Just four years ago, I set myself the ambitious goal of become a rentier in 2020. During the 2019 retrospective, four months ago, I still had strong doubts that I could do it. Today, the stock market consequences of the Chinese virus paradoxically make me see things in a much more optimistic way. There are two main reasons for this.
First, the most obvious is the drop in prices. For the moment, it remains fairly contained, with valuation ratios still historically quite high in the US and Switzerland. Compared to other major historical bear markets, the drop is also small (in 2000 and 2008, we saw a drop of almost 50%, during the Great Depression it was down to 90%). If the stock market corrects as it did in the last two bear markets, then stocks will be attractive again. They will offer attractive dividend yields and good prospects for capital gains. This means that the cost of an annuity will become much more affordable.
The other point, just as important, is that my determining portfolio has held up very well to the recent market turmoil. This is not really a surprise, since it is designed specifically for this purpose. The advantage of this is that low downward volatility allows, as I explain in my e-book, to live off a smaller amount of capital, and therefore to become a rentier much more quickly (provided of course that too much profitability is not sacrificed in the process). Thanks to the Chinese virus, the strategy has been successfully put to the test by fire.
I don't know yet if I will actually have left my profession before the end of this year, but what is certain is that I am already preparing for it. The barrier is no longer financial but psychological. I have redone my little calculations in my head many times and I arrive at the same conclusions each time. I can do it. So, from now on, I am projecting myself in a few months and I am asking myself:
- on how I will communicate my departure;
- on what I'm actually going to do next.
When you take early retirement at 60, almost no one cares. But when you're under 50, that's another question. I've already turned this question over in my head several times. Announcing that you're becoming a rentier so young raises a lot of questions, jealousies and distrust. "He's going to fail, he must have scammed people, he's a cheapskate who lives close to his pennies, he won the lottery, he must have inherited a fortune, etc." In the world of Rat Race, no one can imagine that one is likely to become a rentier by living normally, just by following an intelligent investment method, patiently, for many years. The other possibility is to declare oneself as an "investor". Here too, it is the open door to criticism and jealousy. If you invest, you are necessarily a selfish vulture, who will also fail like everyone else.
In short, the truth is sometimes difficult for some people to hear. On the other hand, it is possible not to tell everything, without having to lie. This brings me to the second point: what will I do with all this free time? I always complain about not having enough time for my hobbies, in particular to follow my investments, write on my blog, play sports and see my friends. I will therefore be able to give myself to my heart's content. Nevertheless, I will still have a lot of time to occupy. Outside of my job, over time, I have acquired over a number of years a certain number of skills that I intend to develop and put to good use in a small independent activity. This will allow me to combine some of my passions with a small occupation that will generate a small additional income. The advantage is that I will not depend on this activity to live. This will also allow me to contribute to social security and therefore avoid being taxed from an AVS point of view on my fortune. Psychologically speaking, it is also good to maintain a small economic activity, to feel useful and to diversify one's sources of income a little.
I will be all the more comfortable communicating the reasons for my departure if I can highlight the development of an independent activity. This is an approach that is unanimously accepted, not to say valued, within the company. In addition, it is the strict truth, even if I am silent on the real importance of this occupation in my future schedule…
Discover more from dividendes
Subscribe to get the latest posts sent to your email.
Français 
English 
Italiano 
Deutsch 
Español 
Português
That's great news! I'm really happy for you, congratulations!
Can I ask you how old you will be this year?
After so many years of keeping your goal in sight and finally reaching it, I don't think it's a problem to find an explanation for the doubters and jealous people of the rat race, I'm not worried about you :)
Congratulations!
This is news that pleases me very much. I have set myself a date of 2025. Maybe it will be a little earlier?
Have a great day and always a pleasure to read you.
Your readers on this blog are neither jealous nor envious. On the other hand, they study your career path carefully. As for me, 52 years old and also seriously considering leaving my position as an employee of a large American company. Diversified income for the future: land, real estate, dividends and an independent activity to keep in touch with real life.
You have reached a crossroads! You now have the luxury of being able to choose between continuing to work (at a further reduced rate) or turning the page once and for all. Your decision now depends only on your desires and priorities in life, and no longer on financial aspects.
