The Journey to Financial Independence, Chat With the Poor Swiss

Yasi: Hello, Swiss guy. I call you Swiss guy or how would I call you? 

The Poor Swiss: No, Swiss guy is fine. 

Hi, how are you doing 

Yasi: Swiss guy, welcome to the Fast track podcast.

The Poor Swiss: Thank you very much for having me. 

Yasi: for the audience, he remains to be anomymous. So his name will be Swiss guy in this podcast. And, so I know that you have a finance blog for a long time. And, how did you start it? It like when, since, when did you started to have interest in personal finance?

The Poor Swiss: So I always had a little interest, but I guess my main interest started about a bit more than three years ago. I realized that my finances were not as good as I thought before, because I did not really track it well, fortunately I tracked all my expenses, but I did not track like my savings rate. And even though my income was increasing, I was saving less and less of my income each month.

And at this point I realized that something is wrong. And I started really looking into it and that’s at the beginning, I started my blog, the poor Swiss, just to track my progress. And then as I learned more and more about the domain, I started sharing what I learned in my blog. And this is how it started.

And what are the money mistakes did you make in the past? 

I met many like everybody. I mean, there’s no, no problem with mistakes. We just have to learn from them. as I said, not really considering my savings rates or I was, as soon as they had like a, a raise at work, I was just spending more, which is kind of natural for most people.

But in the longterm, it’s really not sustainable. And I would think that the other big mistake I did was about investing. in a sense, I started investing very early when I was 20 years old, but then after like I think seven months on Lee, I stopped everything because there was a big downturn in the market that I sold, which was a terrible idea.

Of course. And then I took me, close to eight years to go back into investing. I would say that one of my biggest mistakes, 

Yasi: but when you started investing, when you were 20 years old, Did you already understand the financial market or how to invest or you just want to try it out? 

The Poor Swiss: Yeah, that’s how those a so I, at that time, I didn’t understand anything about it.

So I was contacted by my banker and he suggested that I had enough money in cash and suggested I started investing, which is a good suggestion. But the problem at this time is I did not understand in what I was reinvesting. I did not understand how to invest. And for instance, I didn’t check anything about fees or anything.

I checked, like years later it was funds with like 1.5% fees and load fees on top of that. And, it was really bad, but, I really invested without checking anything. So it’s more my fault. 

Okay. So 

Yasi: that’s why when the market went down, you were panicked. So you started selling. 

The Poor Swiss: Yeah, I didn’t, I didn’t not have like a longterm, horizon in front of me.

I was just considering, okay. I, I lost 10%. I don’t want to lose more. Let’s get out. Which, which is a thing that I I’m pretty sure most people do at some point, but now I will not sell. If I like the lost net person, I would just buy more. 

Yasi: Okay. And then you, and then after that you learned more about investment and, personal finance through your blog, or just through, you know, asking other people or reading books, or how did you gain all this knowledge?

The Poor Swiss: I think it all started with my blog somehow. So when I started discovering that my finances were not good, I first learned how to make them better or to save more or to earn a little more. And then. by reading one blog after another, I found the subject of investing and I found it very interesting. So I, I tried to learn a lot about it.

I also read books about it and that’s when I started to invest myself. And, yeah, it’s like really started from a small thing in a small issue in my budget. And then I learned a ton about investing and personal finance. 

Yasi: And from your blocks, I get an idea that you like to achieve financial freedom. Is it? Yeah? 

The Poor Swiss: Yeah. So I, my main goal is to try to be financially independent Italy, before I’m 50. I’m not sure I will retire early at this time, but I will really like to have the option to retire early. So, for me, my plan is to, use the 4% rule. So not necessarily with 4%, but to be able to live from my investment at some point.

So when I will have enough, then, we’ll start withdrawing, selling shares and live from them, these shares, but I’m, I’m quite far from it. 

Yasi: You’re still quite young. So you have a lot of time. 

The Poor Swiss: Yeah, I’ll have a little time. And then also start, I started a little late, if I had realized that five years earlier, I would be in a much better place now, but now is still much better than tomorrow to start. 

Yasi: Exactly. Everybody I talked to, they will say, Oh, if I knew this I would have started right away when I started earning. Everybody said that. 

The Poor Swiss: Yeah. With insight, everything is much more, much easier.

Yasi: And what do you think about achieving that in your own terms?

Like financial independence in Switzerland? Is it easier than other countries? Would you say or difficult? 

The Poor Swiss: I would think it’s probably more difficult, because the amount you need to accumulate is based on your expenses and life in Switzerland is quite expensive, though. And even after you retired, you will have a large networth.

