YES! A channel for FIRE from Europe, hello from your neighbour (Czech republic) 🖐😅 Our family is on the Fire journey for just about 2-3 years and we were struggling finding relevant and useful information for our region, every Fire couple out there seemed to be American😅 Glad I found your channel today
Welcome, I'm happy you found me! 🙏 Yeah, part of the reason is probably that people rarely talk about money openly in Europe, let's see if we can slowly change that :)
Thanks for debunking the dividend argument. I hear so many people talk about how you will never run out of money with a dividend portfolio, instead of selling shares, which is just mathematically incorrect. Selling shares is exactly the same as receiving dividends from a total portfolio perspective, so i hope more people will talk about how dividend strategies are just psychological models.
But if I have 100 shares of acc ETF for example and I want to take some money. So I have to sell some shares and now I have 98 for example. With dividends I keep my 100 shares and recieve cash with dividens. I understand that i have to pay taxes and etc. But I dont understand this part guys when you say just sell and its the same. Probably you understand better. Maybe can explain?😁 Still great content! Cant wait next episode!
@@tadasrinkunas689the reason they say it's the same is because with accumulating ETFs your profit gets reinvested so if you sell the exact amount you profited you have still the same amount of shares, hope it clarifies
Hello Angelo!! I’m Italian and I follow you from few weeks. I extremely appreciate your precise explanation of matters. Technical enough to never being boring. One of my favourite channels on ETFs and early retirement. Keep up the good work! By the way I’m in Vienna these days, but I didn’t know you lived here!!😂 what a coincidence
Never thought about the tax thing. Here in Portugal, Capital Gains Tax is 28%, but you can pay taxes instead by adding that up as Income Tax. If you’re “retired”, without income, that’s 0% as well. That’s smart!
Hi Angelo! Very informative - in the UK there are taxwrappers like ISAs so you can basically withdraw profits from an ETF without the 26% capital tax gain. Are you aware of other options?
Hello Angelo! What a nice channel you've created. Im a 23Y man from Spain which just graduated from my university degree. I'm in a part-time job and i would like to start investing for my future. I was wondering if u are commited to VWCE 100% rather than S&P 500 despite being 2-3% off during the last 30years (6-7% VWCE - 8-10% S&P). Do you believe the emerging economies from Brazil, India and China will push up a bit the return% of the VWCE in the next decades? Keep helping us like you do!!! Cheers.
Thank you! You don't have to include Emerging Markets if you're not convinced of them, but I'd still argue that investing across all developed markets on a market-cap basis makes sense, since you never know which country/region is going to perform best going forward. I took a closer look at Emerging Markets in this recent video: th-cam.com/video/N-Of7ow3M_E/w-d-xo.html
Hello Angelo! I just found your channel. What a blessing! I subscribed. 😀 I am also planning to "retire early", and will be living in Austria from next year. I was initially concerned, as taxes seem high, even on unrealized profits on the ETFs I currently own in Interactive Brokers. I understood that Austria taxes unrealized gains as well. I don't want to move my ETFs from Interactive Brokers, as I would like it to be my "life companion" wherever I move in the future, as it's not tied to any country's system. My question is: Do you think I need to get a "steuerberater" there to do my (complex) taxes then? (Not planning to withdraw any amount until retirement, but I am referring to unrealized gains). Thanks a bunch!
Hi Angelo, great content. I think many would benefit from learning if there are Regelbesteuerungsoption equivalents elsewhere in Europe. Capital Gains taxed really take a large dent of the money in my personal simulations. 😢 I am particularly interested in Italy. I looked up the pwc site but it doesn't seem deep enough...
Thank you! If I find the time I'll look into a few other countries, including Italy. Perhaps Reddit could be a good place to ask financially savvy Italians about this though :)
Great video, one that folks really need to watch. I' m 50, retired a while at 45. 1 have 35% of my capital invstments in an IRA. 25% in index funds, and the balance spread across other investment accts. in cumulative of over $ 5M. I receive income from my rental properties too. Zero debt and all is going accordingly. My financial consultant has been patient and has done a wonderful job for me throughout the years.
Hi Angelo! Love watching your videos and all the knowledge you add in youtube! I was wondering if you could make a video focused on Austrian investors. Brokers, fees, taxes, Finanzamt, and so on. You can maybe post it in German and get an Austrian audience to your channel? I just started my investing journey but I see the differences between here and Germany (mostly all channels are focused in Germany and the information is limited for the Austrian market). Can you explain how retirement will work? Selling shares? Living from the dividends? Thank you a lot and alles gute für dich und deine Familie! Lg Rodrigo
Thank you, happy to hear that! If you're in Austria, I would stick to Flatex so you don't have to waste time doing taxes. Less than 1% of my viewers is from Austria, so a video about this wouldn't make much sense sadly. But send me a question you have right now via mail: p2pinvesting.eu/contact
Great Video! Especially on the Tax side. I learned something off of that ;) Can i ask, if you might want to dive a bit into the topic of investing as a "company" (for example GmbH) instead of an individual? Since your taxes will definitely change based on that, as long as you don't pay yourself anything out yet.
Thank you! I have no experience with investing within a GmbH, so I'm the wrong person to ask about that. I've always liked keeping things as simple as possible. But I know that even the GmbH has to tax capital gains from ETFs at 27,5% in Austria.
I'm a new investor, and I recently learned about something called the Vorabpauschale in Germany. It's a tax imposed by the state, even if you're invested exclusively in accumulating ETFs. Essentially, you're being taxed on a profit that you haven't actually received yet. I find this quite concerning and it has me reconsidering my decision to invest in ETFs altogether. Interestingly, traditional pension plans seem to be unaffected by this tax. I'm curious if Austria has a similar concept in place, and if so, did you take it into account when making your investment decisions?
Man du bist richtig angenehm zu ansehen/hören. Bin 30 und meine Frau 28, unser kleiner Bub 16 Monate. Ähnliche Verhältnisse wie bei euch… nur leider erst 105.000€ Vermögen bisher… ich denke FIRE gibts erst in 15 Jahren bei uns… 😅 wünsche euch ganz ganz viel Erfolg bei eurem Weg 😊
Danke, das freut mich Simon! Schön, dass ihr auch schon so jung ein Kind habt :) Ich denke, wir sind euch einfach ein paar Jahre voraus (ich bin 3 Jahre älter als du) und haben etwas früher gestartet, das ist alles. Wünsche euch drei auch ganz viel Erfolg, genießt die FIRE Reise :)
Hello Angelo! At first let me congratulate you on the videos you are doing. I absolutly love them. I am currently holding and investing only into VWCE acc and I was wondering if you have allready made any video that I have not see yet where is your whole ETF portfolio. Thank you and best wishes!
Thank you, hearing that makes me very happy! You can see our full ETF portfolio here, which includes our old shares of the Distributing FTSE All-World and old Distributing MSCI World ETF shares: th-cam.com/video/PXzvP1lt32s/w-d-xo.html
Because the few I've seen for Europe are difficult to buy on most low-cost brokers, performed worse than their ETF counterparts even though they sometimes have a lower TER and the tax advantage in Spain as far as I understood is limited to you not needing to pay tax if you move from one index fund to another. Which is not that relevant if you just buy a global ETF long-term instead of speculating in different sectors
Grazie Angelo, ti seguo da tanto tempo, ma con questo video mi hai fatto finalmente clickare il subcribe!, da pocchi giorni sono con mia famiglia anche a Vienna, ma purtroppo non possiamo avere un afitto come il tuo, come funzionano i genossenschaftswohnungen? Si trovano da 3 Zimmer? Grazie per il contenuto.
Mi fa molto piacere! Ecco una lista: www.neubauprojekte.wien/genossenschaften Basta iscriversi gratis a un paio di Genossenschaften e aspettare che comincino a mandarti delle offerte. Probabilmente per le offerte più interessanti ti tocca aspettare almeno 1-2 anni, quindi iscriversi subito vale la pena! Si, la nostra ha 3 camere.
Great video as usual Angelo 👏👏 I follow the same VWCE strategy but im starting to slowly combine it with some REITs, which are getting quite cheap and pay good dividend. Just a way to expose myself to the real estate market. BTW if you ever want to hike in Norway, let's get in touch!
