1.What is a 3rd pillar and why is it important?
Can you live on 60% of your wages?
This is roughly the amount that we will receive from AHV and the pension fund when we retire. For many of us, that's not enough.
For this reason, there is the option of making private provisions on a 3rd pillar (also known as Pillar 3a). The state even supports your savings. Up to the maximum amount of CHF 6,883 you can deduct all payments from your taxable income.
The restriction for this tax reduction is that you cannot simply withdraw the money before retirement. Purchase of residential property and self-employment are among the few exceptions.
2. What should I look for in a 3rd pillar
provider?
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All 3rd pillars are tax-privileged, so that alone is not a unique selling point of a provider - but everyone likes to advertise with it. 😉
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But pay attention to the costs*, since you will be investing for a long time, these are particularly relevant. The costs for modern providers are less than 0.5% of the managed assets. However, traditional providers can charge up to 3x more, i.e. 1.5%
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Help determine your investment strategy. There is no "best" strategy here. Only one that is suitable for you. In principle, however, it is worth investing a little aggressively at a young age. Fluctuations in value are easier to bear with a long investment horizon.
*Pay attention to the total costs, also known as TER. You are always interested in the administration and product costs. Rule of thumb: If the costs are not transparent, they are often too high.
3. When should you start with my 3rd pillar?
As soon as possible! The earlier you start, the stronger the compound interest effect works in your favor.
Assume a return of 5% - someone who invests 35 years has almost twice as much as someone who invests 25 years 😱
You don't have to pay in the maximum amount of CHF 6,883 per year (569.- per month), but start small and save regularly. The best way to do this is with a standing order, so that saving becomes a habit.
Don't forget your partner. If you have an earned income, you should pay into the 3rd pillar.
... so go ahead, open 3rd pillar account, set up a standing order #getitdone 👍
Your navigator through the family jungle
When is it a good time to invest?
Yes, markets fluctuate, and 2022 in particular was not a good year for many investors - regardless of whether they invested in equities or bonds. "Market timing" is a strategy that cannot be recommended. Various studies have shown that this strategy is purely a matter of luck - if one does not have an information advantage.
To avoid "market timing", it is worthwhile to invest regularly. This gives you an average good investment timing, and that's good. As an investor, it is best to invest monthly or quarterly over a long period of time, regardless of whether the market is rising or falling right now. Sounds boring, but brings on average the best results.
Are there bad pillars 3a?
Basically no, but there are savings models where your needs are not necessarily at the centre. As already mentioned, the earlier you invest the better. If you then choose a provider with moderate to low costs, Great!
However, we advise you to be careful if a pillar 3a is combined with an insurance (life insurance). The high costs of the insurance are often hidden by a lower investment return.
