Journal of my journey towards Financial Independence in Switzerland (#3)

I like this journal format because it allows me to deal with topics quickly without having to wait until I reach the subject in my (very) long list of articles to write.

Below is a table of contents of what you will find in this edition:

The book, it’s really started!

I was talking about it in the last edition of this journal, and the decision is made this time: I will write my book about financial independence in Switzerland. Or should I say, I’m writing it!

For now, I’ve finished the table of contents (a bit revised), the introduction, and chapter 1, and now I’m finishing the second chapter. It seems quite simple to write like that, following the book’s table of contents. But in fact, as I expected, it’s quite an exercise to have to orchestrate all the elements so that they make sense together. It’s a good exercise in any case, which allows me to structure my thoughts.

Related to that, I’m meeting with an editor this Wednesday morning who is potentially interested in my project. To be continued!

As some of you know, I decided to undertake this project in a special way by “crowdfunding” it. That is to say that readers of the blog support the idea financially (with the aim for me to get as much time off as possible), in exchange for bonuses:

1. Sending of each chapter by email as soon as it is finished, exclusively for you, several months before the book’s release
2. Private email exchange about your comments and feedbacks (without fuss!) on each chapter
3. Sharing what goes on behind the scenes of the book writing and publishing processes (choice of “standard editor” or “self-publishing” mode, ISBN request, etc.)
4. Mention in the acknowledgements of the book (like a “People who believed in it from the beginning” section)
5. Handing over the signed book in person (around a coffee or a beer ;))

The (temporary) cover of my future book :)

It’s only possible for French speakers because I’ll translate the book, but only at the end of the writing process… but there’s Deepl.com for the most daring — as Max, who wants to perfect his French with this :D!

If you want to be part of it, don’t hesitate to send me an email.

I decided to limit the number of people to 10 at the beginning to keep the rhythm of the exchanges sustainable, and to my great surprise we reached them in less than 4 hours…
As a result, I have a waiting list that is growing, and I will see to accept more people in the coming weeks/months.

Mrs. MP debuts in zero waste

Mrs. MP keeps surprising me.

Whether it’s because of her frugality, which I still discovered aspects of in the interview for the anthropological book that the MP family will be part of.

But also by the fact that she has embarked on zero waste. To be clear, we don’t become granolas/hippies (or do we?). It all started with a discussion with a family member who decided to craft his own laundry with natural ingredients only, and therefore without packaging and all. I don’t know why it came up at that point, but Mrs. MP picked up on it and got into it. As cool and interesting as I think it is, I must admit I’ve never prioritized it higher than my blog and personal finance. So it makes me really happy that she manages this part. Because in terms of health, we now have a detergent without chemical components that washes just as well.

One thing leading to another, she then made our own deodorant. A revelation for me in terms of efficiency. And I’m not even talking in terms of health. Or budget because I haven’t done the math yet. I plan to dedicate an article with a tutorial because it’s such a big deal!

Mrs. MP's new 'Zero Waste' artillery!

The latest DIY to date is our yoghurts. All homemade too now. Delicious, and much healthier. Budget-wise, same as the deodorant, not yet taken the time. I’m still wondering if the ecological level (incl. the 5 hours of cooking at 40 degrees) is really better than the industrial one — although my instinct tells me that yes, considering the transport, the industrialization, and the plastic thrown away in the end. An article will come as well I think.

The next item on Mrs. MP’s list: toothpaste!

And just in case the ecological police are passing by: we’re far from perfect, and we’re taking it step by step, little by little. So at worst, be constructive in your comments by pointing out where we can improve.

Building in France: full again, and taxes

We still had one vacant apartment from last October. Then, at the beginning of the year, our real estate agency that manages our entrances and exits called me to tell me that they had a file that seemed OK! It was done in a few days, so our rental building in France is now full again. A priori, we should be at the break-even point, or even above it. We are waiting for the final tax decision to be fixed.

By the way, there are several things that I can confirm to you concerning taxes when you have a property in France as a Swiss citizen/resident:

Taxes in France (non-resident taxation)

• You have to pay a tax on real estate income in France. As a foreign resident, you have a flat rate of 20% up to 27'519€, then 30% above. On top of that, you have a 7.5% social security tax rate
• As we are doing all this via a SCI (“Société Civile Immobilière”), you declare your income and tax deductions as a “professional” in one go, then each partner of the SCI fills out a “personal” tax return with his number of shares
• Tax returns in France are now all done via the internet, so we applied for our account online at impots.gouv.fr — hence I don’t know exactly how much we’re going to pay yet as I still wait for my credentials

Taxes in Switzerland

• We had to declare the value of our property as well as deduct our debt related to the mortgage loan in France, as this element is taken into account for the calculation of the final tax rate
• Net income (gross income minus expenses) was also reported, which is also taken into account for the calculation of the Swiss tax rate
• I did the exercise of filling out our Swiss tax return without the building in France, then adding it. The difference amounts to CHF 906.10 of additional taxes in 2019

Real estate: never say “never again”…

At the end of last year, I explained to you that rental real estate investing was cool, but that it took a lot of time and energy. In my opinion, either you focus 100% on it for your investments or you put it aside.

