For this, we will need to review what we know about bonds. Then, we need to understand what does the inversion of this yield curve really means. We can also see what causes such an event to happen. As we are going to see, all of this is actually quite simple. So what is all the fuss about? In the past, the yield curve inversion has accurately predicted the coming of recessions.
And what will happen after such an event? Is the recession already upon us? Should we sell anything and get out of the market? The most important thing is to see what we should do, now that the yield curve in the U.S. is inverted.
Continue reading “Yield Curve Inversion: Should we panic?”
I had the chance of interviewing Daniel Peter, the CEO of VIAC. If you do not yet know what VIAC is, it is a Swiss company that is providing an excellent third pillar option. If you are not familiar with the third pillar, I wrote an entire post about the third pillar. It is the Swiss equivalent of an IRA but with less choice. It is tax-advantaged and should be used by everyone serious about retirement.
I have already talked about this company on this blog. Currently, VIAC is offering the best third pillar option in Switzerland. They have very low fees compared to the other Swiss options. It is very easy to open an account at VIAC as well.
Moreover, they were also the first company to offer a third pillar account with 97% of stocks. Before that, the best option has only 75% of stocks. This is really great because the investment time of the third pillar is very long. Therefore, we want a large allocation to stocks.
But, Daniel Peter will tell you all about VIAC much better me. So, without further ado, here are Daniel’s answers to my questions!
Continue reading “Interview of Daniel Peter, CEO of VIAC”
March 2019 was a good month. We went skiing for two days with Mrs. The Poor Swiss. Her ski lessons are going good. Other than that, we did not have any big event. From a financial point of view, it was a very good month as well. I received my bonus. This makes a large increase in our net worth. This is the first time I receive a bonus. I was more used to the thirteenth salary that is more the usage in Switzerland.
Because of the bonus, we were able to save a lot of money this month. Unfortunately, we spent more than I would have wanted. Our goal is to spend less than 5000 CHF a month. We spent a bit too much on food this month. Mrs. The Poor Swiss also started a French course, which adds to the budget. But that is something that is not to be regretted!
This post will tell you everything that happened to us and the blog in March 2019.
Continue reading “March 2019 – Bonus and French Courses”