Czech, 23, FIRE, investment suggestions welcome!

For investors outside the US. Personal investments, personal finance, investing news and theory.
Sister forums: Canada, Spain (en español)
---------------
Post Reply
Topic Author
Ikarases
Posts: 7
Joined: Fri Apr 02, 2021 12:18 pm
Location: Czech Republic

Czech, 23, FIRE, investment suggestions welcome!

Post by Ikarases »

Country of Residence: Czech Republic

International Lifestyle: None as of yet. My job is fully remote at this time though, asI teach English part-time while studying at the uni.

Currency: EUR (1€ = 25 CZK for simplicity)

Income: 600€ (I expect this to be higher once I will be able to work full-time)

Expenses: 400€, broken up into:
food - 110€
student dormitory rent - 130€
mutual funds - 60€ (I'm about to terminate this, because the fees aren't worth it and I can do better with index funds)
other (car - diesel + insurance, health insurance, quality of life) - 100€

Total funds: 11k€ (I suppose 1,5k€ in emergency fund?)

Debt: 0

Age: 23

Investment plan:

Saving for FI/RE. Ready to drop the 9k€ instantly and then add 100€ every month. There are no big planned game-changers in sight for me at the moment and if there are, I plan to update this thread ASAP.

An eventual game-changer might be living/inheriting the flat after my grandma. Though I'll want my own place to live at some point, I can't conceivably calculate with this in mind.

Proposed Asset allocation:

I got the following advice from my post on r/eupersonalfinance and r/EuropeFIRE, though I only got replies from three guys (was hoping for a bigger discussion) and I'd rather double check this.

Broker - Degiro (custody account), choose a free (accumulating) ETF from the list, specifically IWDA - 87% and IEMA/EMIM - 13%. Good things about VWCE too, but it costs a bit more on broker fees.

_______________________________________________________________
Questions:

1. What are your opinions on the proposed ETFs? Are you in the same ones? Why yes/why not?

2. If there's anything else that I should be aware of or a piece of advice that you think would be helpful in my financial (and perhaps personal) life?



Thank you for your insights!
mrekvy491
Posts: 43
Joined: Wed Jul 29, 2020 10:43 am

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by mrekvy491 »

Congratulations on starting your investment at such an early age!

It seems like you got, or are going to get some capital from your family which will be a great help. I will try to answer your questions as I am also a Czech resident.


1. What are your opinions on the proposed ETFs? Are you in the same ones? Why yes/why not?

IWDA/EMIM seems to be the perfect choice. At Degiro, you don't even need commission. I don't think you need bond yet as you are young and just starting. Besides, bond will onld add the currency risk.

2. If there's anything else that I should be aware of or a piece of advice that you think would be helpful in my financial (and perhaps personal) life?

A1. It may help to clarify your situation with the inheritance of the flat. Will you get to live there at a lower-than-the-market-price rent, or will you inherit it fully? How much is the marke tprice? Is it DV or OV? Is it in Prague? How big is it? Will you need to pay inheritance tax?

This should be cleared first, because it will change how much you will need in CZK for the real estate you will need for your living. And you will need to assess whether it will be enough for your family, if you plan to get married and have kids. If the flat you will inherit could cover most of the housing costs, you can aggresively invest in IWDA/EMIM and have no bonds.

A2. Czech tax system is good for people with multiple jobs. You main full time employment will cover the social securities part, so you will lose around 30% per month including the 15% income tax. But your part time job will only take 15% if your job pays you less then 10k per month. So in theory, you can reduce the risk of losing income fully by having more jobs (diversification) while increasing the net income better. I am not sure how much this will cost you in terms of pensions, but I think it will be much better not to pay for the pension and have the equivalent amount in equities in the long run. At least you are not at the mercy of the politicians and pension reforms.

60k CZK full time job (Above average/median income in Prague)
Net: ~42k CZK

45k CZK full time job (Average/median income in Prague)
10k CZK part time job 1
10k CZK part time job 2
Net: ~48.5k CZK

When you are starting your investment and career, absolute amount of income matter way more than the yield from investment. So it is more benefitial to focus more on increasing the abosulte amount of income and put everything on equities and real estate, rather than thinking too much about AA. If you have jobs that require skills that do not overlap, you can hedge the risk of unemployment, and have an open path to a career change.