It's fantastic, but of course such freedom of action is not necessarily easy to manage psychologically and this emptiness can be dizzying.
I wouldn't take too much notice of the "what will people say": honestly, I think that no one who doesn't follow the same approach as us can really understand that someone retires at 45 or 50. By making choices that are diametrically opposed to the masses, we inevitably arouse distrust, hatred or jealousy.
Make choices that match your true nature, only you know what is likely to make you happy. The quest for financial independence is a solitary quest. At best, you will find support and understanding on platforms like this one and not from your work colleagues.
They say that good preparation is the key to a successful retirement. This preparation is even more important if you leave the world of work 15 or 20 years before everyone else, since the duration of your retirement will be that much longer. Planning your days and planning one or two side activities will undoubtedly help you start this new chapter of your life in a better way.
Well done!
Even though the financial calculations show that it is possible, it takes a certain amount of courage to take the step.
Thank you all for your comments and encouragement!
To answer Seb, I am in my forties.
Well done!
Personally, I set myself 2025, at age 45. I'm working hard to get there!
Courage. It goes by quickly!
Dear Jerome,
You have achieved what for many people is a dream: having time to have time for what is important to us. It gives an extra motivation to hold on to our dreams, to our goals.
I completely understand your questioning about "what will people say"? This is perhaps the point that I find most unfortunate: despite success, there is a kind of socio-psychological hold on our freedom that refers to those who are jealous of success, whatever the reason, and who keep us still and always chained in the face of FREEDOM!
If you got there, it's because you gradually built things, took the time to think, executed decisions, etc. In short, I would say that all these elements, more or less small, represent a lot of time. It is therefore not surprising that you are ahead of those who are not actors in their future when they leave work.
Your position is deserved, I sincerely congratulate you. I wish you to be able to enjoy it freely, FOR yourself, your family and your loved ones!
Thank you thank you thank you!
Congratulations Jerome!
You have often described this psychological barrier of the transition to retirement, but why stop at a prejudice that the rentier no longer works? If I play on words, you have achieved financial independence that allows you to undertake new adventures with one less worry, namely the financial aspect that allows you to live.
You become your own "sponsor"! Nobody gets offended when we talk about athletes who earn their living like this.
I especially ask myself this question with regard to children. What will they be able to answer when their friends ask them:
“What are your parents’ jobs?”
Or
“Why are your Mom and Dad always at home?”
Swiss banking secrecy, even if it no longer exists as such, "forbids" us from talking about income, savings, investments. Our culture or at this level it is almost our Swiss DNA that is taking over, money has been demonized and it is frowned upon to earn more than your neighbor, moreover "without" working and to dare to say so.
I have the feeling that those who seek financial interdependence are individuals who dare to undertake, who challenge received ideas, who are seasoned managers and above all who think differently... could we call them visionaries?
I remember your survey and the striking fact that a typical profile of person emerged from it, not the one on corona2019 which categorizes us as "alcoholics" ;-).
I hope we can always find people here with common values to exchange. Today, I am more of a consumer than an actor, because I am in the learning phase, but I hope to change this in the near future.
The answer about children is the same as the one given when you quit your job or when you meet someone later who asks you what you do for a living. It's the same problem.
My goal is not to lie but not to tell the whole truth either. I will therefore be independent in a small business 'x', which will in fact only represent a very small part of my schedule and my income...
How do you imagine your return to the stock market and your annuitant portfolio? A good mix of Switzerland, USA, Japan? Or are you also thinking of concentrating on the Swiss market, particularly for reasons of exchange rates and taxes?
I am looking forward to returning to Swiss and American stocks. But we have to wait a little longer. In any case, I will maintain a Japanese exposure. These stocks are incredibly cheap, even more so now. In my opinion, international coverage is much more important than the tax or currency aspect.
In short, I hope that in the more or less near future we will find ourselves in a configuration like the one we experienced in 2009-2010 where everything was good to take, even companies of exceptional quality.
And what about you?
