Gettin' Rich in Poland

[IceMajor]

Hi! I've recently discovered the blog of MMM and found it very interesting to the point that I've already made some small habits a thing (cycling everywhere, no eating out, not buying coffee or other snacks in machines, etc.). I now really consider to pursue this big time, but I'm a huge noob that still needs to educate himself on a lot of basics.

As you may have already figured it out, I'm Polish. I've also just started studying outside my hometown city. I've never had any particular interest in economics - investments especially.

Mr. Money Mustache said lotsa times that you can make early retirement happen not only in US, Canada or Australia, but also in plenty of Europe countries as well. Thus, the question arises: could Poland be considered one? I don't see a reason why not, but does investing here work pretty much the same way? I really would like to avoid leaving Poland (I may move to different cities here, though) at all costs and achieve the goal here. What's your take on this? I'd be really grateful if you taught my stupid self a little bit.

[reeshau]

Welcome to the community!

Whatever you find you can and cannot do, you have taken the first step: to know there are alternative from what the advertising says and what your friends do.  You will be better off because it, no matter what.

There are a lot of blogs about FIRE in Europe.  They can help you understand investing options.

I did find at least one example for you, with a quick Google search:

https://www.millennial-revolution.com/build/reaching-financial-independence-in-poland/

[IceMajor]

Thanks for the welcoming words and the answer, of course!

I've read this post (and will seek more like these) and have had difficulty reading it. I've close-to-zero experience with taxes, investing, stuff like that and had trouble basically understanding the meaning of some of the sentences. For example, I have no fucking idea what was written there,

The tax structure is convenient for the wealthy unemployed. Property tax for each of our rentals is about $30 per year (less than 1 month’s electric bill!). Income tax on the rental income is 8.5%! Meanwhile capital gains is 19%. There is no property capital gains in terms of a flip if 5 years have passed since the purchase, OR if you put the money from the sale towards another residential property within 3 years.

I know I'm lacking a TON of essential knowledge on this and do need some kind of Economics 101. Do you happen to know a good book or two that I could read? Maybe a guide, a course?

More on the post itself: I don't know how to feel about this (one of the reasons is mentioned above). Sounded quite alright, but there was some critique in the comments section and I had questions myself. For example, the Polish person interviewed in the article gets a lot of her income through rental. She doesn't invest much in stocks. Good, but why? Why is rental more affordable? Because of current situation - okay. Wouldn't investing in stocks be a safer option as it would give you a more or less steady income in the long term with no risk? While the situation of landlords is currently awesome in Poland, it will change someday in the future. Just my uneducated thought.

[reeshau]

I'm sure there probably are books.  But anything related to taxes is country-specific, so they are probably in Polish.  So I won't know them.  If you have a college bookstore, you can probably find tax textbooks.  They will probably be the driest reading you have ever done, but those are the primary sources foe that information.

Have you looked for any meetups or other interest groups in your area?  I don't see any ChooseFI meet up groups in Poland.  The closest I see are in Germany.

Some Chautaqua conferences have been held in Europe.  That's a spendy way to start, but could put you in touch with people, if no one is local.


https://www.fichautauqua.com/

You could also hunt down contact info for the interviewee, and introduce yourself to them.  Many FI people, even "famous" people (worthy of interviewing) are very personable and approachable.

[Dicey]

Paging @2Birds1Stone.

[Shane]

Welcome to the forums, IceMajor.

Perhaps, this blog post by Jim Collins might help?

Investing with Vanguard for Europeans: 2020 update


Good luck with your FIRE journey!

[lemanfan]

Welcome to the FIRE movement!

I know I'm lacking a TON of essential knowledge on this and do need some kind of Economics 101. Do you happen to know a good book or two that I could read? Maybe a guide, a course?

The beauty of the modern world is that most things are available online, for free.  And some more things for very low fees.  As I'm not Polish but Swedish (and our countries went separate ways when we sacked Sigismund / Zygmunt back in 1599) I don't have very much polish-specific information to give... but general searches from my neck of the woods would include:

- Coursera:  https://www.coursera.org/search?query=personal%20finance&  (most can be taken free).  US focused, but many terms are applicable in also over here even if the details differ.

- Youtube: search for "personal finance" or "taxes" and "tutorial" in your own language. Or in English for that matter.

- If you do use Facebook, Instagram or Twitter, there are often groups for this interest.  "Fintwitter" is apparently really big in Sweden at least.

Also, for stuff like taxes, I actually learned a lot in my own country by actually reading the informational material from the tax authorities and tried to understand every field in the tax declarations that I do annually.  They don't tell you the tricks to lower the tax, but you get the terminology so you can understand other articles.