A3. You may want to look into pension savings plan (Edit : Doplňkové penzijní spoření) You can get quite a high interest rate although the absolute amount you can save is quite low. But it always helps to add a government sponsored benefit that is in something in CZK.

A4. If the flat from your grandmother is big, you may want sell it and get two small flats. One small recidence for you or your future family, and the other one for investment. Having one investment property possibly with a mortgage helps a lot, because it is inflation/currency hedge investment that will balance the FX volatility of your equity portfolio. Of course, this will depend on the value of the real estate in the future.


I hope this helps, and good luck to you!
Topic Author
Ikarases
Posts: 7
Joined: Fri Apr 02, 2021 12:18 pm
Location: Czech Republic

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Ikarases »

Hello!
mrekvy491 wrote: Sat Apr 03, 2021 4:47 am Congratulations on starting your investment at such an early age!

It seems like you got, or are going to get some capital from your family which will be a great help. I will try to answer your questions as I am also a Czech resident.
Investing (in some form or another) has always been on my mind and it always felt that the least I can do is to not spend money on frivolous things and to stash it away. I'm happy that you found this thread, because every country is different in terms of government regulations, pension plans and whatnot, so writing with a fellow Czech resident is a great help!
mrekvy491 wrote: Sat Apr 03, 2021 4:47 amIWDA/EMIM seems to be the perfect choice. At Degiro, you don't even need commission. I don't think you need bond yet as you are young and just starting. Besides, bond will onld add the currency risk.
I was reading about a lot younger folks simply going full equity and it seems to make sense in my eyes as well.

I have more things that popped to my mind regarding this:

There are two types of accounts at Degiro - Basic (that borrows the equity to third parties) and Custody (that doesn't borrow the equity), though it is a bit more expensive on dividend and coupon processing. I decided to go with Custody, as I don't expect to be paid any dividends soon (let alone ones of considerable value) and have no plans as of yet to go into any other instrument than ETF. I rather have the returns reinvest themselves with the accumulating funds (and both IWDA and EMIM are accumulating). Is my logic here correct or have I missed something?

I have a part of my funds in ISK, because I worked in Iceland two years ago and decided to keep the money there and not touch it unless I'd need it. However, Degiro says it will only accept payments in CZK (and in EUR for existing clients) and convert the investments to EUR. I guess it makes the most sense to covert my ISK to EUR, so I don't need to convert the money twice.
mrekvy491 wrote: Sat Apr 03, 2021 4:47 am A1. It may help to clarify your situation with the inheritance of the flat. Will you get to live there at a lower-than-the-market-price rent, or will you inherit it fully? How much is the market price? Is it DV or OV? Is it in Prague? How big is it? Will you need to pay inheritance tax?

This should be cleared first, because it will change how much you will need in CZK for the real estate you will need for your living. And you will need to assess whether it will be enough for your family, if you plan to get married and have kids. If the flat you will inherit could cover most of the housing costs, you can aggresively invest in IWDA/EMIM and have no bonds.

A4. If the flat from your grandmother is big, you may want sell it and get two small flats. One small recidence for you or your future family, and the other one for investment. Having one investment property possibly with a mortgage helps a lot, because it is inflation/currency hedge investment that will balance the FX volatility of your equity portfolio. Of course, this will depend on the value of the real estate in the future.
The situation is that my grandma has two sons - my father and my uncle. My father and my mom have their own (no mortgage) house in Ostrava. My uncle moved to Bohemia/Prague years ago, so while should inherit a part of it, there's no practical utility for him to want anything else than cash payout, as he has his own mortgage on a house. My brother is currently renting a flat, but he expressed no desire to live in the flat after grandma, plus his long-term GF lives in a house with her mom.

It's a 3+1 flat, OV, in Ostrava. My grandma pays 150-200€ for the services (so only a few dozen % increase over my current rent), as it's her own flat. Zero idea about the inheritance tax. The estimated value is north of 80k€ (found an online calculator), though I don't know how big it is exactly (assuming 90m^2). If it was a flat in Prague, my whole family would be able to retire already, haha.