I’d rather be behind my screen than on the phone with building contractors and tenants, so I said, “No more real estate, I’m focusing on anything that can be done in a few clicks like my ETF investments, in value, or P2P loans (read carefully the important note in the beginning of the P2P article).”

Except that…

At the beginning of the year, I sympathized with a reader who is in real estate in the canton of Vaud. We met several times and he ended up offering me an investment opportunity…in real estate of course.

It’s different from buying a simple property. But in terms of return, we go to a higher level: 55%. I told him that I thought it was too good to be true. But apparently the rules of the game in real estate construction are different than in the stock market. So I did my due diligence (excerpt from the lawsuits, requests to my network) and knowing in addition that we will do everything by the rules via a notary, I am almost reassured. We’ll test the collaboration on a small amount to start with, and we’ll see what happens afterwards.

Once the operation will be completed during the course of this year, I will be less mysterious and give you all the details ;)

The big disadvantage is of course that it’s right when I could have bought stuff on sale on the stock market…

What will we tell our acquaintances when we are FIRE at 40?

I voluntarily maintain anonymity on this blog because money is not a subject that everyone likes to talk about. And unfortunately, it still gives rise to too many misunderstandings or jealousies. And we don’t want to affect our existing relationships (family and friends) with it.

As I told you, we (Mrs. MP and myself) were interviewed by an anthropologist for her future book on different movements including frugalism. We don’t talk about financial independence every day because it was my dream in the beginning and I took her on board. But for a long time she thought it was a utopia, and had (and still has) trouble projecting herself. As a result, talking about it with this author made a lot of things more concrete.

Including the question: “But nobody in your circle knows about it then? Your family? Your friends? What are you going to tell them when you turn 40 and go on a road trip for 6-9 months per year?”

Mrs. MP would have no problem to claim that we’ve been working and saving up for it. As for me, I’m more on the reserve because I have fears (founded or not, you’ll tell me) of the following kind: “Hey, buddy, I’m really screwed this month. Since you’ve got a lot of cash saved up, could you help me out and I’ll pay you back in a few months?”. Or: “Hey MP, there’s XYZ’s wife who absolutely has to go abroad for work, and it would really help them if you could watch their kids in the mornings for a couple of weeks? Don’t you think you could delay your trip to Canada? You’re going to be there for four months anyway, so it’s not a week or two that’s going to make a difference.”

Do you feel the unhealthy blackmail in these situations…? do you see yourself replying “No, you’re sweet, but I have a life to live too.”?

Avenches arena outing

Just so we’re clear, I have a social side. I don’t have an issue about helping out with nothing coming back. But I want it to be chosen and not imposed. I don’t want them to end up likening us to “At worst you can call the MPs when you need them, because in any case they’re under no obligation!”

But then we come back to the question: “What are you gonna tell your friends and family when you pull the plug?”

By reflecting upon it, I think I’ll say I’m doing financial consulting/coaching and I can work from anywhere (which will be partly true because I like to do it once in a while, like 1-2 hours. Per month :D). This solves the problem of “How do you pay your bills?”. We’ve still got a few years to talk about it with Mrs. MP to refine and align our exit strategy from the hamster wheel, but hey, it reassures me to have some kind of idea of how we’ll manage it.

But clearly, apart from some very (very) close friends and you dear reader (some of whom are becoming friendly relations too), nobody will be aware that we’re “financially independent”.

Ah, and another question that Corinne from TTC (TV show on RTS) and also the anthropologist asked us: “And concerning your social status, won’t you mind not having a career title like manager or director, or being able to say that you’re working in such a big company with all these ‘advantages’?”
We’re fully agreeing on this one with Mrs. MP. We don’t give a damn! Especially since we’ll be more proud to say that we do remote consulting, and that this way we can live from where we want when we want.

What do we tell our children right now?

My MP Kid #2 asked me just yesterday at breakfast: “But, Dad, why are you doing stuff on your computer every morning when I get up at 6am? Is it for work?”

I was surprised it was coming from #2, and not from the older one. And I was especially caught off guard.

I told them that it wasn’t work, that I took advantage of getting up early to read some stuff for myself, and other things. And all this before going to work so I prioritized my passions before the job.

That’s enough of an answer for now… until when!

Because the eldest, who knows how to read, regularly looks over my shoulder and says to me: “Ah, what’s with the LEGO guy?! And who’s this Marc Pittet Daddy?”