Thank you as always! 🙏 Nice! Yeah, REITs can be a good way to add more real-estate without concentrating a large percentage of the portfolio (+leverage) on a single property. Thank you so much for the invite, I'll keep it in mind! I'm happy that I know someone that's based in Norway now :)
Any Danes here? It seems to me that the FIRE movement is basically impossible here in Denmark because we get taxed so heavily. Even investing in ETFs seems seems to be discouraged with the taxes you pay on unrealised profits.
I'm skeptical about the sustainability and reliability of relying on taxpayer-funded supports like subsidized housing and child allowances. It seems risky to build a financial independence plan on variables like government support, which can change with shifting political and economic climates. if you would not be in a regulated rent, how much it would be in a free-market cost (I assume 1500 -1800) ? does this still fit with your plans ? what happens if no child support is granted ? and how are calculated the long term expenses like studying abroad for your daughter or other questions that it may happen along the way. I am trying to build my financial independence but my figures go way beyond what you put in the numbers. We are also a family of 3, with a 3 years old daughter ....
Hi Angelo. Have you considered selling covered calls on your etf part of your portfolio? Based on your reasoning of your retiring plan, it seems to me this would fit perfectly. Here is why: 1. You plan to keep your etf indefinitely. That means if the price goes down in the short term you are not concerned with selling at lower price and you keep the premium of your covered calls. 2. It is highly unlikely your etf will experience wild swings both to the upside and to the downside, but for the sake of this argument the focus is on the upside (it is unlikely your etf will suddenly worth 20% more at the end of a month). That means you can go with fairly low delta ( yes, I know less than .8 is not recommended) and receive very high premium 3. Still, if you follow very conservative covered call rules and sell deep OTM options, you could easily cover your yearly expenses just with this strategy. 4. Covered calls can be sold on different time frames, but say if you decide to sell monthly options, it is considered passive income since you would spend maybe 15 minutes per month doing this. And it is something you could do when you retire. I'd appreciate your opinion on this. Thanks!
Thank you for the input! I'm leaning towards no, as I'm sure it still involves risks that are outside of my control but you still got me interested in looking into it more!
It makes perfect sense that you guys can retire with half mil invested but even better if you can buy at least one rental property just to make at least extra 500 a month. I think having fire as a goal is amazing and living simple minimalistic frugal life is the way to go even if you have milions in the bank... Great channel buddy, keep it up.
Dear Angelo, your content is financially waking and we (my wife and 3 kids) who also live in Vienna are grateful for discovering your channel. Can you please help clarifying one point regarding taxation after retirement in Austria? Specifically, does it matter if we manage all saving in one broker account (opened for one of us), or should we manage 2 separate accounts for being eligible for example for 2 independent 0% benefit on 11693EUR for each of us? In other words, if we manage an single account, and withdraw 11693x2=23386EUR after retirement, will it still be 0% taxed?
Happy to hear that! Since you're taxed individually, you would each need to hold those shares in your own name for that to work and to take advantage of the reduced tax when selling in retirement
Great overview. Certainly everyone's mileage will vary, which is why its so important to keep track of your expenses, but also estimate what those will be in retirement. For us, these will go up, as we will travel more (I WFH). Also, what is retirement? Us, with a young son, would not travel much more anyway as he would be in school, so we would not really retire early, and would bring in some sort of income regardless of any FI position, which is what you are saying in this vid.
Thank you Kevin! Exactly, and chances are, you'll want to work on something anyway even if you're FI, which will most likely bring in extra income. Appreciate you sharing your perspective!
Once again, you are the best passive income channel in Europe bro! Keep going, all the best! Before I go, I have a question! Interactive broker: which do you prefer, a normal Brokage account or the Retirement account?
Referring to Austrian taxation (KESt at 27.5% vs the income tax as per the table): a quick goal seek shows that in Austria, with up to appr EUR 59,650 investment earning per year you are still better off with income tax (and Regelbesteuerungsoption) than with the capital earning tax (KESt). This is of course per person.
@@AngeloColomboFi I calculated with the 40% tax rate for the 32,076 to 62,080 EUR bracket effective since July 2023. Tax bracket Investment earning Tax Rate Tax 11,693 and below 11,693 0 0 11,694 to 19,134 7,440 20% 1,488 19,135 to 32,075 12,940 30% 3,882 32,076 to 62,080 27,577 40% 11,031 Total investment earning 59,650 Total tax amount 16,401 Tax % 27.50%
Hello Angelo .I enjoy your video. May I ask you what your plan for securing your home,?? Do you plan to inherent money from your parents ? I think not securing your own home the amount of your funds are not enough
Do you maybe know when PEPP(Pan-European Personal Pension Product) will be available in Austria? And which broker will be the first to provide the option of investing through PEPP? In Europe, for example, Finax in Poland provides this
The 4% rule is a very good "rule of thumb" as you said: It's more than likely to work out just fine - and in fact I'd just budget with reserves - so if your real spendings are 1500€, budget as if you'd need 2000€ and then you'll be save in like 99% of cases. As you said: Working longer get 2% more security isn't free either - it's costing you your irrevertible lifetime. The original study is also based on a 60/40 stock/bond mix - if you're retiering younger you'll likely be much more stock heavy - close to 100% - the potential withdrawal rate is much higher, closer to 5% than 3% but it also comes with a higher sequence of returns risk. All in all, all the math is really daunting and not really providing us with much context. the 4% rule for stock investors is more than enough to retire early if spending flexibility is a thing. In my experience, YOU adjust to your available funds, not the other way around - so if you need to save, due to a market crash, you will and let's be honest here... It's not like you're gonna eat just rice and beans... Maybe skipping abroad holidays for 1-2y is all it takes to push your withdrawal rate to a save place, even in the worst years.
Couldn't agree more. And really, in case we feel that we're withdrawing more than planned from out portfolio during retirement due to a market crash for example, then the worst-case scenario would be one of us looking for some part-time work to make some extra money. Would that really be the end of the world? I don't think so :)
I still have a large amount of ETF shares on Flatex, but I'm using Interactive Brokers & Trade Republic the most to buy more of my ETF. Just keep in mind I'm not your average Austrian investor. I'm self-employed (thus need to file taxes anyway) and additionally this finance TH-cam channel is targeted towards all of Europe. As a result, I need to have first-hand experience as an investor with low-cost brokers that are able to serve most of the people watching. While the tax reports on IB are useful (especially if you're investing in single stocks), they don't include everything you need to declare for ETFs on a yearly basis in Austria. That part is a lot more complicated, so I would honestly stick to Flatex. As long as you stick to their 1,5€ saving plans (recurring investments), your fees will be almost the same and you won't need to waste hours every year filing your taxes and tracking your shares separately on a long-term basis. The closest low-cost alternatives so far would be Trade Republic and Scalable, which provide you with pretty good tax reports specifically for Austria on a yearly basis, which make tracking easier but would still require you to file them every year: angelo.fi/etfs
Hi Angelo, thank you very much for sharing all these knowledge. Your channel is super helpful and actually one of the reason I started investing. I have a similar situation as yours. I live in Vienna and I work as a self-employed. I started investing in the ETF all world with an accumulating plan. I invest every two months. I also bought some crypto. Regarding the accumulating plan I intend not to withdraw money from it for the next 10 years (that's my idea). Concerning taxes is it correct to say that I have to declare and pay taxes only if I withdraw money by selling my ETF?
Hi Umberto, I'm happy to hear that! Sadly that's not entirely accurate. You still need to pay a bit of tax on the accumulating ETF on a yearly basis. Shoot me an email and I'll happily send you more info: angelo.fi/mail
Hey Angelo, i also live in Vienna, and i wanted to ask you about the point number 5. Did you mean that once "retired" you could withdraw 11,693 eur as a single person from the Accumulating ETF in a single year without paying any tax? meaning 0% and not 27.5%? Thanks so much ! Would be chill if you do some kind of meetup in Vienna , would like to attend :)
We could withdraw a lot more actually, since you only pay tax on the percentage that's in profit from the amount you're selling. But generally speaking yes, in case you're retired or earning less putting you in a lower tax bracket, then you can select the "Regelbesteuerungsoption" in your tax returns. For example, my wife and I could each realize 11.693€/year in capital gains tax-free (based on current tax brackets) if we were to retire right now and not have regular income. Or 19.134€ each per year paying an average of 7,78% in taxes. Yeah I've been thinking about a meetup at some point, let's see :)
Hey Angelo, great video again. Regarding the 4% rule, I would suggest watching Ben Felix’s videos about this topic. He really does his due diligence on his topics and I believe him if he says that a 4% withdrawal rate is more than likely too high to be safe. However, my goal is not to retire early but just to have the freedom to do what I want and then to retire at 64 and not have to live like I need to count every Euro. And oh, a variable rate based on economic circumstances seems to be the safest bet of all…
Thank you! I've seen his videos, which are indeed a great resource. Still, do you disagree with my reasoning in this video for why I still aim for 4% for now? That sounds like a worthwhile goal as well, thanks for sharing!
