Switzerland retirement system is based on a system with three pillars. Each pillar is paid in a different manner and will cover different needs. If you are working in Switzerland, it is important to know these three pillars. This will help you plan your retirement.
In a series of posts, I will try to give you enough information on these three pillars. The goal is that you have a good understanding of how they work. And also what you can do with them to improve your retirement. In this first post of the series, I will introduce the system and talk about the first pillar.
Continue reading “The first pillar of retirement in Switzerland”
I have monitored my net worth since October 2017. But until now I have not considered my second pillar into it. Why? Because I do not get a monthly report on my second pillar. However, I do not really need this monthly report since I can extrapolate from the yearly results. I just was too lazy before to do it.
So, I decided to stop being lazy and do it. In this post, we are going to see why you should integrate your second pillar into your net worth. And we are going to see how to integrate it. It is very simple. And it will make your net worth calculation much more accurate. I believe it is very important to have an accurate view of your net worth.
If you do not know your net worth, first take a look at how to calculate your net worth. I strongly encourage everybody to compute his net worth. It is an important indicator, especially if you want to become financially independent.
Continue reading “How to integrate second pillar in your net worth”
In my review of DEGIRO, I mentioned that something I really did not like was that it was not possible to see the total result of the position in the mobile application. The application is only able to display the daily result of each position of your portfolio. Personally, I do not really care about the daily variations of my portfolio. I am much more interested in the total results of my portfolio. This is what most long-term investors should care about.
However, I just found out it was, in fact, possible to see this information on the DEGIRO mobile application. It is just not really intuitive. Or maybe, it is just me. But once you know it, it is really easy to use. Since it was not easy for me to find it, I am going to post my findings for all of you!
Continue reading “How to see total result on the mobile Degiro application”
It is now time to make the point about March 2018. Compared to the very poor February month, March 2018 is a great month :)
Not a lot of things happened this month. But that is not bad. I like quiet months. And I was able to save a large part of my income this month. This is great after a bad month.
Continue reading “March 2018 Update – Excellent month”
(This post was first published on Mustachian Post. Thanks a lot to MP for the opportunity of guest posting.)
I have now been using DEGIRO for about four months. I think It is now time for a review of the tool.
It’s important to mention that I never tried any other broker. I decided to use DEGIRO four months ago based on costs. Moreover, I am a computer scientist, so no issues with potential tech issues. Finally, my portfolio is very small, so my experience may not compare to yours.
Note: The links to DEGIRO are affiliate links. If you use them to create an account, you will receive 20 CHF and I will receive 20 CHF as well.
Continue reading “My review of Degiro as a broker for Swiss investor”
DEGIRO just updated a few things about the cash you hold in your account.
Since Netherlands investment firms are not permitted to hold cash, Degiro invest the cash from your account in a money market fund. There is a separate money market fund for each currency that you can hold with Degiro. Money market funds are principally investing in government bonds, with very high quality. However, the interest rates are very low and even negative for many European countries. Therefore, some money market funds, such as the EUR or CHF cash funds, have a negative interest rate.
Continue reading “Degiro updated its Cash Funds structure”
For the first time, I have computed my Financial Independence (FI) ratio. In this post, I am going to explain to you what is FI and how to compute your FI ratio.
First, what is Financial Independence (FI)?
It is when you have enough money to sustain your lifestyle without working. For this, your wealth must generate income. And this income must be greater than your expenses. The main way to generate income from your wealth is simply to withdraw from it. However, you need to withdraw little enough to sustain your wealth for the longest time. This is only one of the ways to reach Financial Independence. This is the most used way. Some people prefer to focus on passive income. And some people focus entirely on real estate to become financially independent.
There are many reasons to become Financially Independent. It is currently very popular on the internet. Especially with the Financial Independence and Retire Early (FIRE) philosophy. The idea is to become Financially Independent as soon as possible and retire early.
Continue reading “How to calculate your Financial Independence (FI) Ratio”
In Switzerland, the third pillar of retirement can be either in a bank account or in the form of a life insurance. The bank account option is the obvious solution. This is a special form of life insurance. You will get some part of your capital back at the retirement age (65 years old currently). In the case you die, your spouse will get the capital. Moreover, most of these insurance policies also cover the case where you cannot pay any more. Not if you stop paying, of course. But if you become handicapped or unable to work. In this case, the insurance will cover your fee while you can’t work.
I am not sure this is a good deal for everybody. But I think it is a good deal for me. My future spouse does not yet work and will not have a full retirement pension once she retires. Thus, if I pass away, she will have a good cover from my life insurance. For some people, it is also a good way to force them to contribute to their retirement savings.
I pay 300 CHF each month for this insurance. Until now, I have always counted that as an expense in my budget. But, I now realize it is not really an expense. It is similar to the payment I do to my bank third pillar. And I do not account for these as expenses. This is an investment. So, I decided to remove this recurring expense from my budget. Since we are close to the beginning of the year, I also decided to remove it from January 2018 and February 2018. This means that my savings rate is better in these two months. It is now 33% in January and 4.2% in February. I will update the Savings Rates shortly.
However, my Net Worth does not get better since the current value of the insurance is 0 CHF. If you take out the insurance in the early years, you lose everything. In fact, I will start accounting the insurance as Net Worth in September 2018. I believe this makes my accounting better and more accurate.
What about you? How do you account for your retirement life insurance? Do you have one?
These days, I have made many updates on the blog. Since the migration to self-hosted WordPress, I have improved the performance of the website, fixed the HTTPS version of the site and cleaned up my WordPress plugins. I am hoping that this will improve the experience of the readers of the blog.
In this post, I am going to describe the changes I have done recently. The goal is to improve the performance of the website as well as the Search Engine Optimization (SEO) of the website. This will be a blogging and hosting post, nothing really related to finance here :)
Continue reading “Updates on the blog – Faster and more secure”
Update: I have now made some changes to make my investment portfolio much simpler.
In 2018, I wanted to add a few bonds to my portfolio. I am in long-term investing. I only in my 30s and I do not plan to retire for at least 10 years. And I already have some very safe investments in my second and third pillars. Therefore, I do not need a lot of bonds. But I wanted to add 5% of bonds into my portfolio to be safe and to allow for more re-balancing opportunities. Also, I do have bonds in my third pillar account.
Moreover, I wanted to improve my portfolio. More specifically, I also wanted to get rid of my crypto-currencies. So, I updated a bit my previous portfolio to reflect this. Moreover, I also wanted to depend less on the dollar. In this post, we are going to see exactly what I have changed in my portfolio.
Remember that it is only one example of a portfolio. I am no financial advisor. I am just sharing what I am doing for investment. What may work for me may not work for you.
Continue reading “Updated ETF portfolio for Switzerland – Bonds and Dividends”