For my part, it's still the same: my portfolio is almost entirely composed of Swiss stocks, with just a few positions in GBP and only one in USD. I'm not friends with taxes and I leave them as little as possible. Same with foreign currencies: in recent years I have liquidated several positions at a loss in EUR and USD, disgusted not by the evolution of the securities themselves but by the losses in value once returned to Swiss francs (e.g. several positions purchased 10 or 15 years ago when the EUR was still well above 1.50!). In short, I am permanently vaccinated against foreign currencies...
My portfolio has suffered lately more or less like the market as a whole, but I haven't sold anything at a loss. I had pocketed some gains in late February - early March when things started to smell like a burn and on positions that I found too expensive - in hindsight an excellent idea.
I had not anticipated (like almost everyone else) such a sharp and especially rapid decline. But that's how it is on the stock market and I have always accepted the rules of the game and invested with full knowledge of the facts.
The most important thing for me is to stay true to my strategy and invest regularly when cash is available without asking myself too many questions. No one is able to buy at the lowest price and that's why I'm a big fan of dollar cost averaging. Since I've owned my apartment, I have about 1000 francs more than before to invest per month and it's really great!
On the other hand, I am much further away from my goal than you: according to my calculations, still between 8 and 12 years, but it takes more than that to discourage me 🙂
I understand your reaction to foreign currency securities, having also been a stickler for this issue for a long time. I actually posted a lot on this subject at the time. However, I have since softened my position. Each security has an intrinsic value, which is reflected in the long term via its price and exchange rate. When a currency falls, prices tend to rise, and vice versa. Overall, it balances out. I don't know exactly the situation of the securities you are talking about, but if the weakening of their currency has not been sufficiently covered by the increase in the price, it is perhaps more the performance of the security that should be questioned. If you remain focused on CHF securities, you are also indirectly taking a risk linked to the currency, because the strength of the CHF is unfavorable to Swiss companies and therefore weighs on stock prices. Focusing on a single market is also dangerous. There may be a cyclical or systemic risk that only affects this market. Again, the important thing is to diversify currencies, like markets, stocks and assets.
That said, your focus on Swiss stocks in recent times was rather a good thing since, like Japanese stocks, they have done better (or rather less worse) than their American or European counterparts. I have not looked into why in detail, but the strength of the Swiss healthcare sector, especially pharma, has certainly helped.
I had not seen a decline like this coming either, but as you know, I have been preparing for a correction for three years, so for me it was not really a surprise. You are right, trying to buy at the lowest point is like trying to make the 6 right numbers. Statistically speaking, there is very little chance of succeeding. On the contrary, the risk is to get caught in a bearish whirlwind that lasts and lasts. Dollar cost averaging is indeed one of the best approaches from this point of view.
Ah ah! That's for sure! Real estate, what a magnificent catalyst for financial independence!!! For me, it was one of the big steps towards financial independence, not to mention that you can reclaim your capital stolen by pension funds.
Courage, the closer you get, the more you see the finish line flag, the more you put the other “small” annoyances into perspective.
If I remember correctly, you have already reduced your occupancy rate from 100 to 50%. Rather than quitting your job, have you considered the option of continuing with a symbolic percentage like 20%? You would only work one day a week, 6 days out of 7 of freedom, you would maintain a social connection, you would continue to contribute to the AVS and you could still start your coaching activity at the same time.
This would have been the case if I liked my job and/or needed it to live. But I can't stand it anymore. Worse, right now I'm practically doing 100% again, I'm running everywhere, I don't even have time to eat. It's a disaster.
Reading this in the middle of the Covid crisis is exceptional & extraordinary. Hats off to Master Jérôme!! I have a huge smile stuck on my face! Nothing beats a little crisis to retire lol. Congratulations!!!
On a more personal note, I find that the 2nd pillar is a good instrument available to lower your taxes by contributing to it and later withdrawing it. I will reread your posts on this subject but I admit that the less tax I pay, the better off I am.
Thank you soon.
Be careful for the second pillar you must mainly extract it rather than contribute to it! Fiscally you lose (in the short term only), but you gain across the board in performance and above all you can benefit from it immediately.