Hello everyone,
I’m new here and I would really appreciate your advice and the chance to share your good ideas
For a reason that is not important for our topic, I find myself with 100k in my account from a mortgage at a fixed rate of 1.18% that I have to repay in 9 years.
I am self-employed with a rather tight financial situation. I don’t have the capacity to take too many risks with this loan. What would you do in my place with this sum? The idea is that it earns more than the due interest. I live in Switzerland, I have an IB account, and my level of knowledge in investment is not glorious.
The safest solution I found was a Raiffeisen fund with guaranteed capital, but with a yield of 1.7%, which is already good. Since inflation does not concern me, I also thought about bonds (to take advantage of the decrease in interest rates). However, I wouldn’t know what to buy or where to buy them, and government debts are not reassuring at the moment. In short, I am a bit lost, and before committing for 9 years, I would like to have your opinion.
Thanks in advance for your help.
PS: Bonus question, I noticed that many posts mentioned the ETF VT, but I invested in VOO. Should I change?
Do you need that money to stay liquid? 9 year term medium term notes can yield up to 2.4% but are locked for their term. Savings accounts can yield up to 1.55% but will be subject to interest rate risk on the 9 year duration.
Edit: Also, for a mortgage repayment, if you are elligible for it and are not yet maxing your 3a contributions, putting the money there could be a good option. Either a bond fund (most of those that are proposed are medium term, so you’d be set for a few years, then would need to start managing duration in 2-3 years), a cash savings account or some low equity solution (I like VIAC’s Account Plus with 5% stocks for no management fee).
Depending on your age and pension situation, one thing to consider is paying it into your pension with the idea of having it grow tax free, getting a deduction against income tax and then withdrawing in 9 years time to pay off the mortgage.
I think you’re talking only about 3a (as an independant) but in case you are considering building and drawing from a potential 2nd pillar, restrictions apply when doing so after 50 years of age (max what you had at 50 or half what you have when you make the withdrawal).
The 2nd pillar seems a very good idea. I will explore this possibility. Thank you for your advice, it’s nice to share ideas.
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I also thought about bonds (to take advantage of the decrease in interest rates). However, I wouldn’t know what to buy or where to buy them, and government debts are not reassuring at the moment. In short, I am a bit lost, and before committing for 9 years, I would like to have your opinion.