@@AngeloColomboFi Partly, because it’s not really financial independence if you’re still relying on extra income. However, I still think it’s indeed a great first goal as us humans need goals to keep us motivated!
Based on historical data from 1900-2022, there's a very high chance we wouldn't need any extra money apart from the 4% WR from our investments. I was simply trying to show how unlikely it is that you'll never have any extra income (pension, inheritance, or even side income from a passion at some point) or even that you have zero flexibility in how much you withdraw even in a market crash if you retire in your 30s or 40s. Therefore working longer just to be able to have a lower theoretical withdrawal rate could be a mistake.
Hi Angelo, I noticed that both your name and surname are italian. Maybe It has been already asked, but are you from Italy or do you have parents from there? I am asking cause I am italian
Don't you want to buy a property to get rid of the biggest monthly expense? Yes, it will take years more to FIRE, but will also significantly reduce your risk..
Please explain how buying a similar 83m2 3-room apartment for at least 350.000€ in our area, plus interest on the loan, 3-5% purchasing fees, setting aside money for repairs and likely still with 350€/month in operating costs even as an owner would make any financial sense vs. our current housing costs of 683€/month (incl. electricity, heating, insurance, internet). According to our rental agreement, we can't be kicked out (unless of course we screw up by not paying rent etc.), as we're not renting from a private landlord, but a housing coop. And if we do ever need to move somewhere else, we'll keep appreciating the flexibility of renting, even if we'll most likely be paying more in rent vs today. Or we'll consider buying if it makes financial sense then, right now it certainly doesn't.
@@AngeloColomboFi I've heard that Austria's rent laws are special, but this is wow! :) Is 683€/month fixed indefinitely or is there a gradual inflation-following increase to that? And out of curiosity - are you in Vienna? (you may have said this, but I missed it).
Super Video! Grüße von einem FIRE Aspiranten aus NÖ! Bei so gut wie allem bin ich zu exakt den selben Überlegungen und Ergebnissen gekommen. Eine Frage, die ich noch nicht zufriedenstellend beantworten konnte: Wie kann man beim Andenken der "Regelbesteuerungsoption" im Vorhinein den zu versteuernden Anteil der verkauften ETF Anteile berechnen? Ein Teil wird natürlich Wertsteigerung sein, ein Teil "ursprünglich gekaufte Anteile"(die werden nicht versteuert); weiters gilt glaube ich "first in - first out". Ich sehe da kaum eine Möglichkeit im Vorhinein herausfinden zu können, wenn man zB €10000 verkauft, wieviel von diesen zu versteuern sein wird.
Danke! In Österreich gilt steuerlich das gleitende Durchschnittsverfahren (nicht FIFO) bei Aktien und ETFs, ist also relativ einfach. Wenn du 20% im Plus bist, ist also genau 20% deiner verkauften Anteile zu versteuern :)
I don't get this Angelo. With your favourite ETF 'Vanguard FTSE All-World UCITS ETF (USD) Accumulating' showing an annual growth of ~17% how can it be possible to only take out 4% per year without reducing the value of the investment?
You could of course take out more some years that go well and less during other years when the market is down. The 4% rule tries to take this volatility into account based on historical data, so that you don't run out of money in retirement
Hi Angelo, I live in Linz and I calculated that I could retire early in about 8 years. I am very interrested in your ideas about self employment. How can I do this, and what happens to your "Pensionskonto"?
Nice, cheers to that!🥂 I think you're better off reaching out to WKO about these questions. Your Pensionskonto includes payments from both your employment and self-employment.
In most countries (like Austria), you're much better off investing the money yourself. Also, many pension systems across Europe are clearly unsustainable.
Don't you think Real Estate can be a better solution than ETF? I would really like to know your opinion! I know that RE is included in ETF as a sector. Once I calculated in a spreadsheet with RE and it turned out, you get almost same growth in value and pretty robust dividends guaranteed with a rental contract. And about the liquidity the thing is that you cant sell the ETF any time as well, I mean you have to wait up until it recovers from the down phase in such case. Ideally you don't sell any of your investments but enjoy the dividends or rental income instead. What you think?
I don't, I know a few people that regret going into RE and all the work that comes with it. Do you subtract what your work hours are worth from returns? It's not a passive investment by any means and far from risk-free, especially if you're using leverage. I discuss RE more here: th-cam.com/video/BRoerc3EmnM/w-d-xo.html
Then I just use the money from our cash reserves first, which we'll refill on a regular basis exactly for these scenarios. Or worst case, I work a bit extra to add more of a safety cushion.
That was a unique situation due to the birth of our daughter and us pre-paying more tax than needed that year (2022). I'm self-employed, just to add a bit of context.
Yeah i don't agree that "selling 2%" of your total value to replace the Dividend Distribution is the exact same. If i sell, i will lose those shares AND if the market is down, i will sell "at a loss" and need to time the market, which is going to be horrible, if you need the money during crashes. If i get cash flow via Dividends, i keep my shares, never have to think about timing or selling and still get money, no matter the market condition. This is one of the most important reasons for Dividend Investors. But i had commented about this on another video. You are just not a fan of Distributing ETFs ;)
I get that, ideally you would choose when to refill your cash buffer for expenses by selling some accumulating ETF shares. It doesn't need to be exactly x amount at the same date every year. And in your comparison, you're leaving out the upside of keeping the money invested and compounding in an accumulating ETF if the market goes up (which it statistically does more often than not). But I'm not arguing the psychological benefit/difference of having dividends paid out to your account automatically, no matter what the share price is :)
Funny how us Europeans always assume owning a property is key for retirement. However, if you would put your downpayment on that house you would have bought aside and you would rent instead, while investing the surplus you have every month into stocks compared to the mortgage (and other costs associated with a property) you would have paid, you’d more than likely have saved more after 30 years than what your house is worth.
I think that Angelo lives in a Genossenschaftwohnung, it means you pay upfront for example 40000€ and then a lower rent to the constructors of the building, if you want to leave you become your 40000€ minus 1% per year that you were in this house.
I think @DwarFStrider and @carloschamorro explained it perfectly (thanks guys!). Luckily our upfront coop contribution was a lot better as well, at only 10.500€ :) Here's what I wrote in another comment: Buying a similar 83m2 3-room apartment for at least 350.000€ in our area, plus interest on the loan, 3-5% purchasing fees, setting aside money for repairs and likely still with 350€/month in operating costs even as an owner would make ZERO financial sense vs. our current housing costs of 683€/month (incl. electricity, heating, insurance, internet). If we do ever need to move somewhere else, we'll keep appreciating the flexibility of renting, even if we'll most likely be paying more in rent vs today. Or we'll consider buying if it makes financial sense then, right now it certainly doesn't.
Hallo Angelo, do u mean my that u and ur wife have separated accounts and u withdraw from each account 19000€/y tax free ? And that is only when u stop working! Otherwise what ever u sell it will get taxed at 27% ?!
Yes, since we're taxed as individuals in Austria even as a married couple. Not quite, 11.693€/year each tax-free (based on current tax brackets) or 19.134€/year each paying an average of 7,78% in taxes. Yeah, until then we would pay 27,5% on capital gains, since that's still lower than our current tax brackets while we're working.
How did you manage to put aside 300k euros by age 33? Was this capital from your 9-5 job or from other side income as well? I am asking just to get income-generating ideas
Don't forget, it includes my wife's savings/investments as well :) We kept our expenses low (in part due to how lucky we got with our rent - our previous one was even lower) and managed to save up 70% of our income on a monthly basis. I work in IT and Online Marketing, plus a few side hustles on TH-cam and blogs over the past few years, but most of my income is still active. We also managed to realize a nice chunk of profits from crypto and our ETFs are up +38k in value right now
@@AngeloColomboFi Thank you so much for your thorough reply. You helped a lot. I happen to be a fellow European, so your numbers make sense to me, although much lower than yours. The point is, to achieve such net worth you need a combination of income sources (a day job for sure + other side hustles).
