Potential very good news

Dear all,

We just finished completing our 3014 tax declaration and we believe that a very surprise is coming. Clearly we need that the tax office agrees on the different items but we probably over paid in 2014. Here in Switzerland, we pay account every month (based on previous year) and then the reconciliation is performed once you have completed the tax declaration.

In 2014, we paid 71’100 CHF of accounts and based on our calculation, we should have paid only 60’000 CHF. So we should have a return of 11’100 CHF. We will not get directly get the cash back but the tax office will reduce our monthly account payment. That will boost our saving rate for 2015!

The big question, is what to do with this additional cash. We have different options, clearly the one I would prefer is to re-invest the amount into high dividend yield companies. Another option, would be to increase our emergency found to cover 2 months expenses, at the moment, we have only 1 month covered expenses.

Next year, we are planning to change our car, so it could be as well the part of the entrance fee for the leasing.

Any advice from your side?

Cheers,

RA50

Saving calculation

Hi all,

Based on different comments on our posts, I would like to develop and have your opinion.

I see that we have differences between us, bloggers and FI seeker related to the calculation of our saving rates:

Should we include all our savings that for us working class, would include, gov. retirement fund, company pension fund? This is  what we decided to apply in our this post (Saving %), this way we  know exactly how much we are saving and how much we will have when we retire/leave Switzerland. And you, what are your thought about it?

Regarding our monthly budget, we include our taxes. Some of you are calculating their budget after taxes, so is there a better way to do or not?

I believe that it is up to each of one to feel comfortable with the budget or saving calculation. Do you agree?

In waiting your comments, I am wishing an excellent week.

Cheers, RA50

Saving %

Dear FI Friends,

I would like to describe our total saving scheme which include the government, company pension fund, tax advantage and personal savings.

In Switzerland, I must say that we are really lucky to have a good retirement saving scheme, which is composed of 3 pillars of out 2 are mandatory and 3rd one is private but as a tax advantage benefit.

1) Social Security fund, taken directly out of our salary and represent 4.2%. The company contribute to 4.2% as well which give us a total 8.4%.

2) Company pension fund, taken directly out of our salary, the percentage has a minimum defined by law by can vary above this percentage from company to company. For my company, the percentage is 7% (new as of 1st of Jan 2015).

The 2 above funding process should represent around 60% of the last salary.

3) The privately funded 3rd pillar has a maximum amount 6768 for an employee, this amount is increasing a little bit every year. This amount if fully deductible from your tax (income).

All of the above cannot be withdrawn before 65 years old except if you are leaving Switzerland or for the 2) and 3) if you want to buy a house.

Now, our individual saving that goes at 100% into our portfolio increase. After all above deductions, taxes, rent and all other spending we are still able to put 18% aside.

So let’s recap on the below table:

Saving type

Saving percentage

Social security fund 4.20%
Company Pension fund 7.00%
Tax advantage fund 3.28%
Personal investing fund 18%
Total 32%

In total, we achieve a minimum of 32% saving, but from time to time we are able to save a little bit more on the personal investing fund.

We are away from some of our FI friends around the world but still believe that living in Switzerland is great achievement.

Let me know where you stand on the savings.

Cheers,
You can choose to put your money under a simple account that will give you around 1%-2% per year or you can choose in invest in fund with different risk level (% of equities).