That’s really cool. You’ve thought this through perfectly. I assume you’re not contributing to a statutory pension plan and are therefore handling everything yourself as part of your private retirement planning—that’s great! 👈
The portfolio will certainly run its course and continue to perform more than respectably. As an entrepreneur, however, it’s very important in this context to limit your personal liability risks arising from your business ventures. You’ve probably already done that—you mention a holding portfolio, so you likely already have a multi-tiered ownership structure where the subordinate LLCs limit liability, while you can funnel 2% (?) of the profits up to the holding company.
I’d be interested to know how you structure this holding portfolio and how you plan to organize future distributions to your personal accounts without being overly taxed.
The portfolio will certainly run its course and continue to perform more than respectably. As an entrepreneur, however, it’s very important in this context to limit your personal liability risks arising from your business ventures. You’ve probably already done that—you mention a holding portfolio, so you likely already have a multi-tiered ownership structure where the subordinate LLCs limit liability, while you can funnel 2% (?) of the profits up to the holding company.
I’d be interested to know how you structure this holding portfolio and how you plan to organize future distributions to your personal accounts without being overly taxed.
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@NichtRelevant That's correct; the operating companies were—are—and will always be limited liability companies (GmbHs).
The focus is on 1.) employee satisfaction, 2.) customer satisfaction, and 3.) profitability; the concept has proven quite profitable to date and is resilient in the long term.
Exactly—profits are then funneled upward at a tax rate of just under 1.5% and transferred to the holding company’s account.
Good question—the tax bill always catches up with you eventually, so I’m not focusing on that right now. I’m purely focused on growth and leveraging the “pre-tax effect” through more capital that can be put to work, plus a knack for picking individual stocks—that should yield good results in the future 😁
Alternatively, the money will be reinvested in new companies, real estate, or other things… let’s see 😇
The focus is on 1.) employee satisfaction, 2.) customer satisfaction, and 3.) profitability; the concept has proven quite profitable to date and is resilient in the long term.
Exactly—profits are then funneled upward at a tax rate of just under 1.5% and transferred to the holding company’s account.
Good question—the tax bill always catches up with you eventually, so I’m not focusing on that right now. I’m purely focused on growth and leveraging the “pre-tax effect” through more capital that can be put to work, plus a knack for picking individual stocks—that should yield good results in the future 😁
Alternatively, the money will be reinvested in new companies, real estate, or other things… let’s see 😇
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•@Meli94 Yes, using the holding company as a “piggy bank” does provide a tax deferral effect, which is definitely very beneficial.
A real estate investment made through the holding company certainly makes sense, since the tax burden on profits within the holding company can be reduced through depreciation.
However, when income is (later) distributed to the individual level, the tax authorities will indeed step in. Presumably, a managing director’s salary is the simplest option. Alternatively, you could first withdraw any private loans granted to the company (if any) tax-free and pay interest on them at the minimum permissible rate, so that only capital gains tax applies to this interest.
👉 Please keep us posted. I find the topic of holding companies very interesting, and unfortunately, it hasn’t been discussed much here in the forum so far. 😉
A real estate investment made through the holding company certainly makes sense, since the tax burden on profits within the holding company can be reduced through depreciation.
However, when income is (later) distributed to the individual level, the tax authorities will indeed step in. Presumably, a managing director’s salary is the simplest option. Alternatively, you could first withdraw any private loans granted to the company (if any) tax-free and pay interest on them at the minimum permissible rate, so that only capital gains tax applies to this interest.
👉 Please keep us posted. I find the topic of holding companies very interesting, and unfortunately, it hasn’t been discussed much here in the forum so far. 😉
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•@NichtRelevant That's right—real estate is actually still a bit of uncharted territory for me. Let's see what my 40s have in store for me. Until then, I'll keep building up my savings 😇
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•@Meli94 Your post kept me thinking a bit last night, since I do see a few parallels in my own life story. At 30, though, I wasn’t quite at the point where I had a holding company. 😅
I don’t want to say too much about the portfolio—I think you’re handling that very well on your own. Rather, I’d like to share a few “words of wisdom,” even if you might not need them either. (Note: The list might sound like a string of concerns, but I think you can put it into perspective.)
1) You’re in a different league than many of the other forum members here (This is just an observation, not a judgment). That’s not necessarily or primarily due to the size of your portfolio, but rather to the fact that you’re managing your retirement savings entirely on your own. For most people here, starting at age 65 or 68, their portfolio serves as a nice supplement to their statutory pension. For you, it will eventually have to cover all of your income needs. So you simply need a larger portfolio than other people, but of course you have the advantage that you don’t have to contribute to a failing pension system and, above all, you can make flexible contributions to your portfolio depending on your business activities.