I wish it was that easy, in most cases your previous country will ask you for taxes on the gains (from the shares you purchased while you were a resident) once you realize them.
Food, both at home and our weekly restaurant visit is of course included in "Everything else (6 mo. average): 973€" I was a bit too lazy to extract just food-related items from all our shopping.
You are not living frugally, you are enjoying the benefits of strong social system and strong currency, and cutting out the unnecessary and often idiotic luxury. Your "frugal" lifestyle would've cost >10.000 Eur per month (at least, when direct comparision possible) in the country I reside in. For example, you say "hiking is not expensive", which means you have free time through the week for home maintenance tasks, and you don't need to work weekends to make ends meet; affordable means of transport; well taken care of and secure hiking environments in the hiking destination. Here there is no affordable transport option, the cheapest is to drive, which will kill your investment budget. Hiking has huge security issues, so you need to book a group with some expert guys inside, and allowed only in certain locations, these are typically sold as an expensive "weekend holiday package", and since you are not working the weekend, then you are either not fulfilling your job obligations or home obligations, which has significant financial costs involved. In short, I think you are doing the right thing.
The biggest issue I have with the 4% is that your account still crawls to 0. Slowly, but to 0. And various markets had many "lost decades" (first crash, then flat for a long time) . I just don't want to be caught in one when I'm 60 or 70. And I want to leave something to my kids. So I will stay with dividend / dividend growth investing. Good luck to all of us :)
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It does not crawl to 0. In most scenarios of the Trinity study you would end with more money after 30 years than what you had at the beginning. Median for 40 years withdrawal period was you would end with 8x of what you begin with. Check out updated Trinity study on the Poor Swiss blog. Angelo mentioned it in one of his previous videos.
Well said! We're not planning on having our nest egg decrease in value in retirement, but to live off its long-term returns (capital gains & dividends). As @investicnibrambora mentioned, using this calculator you'll see that in most scenarios, retirees using the 4% rule ended up witch a much larger amount in investments than they started their retirement with in the past: thepoorswiss.com/retirement-calculator And again, this is assuming they always withdrew an inflation-adjusted 4% of their initial retirement amount every year, with zero extra income or flexibility.
@ We both live in the Czech Republic. The average inflation for the past 30 years is 4.7% - significantly higher than the US's 2.3% (roughly). Do you take that into account?
@@AngeloColomboFi I distrust these online tools (being a programmer, I can code one up myself in a day :)). Tweak one variable, and curves and numbers look very different. I would like to highlight a few more risks of the 4% rule: 1) It's by US, for US. Applying it to ourselves, Europeans, is riskier. Our average inflation might not be the same as the US and thus break the 4% rule. 2) The SP500 had an unprecedented massive bull run in 2010-2020 that skews historical results. Makes them potentially too rosy. All in all,I wish you well and I'm only trying to persuade you to be a little bit more conservative and maybe aim for 3% (ish) withdrawal. I'll stick to classic diversified dividend strategy - it gives me peace of mind that I won't have to touch the capital. (but I buy a World ETF too as part of my portfolio).
Well the point is, your kids wont need money when you die anyway(lets assume you will be 90 and kids 60). They probably need it in their late 20s or early 30s. Also you can most likely rely on both state pension later on and you can decrease withdrawals in bad years if needed, thats why I actually believe 5% withdrawal rate with like 30% flexibility is enough. Not to mention your lifestyle will change with age and you will need less in the last stage of your life. And taking 4.7% inflation into account is maybe technically correct, but there was high inflationary period connected with the change from communism to capitalism, so I would personally underweight that period. Though it still is rather 3% than 2% as calculated usually.
I wish we had similar tax system here. In Finland you have to pay 30% capital gains tax no matter how low your income is. This makes it much more difficult to reach FIRE here but I have accepted the challenge anyway. Thank you for sharing your inspiring journey! 😊
You could try to move to another EU country with a "better" tax scheme. E.g. Cypress, Portugal or even Ireland. Of your course it would depend on your profession / source of incomings... I understand not everybody can easily move across the EU...
My pleasure! Interesting, is there any way to save a bit of capital gains tax by setting up a company or something like that? Personally I wouldn't move to another country just for tax reasons.
@@AngeloColomboFi a lot of "influencers" or such "digital nomads" (from Spain) are moving to Andorra (ok, it is not EU), Cypress or Portugal in order to avoid the tax hell that Spain and the most of the EU countries have became. As as know, the German equivalent are moving to Dubai (Switzerland is no longer safe since that scandal with the leaked CD / DVD with information of German clients 😁). You can save a huge difference in taxes if you are willing to move to those "tax haven" countries.
I agree. I really like living here in Finland (although the weather is terrible for most of the year) so moving to another country for tax reasons is not an option. There might be tax advantages if you invest through company but I haven’t done the research yet. Maybe a fellow Finn could enlighten us? 😊 EagleOxy, good point!
So in the end of your lives what do you get to give to your kid ? There is any of the stocks left or this way is calculated for the parents to just make it to the end with relativy safety ? But the kid gets nothing. No house. No stocks. No car. If that is the case it is like the WEF plan ?" You will own nothing and you will be happy "
What do you think? We set up an ETF savings plan a month after our daughter was born and we're planning to leave her enough to never have to worry financially. No idea why you're so negative 😐
Do you agree or disagree with the points I made? :)
🇪🇺ETFs, bonds + 4% interest: angelo.fi/trep
🇪🇺Interactive Brokers (ETFs): angelo.fi/ibkr
👉Compare ETFs & Stocks: angelo.fi/comp
📌Esketit (P2P): angelo.fi/esk
📌Mintos (P2P): angelo.fi/min
📌Income (P2P): angelo.fi/inc
🏠Current P2P Deals: angelo.fi/p2p
⚡Where I buy Crypto: angelo.fi/bit
📈I track my ETFs here: angelo.fi/getq
🇦🇹🇩🇪Germany & Austria only (ETFs): angelo.fi/atde
Inspirational to have a European insight into FI.
Happy to hear that!
YES! A channel for FIRE from Europe, hello from your neighbour (Czech republic) 🖐😅 Our family is on the Fire journey for just about 2-3 years and we were struggling finding relevant and useful information for our region, every Fire couple out there seemed to be American😅 Glad I found your channel today
Welcome, I'm happy you found me! 🙏
Yeah, part of the reason is probably that people rarely talk about money openly in Europe, let's see if we can slowly change that :)
@@AngeloColomboFi yes, that is true.. we are also trying to change that in our inner circles and speak about our plans
Thanks for debunking the dividend argument.
I hear so many people talk about how you will never run out of money with a dividend portfolio, instead of selling shares, which is just mathematically incorrect.
Selling shares is exactly the same as receiving dividends from a total portfolio perspective, so i hope more people will talk about how dividend strategies are just psychological models.
My pleasure, I'm glad to see I'm not the only one who feels that way
But if I have 100 shares of acc ETF for example and I want to take some money. So I have to sell some shares and now I have 98 for example.
With dividends I keep my 100 shares and recieve cash with dividens. I understand that i have to pay taxes and etc. But I dont understand this part guys when you say just sell and its the same. Probably you understand better. Maybe can explain?😁
Still great content! Cant wait next episode!
@@tadasrinkunas689the reason they say it's the same is because with accumulating ETFs your profit gets reinvested so if you sell the exact amount you profited you have still the same amount of shares, hope it clarifies
@@tadasrinkunas689 The 98 shares of ETF include more shares of companys because the dividends are reinvested (inside the fund).
Hello Angelo!! I’m Italian and I follow you from few weeks. I extremely appreciate your precise explanation of matters. Technical enough to never being boring. One of my favourite channels on ETFs and early retirement. Keep up the good work! By the way I’m in Vienna these days, but I didn’t know you lived here!!😂 what a coincidence
Grazie Emanuele, I'm very happy to hear that! Meanwhile I'm visiting family in Rome right now 😅 but I'll be back in a few days!
i love your content. I am from Italy and you are the most humble and explain in such a friendly way. Please don't stop posting, greetings!
Never thought about the tax thing. Here in Portugal, Capital Gains Tax is 28%, but you can pay taxes instead by adding that up as Income Tax. If you’re “retired”, without income, that’s 0% as well. That’s smart!
