FIRE strategies for Swiss investors

[Max]

What about you then? Do you plan to retire in Switzerland with a 4.5%+ withdrawal rate?

I would gladly do that! This is why I am trying to find out whether this US USD simulation is applicable to retirement in Switzerland.

The problem is that if you have 50 years of data, you can only do a single 50-year retirement simulation. If you are limiting yourself to such a sample, you need to rely on something else than historical analysis.

I can be wrong, but as far as I can imagine, in such a case multiple 50-year rows are built by randomly combining single historical years (or blocks of years).

 

[Baptiste Wicht]

I can be wrong, but as far as I can imagine, in such a case multiple 50-year rows are built by randomly combining single historical years (or blocks of years).

It depends on your method.

If you do pure historical analysis, this does not work like it; each month is followed by the next one.
But if you do historical sampling (bootstrapping), you would indeed be able to build multiple sets of 50 years from a single 50-year period.

 

[Max]

It depends on your method.

If you do pure historical analysis, this does not work like it; each month is followed by the next one.
But if you do historical sampling (bootstrapping), you would indeed be able to build multiple sets of 50 years from a single 50-year period.

If I understand correctly, the pure historical analysis is unsuitable in this case. So an alternative is necessary.

 

[Baptiste Wicht]

If I understand correctly, the pure historical analysis is unsuitable in this case. So an alternative is necessary.

Correct. Historical analysis is only good if you have enough data.

 

[FireBridgeEurope]

Are you worried about the worst duration of this strategy (ability to fail early)? The success rate is quite high, with 3.5% over 50 years.

A glidepath could help there I think.

I think this is actually an interesting distinction.

Many people seem to like the idea of financial independence much more than the idea of permanent retirement.

Personally, I find myself somewhere in between.

Having enough capital to reduce working hours, take a few years off, change careers or stop full-time work earlier feels much more realistic (and appealing) to me than never working again for the next 40 or 50 years.

Maybe financial independence is more of a spectrum than an all-or-nothing goal.

 

[Baptiste Wicht]

Maybe financial independence is more of a spectrum than an all-or-nothing goal.

I think it definitely is.

The financial independence part is about freedom. Once you are financially independent, you can do what you want since you do not have to rely on a job:
* Do charitable work
* Work on a lesser paying job
* Do not work at all
* Try a totally different carerr

The retire early part of FIRE is actually optional. And doing nothing is probably not a good option for many people.

 

[AutonomousNerd]

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?

I would recommend looking into geo arbitrage as a strategy for achieving financial independence. The cost of living is astronomical in many Swiss cantons and most places in the world are significantly cheaper than Switzerland.

Recently I conducted an analysis to determine my financial independence number that compared staying in the Zurich area versus moving to a specific small city in a cheaper region of the United States. I was astonished by the cost of living differences. Everything is so much cheaper in that region of the US (renting an apartment, car related expenses, food, dining out, taxes, health insurance, etc.) compared to where I currently live in Switzerland.

The cost of living difference is significant because utilizing geo arbitrage will allow me to become financially independent 8 years earlier if I relocate to that cheaper region of the US instead of staying in the Zurich area. Financial freedom during my limited time alive is much more important to me than where I reside.

 

[Baptiste Wicht]

The cost of living difference is significant because utilizing geo arbitrage will allow me to become financially independent 8 years earlier if I relocate to that cheaper region of the US instead of staying in the Zurich area. Financial freedom during my limited time alive is much more important to me than where I reside.

Indeed, 8 years is pretty wild.

It's quite important that you are able to balance the two!

 

[klaus.koenig]

Hi @Baptiste Wicht ,

First of all, thank you for your blog. I find it extremely useful and really appreciate all the work you put into sharing your research and experience.

I’ve read your articles and comments on equity glidepaths, and I understand that your current long-term preference is to eventually hold 100% stocks in retirement, while you would consider starting retirement with a lower equity allocation if you no longer had income from the blog.

What I’m particularly interested in is how you would implement this in practice.

Would you gradually move from 100% stocks to something like 80/20 during the last few years before FIRE, or only adjust the allocation once you actually early-retire?

Also, if I understood correctly, you plan to withdraw your second pillar entirely as a lump sum. Once you receive it, would you invest it immediately according to your overall portfolio allocation, for example VT/CHSPI, or would you use part of it to build the cash/bond portion of the glidepath?

And once retired, over what period would you expect to move from, say, 80% stocks back towards 100% stocks?

Finally, within the equity portion, do you expect to keep roughly the same VT/CHSPI allocation you use today?

Thanks again!
Klaus