Note: I actually don’t like to talk about retirement planning, since that sounds totally negative to me—namely, like something far off and associated with old age. “Financial independence” sounds much better, and in the end, it’s the same—or even better—for you, since you’ll hopefully be financially free well before the statutory retirement age and will also have much more flexibility with your private retirement plan.
2) I’ve written about liability before, but depending on your industry, it can fluctuate cyclically over the years. From my own experience (at least that’s how it was for me), you sometimes have the reflex to prop up a business that isn’t running at 100% after a few good years using your personal assets. This is where it gets dangerous if those assets are meant for your personal retirement savings. My advice in such cases would be to scale back a bit rather than pouring too much money back into the company. Even though it’s hard—I realize that (contrary to popular belief) you get attached to employees, especially if you’ve invested a lot of time and money in their training and, in a company with flat hierarchies, you also form personal bonds with them.
3) As a precaution, I would NOT view the company as part of my retirement plan—in other words, I would NOT count on substantial proceeds from a sale. Many owners expect enormous proceeds from selling their life’s work and are then totally disappointed when a sale doesn’t yield the projected amounts. I’d therefore rather plan on “0” and be happy if the sale brings in additional, previously unplanned funds. Putting the company in good hands and ensuring its continued existence would be more important to me than a high sale price (though, in your case, that’s still quite a while off).
4) With two companies and a holding company, you’ll have your hands full. Please don’t neglect your personal life—back “then,” I was almost constantly working and on the go. Looking back, I wish I’d spent more time with friends and family. I almost “missed out” on my kids, since my wife was also constantly working and living elsewhere. What I’m trying to say is: It’s important to take on responsibility, get things moving, and make them happen, but you shouldn’t be so disciplined that you completely forget about life.
I’ll send you a follow request—I’m curious to see how things go for you. 👈
I don’t want to say too much about the portfolio—I think you’re handling that very well on your own. Rather, I’d like to share a few “words of wisdom,” even if you might not need them either. (Note: The list might sound like a string of concerns, but I think you can put it into perspective.)
1) You’re in a different league than many of the other forum members here (This is just an observation, not a judgment). That’s not necessarily or primarily due to the size of your portfolio, but rather to the fact that you’re managing your retirement savings entirely on your own. For most people here, starting at age 65 or 68, their portfolio serves as a nice supplement to their statutory pension. For you, it will eventually have to cover all of your income needs. So you simply need a larger portfolio than other people, but of course you have the advantage that you don’t have to contribute to a failing pension system and, above all, you can make flexible contributions to your portfolio depending on your business activities.
Note: I actually don’t like to talk about retirement planning, since that sounds totally negative to me—namely, like something far off and associated with old age. “Financial independence” sounds much better, and in the end, it’s the same—or even better—for you, since you’ll hopefully be financially free well before the statutory retirement age and will also have much more flexibility with your private retirement plan.
2) I’ve written about liability before, but depending on your industry, it can fluctuate cyclically over the years. From my own experience (at least that’s how it was for me), you sometimes have the reflex to prop up a business that isn’t running at 100% after a few good years using your personal assets. This is where it gets dangerous if those assets are meant for your personal retirement savings. My advice in such cases would be to scale back a bit rather than pouring too much money back into the company. Even though it’s hard—I realize that (contrary to popular belief) you get attached to employees, especially if you’ve invested a lot of time and money in their training and, in a company with flat hierarchies, you also form personal bonds with them.
3) As a precaution, I would NOT view the company as part of my retirement plan—in other words, I would NOT count on substantial proceeds from a sale. Many owners expect enormous proceeds from selling their life’s work and are then totally disappointed when a sale doesn’t yield the projected amounts. I’d therefore rather plan on “0” and be happy if the sale brings in additional, previously unplanned funds. Putting the company in good hands and ensuring its continued existence would be more important to me than a high sale price (though, in your case, that’s still quite a while off).
4) With two companies and a holding company, you’ll have your hands full. Please don’t neglect your personal life—back “then,” I was almost constantly working and on the go. Looking back, I wish I’d spent more time with friends and family. I almost “missed out” on my kids, since my wife was also constantly working and living elsewhere. What I’m trying to say is: It’s important to take on responsibility, get things moving, and make them happen, but you shouldn’t be so disciplined that you completely forget about life.
I’ll send you a follow request—I’m curious to see how things go for you. 👈
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•Thanks for your message and your honest words, @NichtRelevant 🙏
It feels good to talk to someone who’s been down this path themselves. I’ve found myself agreeing with many of your points, though over the years I’ve set up my system with fairly strict separation
Financial freedom: I absolutely agree with you. That captures it much better than “retirement planning,” and it’s precisely this independence that’s the goal here.