That leaves me in the equation. I have plans to move in at some point, get one of the rooms for myself and rent the other two rooms. I have to discuss this with my family members in more depth though, as only my grandma is fully aware of this from my own conversations with her.
mrekvy491 wrote: Sat Apr 03, 2021 4:47 amA2. Czech tax system is good for people with multiple jobs. You main full time employment will cover the social securities part, so you will lose around 30% per month including the 15% income tax. But your part time job will only take 15% if your job pays you less then 10k per month. So in theory, you can reduce the risk of losing income fully by having more jobs (diversification). I am not sure how much this will cost you in terms of pensions, but I think it will be much better not to pay for the pension and have the equivalent amount in equities in the long run. At least you are not at the mercy of the politicians and pension reforms.

60k CZK full time job (Above average/median income in Prague)
Net: ~42k CZK

45k CZK full time job (Average/median income in Prague)
10k CZK part time job 1
10k CZK part time job 2
Net: ~48.5k CZK

When you are starting your investment and career, absolute amount of income matter way more than the yield from investment. So it is more benefitial to focus more on increasing the abosulte amount of income and put everything on equities and real estate, rather than thinking too much about AA. If you have jobs that require skills that do not overlap, you can hedge the risk of unemployment, and have an open path to a career change.
On a good note, I am a student/self-employed (OSVČ) at the same time. That means I dodge social security (I'd need to earn around 220k CZK per year - 9k€), my health security is taken care of by state due to my student status and my income tax is zero too. I dodged any/all taxes in 2020, except the 2.5% I needed to pay on health insurance. This should be the situation for the next 2-3 years, as I'm gonna do my masters, granted my finals go well at the end of May.

My current part-time job is English lecturing. Online classes boomed for me starting November. I get paid 12€/hour and I keep all of it minus the 2.5% on HI. I made over around 900€ for about 80 hours of work in March, doing something that comes naturally to me while earning money for it. It's a pretty sweet deal.

One thing to keep in mind is that it's not a 100% steady income, so that's why I put 600€ in my income. I likely have to find something for the summer or live off of my reserve, because I suspect a part of the courses will not be running and I will have to cover the fluctuations in some way.
mrekvy491 wrote: Sat Apr 03, 2021 4:47 amA3. You may want to look into pension savings plan (penzijni pripojisteni) You can get quite a high interest rate although the absolute amount you can save is quite low. But it always helps to add a government sponsored benefit that is in something in CZK.
The main issue here is that while the state sponsored benefit is nice, I can't get to it before I am 60 (according to Wiki). If I had a hefty employer benefit (or was about to retire/retired), I'd consider it (looking at the calculator), but at this point in my life it seems that my money would be better used somewhere else.
mrekvy491 wrote: Sat Apr 03, 2021 4:47 amI hope this helps, and good luck to you!
Thanks for the insights and the contribution! The discussion helps me to scrutinize my future plans.
Laurizas
Posts: 230
Joined: Mon Dec 31, 2018 4:44 am
Location: Lithuania

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Laurizas »

Ikarases wrote: Fri Apr 02, 2021 1:55 pm I got the following advice from my post on r/eupersonalfinance and r/EuropeFIRE, though I only got replies from three guys (was hoping for a bigger discussion) and I'd rather double check this.
I guess the rest 300 or 3000 just agreed with these 3 guys:)
Ikarases wrote: Fri Apr 02, 2021 1:55 pm 1. What are your opinions on the proposed ETFs? Are you in the same ones? Why yes/why not?
They are good. They should form the core of your portfolio or even all portfolio.
Ikarases wrote: Fri Apr 02, 2021 1:55 pm 2. If there's anything else that I should be aware of or a piece of advice that you think would be helpful in my financial (and perhaps personal) life?

