I discovered this forum a few months back and have read quite a big chunk of it. I really appreciate the quality of content and the overall sympathy that prevails on this forum. Now it is time to introduce myself and contribute a bit from time to time. I am in my late twenties, live in a rural area in the French part of Switzerland and work in Bern (meaning a long trip by train twice a week and home-office also twice a week. I currently work 80% but will maybe increase to 90% as I could do it on 4 days only and keep one day off per week. We’ll see. I began seriously working two years ago and investing six months ago or so.
I am currently married and we don’t have children. My annual net income is about 66k CHF, for my wife it usually fluctuates between 50k and 60k (let’s say 55k on average). I don’t plan to retire really early but I don’t want to accumulate CHF on a 0% interest rate account… Plus I have always been interested in the stock market (I have an economics degree), and played a bit with options a few years back (was not always a good strategy). Now I want an investment strategy and stick to it !
On the personal side, I like to go road cycling in my free time and I also have some bees which need a bit of attention I share the beehives with a relative who wants to quit (due to his age), so it could be a (small) side hustle in the future. Not sure that the hourly rate would be very high but I take it more as a hobby !
On the financial side, my wife and I share a common account where our two salaries go. Each month, we both take 35% back from what we “contributed” and send it on our own bank account. Our budget is the following :
Income : 9275 CHF
Savings : 3245 CHF
Taxes : 1400 CHF
Rent : 1250 CHF (not too bad for a 3-bedrooms 90m2 with garden, parking space etc.)
Groceries : 1000 CHF
Health insurances : 600 CHF
Car : 300 CHF
Train : 300 CHF (annual AG for me + various tickets)
Restaurants, etc : 400 CHF
IT, phones, Serafe : 130 CHF
Clothes : 60 CHF
Electricity : 60 CHF
Household insurance : 30 CHF
Cash reserve for unexpected expenses : 500 CHF
I am sure we will be able to increase our 35% “return” rate to at least 40% in the next few months, when our cash reserve will be sufficiently high.
My wife does not care at all about FIRE etc. but has always known the value of money so she puts a large part of her 35% on a saving account each month. What I do each month with these 35% (1775 CHF) is the following :
200 CHF : various personal expenses
500 CHF : VT
500 CHF : saving account
275 CHF : classic 3a bank (0.1% interest rate)
300 CHF : finpension - Globale 100
Next year I’ll be able to drop the contribution on the saving account and put 1000 CHF in VT. I am keeping a small contribution on the 3a bank account in case of a future house buy, but that could change. Prices aroud here are quite low (500k for a small villa with few renovation costs).
My question would be : should I get rid of the 0.1% 3a account and transfer it on finpension to maximize growth (There is 15k on this account) ? The answer (yes) seems easy to find, but I am afraid that we then will postpone our RE buying wishes. Solution would be to take on 2nd pillar + savings.
Thank you for your answers and other advices Best regards
I migrated my classic BCGE 3a pilar with the standard letter given by Viac and the new iban to wire the money.
BCGE took 100.- by 3a and closed it. They did not even call me.
Why would investing it postpone your RE buying wish?
Regarding buying RE, strictly financially it is in most cases better to rent with the current mortgage rates. I’d calculate it in more detail. Of course, buying a house has many other aspects (positive like being your own boss and negative like locked in the same place for many years) than just the financials, which sometimes can not be translated to a number and are also very subjectove. You need to decide for yourself whether this aspects are worth it or not.
Thank you for your answers. Regarding timing of RE buy, let’s say we want to be able to buy something in 5 years, what is invested on the stock market is very likely to need a longer time frame to be profitable. Hence the money invested should not be taken into account as downpayment, but only what we have on our bank account and 2n pillar. Another option could be to pledge this invested money, so that it stays on the market ? What is your opinion on that ?