Liability & Reserves: My personal savings are completely separate from the business. To ensure I don’t have to dip into my personal assets for salaries, licenses, or taxes in an emergency, I operate the companies using an account-based model with fixed buffers.
Sales Value: I actually plan mentally with a value of €0. Agencies have hardly any intrinsic value without the people behind them anyway. Since we’re completely bootstrapped, we could wind everything up cleanly in the worst-case scenario—I’ve actually done this before. The companies are currently liquid cash flow machines, not retirement assets. Following the credo, “Whoever plants something that bears no fruit is indulging in a misguided form of luxury,” they must continuously support themselves.
'Life-Business Balance': The pure “tunnel phase” only existed in the early days. Today, I have fixed working hours like a traditional employee, delegate a lot to the team, and plan 3–4 vacations a year. Weekends are reserved for family and friends.
In the end, everything has its time. And if, contrary to expectations, things do go wrong, I’ll just go back to a normal salaried job and resume making regular pension contributions :D
It feels good to talk to someone who’s been down this path themselves. I’ve found myself agreeing with many of your points, though over the years I’ve set up my system with fairly strict separation
Financial freedom: I absolutely agree with you. That captures it much better than “retirement planning,” and it’s precisely this independence that’s the goal here.
Liability & Reserves: My personal savings are completely separate from the business. To ensure I don’t have to dip into my personal assets for salaries, licenses, or taxes in an emergency, I operate the companies using an account-based model with fixed buffers.
Sales Value: I actually plan mentally with a value of €0. Agencies have hardly any intrinsic value without the people behind them anyway. Since we’re completely bootstrapped, we could wind everything up cleanly in the worst-case scenario—I’ve actually done this before. The companies are currently liquid cash flow machines, not retirement assets. Following the credo, “Whoever plants something that bears no fruit is indulging in a misguided form of luxury,” they must continuously support themselves.
'Life-Business Balance': The pure “tunnel phase” only existed in the early days. Today, I have fixed working hours like a traditional employee, delegate a lot to the team, and plan 3–4 vacations a year. Weekends are reserved for family and friends.
In the end, everything has its time. And if, contrary to expectations, things do go wrong, I’ll just go back to a normal salaried job and resume making regular pension contributions :D
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•@Meli94 Awesome! You’re clearly much further along and more organized than I was back then. I don’t think you’ll ever go back to being an employee—but I think you know that yourself. 😉
I wish you the best of luck! If you find the time, take a look into real estate. That could be another boost for you. It’s true that as a self-employed person, you always have a harder time with banks than an employee or civil servant, but in the long run, it’s worth it and it’s very easy to budget for.
Have a great rest of your Sunday! 😊
I wish you the best of luck! If you find the time, take a look into real estate. That could be another boost for you. It’s true that as a self-employed person, you always have a harder time with banks than an employee or civil servant, but in the long run, it’s worth it and it’s very easy to budget for.
Have a great rest of your Sunday! 😊
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@NichtRelevant I'll do that, thanks :)
As things stand now, I'm planning to look into real estate in my late 30s or early 40s... we'll see :)
As things stand now, I'm planning to look into real estate in my late 30s or early 40s... we'll see :)
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@NichtRelevant Just a quick note: There are quite a few people here in the app who are potential candidates for early retirement, for whom the GRV also plays virtually no role because the time span between leaving the workforce (whether as an employee or a self-employed person) and reaching retirement age is too long.
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@KevinE All the better. I’m happy for anyone who manages to reach the point early enough that they’re free to do whatever they want. The worst thing is having to drag yourself through a job you don’t like until you reach a predetermined retirement age.
Even if you don’t have to work anymore and you actually enjoy your job, it’s nice to have the option to quit at any time or do something else. 🙂
Even if you don’t have to work anymore and you actually enjoy your job, it’s nice to have the option to quit at any time or do something else. 🙂
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@NichtRelevant I feel the same way.
Fortunately, I generally like my job. It hasn’t always been that way—that’s what sparked my desire to make a change.
However, I still enjoy my free time more than my current job. I’ll see then whether I quit completely or look for something else (it’s hardly realistic to work part-time in my field).
I can’t say how it would be to be self-employed. I’ve thought about it often, but I haven’t come up with a business idea that would be lucrative for me.
Fortunately, I generally like my job. It hasn’t always been that way—that’s what sparked my desire to make a change.
However, I still enjoy my free time more than my current job. I’ll see then whether I quit completely or look for something else (it’s hardly realistic to work part-time in my field).
I can’t say how it would be to be self-employed. I’ve thought about it often, but I haven’t come up with a business idea that would be lucrative for me.
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