Save more and follow Bogleheads® investment philosophy https://www.bogleheads.org/wiki/Boglehe ... philosophy
Topic Author
Ikarases
Posts: 7
Joined: Fri Apr 02, 2021 12:18 pm
Location: Czech Republic

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Ikarases »

Hi!
Laurizas wrote: Sun Apr 04, 2021 1:02 am I guess the rest 300 or 3000 just agreed with these 3 guys:)

Haha, possibly!
Laurizas wrote: Sun Apr 04, 2021 1:02 am They are good. They should form the core of your portfolio or even all portfolio.

I found also this free Degiro ETF iShares Core MSCI Europe UCITS ETF EUR (Acc). I'm thinking of adding it too, because it has an even lower TER and increases the EU exposure.

If I go 80/20 IWDA/EMIM, I basically have 50% of all my investment in the US. Is that too much? How did you deal with this in your own portfolio? I think I trust the EU and China (as the two other biggest global players besides US) more, but I could also be completely wrong relying on my gut!
Laurizas wrote: Sun Apr 04, 2021 1:02 am Save more and follow Bogleheads® investment philosophy https://www.bogleheads.org/wiki/Boglehe ... philosophy
I'm already on both of them! Thanks for the reply to keep the discussion going!
Topic Author
Ikarases
Posts: 7
Joined: Fri Apr 02, 2021 12:18 pm
Location: Czech Republic

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Ikarases »

An update on the flat situation: The market price is roughly 100k€ and the rent/services 200€. It's DV, with my grandma owning the share equaling the price of the flat. My brother doesn't want to live in it.

I think it would be a good idea for me to live in it in the future, however I'm unsure how would I muster the resources to buy out the share of my uncle and my father who are obviously the first to inherit. I need to further discuss the topic with my family to get more details about this situation.

I've also researched a bit more into ETFs composition (that are free on Degiro) and I'm gonna "pull the trigger" tomorrow using this composition:

60% - iShares Core MSCI World UCITS ETF USD (Acc) - TER 0.20% - IE00B4K48X80
20% - iShares Core MSCI Europe UCITS ETF EUR (Acc) - TER 0.12% - IE00B4L5Y983
20% - iShares MSCI EM UCITS ETF (Acc) - TER 0.18% - IE00B4L5YC18

I've decided to increase the EM and EU exposure. In total, this leaves my allocation with roughly 40% in the US, 25% in the EU and 7% in China. Further suggestions are welcome, thanks for all the help!
Laurizas
Posts: 230
Joined: Mon Dec 31, 2018 4:44 am
Location: Lithuania

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Laurizas »

Ikarases wrote: Sun Apr 04, 2021 5:20 am If I go 80/20 IWDA/EMIM, I basically have 50% of all my investment in the US. Is that too much? How did you deal with this in your own portfolio? I think I trust the EU and China (as the two other biggest global players besides US) more, but I could also be completely wrong relying on my gut!
So do not rely on your gut:) Rely on other people's decisions because the stock market is a reflection of all buy and sell decisions and majority of them are done by people way smarter and knowledgable then you.
Laurizas
Posts: 230
Joined: Mon Dec 31, 2018 4:44 am
Location: Lithuania

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Laurizas »

Ikarases wrote: Mon Apr 05, 2021 10:49 am 60% - iShares Core MSCI World UCITS ETF USD (Acc) - TER 0.20% - IE00B4K48X80
20% - iShares Core MSCI Europe UCITS ETF EUR (Acc) - TER 0.12% - IE00B4L5Y983
20% - iShares MSCI EM UCITS ETF (Acc) - TER 0.18% - IE00B4L5YC18

I've decided to increase the EM and EU exposure. In total, this leaves my allocation with roughly 40% in the US, 25% in the EU and 7% in China. Further suggestions are welcome, thanks for all the help!
It is a deviation from the total stock market portfolio, so you are making a bet that Europe and EM will do better in the future. Think about it from this perspective: your job, real estate and future pension are already connected with Europe and you want to have even more exposure to it?
Topic Author
Ikarases
Posts: 7
Joined: Fri Apr 02, 2021 12:18 pm
Location: Czech Republic

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Ikarases »