Nice, happy to hear Portugal offers a similar option!
Hi Angelo! Very informative - in the UK there are taxwrappers like ISAs so you can basically withdraw profits from an ETF without the 26% capital tax gain. Are you aware of other options?
Hello Angelo! What a nice channel you've created. Im a 23Y man from Spain which just graduated from my university degree. I'm in a part-time job and i would like to start investing for my future. I was wondering if u are commited to VWCE 100% rather than S&P 500 despite being 2-3% off during the last 30years (6-7% VWCE - 8-10% S&P). Do you believe the emerging economies from Brazil, India and China will push up a bit the return% of the VWCE in the next decades?
Keep helping us like you do!!! Cheers.
Thank you!
You don't have to include Emerging Markets if you're not convinced of them, but I'd still argue that investing across all developed markets on a market-cap basis makes sense, since you never know which country/region is going to perform best going forward. I took a closer look at Emerging Markets in this recent video: th-cam.com/video/N-Of7ow3M_E/w-d-xo.html
Very happy to have come across your channel!
Hi Angelo,
Good Job ❤
Thank you Umar!
Hey,
Your videos are great, keep doing them. I see you using different tools to track your money, profit, etc. Maybe you can cover them?
Thank you! Good idea, I'll think about it for an upcoming video!
I had the same question, I would love to know how to better track the performance of my portfolio 🙌🏻
Love the examples greetings from Vienna ;)
Happy to hear that! Cheers from Rome, I'll be back in a few days though :)
Hello Angelo! I just found your channel. What a blessing! I subscribed. 😀
I am also planning to "retire early", and will be living in Austria from next year.
I was initially concerned, as taxes seem high, even on unrealized profits on the ETFs I currently own in Interactive Brokers. I understood that Austria taxes unrealized gains as well.
I don't want to move my ETFs from Interactive Brokers, as I would like it to be my "life companion" wherever I move in the future, as it's not tied to any country's system.
My question is: Do you think I need to get a "steuerberater" there to do my (complex) taxes then? (Not planning to withdraw any amount until retirement, but I am referring to unrealized gains).
Thanks a bunch!
Hi Angelo, great content. I think many would benefit from learning if there are Regelbesteuerungsoption equivalents elsewhere in Europe. Capital Gains taxed really take a large dent of the money in my personal simulations. 😢
I am particularly interested in Italy. I looked up the pwc site but it doesn't seem deep enough...
Thank you! If I find the time I'll look into a few other countries, including Italy. Perhaps Reddit could be a good place to ask financially savvy Italians about this though :)
Respect to show how much money you own in your investment account ! I m sure some or your collegues and/or friends had some comments about it... ;)
Great video, one that folks really need to watch. I' m 50, retired a while at 45. 1 have 35% of my capital invstments in an IRA. 25% in index funds, and the balance spread across other investment accts. in cumulative of over $ 5M. I receive income from my rental properties too. Zero debt and all is going accordingly. My financial consultant has been patient and has done a wonderful job for me throughout the years.
Inspirational Angelo. Stay the course. As you said, you make the needed adjustments with new information.
Thank you! 🙏
Well done Angelo!! In Greece UCITS etfs are completely tax free and for stocks you pay taxes only for the dividends 😁
I know, you guys are very lucky :)
Hi Angelo, great content as always. I appreciate if you share the list of finance/investment/portfolio mobile Apps you use and for which purpose?
Thank you! Here's everything I use: p2pinvesting.eu/investor-toolkit
Hi Angelo! Love watching your videos and all the knowledge you add in youtube! I was wondering if you could make a video focused on Austrian investors. Brokers, fees, taxes, Finanzamt, and so on. You can maybe post it in German and get an Austrian audience to your channel? I just started my investing journey but I see the differences between here and Germany (mostly all channels are focused in Germany and the information is limited for the Austrian market). Can you explain how retirement will work? Selling shares? Living from the dividends? Thank you a lot and alles gute für dich und deine Familie! Lg Rodrigo
Thank you, happy to hear that! If you're in Austria, I would stick to Flatex so you don't have to waste time doing taxes. Less than 1% of my viewers is from Austria, so a video about this wouldn't make much sense sadly. But send me a question you have right now via mail: p2pinvesting.eu/contact
I am living in Vienna as well. It would love to hear more about this specific topics as well.
Great Video! Especially on the Tax side. I learned something off of that ;)
Can i ask, if you might want to dive a bit into the topic of investing as a "company" (for example GmbH) instead of an individual? Since your taxes will definitely change based on that, as long as you don't pay yourself anything out yet.
Thank you! I have no experience with investing within a GmbH, so I'm the wrong person to ask about that. I've always liked keeping things as simple as possible.
But I know that even the GmbH has to tax capital gains from ETFs at 27,5% in Austria.
I'm a new investor, and I recently learned about something called the Vorabpauschale in Germany. It's a tax imposed by the state, even if you're invested exclusively in accumulating ETFs. Essentially, you're being taxed on a profit that you haven't actually received yet. I find this quite concerning and it has me reconsidering my decision to invest in ETFs altogether. Interestingly, traditional pension plans seem to be unaffected by this tax. I'm curious if Austria has a similar concept in place, and if so, did you take it into account when making your investment decisions?
Vorabpauschale is normally small
Man du bist richtig angenehm zu ansehen/hören. Bin 30 und meine Frau 28, unser kleiner Bub 16 Monate. Ähnliche Verhältnisse wie bei euch… nur leider erst 105.000€ Vermögen bisher… ich denke FIRE gibts erst in 15 Jahren bei uns… 😅 wünsche euch ganz ganz viel Erfolg bei eurem Weg 😊
Danke, das freut mich Simon! Schön, dass ihr auch schon so jung ein Kind habt :)
Ich denke, wir sind euch einfach ein paar Jahre voraus (ich bin 3 Jahre älter als du) und haben etwas früher gestartet, das ist alles. Wünsche euch drei auch ganz viel Erfolg, genießt die FIRE Reise :)
Nice diversified portfolio!
Would be good to hear about P2P if you're really into this.
Thanks for the video
Hello Angelo! At first let me congratulate you on the videos you are doing. I absolutly love them. I am currently holding and investing only into VWCE acc and I was wondering if you have allready made any video that I have not see yet where is your whole ETF portfolio. Thank you and best wishes!
Thank you, hearing that makes me very happy!
You can see our full ETF portfolio here, which includes our old shares of the Distributing FTSE All-World and old Distributing MSCI World ETF shares: th-cam.com/video/PXzvP1lt32s/w-d-xo.html
It's true that (acc) is mathematically better than (dist). But i get the psycological effect of "getting a steady income stream".
I'm curious, why don't you invest in low cost index funds? I live in Spain, and low cost index funds have a few tax advantages over ETFs.
Because the few I've seen for Europe are difficult to buy on most low-cost brokers, performed worse than their ETF counterparts even though they sometimes have a lower TER and the tax advantage in Spain as far as I understood is limited to you not needing to pay tax if you move from one index fund to another. Which is not that relevant if you just buy a global ETF long-term instead of speculating in different sectors
Grazie Angelo, ti seguo da tanto tempo, ma con questo video mi hai fatto finalmente clickare il subcribe!, da pocchi giorni sono con mia famiglia anche a Vienna, ma purtroppo non possiamo avere un afitto come il tuo, come funzionano i genossenschaftswohnungen? Si trovano da 3 Zimmer? Grazie per il contenuto.
Mi fa molto piacere! Ecco una lista: www.neubauprojekte.wien/genossenschaften
Basta iscriversi gratis a un paio di Genossenschaften e aspettare che comincino a mandarti delle offerte. Probabilmente per le offerte più interessanti ti tocca aspettare almeno 1-2 anni, quindi iscriversi subito vale la pena! Si, la nostra ha 3 camere.
Great video as usual Angelo 👏👏
I follow the same VWCE strategy but im starting to slowly combine it with some REITs, which are getting quite cheap and pay good dividend. Just a way to expose myself to the real estate market.
BTW if you ever want to hike in Norway, let's get in touch!
Thank you as always! 🙏
Nice! Yeah, REITs can be a good way to add more real-estate without concentrating a large percentage of the portfolio (+leverage) on a single property.
Thank you so much for the invite, I'll keep it in mind! I'm happy that I know someone that's based in Norway now :)
Any Danes here?