As for books... sorry, most of what I read are either quite old or in Swedish. Hope this helps a little bit.  :)

[NorthernIkigai]

Welcome IceMajor! As a fellow European Mustachian, I would still recommend that you read this blog and all kinds of other sources you find interesting (JL Collins is great).

A lot of the stuff about how to think about spending, saving, and investing is still the same here as in the US, although the legal, tax, and market details are different. Don’t read in order to find “the right answer”, because there isn’t one. Read to learn the general idea behind it, and then start looking at how things work in practice in Poland. Try googling things like “financial independence” or “early retirement” or simply “investing” in Polish, and read read read. I’m sure there are also discussion boards in Polish, if not on this topic then at least on investing.

I invested for years just as a hobby and as a place to put my extra money, before even starting to consider actual financial independence or early retirement. But by that time I’d learned what I needed about investing and taxes. Financial independence is just what happens once you’ve saved and invested enough money, and early retirement is an option you have once you’re financially independent.

[IceMajor]

@reeshau
Right. Books on taxes. Whew, that'll be fun! I'll keep that in mind.

On groups - no I haven't poked around mainly because what would a guy like me do?! History of one vacation job, not a lot of knowledge. Though, now that I think of it, it may be worth searching for a group (on Facebook, for example) and just examine the conversations and try to get useful information (esp. on investing!).

It's good idea to get in touch with someone that's financially independent. I'll look around the Internet and search for Polish blogs on FI. Hopefully, there'll be something for me :)

@Shane
Just read the article. My takeaway (though, again, I have not understood everything) is that in Europe investing is much more complicated than in US. Though, it's possible to achieve similar benefits. I wonder, what's up with the currencies (Poland: złoty, Vanguard: dollars). Need to do some research on that.

Plus, thanks for the link. Looks decent, I saved it and will read through it in the next weeks.

Hallå, @lemanfan !
I do have Facebook and I'll try to look for such a group. Course on YouTube also sounds like worth giving it a try.

I actually learned a lot in my own country by actually reading the informational material from the tax authorities and tried to understand every field in the tax declarations that I do annually.

Sorry, I don't quite understand. What kind of informational material?

@NorthernIkigai
Spending and saving is pretty... intuitive? I mean, it works more or less the same here, right. You earn money (as you do in US) and you spend money in shops, on rent, etc. (also as in US). It's pretty straightforward.

However, the world of investing seems like a dark matter to me. It's not something that I was taught, it's not something my parents did, it's not something common and talked about in public, basically. Thus, I have no knowledge on how it works (contrary to the saving and earning).

I'm aware that I need to expand my knowledge here and the advice of "read, read, read" seems like a perfect one. And that is my focus for the upcoming weeks.

[lemanfan]

Hallå, @lemanfan !
I do have Facebook and I'll try to look for such a group. Course on YouTube also sounds like worth giving it a try.

I actually learned a lot in my own country by actually reading the informational material from the tax authorities and tried to understand every field in the tax declarations that I do annually.

Sorry, I don't quite understand. What kind of informational material?

At least in my country there is a bunch of PDFs on the tax office web site for e.g. how you are taxed on e.g. selling investments and stuff like that. 

[NorthernIkigai]

What I meant with “how to think about saving and spending” is because that’s been what I’ve learned most here on MMM: That many people spend on stuff because they just haven’t realised there is another way. Quite often, either Mr Money Mustache or someone here on the board has an idea of how to do something for free or very cheaply, or do some alternative thing instead, instead of simply doing into a shop like a “normal” person would. And the Shockingly Simple Math post on the blog is there to remind us why even tiny choices matter.

Investing shouldn’t be any more complicated in Poland than it is the US. The only problem is that so much of the information out there on investing (both online and in book form) is geared towards US investors, so some details (products available, taxes, state or other pensions) are slightly different.

The general rules for investing remain the same: keep it simple and preferably automatic (so you don’t have to make a lot of choices and maybe end up not investing), don’t invest in something you don’t understand, be careful not to pay too high fees, think about how much risk you want to take and don’t over- or underestimate that, and diversify into different sectors and geographical areas as well as across time.

You should have similar products available to you in Poland as the Americans do: index funds, ETFs, and shares (and of course real estate).

[IceMajor]

@lemanfan

Right! Got it, many thanks.

