FIRE strategies for Swiss investors

Baptiste Wicht said:
Great questions

I can answer based on our own strategy for FIRE, but it may not apply to your situation.

1. Currently, we aim for 3.8, but we will adapt until we reach retirement. 3.5% is likely fine. Our worst enemy as Swiss investors is the depreciation of USD.
2. We plan to go 100% stocks. But if you plan to be more conservative, a great strategy is an equity glidepath. You start with 20% bonds (or cash) for instance and you slowly sell them to go 100% stocks. This way, bonds, and stocks are doing what they are great for, respectively short and long term.
5. We plan to keep a house in retirement. Our plan for that is to have a long-term mortgage before we retire to avoid issues renewing it and prepare significant enough margin so that banks won't be deterred.
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Hi @Baptiste Wicht I'm curious why you plan to go 100% stocks, rather than a bond tent/ equity glidepath approach? Thank you
 
Riches1 said:
What are the cheapest countries to live in comfortably (and safely)? If you don't need much and just want to chill and let your portfolio grow a bit more, while also living off of a part of the earnings: what place on earth would allow you to spend the least?
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There is a free online tool called PortfolioAtlas that allows users to compare FI numbers in different countries and cities.

The creator of PortfolioAtlas also wrote an informative article that included this chart, it applies the 4% rule to several cities around the world.

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Baptiste Wicht said:
I want to keep my CH stocks in retirement as well.
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Interesting. If I understand correctly, you will withdraw your full 2nd pillar as lump sum. This means that you will have to invested a significant portion in bonds. A challenging task with such choices of Swiss bonds.
As for my own situation, I am flirting with the idea of investing even my 2nd pillar in equity. But that's still far, far away.
 
Baptiste Wicht said:
I do not think a withdrawal rate of more than 4% is reasonable in retirement.
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Why do you think so?

Baptiste Wicht said:
I would consider CH bonds, but they are currently not interesting. The portfolio you are mentioning is too US-heavy for me. I want to keep my CH stocks in retirement as well.
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I have checked a mixed portfolio with CH stocks and CH bonds. The Advanced FIRE calculator counts 90% success rate for 5.6% withdrawal rate and 30 years of retirement (and 95% at 5.2%).

For 40 years of retirement it counts 90% success at 4,95% withdrawal (and 95% success at 4,5% withdrawal).

(If I further split bonds between US and CH, I get an error message "Oups, something went wrong! Error: The number of assets is too high".)
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gaijin said:
Interesting. If I understand correctly, you will withdraw your full 2nd pillar as lump sum. This means that you will have to invested a significant portion in bonds. A challenging task with such choices of Swiss bonds.
As for my own situation, I am flirting with the idea of investing even my 2nd pillar in equity. But that's still far, far away.
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Actually I am keeping CH stocks not bonds :)
Max said:
Why do you think so?
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It's probably doable in the US, but not in Switzerland when you have to deal with the uncertainty of the USD/CHF.
Max said:
(If I further split bonds between US and CH, I get an error message "Oups, something went wrong! Error: The number of assets is too high".)
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Some of the withdrawal methods do not support many assets. Did you use a specific method?
 
Max said:
Why do you think that the upper limit is 4%?
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Because historically, the USD has lost value against the CHF, and I believe it will continue to do so. As a result, if we spend in CHF, we need to factor extra depreciation into account. And for me, this comes below 4%.

We have historical data for USD/CHF, but it's not really good because of the gold standard and the end of the Bretton Woods system.
Max said:
I didn't change the default settings.
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Thanks, this should be fixed now (y)
 
Baptiste Wicht said:
Because historically, the USD has lost value against the CHF, and I believe it will continue to do so.
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Well, the depreciation cannot continue indefinitely. Of course, this is pure speculation from my side, but I think that we are close to the bottom of the depreciation.
 
Baptiste Wicht said:
Because historically, the USD has lost value against the CHF, and I believe it will continue to do so. As a result, if we spend in CHF, we need to factor extra depreciation into account. And for me, this comes below 4%.
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In my understanding, if we want to factor extra depreciation into account, we can subtract the expected long-term depreciation from any SWR calculated for US USD. Is it the way you come to 4%?
Baptiste Wicht said:
Thanks, this should be fixed now (y)
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(y)
 
gaijin said:
Well, the depreciation cannot continue indefinitely. Of course, this is pure speculation from my side, but I think that we are close to the bottom of the depreciation.
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I hope you are right! But as you said, it's pure speculation. I prefer my early retirement to survive a drop rather than be too optimistic.

Max said:
In my understanding, if we want to factor extra depreciation into account, we can subtract the expected long-term depreciation from any SWR calculated for US USD. Is it the way you come to 4%?
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More or less, yes. My portfolio would not be good with a 4.8% SWR, but more 4.5% and then I put it down to 3.8% to account for this.

I am still far from retirement, so I may change my SWR by that time.
 
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