It seems to me that the FIRE movement is basically impossible here in Denmark because we get taxed so heavily.
Even investing in ETFs seems seems to be discouraged with the taxes you pay on unrealised profits.
I'm skeptical about the sustainability and reliability of relying on taxpayer-funded supports like subsidized housing and child allowances. It seems risky to build a financial independence plan on variables like government support, which can change with shifting political and economic climates. if you would not be in a regulated rent, how much it would be in a free-market cost (I assume 1500 -1800) ? does this still fit with your plans ? what happens if no child support is granted ? and how are calculated the long term expenses like studying abroad for your daughter or other questions that it may happen along the way. I am trying to build my financial independence but my figures go way beyond what you put in the numbers. We are also a family of 3, with a 3 years old daughter ....
Hi Angelo. Have you considered selling covered calls on your etf part of your portfolio? Based on your reasoning of your retiring plan, it seems to me this would fit perfectly.
Here is why:
1. You plan to keep your etf indefinitely. That means if the price goes down in the short term you are not concerned with selling at lower price and you keep the premium of your covered calls.
2. It is highly unlikely your etf will experience wild swings both to the upside and to the downside, but for the sake of this argument the focus is on the upside (it is unlikely your etf will suddenly worth 20% more at the end of a month). That means you can go with fairly low delta ( yes, I know less than .8 is not recommended) and receive very high premium
3. Still, if you follow very conservative covered call rules and sell deep OTM options, you could easily cover your yearly expenses just with this strategy.
4. Covered calls can be sold on different time frames, but say if you decide to sell monthly options, it is considered passive income since you would spend maybe 15 minutes per month doing this. And it is something you could do when you retire.
I'd appreciate your opinion on this. Thanks!
Thank you for the input! I'm leaning towards no, as I'm sure it still involves risks that are outside of my control but you still got me interested in looking into it more!
It makes perfect sense that you guys can retire with half mil invested but even better if you can buy at least one rental property just to make at least extra 500 a month.
I think having fire as a goal is amazing and living simple minimalistic frugal life is the way to go even if you have milions in the bank... Great channel buddy, keep it up.
Dear Angelo, your content is financially waking and we (my wife and 3 kids) who also live in Vienna are grateful for discovering your channel.
Can you please help clarifying one point regarding taxation after retirement in Austria?
Specifically, does it matter if we manage all saving in one broker account (opened for one of us), or should we manage 2 separate accounts for being eligible for example for 2 independent 0% benefit on 11693EUR for each of us?
In other words, if we manage an single account, and withdraw 11693x2=23386EUR after retirement, will it still be 0% taxed?
Happy to hear that! Since you're taxed individually, you would each need to hold those shares in your own name for that to work and to take advantage of the reduced tax when selling in retirement
@@AngeloColomboFi Thanks !
Great overview. Certainly everyone's mileage will vary, which is why its so important to keep track of your expenses, but also estimate what those will be in retirement. For us, these will go up, as we will travel more (I WFH). Also, what is retirement? Us, with a young son, would not travel much more anyway as he would be in school, so we would not really retire early, and would bring in some sort of income regardless of any FI position, which is what you are saying in this vid.
Thank you Kevin! Exactly, and chances are, you'll want to work on something anyway even if you're FI, which will most likely bring in extra income. Appreciate you sharing your perspective!
Once again, you are the best passive income channel in Europe bro! Keep going, all the best!
Before I go, I have a question!
Interactive broker: which do you prefer, a normal Brokage account or the Retirement account?
Thank you! As an Austrian resident, I didn't have the option to choose. I have a simple Cash (not Margin) account :)
Referring to Austrian taxation (KESt at 27.5% vs the income tax as per the table): a quick goal seek shows that in Austria, with up to appr EUR 59,650 investment earning per year you are still better off with income tax (and Regelbesteuerungsoption) than with the capital earning tax (KESt). This is of course per person.
Not quite, with that amount you would be paying a higher average tax of 27,96% already: www.finanz.at/steuern/einkommensteuer/?calc=369926
@@AngeloColomboFi I calculated with the 40% tax rate for the 32,076 to 62,080 EUR bracket effective since July 2023.
Tax bracket Investment earning Tax Rate Tax
11,693 and below 11,693 0 0
11,694 to 19,134 7,440 20% 1,488
19,135 to 32,075 12,940 30% 3,882
32,076 to 62,080 27,577 40% 11,031
Total investment earning 59,650
Total tax amount 16,401
Tax % 27.50%
Hello Angelo .I enjoy your video. May I ask you what your plan for securing your home,?? Do you plan to inherent money from your parents ? I think not securing your own home the amount of your funds are not enough
Great content as always!
Thank you! 🙏
Do you maybe know when PEPP(Pan-European Personal Pension Product) will be available in Austria? And which broker will be the first to provide the option of investing through PEPP? In Europe, for example, Finax in Poland provides this
I retired at 35 years old last year 2023.
The 4% rule is a very good "rule of thumb" as you said: It's more than likely to work out just fine - and in fact I'd just budget with reserves - so if your real spendings are 1500€, budget as if you'd need 2000€ and then you'll be save in like 99% of cases.
As you said: Working longer get 2% more security isn't free either - it's costing you your irrevertible lifetime.
The original study is also based on a 60/40 stock/bond mix - if you're retiering younger you'll likely be much more stock heavy - close to 100% - the potential withdrawal rate is much higher, closer to 5% than 3% but it also comes with a higher sequence of returns risk.
All in all, all the math is really daunting and not really providing us with much context. the 4% rule for stock investors is more than enough to retire early if spending flexibility is a thing. In my experience, YOU adjust to your available funds, not the other way around - so if you need to save, due to a market crash, you will and let's be honest here... It's not like you're gonna eat just rice and beans... Maybe skipping abroad holidays for 1-2y is all it takes to push your withdrawal rate to a save place, even in the worst years.
Couldn't agree more. And really, in case we feel that we're withdrawing more than planned from out portfolio during retirement due to a market crash for example, then the worst-case scenario would be one of us looking for some part-time work to make some extra money. Would that really be the end of the world? I don't think so :)
Love the fact that this is in Europe.
Happy to hear that! We definitely need more people openly talking about FIRE in Europe!
The housing cost is mortgage or rent? It's so good price compare to Slovakia here. Anyway, thanl you for sharing. It's so informative as usual!
We're renting. Yeah I know, we got extremely lucky 👌
You're very welcome!
Love it, keep going :)
Thank you! 🙏
Back here capital gains are taxed at 30% up until 30 000€ and 34% after that. Pretty brutal
Damn, that's a lot! Hopefully they don't increase our rates beyond 27,5% in Austria
Hi Angelo. I am also living in Austria and I was wondering whether you still use Flatex as your broker. And if not, why did you stop? LG, Aidar
I still have a large amount of ETF shares on Flatex, but I'm using Interactive Brokers & Trade Republic the most to buy more of my ETF.
Just keep in mind I'm not your average Austrian investor. I'm self-employed (thus need to file taxes anyway) and additionally this finance TH-cam channel is targeted towards all of Europe. As a result, I need to have first-hand experience as an investor with low-cost brokers that are able to serve most of the people watching.
While the tax reports on IB are useful (especially if you're investing in single stocks), they don't include everything you need to declare for ETFs on a yearly basis in Austria. That part is a lot more complicated, so I would honestly stick to Flatex. As long as you stick to their 1,5€ saving plans (recurring investments), your fees will be almost the same and you won't need to waste hours every year filing your taxes and tracking your shares separately on a long-term basis.
The closest low-cost alternatives so far would be Trade Republic and Scalable, which provide you with pretty good tax reports specifically for Austria on a yearly basis, which make tracking easier but would still require you to file them every year: angelo.fi/etfs
Hi Angelo, thank you very much for sharing all these knowledge. Your channel is super helpful and actually one of the reason I started investing.
I have a similar situation as yours. I live in Vienna and I work as a self-employed.
I started investing in the ETF all world with an accumulating plan. I invest every two months. I also bought some crypto.
Regarding the accumulating plan I intend not to withdraw money from it for the next 10 years (that's my idea).
Concerning taxes is it correct to say that I have to declare and pay taxes only if I withdraw money by selling my ETF?