@NorthernIkigai

What I meant with “how to think about saving and spending” is because that’s been what I’ve learned most here on MMM: That many people spend on stuff because they just haven’t realised there is another way. Quite often, either Mr Money Mustache or someone here on the board has an idea of how to do something for free or very cheaply, or do some alternative thing instead, instead of simply doing into a shop like a “normal” person would. And the Shockingly Simple Math post on the blog is there to remind us why even tiny choices matter.

Yeah, I got you. That's what I meant as well, just have not ranted enough about it ;)

The general rules for investing remain the same

Hopefully!

think about how much risk you want to take and don’t over- or underestimate that

Preferrably none? I want to have as steady and safe income from the invested money as possible.

[NorthernIkigai]

@NorthernIkigai

The general rules for investing remain the same

Hopefully!

Yup, they do! If you want, you can even decide to invest like an American (well, like some Americans) and only invest in American shares. Not that this is a particularly smart thing to do, but considering the global reach of American companies, it would at least give you a better diversification than investing in only Polish companies. (People tend to have a home market bias, they feel safer owning companies they feel they “know”.)

think about how much risk you want to take and don’t over- or underestimate that

Preferrably none? I want to have as steady and safe income from the invested money as possible.

Yeah, nah, you need to embrace risk to be able to reap rewards. That’s the interesting bit: to get to know yourself and find out what works for you. I enjoy volatility now, because I know that’s the price I pay for gains. I hope I can still feel as philosophical about it when I’m FIRE and relying on my stash… (and if I can’t, I have miscalculated my risk tolerance).

[2Birds1Stone]

Thanks for the batsignal @Dicey

OP, this is the best FIRE resource I've seen over the years for people aiming for FIRE in Poland.

https://inwestomat.eu/

The author also has a good amount of podcast interviews that you may enjoy. Check youtube and google.

[IceMajor]

@NorthernIkigai

I thought, given what I've read on the MMM blog, investing should be close-to-none risk. I don't want to, you know, lose my savings due to not having a good nose for investing. I want to keep it as low-risk as possible.

@2Birds1Stone

Hi, thanks for the link. I think I know on what I'm going to be spending my free time in the next weeks!

But: how can you claim it's a useful resource?

[reeshau]

@NorthernIkigai

I thought, given what I've read on the MMM blog, investing should be close-to-none risk. I don't want to, you know, lose my savings due to not having a good nose for investing. I want to keep it as low-risk as possible.

It is!  The trick is your time frame.  Over 20 to 30 years, it is very low risk.  Or rather, the types of risks that might happen (i.e. world wars) wouldn't matter what resources you have.  And your investing career is longer than that:  even when you retire, you hopefully have *another* 20 to 30 years to invest and grow.  (or more, if you FIRE)    The difficulty is to always have this timeframe in mind, rather than the noise of what happened today / this week / this month.

[lutorm]

I thought, given what I've read on the MMM blog, investing should be close-to-none risk. I don't want to, you know, lose my savings due to not having a good nose for investing. I want to keep it as low-risk as possible.

As they write in prospectuses, "all investing carries risk". If you aren't willing to risk losing money, you should put your money in a bank (which actually isn't risk-free either, because right now you'll watch your money disappear to inflation.)

The trick is knowing what risk you're willing to accept. Generally, there's a correlation between average returns and variance, meaning methods for making more money on average are also more likely to go up and down more, even if they on average, over long time periods, generally go up more. Sometimes that long period may be very long, and it's also possible that one of the dips will take your money to zero and you're out of the game. If you invest in a single company, this is far too likely to put all your money in it.

However, if you a) only invest in broad based index funds, so you own thousands of companies, and b) invest over a timescale of decades, you are very likely to get a decent return. It will still go up and down, but the likelihood of being lower after 10-20 years than you started with is very low. The likelihood of losing all your money is also probably about the same as the likelihood of WW3 (... which may not be unlikely enough for our tastes right now.)

But what you should absolutely not do is invest in stocks if you need the money to be available in a year or two. That becomes very risky. Investing is a long game.

[IceMajor]

@reeshau

Yes, that's what I meant. I know it's difficult to hope for big success within a year or five, but in the long run (>10 years) I want to have a surplus that enables me to be retired forever.

@lutorm

So, my takeaway would be: the risk is the time frame. It's high, when we talk about short-term investments; it's low, when we talk about long-term, broad investments. I was confused earlier cause' whenever I say investing, I mean long-term investing and I want it to be relatively low-risk :)

Plus, sorry for my lack of knowledge, but that's why stocks are usually preferred over bonds? Because when inflation happens, the stocks are usually more or less unaffected due to them going along with it, while bonds stay the same?