I dodge for the moment by saying it’s a cool website that I like to read :)

Likewise, and that was yesterday: “Daddy, how much money do you have in your account? And how much do you make?!”

As much for the blog, as our respective salaries, as our net worth, and as our FIRE goal by 40 in Switzerland, we agreed with Mrs. MP that we didn’t want to impose on them to have to keep such a secret for them at their age. We’re thinking of talking to them about all this between the ages of 15 and 20, when they’re mature enough to understand why we don’t want to talk about it publicly.

In the meantime, that doesn’t stop us from giving them a frugal education in money management and spending. In our opinion, this is the most important wealth we can offer them as an inheritance. In fact, unlike money that can be used up to the point of exhaustion, education is a gift that lasts a lifetime.

Zero taboo question: too much monetization on this blog?

We’re switching topic entirely, with this introspective question that has come up twice in the last few weeks: “does the blog smells too much monetization, and is losing its essence?

I bring it up here because it’s affecting me. My goal is not to justify myself for being right and/or to silence the remarks. On the contrary, it’s to open and continue the discussion via the comments so that this blog and forum remain as qualitative as possible in the long run.

I’d rather take a slap in the face now than see you leave the Team MP tomorrow.

Let’s talk about the two examples in concrete terms:

1. I’ve added two links on the forum that point to the blog. My goal was clear: if a new visitor first comes to the forum, he can see that there is also a blog linked to it. Strabor, from his forum nickname, thinks it’s starting to be too much (after the Cumulus MasterCard and Revolut affiliate inserts) because I’m the one who benefits from the exchanges made on the forum (which I almost never participate in, by choice because I don’t have enough time) with the blog affiliations
2. The second feedback came from Sjess regarding my latest article on P2P investment via Mintos. From her point of view, she thinks it’s irresponsible and wouldn’t talk about something I’ve only been testing for 1-2 months. Others think that they could not advise with their conscience at peace to invest in P2P loans in these pre-recession times

I am going to respond to these two points precisely to present my point of view to you. But before doing so, I would like to clarify several basics:

• I use all the services I recommend
• Do I like the idea of monetizing my blog project and being able to live off it (even partially) one day? Of course I do!
• Am I aware of the danger of affiliate link bias — i.e. it could lead me to talk more about one topic than another? Yes, clearly. This is why I am taking the time to write these lines, and why I am in discussion with the above mentioned members on the forum. As a member of the Team MP, I am counting on you to play the role of “supervisory committee” a bit like my conscience does. And I hope you also see the good work of this latter with for instance Interactive Brokers and VIAC that are the platforms I talk about the most, even though they don’t bring me anything. But I don’t care, the reader first, the profits second. Because it doesn’t work the other way around in the long run
• Am I ashamed to make money through the services I believe in and that readers come to use as a result of my recommendation? Not at all! On the contrary, for me it’s a win-win situation. And when I read a blog that brings me value, and I can help it by clicking on its link rather than going directly to the service, then I do it more than willingly!
• Am I aware of the “power” that comes with having a blog that starts to have some credibility on this big thing that we call Internet? Maybe I underestimate it. Because as Sjess was rightly saying on the forum, there are more and more new visitors in the field of personal finance who might be tempted by the ease of following my footsteps without doing their own research. On the one hand I don’t want to start baby-sitting you by putting “Beware of the risk of investing” alerts everywhere because in my opinion, it is also the duty of the Internet user to use his critical sense. On the other hand, I realize that it’s also a blogger’s duty to warn in every post because a new visitor won’t potentially read my previous posts (and the alerts that go with them). So that’s one of the points I’m going to improve in the future

I leave you for a second, I have to answer my children's questions about our life goals :D

Let’s go back to the two concrete examples now:

1. Monetization of the forum
   Several months ago, I launched the test to put affiliate links only for non-logged visitors because they are the ones who benefit from the platform without giving anything at first. The goal of the test was to see if the platform could be self-financed by this mean (hosting and maintenance costs). Since it brings almost nothing, and since I hate ads as much as Windows 95 popups, I deactivated them last week.
   Then there’s the recent attempt to put two links to the blog’s homepage, and the “Resources” section. The first link was to make it easier to navigate between the blog and forum environments. The second one was clearly to try a new way to make the forum self-funded: a visitor comes to the forum, then clicks on resources, then likes a service, and so the forum benefits if it’s one that has an affiliate commission. My conscience lives pretty well with this test when I know how many hours I put (and still put) into making this forum and blog known, and how long it takes me to do it on a daily basis vs. what I get out of it since 2014. Then, as indicated, I stay tuned and if dozens of remarks come back to me, then I’ll take them into account as I did these last few weeks. “Only stupid people don’t change their mind” as they say!
2. The recommendation of Mintos and P2P loans
   Since the beginning of the blog, I’ve been starting from the premise that “Better done than perfect”. I started investing in ETFs with Swissquote in my early days. I recommended it. I also recommended ETFs that accumulate and reinvest dividends rather than those that distribute them — supposedly because there is no need to declare dividends that are automatically reinvested. In both cases, I was wrong. Swissquote was not the optimal online broker for a Swiss Mustachian investor. And accumulation ETFs are no better than distribution ETFs, because they are taxed in the same way.
   Do I regret having made these recommendations? Not at all! Because I have learned and grown through this sharing, and I can therefore give you better advice today.
   So it’s the same for Mintos: so far it seems to me the most reliable platform (among all the others, not the ultimate platform). Maybe in a couple of weeks my opinion will be different (EDIT: while writing the article : it has already changed, see my comment at the top of the Mintos article). In that case, as with Iban Wallet, I would explain that I don’t recommend it anymore because I’ve learned more.
   The other topic discussed in the forum was the evocative title that says “I hope to get 10%+ returns from it”. There are two important elements in this sentence: yes I sincerely believe that 10%+ is possible in P2P, and yes it comes with risks. On the other hand, and I realized it after the publication, the word “espéré” (literally meaning “hoped” or “wished”) is fine in French because “I hope/wish” to get 10%. But in English, it’s the word “expected” that I used, and it has a connatation (according to me and my level of English which is what it is) a little more affirmative than a simple hope. It can sound more like “I’m expecting 10%”, period. I’ll pay more attention to that in the future because the remark is justified. And ditto, the title of the article was too clickbait. Nobody’s perfect…

To end this paragraph, I reiterate what I said on the forum: my goal is not to do fingerpointing at Strabor or Sjess. On the contrary, I want us to be as hard/critical as possible on the basic problem, while not implying anything personal. By the way, don’t hesitate to tag me in such discussions on the forum or to write to me in private (via email or comments).

Also, I consider myself to be just another member of the Team MP that we are. And not the president or the guru of this latter. So I’m counting on you to challenge me like you did this time.

And finally, the question for you, dear reader, who may only be discovering this topic now: what do you think about it? Are you starting not to like the blog anymore due to monetization? Or because of anything else? If so then let’s talk about it openly and constructively :)

“Hey MP, what’s the impact of Coronavirus on your investments and other financial assets?”

I’ve been getting worried emails asking me if I’d start selling everything before it all goes down on the stock market? Some of you have gone as far as thinking about withdrawing cash and completely reviewing your choices of brokers and financial institutions to prepare for the worst.

I am therefore clarifying my point of view here so that I can point future requests to it.

Firstly, my investment strategy remains the same, i.e. to invest regularly without giving in to panic. On top of that, I advise you to do it with a smile, thinking that it’s a bit like a sale period because you’re buying for less than it was worth a few weeks ago.

Nevertheless, I don’t recommend that you start borrowing money to invest more as it’s a sale. That would be market timing because you have no idea (and me neither!) if the market isn’t going to be even more screwed up than what we’ve been going through the last few days. So invest what you would usually invest, and go back to your real life activities :)

As for the rest, apart from washing your hands well and following the other recommendations of the FOPH, I see no reason to panic. We’re not talking about the half of the planet that’s going to die tomorrow, so let’s put things into perspective. And no, don’t go and withdraw all your cash from the bank for fear of seeing all the ATMs close the day after tomorrow, that would be irrational in my opinion at the moment.

Beginner’s Coaching: “YNAB Budget” and “Starting to Invest”

I have had the pleasure of doing several (paid, let’s call a spade a spade) coaching sessions to help some of the blog’s readers to get started with their investments and YNAB budget.
I take great pleasure when I see a person click. And it also allows me to continually develop my knowledge of personal finance and investment.

Although most of my knowledge is available in my articles, there is always a psychological step to take from theory to action. And as we both know, when it comes to money, time is your ally, so the longer you wait, the more you lose opportunities to enrich yourself.

These sessions reminded me of how important re-insurance and coaching are to get started in any apprenticeship. I tend to forget this but it was also key for me in 2013-2014 when I started my adventure towards financial independence.

That’s why I decided to continue offering these sessions (1-2 per month for the moment). In terms of format, it will now be possible to have :

• Between 1 and 3 hours depending on the complexity of your situation
• 30 minutes at a time for simple questions/cases
• 30 minutes on a recurring basis over several months in follow-up mode to force you to take action and not just take notes during a first session

If you are interested, you can contact me by email (contact [at] mustachianpost.com).

And you, what’s new as we get into spring (uh, did we already have a winter by the way)?!

How would I invest CHF 10'000 in the stock market …

Challenge March 2020 between CHF 1'500 and CHF...