And in Switzerland we pay a wealth tax. So you will still pay a significant amount of taxes after you retired, because you have a large networth. So this does not help compared to many countries, who don’t have this tax. So I think for this, it makes it a little more difficult on the other hand, it’s possible to get some large incomes in Switzerland in some domains.

So this definitely helps if you don’t spend too much during the accumulation. And we currently have a good enough retirement system, so we could have like a nice, social security, currently at 65 years old. Probably later in the future, but if this system stays, it could end up having to accumulate less for the years after the official retirement.

Yasi: And also if people do not have pillar three a when you retire, I’m not sure if it’s still enough, is it like 60% of your working salary? 

The Poor Swiss: So the, the rule is basically, If you only have a first and second Peter, you shouldn’t be covered. I think about 70%. And then if you contribute the maximum to the third pillar, the idea is that you will be covered 100%, but of course, All this is only available after the retirement age.

So if you want to retire at 50, you still have to cover at least 15 years in the meantime, maybe more in the future. So that’s where you have to have something outside of the retirement system. Yeah. In a broker account or something like that and to compensate, but using like the second and the third pillar of course makes sense because you can optimize your taxes during accumulation and still money that is there for, for your retirement.

Yasi: Yeah. And not to mention that for people like me, who came to Switzerland after working a few years in another country, then I have a gap as well as people who use second pillar buy real estate properties, they might have a gap or like, A hole in the retirement fund. So, yeah, it could not be enough. It’s a possibility. 

The Poor Swiss: Yeah. That’s definitely an issue for people that, expatriates to Switzerland later in life, maybe after 10 years of working in another country is you lose, as you said, you have these gaps, but these gaps are actually in each of the three pillars. So you will not get the full social security.

You will. You will have some money in the second period, but only for maybe a few years. And then the third pillar will not be as big as it could be either. So for these people, it makes even more sense to have more money on the side for their retirement, because the official retirement will probably not be enough.

Yasi: Okay. And so we mentioned about retirements. You, you also wished that you could retire at age 50 if you wish, but what motivates you to achieve financial independence before 50? Is this, is it something just sounds nice. So what is the motivation? Why, why, why you don’t want to work till 65? 

The Poor Swiss: So for now, doing what I do now, I could probably work until I’m 65, but the thing is you don’t really know what the future has in a stock for you. So maybe in, in five, maybe in 10 years, I hate my job. Maybe in 10 years, my job has been replaced by robots or maybe in 10 years. I dunno, I, I lose, I’m not able anymore to do the job. And in this case, if you’re able to be financially independent, Obviously before that event, you have the, you can still live your, the same life without working.

And, I think that’s a very, very good like safety net, I will say. And also like comfort net. Yeah. 

Yasi: So you have your future within your own control rather than depends on external factors. 

The Poor Swiss: Exactly. Yes. And that coolers will be that once you are financially independent, you, you can do a job that you may not do otherwise because of less income.

So some people. that our financial independence work with charities or, things like that, or even the same kind of job, but in a smaller company that can pay less. But that could be more interesting. So that’s also an interesting option for many people. 

Yasi: Yeah. It’s the freedom to choose, but not depends on your income. Yeah. Yeah. And how has your three-year blogging journey helped you to increase your personal wealth? 

The Poor Swiss: So I think most of it is related to what I learned. So at the beginning I was just relating my, my, my journey, my numbers, and then I started learning a lot and I started sharing them. And now when I actually write an article, I have to learn about it, on purpose.

So learning all about this is very, very helpful and the blog kind of makes me accountable because each months I, I published my, my savings rate or much I spend everything. It kind of motivates me to keep these numbers good. In a sense, I don’t want to publish like every month I’m spending more and more money or saving less and less.

So it’s more to make me accountable. And I think it, it improved my results by being accountable for myself.

Yasi: And what are the typical things that you think people can save money from or how, how to use money wisely in let’s say our daily life expenses. 

The Poor Swiss: I think there are domestic ways to save more. So from the expense side. So either you stop doing some things that cost money, it’s not something that so something most people want to do because that’s, that will kind of reduce their, their, quality of life in a sense, for instance, not going to the restaurant or going only out the time to restaurant.

This in Switzerland can make a lot of difference because restaurants are very expensive here, but the other way is to pay less for the same thing. And here that think that’s something that everybody should do. For me. if I can save 10 or 15% on something for the same thing does not make sense to not do it.

And, there are many ways to do it. For instance, insurance, in Switzerland, they are. pretty expensive, especially the health insurance, and they are all the same. So paying 50 Franc more per month for the same thing for me does not make sense. And that’s more the category in which I focus. So trying not to reduce the quality of life, but paying less for the same quality.