Hi Umberto, I'm happy to hear that! Sadly that's not entirely accurate. You still need to pay a bit of tax on the accumulating ETF on a yearly basis. Shoot me an email and I'll happily send you more info: angelo.fi/mail
Hey Angelo,
i also live in Vienna, and i wanted to ask you about the point number 5.
Did you mean that once "retired" you could withdraw 11,693 eur as a single person from the Accumulating ETF in a single year without paying any tax? meaning 0% and not 27.5%?
Thanks so much ! Would be chill if you do some kind of meetup in Vienna , would like to attend :)
We could withdraw a lot more actually, since you only pay tax on the percentage that's in profit from the amount you're selling.
But generally speaking yes, in case you're retired or earning less putting you in a lower tax bracket, then you can select the "Regelbesteuerungsoption" in your tax returns.
For example, my wife and I could each realize 11.693€/year in capital gains tax-free (based on current tax brackets) if we were to retire right now and not have regular income. Or 19.134€ each per year paying an average of 7,78% in taxes.
Yeah I've been thinking about a meetup at some point, let's see :)
Hey Angelo, great video again. Regarding the 4% rule, I would suggest watching Ben Felix’s videos about this topic. He really does his due diligence on his topics and I believe him if he says that a 4% withdrawal rate is more than likely too high to be safe. However, my goal is not to retire early but just to have the freedom to do what I want and then to retire at 64 and not have to live like I need to count every Euro. And oh, a variable rate based on economic circumstances seems to be the safest bet of all…
Thank you! I've seen his videos, which are indeed a great resource. Still, do you disagree with my reasoning in this video for why I still aim for 4% for now? That sounds like a worthwhile goal as well, thanks for sharing!
@@AngeloColomboFi Partly, because it’s not really financial independence if you’re still relying on extra income. However, I still think it’s indeed a great first goal as us humans need goals to keep us motivated!
Based on historical data from 1900-2022, there's a very high chance we wouldn't need any extra money apart from the 4% WR from our investments. I was simply trying to show how unlikely it is that you'll never have any extra income (pension, inheritance, or even side income from a passion at some point) or even that you have zero flexibility in how much you withdraw even in a market crash if you retire in your 30s or 40s. Therefore working longer just to be able to have a lower theoretical withdrawal rate could be a mistake.
Hi Angelo, I noticed that both your name and surname are italian. Maybe It has been already asked, but are you from Italy or do you have parents from there? I am asking cause I am italian
Yes, half of my family is from Rome (my mother language is Italian). I've lived my whole life in Vienna though
@@AngeloColomboFi I see, thank you for the answer. I really like your videos, keep it up!
Don't you want to buy a property to get rid of the biggest monthly expense? Yes, it will take years more to FIRE, but will also significantly reduce your risk..
Please explain how buying a similar 83m2 3-room apartment for at least 350.000€ in our area, plus interest on the loan, 3-5% purchasing fees, setting aside money for repairs and likely still with 350€/month in operating costs even as an owner would make any financial sense vs. our current housing costs of 683€/month (incl. electricity, heating, insurance, internet).
According to our rental agreement, we can't be kicked out (unless of course we screw up by not paying rent etc.), as we're not renting from a private landlord, but a housing coop.
And if we do ever need to move somewhere else, we'll keep appreciating the flexibility of renting, even if we'll most likely be paying more in rent vs today. Or we'll consider buying if it makes financial sense then, right now it certainly doesn't.
@@AngeloColomboFi I've heard that Austria's rent laws are special, but this is wow! :) Is 683€/month fixed indefinitely or is there a gradual inflation-following increase to that? And out of curiosity - are you in Vienna? (you may have said this, but I missed it).
Of course rent can/will be increased, but so far we only had a 3% increase since June 2022, so far below inflation :)
Yes, we're in Vienna!
Super Video!
Grüße von einem FIRE Aspiranten aus NÖ! Bei so gut wie allem bin ich zu exakt den selben Überlegungen und Ergebnissen gekommen.
Eine Frage, die ich noch nicht zufriedenstellend beantworten konnte:
Wie kann man beim Andenken der "Regelbesteuerungsoption" im Vorhinein den zu versteuernden Anteil der verkauften ETF Anteile berechnen? Ein Teil wird natürlich Wertsteigerung sein, ein Teil "ursprünglich gekaufte Anteile"(die werden nicht versteuert); weiters gilt glaube ich "first in - first out". Ich sehe da kaum eine Möglichkeit im Vorhinein herausfinden zu können, wenn man zB €10000 verkauft, wieviel von diesen zu versteuern sein wird.
Danke! In Österreich gilt steuerlich das gleitende Durchschnittsverfahren (nicht FIFO) bei Aktien und ETFs, ist also relativ einfach. Wenn du 20% im Plus bist, ist also genau 20% deiner verkauften Anteile zu versteuern :)
Hei, das ist ja simple! Du hast mir wirklich geholfen! Danke dir vielmals!
Grüße nach Wien!
I don't get this Angelo. With your favourite ETF 'Vanguard FTSE All-World UCITS ETF (USD) Accumulating' showing an annual growth of ~17% how can it be possible to only take out 4% per year without reducing the value of the investment?
You could of course take out more some years that go well and less during other years when the market is down. The 4% rule tries to take this volatility into account based on historical data, so that you don't run out of money in retirement
I think you’re a little to optimistic on the inflation rate. I honestly think we haven’t seen the worst yet. But that’s just my opinion.
One more reason to invest in assets like stocks or real estate, which act as a long-term hedge :)
@@AngeloColomboFiwhat about gold (physically)? I don't mention Silver because it is taxed with VAT EU wide 🤦🏽
Hi Angelo,
I live in Linz and I calculated that I could retire early in about 8 years.
I am very interrested in your ideas about self employment.
How can I do this, and what happens to your "Pensionskonto"?
Nice, cheers to that!🥂
I think you're better off reaching out to WKO about these questions. Your Pensionskonto includes payments from both your employment and self-employment.
@@AngeloColomboFi Thanks for the info. I have watched some vids about early retirement but this was the first one which includes insurance topics.
Hi Angelo, what is your job there in Austria?
I'm self-employed in IT and Online Marketing
What about contributing to pensions fund to reduce taxes? is this is worth considering?
In most countries (like Austria), you're much better off investing the money yourself. Also, many pension systems across Europe are clearly unsustainable.
Don't you think Real Estate can be a better solution than ETF? I would really like to know your opinion! I know that RE is included in ETF as a sector. Once I calculated in a spreadsheet with RE and it turned out, you get almost same growth in value and pretty robust dividends guaranteed with a rental contract. And about the liquidity the thing is that you cant sell the ETF any time as well, I mean you have to wait up until it recovers from the down phase in such case. Ideally you don't sell any of your investments but enjoy the dividends or rental income instead. What you think?
I don't, I know a few people that regret going into RE and all the work that comes with it. Do you subtract what your work hours are worth from returns? It's not a passive investment by any means and far from risk-free, especially if you're using leverage. I discuss RE more here: th-cam.com/video/BRoerc3EmnM/w-d-xo.html
what happens if the year of your retirement the stock market crashes?
Then I just use the money from our cash reserves first, which we'll refill on a regular basis exactly for these scenarios. Or worst case, I work a bit extra to add more of a safety cushion.
How did you get 8k in tax refund? I'm in a similar situation (2 adults + 1 child) and similar costs, but my maximum returns were 780 euros.
That was a unique situation due to the birth of our daughter and us pre-paying more tax than needed that year (2022). I'm self-employed, just to add a bit of context.
Yeah i don't agree that "selling 2%" of your total value to replace the Dividend Distribution is the exact same. If i sell, i will lose those shares AND if the market is down, i will sell "at a loss" and need to time the market, which is going to be horrible, if you need the money during crashes. If i get cash flow via Dividends, i keep my shares, never have to think about timing or selling and still get money, no matter the market condition. This is one of the most important reasons for Dividend Investors. But i had commented about this on another video. You are just not a fan of Distributing ETFs ;)
I get that, ideally you would choose when to refill your cash buffer for expenses by selling some accumulating ETF shares. It doesn't need to be exactly x amount at the same date every year. And in your comparison, you're leaving out the upside of keeping the money invested and compounding in an accumulating ETF if the market goes up (which it statistically does more often than not). But I'm not arguing the psychological benefit/difference of having dividends paid out to your account automatically, no matter what the share price is :)
👍🏼
whgat do you mean low rent in housing co op ? what is that ? how can you retire if you do not even own a property
Funny how us Europeans always assume owning a property is key for retirement. However, if you would put your downpayment on that house you would have bought aside and you would rent instead, while investing the surplus you have every month into stocks compared to the mortgage (and other costs associated with a property) you would have paid, you’d more than likely have saved more after 30 years than what your house is worth.
