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Old 09-12-2014, 04:03 AM   #21
Recycles dryer sheets
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Originally Posted by FIREd View Post
I grew up just outside of Geneva and own a condo in that area. So I am familiar with the high cost of living, but I could totally see myself retire there.

I think that you are in good shape financially. A net income of 100,000 CHF is nothing to sneer at. My one concern would be related to exchange rate if most of your assets are US-based. You have to be prepared to weather a drop in CHF income at some point. I know of a couple of American retirees who retired in neighboring France in the early 2000s only to be sent packing by the weak dollar a few years later. But it looks like you have some backup plan in place. So enjoy!
Thanks, FIREd. The dollar/Swiss franc exchange rate has been in a 40 year decline. One dollar in the 1970s bought 4 or 5 Swiss francs, if I remember correctly. Today a dollar buys .90 Swiss Franc. Actually it's .9345 right now due to a strengthening dollar, but the long term trend cannot be denied.

Best might be to have our investments here in Swtizerland and denominated in CHF. However, moving our investments here would be too costly in terms of many years of accumulated capital gains. Also, the US has the best markets and infrastructure for investors, hands down, so we are resigned to always moving funds from the US to here and have calculated in the exchange rate and transfer fees into our budget.

That said, despite the best planning we can do, we very well might end up joining your friends who have had to abandon their dream.

BB
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Old 09-12-2014, 04:07 AM   #22
Recycles dryer sheets
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From afar it looks a bit like Lake Atitlan in Guatemala.



And some of the vegetation and landscape reminds me of highland central Mexico. Very beautiful!
Fuego, absolutely gorgeous! So many beautiful spots on earth. Not enough time to visit them all, alas, even if one had several lifetimes.
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Old 09-12-2014, 04:24 AM   #23
Recycles dryer sheets
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A very interesting post. We have been in Lugano on vacation and found it very beautiful. In fact, we took a long hike along the Riva Vincenzo Vela, past the Casino, through the park, and out to the Museo delle Culture along the water. We must have passed right by your place. I would never have imagined that there were palm trees in Switzerland.
Gumby, we live near the Museo and often walk down the lakeside path to the small fishing village of Gandria for exercise! Next time you are planning to be in Lugano, PM me and then you can ring our bell and enjoy a drink on our balcony while on your hike.

BTW, you can always tell the newbies. First snowfall in winter they are all out taking photos of snow on palm trees to post on FaceBook. I am guilty of the same my first year. It does snow here, perhaps 3 or 4 times, but it then disappears quickly.

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Old 01-15-2015, 11:44 PM   #24
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Hey Bryan, how are you holding on? I hope that today's announcement by the SNB is not going to impact your retirement too negatively.

Switzerland just got a little bit more expensive today. I was there last week and I should have stocked up on chocolate...
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Old 01-16-2015, 04:01 AM   #25
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I feel we'd be remiss if somebody didn't probe a bit about the numbers.

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Taxable Stock Account: $1.65M, produces $80,000 annual dividend income
That's about 5% which I think is quite high considering that my impression is that interest and dividend rates are even lower than rest of the world. So how does this happen.

Plus I have the same question as FIREd, what's the impact of the huge jump in the CHF going to be on your retirement.
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Old 01-16-2015, 05:21 AM   #26
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FIREd, Un disastro! I had been using an exchange rate of .90 CHF for $1 USD in all of my modelling for the last few years. Then in the last six months we had this rebound in the dollar and earlier this week it was trading at 1.02 CHF for $1 USD, a nice 2% above parity, instead of the 10% below parity I was using. So, after researching probable short term trends I gave in to optimism and changed to .98 CHF. It was fun allocating all the new money that was going to come our way in July, when we are finally FIREd.

Talk about being blindsided! I think the exchange rate settled at the end of yesterday at .87 CHF to $1 USD. However, this is an export-driven economy, and Swatch, Nestle, Rolex, etc. are howling. There is some sense that the SNB will introduce new measures specifically to get better balance with the USD, so I remain hopeful that this anomaly won't last.

That said, I'm back to modelling at .90 and reluctantly removing the extras that I just built in to the budget:-( It's better this way; we can always bank any benefit of a rate higher than .90 at the end of the year. That said, the USD has been in a 40 year macro level decline against the CHF and this trend will likely continue in the future. So, we will stay vigilant.

clifp, Thanks for probing! It is one of the things that make this forum so incredibly helpful and interesting. The taxable portfolio is 100% US stocks, focused mainly on dividend growth, and consists of blue chip "dividend aristocrats" (25 years or more of dividend increases) plus a few carefully selected and monitored MLPs and REITS. This is how I get the $80,000 in dividend/distribution income.

-BB
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Old 01-16-2015, 05:33 AM   #27
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Originally Posted by Bryan Barnfellow View Post
Talk about being blindsided! I think the exchange rate settled at the end of yesterday at .87 CHF to $1 USD. However, this is an export-driven economy, and Swatch, Nestle, Rolex, etc. are howling. There is some sense that the SNB will introduce new measures specifically to get better balance with the USD, so I remain hopeful that this anomaly won't last.
Hopefully, you'll make out all right. I don't know what the issue would be with a more favorable dollar exchange rate. The euro is the problem. If the ECB starts pushing QE, the euro will seriously weaken and many people will likely be trying to bale out before it happens. The CHF is the best game in town. If the SNB tries to keep up the 1.20 exchange rate, they will be riding the euro down at what may be a near infinite amount of francs.

I suspect that something will happen when the euro plans are clearer. Unfortunately, the Swiss export economy will take it in the shorts when it comes to the euro exchange rate.
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Old 01-16-2015, 05:49 AM   #28
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Hopefully, you'll make out all right. I don't know what the issue would be with a more favorable dollar exchange rate. The euro is the problem. If the ECB starts pushing QE, the euro will seriously weaken and many people will likely be trying to bale out before it happens. The CHF is the best game in town. If the SNB tries to keep up the 1.20 exchange rate, they will be riding the euro down at what may be a near infinite amount of francs.

I suspect that something will happen when the euro plans are clearer. Unfortunately, the Swiss export economy will take it in the shorts when it comes to the euro exchange rate.
Alas, very true. Defending 1.20 in the face of QE would have been difficult and unadvisable. But just on Monday they reported that there was no plan to change their strategy; so it caught everyone unawares.

-BB
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Old 01-16-2015, 07:21 AM   #29
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Alas, very true. Defending 1.20 in the face of QE would have been difficult and unadvisable. But just on Monday they reported that there was no plan to change their strategy; so it caught everyone unawares.

-BB
The US had no plans to extend FDIC insurance to money market funds but changed their minds after the short term paper market was in the process of being drained of trillions of dollars. Ultimately, reality trumps their misguided intentions.
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