Laurizas wrote: Wed Apr 07, 2021 3:33 am So do not rely on your gut:) Rely on other people's decisions because the stock market is a reflection of all buy and sell decisions and majority of them are done by people way smarter and knowledgable then you.
Laurizas wrote: Wed Apr 07, 2021 3:38 amIt is a deviation from the total stock market portfolio, so you are making a bet that Europe and EM will do better in the future. Think about it from this perspective: your job, real estate and future pension are already connected with Europe and you want to have even more exposure to it?
The line about EU exposure made me think. It's true I already get paid in the EU, so I am "fed" by it and exposed to it. Today I already bought the IWDA with the first part of my available funds, but I will not go into the EU funds. The average market return is good enough for me. Thanks for the food for thought.
mrekvy491
Posts: 43
Joined: Wed Jul 29, 2020 10:43 am

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by mrekvy491 »

Ikarases wrote: Sat Apr 03, 2021 3:01 pm There are two types of accounts at Degiro - Basic (that borrows the equity to third parties) and Custody (that doesn't borrow the equity), though it is a bit more expensive on dividend and coupon processing. I decided to go with Custody, as I don't expect to be paid any dividends soon (let alone ones of considerable value) and have no plans as of yet to go into any other instrument than ETF. I rather have the returns reinvest themselves with the accumulating funds (and both IWDA and EMIM are accumulating). Is my logic here correct or have I missed something?
I think it makes perfect sense if you use accumulating ETFs only.
Ikarases wrote: Sat Apr 03, 2021 3:01 pmThe situation is that my grandma has two sons - my father and my uncle. My father and my mom have their own (no mortgage) house in Ostrava. My uncle moved to Bohemia/Prague years ago, so while should inherit a part of it, there's no practical utility for him to want anything else than cash payout, as he has his own mortgage on a house. My brother is currently renting a flat, but he expressed no desire to live in the flat after grandma, plus his long-term GF lives in a house with her mom.

It's a 3+1 flat, OV, in Ostrava. My grandma pays 150-200€ for the services (so only a few dozen % increase over my current rent), as it's her own flat. Zero idea about the inheritance tax. The estimated value is north of 80k€ (found an online calculator), though I don't know how big it is exactly (assuming 90m^2). If it was a flat in Prague, my whole family would be able to retire already, haha.

That leaves me in the equation. I have plans to move in at some point, get one of the rooms for myself and rent the other two rooms. I have to discuss this with my family members in more depth though, as only my grandma is fully aware of this from my own conversations with her.
I agree that renting out the rooms while you live there is a good idea. Great for accumulating.

But it may be helpful to count strcitly your share of the equity in the long term. Even if your brother does not want to live there, he will eventually want his share of the flat in some way. So I would think it would be better to consider your share of the equity as 20k€. I am not sure if that would be enough for your own primary residence in Ostrava as I do not know the area that well. But I believe it will at least be enough for a downpayment of a relatively small flat (2+kk/1+kk), which is good. You may still need to get a mortgage at some point, but you can focus on building up the investment portfolio without worrying too much about the CZK currency risk.

Also, DV flats are traded on a discount of ~10%, you may want to know about the coop's financial status or possibility of conversion to OV. That can increase the equity and liquidity. And some DVs have weird restrictions set during the 90s (like some attics that can never be converted to OV - For some flats physical ownership is not possible, as it is simply added on onto a right to 'occupy' the attic space etc.) so you may want to look into this. The best scenario would be that it has an undeveloped attic space that can be developed, brining in revenues for the reconstruction / addition of new amenities etc. We live in a DV flat with such an attic, and it is going through a development possibly giving the coop members some sort of small 'windfalls' as well as conversion to OV. Ther could be such an upside in the long run.

Ikarases wrote: Sat Apr 03, 2021 3:01 pm On a good note, I am a student/self-employed (OSVČ) at the same time. That means I dodge social security (I'd need to earn around 220k CZK per year - 9k€), my health security is taken care of by state due to my student status and my income tax is zero too. I dodged any/all taxes in 2020, except the 2.5% I needed to pay on health insurance. This should be the situation for the next 2-3 years, as I'm gonna do my masters, granted my finals go well at the end of May.