Yasi: And besides that, are there any special tips and tricks you’re using? To be smarter with money, 

The Poor Swiss: huh, I’m not sure. So I think it’s one thing you need everybody. If it needs to start with, if they want to increase the expense is actually to start tracking them. when I still speak to people in Switzerland, I think that most of them don’t know how much they spend.

So they’re just at the end of the month, they either slightly higher than zero or zero. Okay. They consider that it’s good. But if they were tracking what they spend, they would realize like how much goes into something. Cause they don’t even need that many people pay for things they don’t choose. You could pay, like, I don’t know, hundreds of Frank per months in Switzerland for TV with like thousands of channels. And, but if you look, if you only watch TV once a month or once a week, that may not be something you want to pay for, but you really have to have the numbers in front of you to realize that, okay, I’m spending like.

2000 per year on TV may not be worth it, or I’m spending like 10,000 vacations to, I really need to go that high. And of course people, but I want to spend 10,000, then the vacation is perfectly fine. That they need to be aware of the fact of how much it cost them in the longterm, I don’t think I do something very smart or smarter than other.

I just trying to look at everything and try to spend less for what I do. But if I were to. recommend people to start somewhere will be groceries because there are huge disparities in Switzerland between people, what they spend for the food. So if you start cooking at home first, it will make a huge difference.

And if you don’t only shop like at a expensive shop, like Manor or Coop, but go to a discounter like Lidl or Aldi, you can easily divide by two your groceries. That’s a simple thing to do, but many people don’t even want to do it. 

Yasi: Yeah, I think it’s also a habit. If you grow up, like in, in Switzerland, people call it migros Kind or the Coop Kind. Do have that in the french speaking part. 

The Poor Swiss: Yeah, it is. It’s true. There are, we have like a big grow families and families, some family, and they go to Coop some familly only go to Migros. It’s, I don’t know why, but it’s true. I know people that only go to Coop, but my family used always to go to micro it’s so way of life. We don’t know exactly why.

Yasi: Imgaine the the children were brought up this way and that they were like a me girl, family.

They would never think about, Oh, I might shop in Aldi or Lidl. They do. It’s just a habit to just do that. Unless they like cautiously decide, okay. I want to reduce my expenses and this is the same. Let’s say. Pepperoni in me grow on the same pepperoni in Lidl. They’re just two different prices. I mean, most of the foods are growing Europa.

They have like a good quality and sometimes you’ll find Swiss grown vegetables. I’m very amazed by the quality of food here compared to when I was living in Singapore, everything was airshipped from other countries. 

The Poor Swiss: Yeah. I think, and we have very high standards of hygiene. So even if you go to a, Even a leader, they have the same rules as migros coop or whatever.

So yes, some of it is important maybe more than that Negro and cup. But personally I do not really mind eating Italian chicken rather than a Swiss chicken. If I can pay like three times less for it. 

Yasi: Yep. And all those little things matter. So it accumulates over time. It’s actually a huge sum. 

The Poor Swiss: Yeah. And then, yeah, 

Yasi: and then you best them and then it’s even become bigger in the future.

The Poor Swiss: Yeah. That’s also a good way to put things in perfect perspective. For instance, if you’re able to save like, let’s say 100 Swiss Franc each month on your groceries, that’s. Of course that’s 1,200 per year, but if you invest it, you add like maybe 5% on that each year. And after 10 years, it will not be like 10 times 1,200, but it will maybe be 20 times that because of the compounding interests on the stock market or on any, as a investment for that matter.

So that’s something sometimes you don’t realize that even a small saving a months can add up to a huge number after 10 or 20 years. 

Yasi: Yeah. It’s just a change of habit touch with sometimes they seen the mind or you’re used to it without realizing that what you are doing that. Yeah. And now we’re talking about investment. What is your investment philosophy? 

The Poor Swiss: So my investment philosophy is very simple. So I invest only in the stock market and, only with passive index funds. So I try to find the funds that are the cheapest and, that are like very broad. So I don’t want to pick stocks like Microsoft or Google. I want to invest in all the stocks in the world, which is what I currently do.

And I tried to keep it as simple as possible. So I only have two ETFs in my investments. So I have one world eTF and one Swiss ETF, and that’s it. So every month, once I get my, after I get my salary, I transfer, the leftovers into my broker account. I invest into one of these two ETFs and then that’s it.

So that’s all I do. And I think, I think that keeping it simple and with low fees, that’s our would get the most returns from the stock market. 

Yasi: What do you think are the most common misconceptions about investing from people who don’t invest? 