Regarding renting vs buying, I totally agree with your statement. But hidden in our wish to buy our own property is also a financial thought. Where we live the RE prices are being quite low in comparison to other regions, which is due to the relatively high distance from Swiss cities. But in the neighbouring regions, prices have started to increase lately. Hence buying something here could be interesting if prices go up in the future. Unfortunately we don’t have a crystal ball and it could well be that prices stay at the same level… Nevertheless I think I’ll move these 3a funds to finpension.
In response to @FunnyDjo : yes indeed, the procedure is quite simple. Apparently, my bank only charges 25 CHF for that. They offered me their own investment solutions but as you can guess, their fees are touching the sky.
That’s generally only possible if your funds are at the same bank that gives you the mortgage and then you’ll often get products with sky high fees. However, VIAC recently started to offer mortgages as well and the have very competitive 3a products with low fees.
Personally I share the opinion that if you have concrete plans of withdrawing your 3a assets within several year’s time, then keeping part of them in cash is a good move. When you invest, you should look at terms of at least 5 years (historically, Swiss stock indexes have grown over almost all 5-year periods, but you get many 3-year terms with losses).
By keeping just part of your assets invested, you still take advantage of possible growth in the stock market. But your risk of loss (and your opportunity for gain) are halved accordingly.
In the event that the stock market is down when the time comes to get a mortgage, pledging 3a stock investments as collateral for a mortgatge would generally be preferrable to selling them at a loss (assuming your loss would be greater than the possible difference in mortgage costs).
Depending on wealth tax rates in you canton, indirect amortization may be favorable in any case, but that depends on your specific situation.
Sound advice, and in case of 3a in stocks wouldn’t this make sense only if the pledge is with the same institution?
Let’s say he moves to finpension, by the time he wants to pledge he would need to transfer the 3a to the bank (or VIAC) and that would trigger a sale at a potential loss, and rebuy-ing the bank’s funds.
In short, either invest and mortgage with VIAC or keep in cash for later use, or brave the risk and invest now with the hope of positive returns.
PS.: RE had a massive run in Switzerland in some cantons, more than the upside return of such an investment I would consider the other side of the coin, i.e. in case you want to plant roots there what would happen to your affordability calculation when prices increase. Obviously it could always go the other way very fast as well…
Except for the risk of an upswing in the short uninvested time, it doesn’t matter whether the transfer happens when you’re in the red. Assuming the investment strategy is close enough between the two 3a providers. See also Forced to be out of the market for 1 week / solutions?
Thank you all for your advices. I see the issue when pledging the money invested in 3a. It makes sense after all that the bank only accept funds that you invested in their 3a products when it comes to pledge it for a mortgage.
I think I will go with that Daniel said and more or less pursue my strategy, that is half on finpension, half on classic bank 3a. As he said, future potential losses and gains are halved. Doing so we may have enough to get our hands on something in a few years, if prices don’t go up too much !
It is important to differentiate between one-off pledges, and indirect amortization.
You can make one-off pledges of pillar 3a assets held in any retirement foundation towards, say, your down payment or to amortize part of your mortgage. It’s very unlikely that a lender would refuse, because your assets are held in escrow by a retirement foundation, so there is no risk of assets not being paid out. However, the risk posed by having 3a assets invested rather than in a savings account may put some lenders off.
Indirect amortization is more complicated, because it involves making ongoing, continuous pledges with each deposit into your pillar 3a. The ongoing admin involved is the reason why banks generally require you to have both your pillar 3a and mortgage with them.
Assets at Finpension, for example, can be pledged without any issue, but indirect amortization is only possible if you find a bank that’s willing to work with them. Viac’s partnership with WIR Bank means you can use indirect amortization with that bank. I haven’t heard back from ZKB, but I’m certain that Frankly can be used for indirect amortization of ZKB mortgages.
In any case, I would recommend investing just part of your assets if you plan a withdrawal in under 5 years.
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
I share the beehives with a relative who wants to quit (due to his age), so it could be a (small) side hustle in the future. Not sure that the hourly rate would be very high but I take it more as a hobby !