My current part-time job is English lecturing. Online classes boomed for me starting November. I get paid 12€/hour and I keep all of it minus the 2.5% on HI. I made over around 900€ for about 80 hours of work in March, doing something that comes naturally to me while earning money for it. It's a pretty sweet deal.
I agree that is a sweet deal. Keeping the teaching job running is a good option. However, the benefit will go away when you graduate, and you will have to pay some sort of tuition if the graduation is delayed (although this is temporarily waivered due to COVID). So you may want to do projections based on the assumption that the social security portion will be taken away in near future. I am sure you will be increasing your income to compensate that, but it is good to be conservative when making long term projections.

However, being able to invest while you are in school is a great start. You are well positioned to start accumulating aggresively.
Ikarases wrote: Sat Apr 03, 2021 3:01 pm The main issue here is that while the state sponsored benefit is nice, I can't get to it before I am 60 (according to Wiki). If I had a hefty employer benefit (or was about to retire/retired), I'd consider it (looking at the calculator), but at this point in my life it seems that my money would be better used somewhere else.
I heard from my wife that you can actually terminate the deal at some point. I am not so sure as we did not look deep into the terms, but it may be worth it to check the terms. Maybe your bank can offer you some deals.
Siaigi
Posts: 80
Joined: Sun May 17, 2020 4:24 am
Location: Italy

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Siaigi »

First of all, congratulations on already having a financial plan at your age and in your condition.

If I were you, I would probably aim, at first, only to buy IWDA to save on any purchase commissions.

Furthermore, month after month I would try to increase the emergency fund, in such a way as to have small sums on yourself in order to qualify yourself even better in the world of work and to be able to start on the right foot as soon as you have the job you want.

I am thinking of an 80% IWDA / 20% cash ratio
Topic Author
Ikarases
Posts: 7
Joined: Fri Apr 02, 2021 12:18 pm
Location: Czech Republic

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Ikarases »

mrekvy491 wrote: Thu Apr 08, 2021 9:35 amI think it makes perfect sense if you use accumulating ETFs only.
Awesome, I was thinking that would be the case from the numerous resources I've been reading recently, saying the same thing.
mrekvy491 wrote: Thu Apr 08, 2021 9:35 amI agree that renting out the rooms while you live there is a good idea. Great for accumulating.
My father was skeptical towards that concept, but I think nobody can know until they try. If I was already living there, I would give it a go for sure!
mrekvy491 wrote: Thu Apr 08, 2021 9:35 amBut it may be helpful to count strcitly your share of the equity in the long term. Even if your brother does not want to live there, he will eventually want his share of the flat in some way. So I would think it would be better to consider your share of the equity as 20k€. I am not sure if that would be enough for your own primary residence in Ostrava as I do not know the area that well. But I believe it will at least be enough for a downpayment of a relatively small flat (2+kk/1+kk), which is good. You may still need to get a mortgage at some point, but you can focus on building up the investment portfolio without worrying too much about the CZK currency risk.
I think the 20k€ is enough for a needed 20%-30% down-payment for a 2+kk or smaller to get a reasonable interest on the mortgage. We'll see what the future holds.
mrekvy491 wrote: Thu Apr 08, 2021 9:35 amAlso, DV flats are traded on a discount of ~10%, you may want to know about the coop's financial status or possibility of conversion to OV. That can increase the equity and liquidity. And some DVs have weird restrictions set during the 90s (like some attics that can never be converted to OV - For some flats physical ownership is not possible, as it is simply added on onto a right to 'occupy' the attic space etc.) so you may want to look into this. The best scenario would be that it has an undeveloped attic space that can be developed, brining in revenues for the reconstruction / addition of new amenities etc. We live in a DV flat with such an attic, and it is going through a development possibly giving the coop members some sort of small 'windfalls' as well as conversion to OV. Ther could be such an upside in the long run.
I'll get informed on that. I know there are some attics in the block of flats, but that's where my knowledge ends.
mrekvy491 wrote: Thu Apr 08, 2021 9:35 amI agree that is a sweet deal. Keeping the teaching job running is a good option. However, the benefit will go away when you graduate, and you will have to pay some sort of tuition if the graduation is delayed (although this is temporarily waivered due to COVID). So you may want to do projections based on the assumption that the social security portion will be taken away in near future. I am sure you will be increasing your income to compensate that, but it is good to be conservative when making long term projections.