I think that Angelo lives in a Genossenschaftwohnung, it means you pay upfront for example 40000€ and then a lower rent to the constructors of the building, if you want to leave you become your 40000€ minus 1% per year that you were in this house.
I think @DwarFStrider and @carloschamorro explained it perfectly (thanks guys!). Luckily our upfront coop contribution was a lot better as well, at only 10.500€ :)
Here's what I wrote in another comment:
Buying a similar 83m2 3-room apartment for at least 350.000€ in our area, plus interest on the loan, 3-5% purchasing fees, setting aside money for repairs and likely still with 350€/month in operating costs even as an owner would make ZERO financial sense vs. our current housing costs of 683€/month (incl. electricity, heating, insurance, internet).
If we do ever need to move somewhere else, we'll keep appreciating the flexibility of renting, even if we'll most likely be paying more in rent vs today. Or we'll consider buying if it makes financial sense then, right now it certainly doesn't.
your wife will be covered by social health insurance at no extra cost (kindererziehung). great video, greetings from styria!
Well that's even better! Although that's likely limited until our daughter reaches a certain age. Thank you!
Hallo Angelo, do u mean my that u and ur wife have separated accounts and u withdraw from each account 19000€/y tax free ? And that is only when u stop working! Otherwise what ever u sell it will get taxed at 27% ?!
Yes, since we're taxed as individuals in Austria even as a married couple. Not quite, 11.693€/year each tax-free (based on current tax brackets) or 19.134€/year each paying an average of 7,78% in taxes. Yeah, until then we would pay 27,5% on capital gains, since that's still lower than our current tax brackets while we're working.
How did you manage to put aside 300k euros by age 33? Was this capital from your 9-5 job or from other side income as well? I am asking just to get income-generating ideas
Don't forget, it includes my wife's savings/investments as well :)
We kept our expenses low (in part due to how lucky we got with our rent - our previous one was even lower) and managed to save up 70% of our income on a monthly basis. I work in IT and Online Marketing, plus a few side hustles on TH-cam and blogs over the past few years, but most of my income is still active.
We also managed to realize a nice chunk of profits from crypto and our ETFs are up +38k in value right now
@@AngeloColomboFi Thank you so much for your thorough reply. You helped a lot. I happen to be a fellow European, so your numbers make sense to me, although much lower than yours. The point is, to achieve such net worth you need a combination of income sources (a day job for sure + other side hustles).
as for taxes, in worse case you might change the residency, when you want to go FIRE, to the other EU country, that have most suitable taxes:)
I wish it was that easy, in most cases your previous country will ask you for taxes on the gains (from the shares you purchased while you were a resident) once you realize them.
I see that your family doesn't eat. No expense on food...
Food, both at home and our weekly restaurant visit is of course included in "Everything else (6 mo. average): 973€"
I was a bit too lazy to extract just food-related items from all our shopping.
You are not living frugally, you are enjoying the benefits of strong social system and strong currency, and cutting out the unnecessary and often idiotic luxury. Your "frugal" lifestyle would've cost >10.000 Eur per month (at least, when direct comparision possible) in the country I reside in. For example, you say "hiking is not expensive", which means you have free time through the week for home maintenance tasks, and you don't need to work weekends to make ends meet; affordable means of transport; well taken care of and secure hiking environments in the hiking destination. Here there is no affordable transport option, the cheapest is to drive, which will kill your investment budget. Hiking has huge security issues, so you need to book a group with some expert guys inside, and allowed only in certain locations, these are typically sold as an expensive "weekend holiday package", and since you are not working the weekend, then you are either not fulfilling your job obligations or home obligations, which has significant financial costs involved.
In short, I think you are doing the right thing.
That sounds rough in comparison, where are you based?
The biggest issue I have with the 4% is that your account still crawls to 0. Slowly, but to 0. And various markets had many "lost decades" (first crash, then flat for a long time) . I just don't want to be caught in one when I'm 60 or 70.
And I want to leave something to my kids. So I will stay with dividend / dividend growth investing.
Good luck to all of us :)
It does not crawl to 0. In most scenarios of the Trinity study you would end with more money after 30 years than what you had at the beginning. Median for 40 years withdrawal period was you would end with 8x of what you begin with. Check out updated Trinity study on the Poor Swiss blog. Angelo mentioned it in one of his previous videos.
Well said! We're not planning on having our nest egg decrease in value in retirement, but to live off its long-term returns (capital gains & dividends). As @investicnibrambora mentioned, using this calculator you'll see that in most scenarios, retirees using the 4% rule ended up witch a much larger amount in investments than they started their retirement with in the past: thepoorswiss.com/retirement-calculator
And again, this is assuming they always withdrew an inflation-adjusted 4% of their initial retirement amount every year, with zero extra income or flexibility.
@ We both live in the Czech Republic. The average inflation for the past 30 years is 4.7% - significantly higher than the US's 2.3% (roughly). Do you take that into account?
@@AngeloColomboFi I distrust these online tools (being a programmer, I can code one up myself in a day :)). Tweak one variable, and curves and numbers look very different. I would like to highlight a few more risks of the 4% rule:
1) It's by US, for US. Applying it to ourselves, Europeans, is riskier. Our average inflation might not be the same as the US and thus break the 4% rule.
2) The SP500 had an unprecedented massive bull run in 2010-2020 that skews historical results. Makes them potentially too rosy.
All in all,I wish you well and I'm only trying to persuade you to be a little bit more conservative and maybe aim for 3% (ish) withdrawal.
I'll stick to classic diversified dividend strategy - it gives me peace of mind that I won't have to touch the capital. (but I buy a World ETF too as part of my portfolio).
Well the point is, your kids wont need money when you die anyway(lets assume you will be 90 and kids 60). They probably need it in their late 20s or early 30s.
Also you can most likely rely on both state pension later on and you can decrease withdrawals in bad years if needed, thats why I actually believe 5% withdrawal rate with like 30% flexibility is enough. Not to mention your lifestyle will change with age and you will need less in the last stage of your life.
And taking 4.7% inflation into account is maybe technically correct, but there was high inflationary period connected with the change from communism to capitalism, so I would personally underweight that period. Though it still is rather 3% than 2% as calculated usually.
I wish we had similar tax system here. In Finland you have to pay 30% capital gains tax no matter how low your income is.
This makes it much more difficult to reach FIRE here but I have accepted the challenge anyway.
Thank you for sharing your inspiring journey! 😊
There are some small deductions in percentage points (a bit less than 30%) depending on how long you have kept the investment for.
You could try to move to another EU country with a "better" tax scheme. E.g. Cypress, Portugal or even Ireland. Of your course it would depend on your profession / source of incomings... I understand not everybody can easily move across the EU...
My pleasure! Interesting, is there any way to save a bit of capital gains tax by setting up a company or something like that?
Personally I wouldn't move to another country just for tax reasons.
@@AngeloColomboFi a lot of "influencers" or such "digital nomads" (from Spain) are moving to Andorra (ok, it is not EU), Cypress or Portugal in order to avoid the tax hell that Spain and the most of the EU countries have became. As as know, the German equivalent are moving to Dubai (Switzerland is no longer safe since that scandal with the leaked CD / DVD with information of German clients 😁). You can save a huge difference in taxes if you are willing to move to those "tax haven" countries.
I agree. I really like living here in Finland (although the weather is terrible for most of the year) so moving to another country for tax reasons is not an option.
There might be tax advantages if you invest through company but I haven’t done the research yet. Maybe a fellow Finn could enlighten us? 😊
EagleOxy, good point!
So in the end of your lives what do you get to give to your kid ? There is any of the stocks left or this way is calculated for the parents to just make it to the end with relativy safety ? But the kid gets nothing. No house. No stocks. No car.
If that is the case it is like the WEF plan ?" You will own nothing and you will be happy "
What do you think? We set up an ETF savings plan a month after our daughter was born and we're planning to leave her enough to never have to worry financially. No idea why you're so negative 😐
Please, do leave your email, so I can email you privately. Thank you!
Sure, send me an email here: p2pinvesting.eu/contact