The Poor Swiss: Yeah, I think the worst one, or not the worst one with the most common is people think they don’t have enough to invest and they think you need the, I dunno, five or 10,000 per month to invest in the stock market, but that’s not true.

You can invest with 100 per months. Of course, it will have less impact than if you invest 5,000 per month, but it will still make a huge difference compared to putting that in a 0% interest rate savings account. So investing with little is also a very good way to get started because then you, you start seeing the results.

You don’t have to wait years and years and. I think that’s the worst misconception about investing. So of course there are some kinds of investing that require more, money. Like if you want to buy an apartment, of course, we should only have 100 per month. It will take you years to get there. But if you want to invest in the stock market or in other like alternative investments, even a small amount per months or small starting sum is really worth it. 

Yeah. 

Yasi: And also you mentioned that, if people want to invest in apartments, you might need a bigger sum, but I know that you’re recently you bought a house. So I like to know how, how did you do it? How did you. Managed to buy a house in three years, is it three years? And then will, because in Switzerland, just for the audience, the information that in Switzerland, you need 20% down payment.

maximum 10% is from your second retirement pillar, second pillar, and then the other 10% cash, or, you know, up to 20% cash if you wish. So in general, The it’s very difficult for people to get that gather the 20%, but, so what did you do? 

The Poor Swiss: That’s a good question. So maybe just one thing is, so we don’t consider a house to be an investment.

Because we are going to live inside it. We are not going to rent it. We are, we don’t plan to sell it in the future. And if we sell it, we are going to end up either buying a new one or renting something else. So that’s not an investment, but it’s true that it’s considered a amount of money that you need to have.

so what you said is correct. So you. Yeah, you need to have at least 10% in cash. And on top of that, you need probably 5% extra in cash for the notary fees, the taxes for the real estate transaction and, Things like that, but, the other 10% can come from, second and third pillar. So this is what we did.

We used almost all of our second pillar and third pillar to make 10% and the other 10% was in cash. And for this, we actually sold, A large part of our investments and in, but in three years it was not that difficult because we focused on that. each month we are saving almost 50% of our income and we’re still trying to improve that.

So with a few thousand each month, Invested in the stock market. You go there in, in three years quite easily because we also didn’t buy a one or 2 million house. We bought a, 700,000 house. So it’s also not that much, I think to save in three years, but it sure takes dedication because the cash that you save, you don’t want to use it for other things.

Yasi: Okay. So the lesson I learned is that. Monitor your expenses and reduce the ones that you can reduce and then try to save and invest. And then with a goal that you plan to buy a house to live there for some years, and then you will monitor your savings rate and over time it actually helped you to get there instead of spending unconsciously.

Yeah. You going to summarize it correctly? 

The Poor Swiss: Yeah. It’s a good summary. Yeah. Goal of what, what you want to do with your money is important. I think so we knew we wanted a house. We know even further in the future, we want to be financially independent. So I think that in mind was important for us. And it’s, it’s honestly become kind of a game.

being able to increase our savings rate. now we kind of reach the point where our expenses cannot go much further down because we still have to live. And there are things we don’t want to cut. but. Once you are done with that, then you are investing. You can also focus on the income, being either with the cider cells or trying to raise your income at work or trying other things.

Okay. Let’s let’s resume. So I have the last question for you. What advice would you give to the audience to improve their personal wealth? So I think, I must have said that before. So start by tracking your expenses then, starting working what you can improve from these expenses. And then, you can focus on investing and trying to earn more and.

We have to, people have to realize that even in Switzerland, it’s possible to live with less and without necessarily cutting the life. I mean, we haven’t cut much from our lives to beginning. We’re just paying less for the same things. And I think that’s a smart thing to do that nobody wants to pay more for the same thing.

I hope maybe some people actually think it’s better, but I really hope it’s not the case. So that, that will be my general kind of advice. 

Yasi: Yup. And then where can people find you online since you, you write your blog and they can also learn a lot from how to improve their personal finance and all the tips and tricks, any other places?

The Poor Swiss: Yeah, so they can definitely find it the poorswiss.com. I have all my articles there. I share my, my numbers. I say I share my journey. And, so everything is there. also on Twitter and Facebook, the link can be found on the website as well. I’m not that active there, I think the blog is the main way.

If people want to contact me or read about my numbers or maybe learn from what I share. 

Yasi: Okay. Yeah, I know. Also I like it is English, so very inclusive. Thank you. Okay. I will put the links in the show notes. So for people who are interested improving their personal finance, they can refer to a blocks and there are lots of great articles.

And thank you so much for being here today. 

The Poor Swiss: Thank you very much for having me. It was very nice talking to you. 

Yasi: Yep. Bye. 

The Poor Swiss: Bye. Bye.