However, being able to invest while you are in school is a great start. You are well positioned to start accumulating aggresively.
I'm aware the benefit will go away after I turn 26 and I'll have to start paying social security/taxes, regardless if I'm still studying or not. In CZ, one can study bachelor for free/without tuition fee for four years and masters for three years, which adds up to potentially +2 years of studying in total.

Even then, the taxes for OSVČ/self-employed are not a killer. The calculator says that if a person makes 18k€ a year (which I believe is nearly double the value most people make in CZ - the modus, not the median), the SS + HI + income tax equal to roughly 8.5% of the income, with the 60% expense flat rate (paušální výdaje).
mrekvy491 wrote: Thu Apr 08, 2021 9:35 am I heard from my wife that you can actually terminate the deal at some point. I am not so sure as we did not look deep into the terms, but it may be worth it to check the terms. Maybe your bank can offer you some deals.
I looked into it more and all the sites say I need to be 60 to get the full package. If I cash it in before 60, I'll lose all the state support, my yields from the profits will get taxed etc. I guess it could be more interesting if I got some pension plan offer from my employer (if I ever have one again), but so far I believe my funding is going to be more efficient somewhere else.

Thanks for the message!
Topic Author
Ikarases
Posts: 7
Joined: Fri Apr 02, 2021 12:18 pm
Location: Czech Republic

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by Ikarases »

Siaigi wrote: Fri Apr 09, 2021 1:58 am First of all, congratulations on already having a financial plan at your age and in your condition.
Thank you! I'm still thinking I could've gotten the courage earlier though, haha.
Siaigi wrote: Fri Apr 09, 2021 1:58 amIf I were you, I would probably aim, at first, only to buy IWDA to save on any purchase commissions.
Yes, this is exactly what I did.
Siaigi wrote: Fri Apr 09, 2021 1:58 amIFurthermore, month after month I would try to increase the emergency fund, in such a way as to have small sums on yourself in order to qualify yourself even better in the world of work and to be able to start on the right foot as soon as you have the job you want.

I am thinking of an 80% IWDA / 20% cash ratio
I'm gonna keep 2k€ (roughly 5 months of my expenses) in reserve on my savings account; money I'll hopefully never have to touch. There are ways to lower my expenses and stretch my money further (going back to live with my parents, selling the car), but again, hopefully it won't come to that.

I feel fairly confident regarding my current job position and I like what I do. I currently have 2 companies I work with, roughly 30/70 time split and 20 hours total. I'm also in contact with another company that would pay me less (some 85% of the wage I have with the first two), but if I needed the work badly (both for the money and to keep me sane), I'd likely go for it.
zerex
Posts: 8
Joined: Fri Jul 24, 2020 9:24 am

Re: Czech, 23, FIRE, investment suggestions welcome!

Post by zerex »

Hello,

Just wanted to share what I am doing, by no means giving advice though, since I also created a topic here to ask for help and I have been staying the course ever since I got help from here which was amazing.

Personally I am only investing in VWCE ( IE00BK5BQT80 ) in Trading212, with no fees at all, I deposit in Euros and buy it in Euros, this ETF seemed like the best one and it is very simple to invest in, every month I just buy 1 share and leave it, since I am making the exact amount you are a month this is what I can afford to invest for now.

And when it comes to taxes VWCE is definitely the best ETF for me, since it is also accumulating and I really don't have to do anything else, but invest and let it be, there is a dividend tax that is paid internally though, but when it is time to withdraw I won't have to pay any taxes on my profit, so I am not exactly sure if that's how it would work for your country .

Personally I don't think the 0.22% fee is that high for VWCE, when I keep in mind that there is no other fee that I am paying other than that one and the dividend tax that is paid internally, and I like the philosophy of just keeping it simple and staying the course - get my paycheck, buy a share, forget about it until my next paycheck, buy, forget and repeat.

I think it is very good that you are investing at this age, personally I am 21 and have been investing for a year now and we are doing our future self a huge favor starting this young.
100% VWCE (IE00BK5BQT80)
Post Reply