This is based on the idea that your personal situation does not change throughout your life as an investor. This is rarely the case in reality.
Some people get married, others divorce, and others lose their spouse. Personally, I am fully satisfied with my current choices, but I also need to consider my new situation and the fact that my partner is much less comfortable with technology and digitalization than I am. In this case, I need to weigh the costs against the ease of use and the administrative procedures required to retrieve the invested amounts from a foreign broker in the event of death (a kind of extreme and definitive example, but you get the idea ).
Yes, sorry for that. I naturally deduced to use IBKR when you mentioned sticking to a broker with minimum fees, even though it wasn’t explicitly mentioned in my previous post. Sorry for the confusion and thanks again for your insightful response .
I notice that there is a certain limit between simplification and extreme optimization, often related to the decision of whether or not to accept higher fees.
I also believe when someone is starting to build wealth, they tend to overthink about costs. But as Portfolio grows, other elements come into play
security
familiarity
peace of mind , etc
So I don’t think one need to stick to IBKR for rest of their lives. It’s cheap and effective but it’s foreign. At some point it starts weighing in on people
I mean you could always buy on IBKR and transfer shares every few years to SQ and pay the CHF 200 p.a. to sleep better (crossposting to the mattress thread? )
First of all, the guy is trying to promote his book, so he is probably biased. Also PE often cites the IRR metric, which will always sound better than complete returns. The lower risk argument is also questionable, since assets are just valued much less regularly. Could do the same by hiring a wealth manager and only call him once a year to find out how my portfolio is doing.
Here is a PE return overview taken from the Financial Times.
PE portfolios are heavily US weighted, so an appropriate benchmark is the S&P500 and not an MSCI World. 5y & 10y returns for S&P500 are 13.2% p.a. and 12.4% p.a. respectively (don’t have longer return periods at hand). So yes, PE has better returns, but I’ll take a wild guess and attribute this to leverage.
FT mentions a recent paper discussing PE returns and its beneficiaries: “Phalippou, whom Institutional Investor has dubbed “the bête noire of private equity”, published an incendiary paper titled An Inconvenient Fact: Private Equity Returns & The Billionaire Factory. As you might expect from the title it pulls zero punches, calculating that the only people to do well out of it (on average) are the private equity tycoons themselves.”
There is increasingly more talk about “democratisation” for people with less capital (1m+ to 20m) and access for retail investors. What makes people think that they will get the good deals & funds? They are probably just taking on assets from institutional investors that want to exit for a reason, or assets that are performing badly.
An example is Swissquotes unicorn AMC index, look at the index components and ask yourself why they are available to retail investors, maybe because the high valuations of the past are not there where they used to be?
In addition to the economic advantages for building up wealth, the investment solution now offers you the option of transferring your pension assets to free assets at finpension when you retire. If you wish, you can even create a desavings plan there.
Does this mean that one doesn’t cash out the 3A securities, but instead transfers them? And one second later cashes out with zero capital gains tax and plugs the cash into whichever fund is their favourite? Edit: sounds a bit like a loophole considering the tax deductions one enjoys with the 3A over years, and the cantonal tax on cashing out a 3A (even SZ’s).
Wondering if there’s a case of all eggs in one basket, though.
That sounds promising, but I assume it is not what I understood when reading it the first time: since 3a is using index funds, and their invest solution is using ETF only, you still need to liquidate all funds, and transfer cash only. That then would not be a big advantage for us. Securities transfer would be nice, but I assume this will not be possible.
I am pretty sure that now they mean “selling everything in the 3a portfolio and adding these funds to the taxable portfolio and buying according to the strategy”.
The funds that are for pension funds only have to be sold absolutely, there is no other way. Other funds can be in principle transferred from 3a to the taxable portfolio. I heard that UBS does it with their shitty funds.
Then, theoretically, funds from a 3a portfolio which are for qualified investors but not for pension funds specifically, can be transferred to a taxable portfolio. IF finpension offer them for the taxable portfolios and I guess either have to establish some type of agreement with the fund management company or you should be eligible for a qualified investor status and/or something else.
Anyway, I don’t see much of the added value to pay an asset management fee for investing in the same ETFs as with any other broker. I would hope that finpension will start offering low cost institutional funds for taxable portfolios.
Well of course (also agree with @Burningstone), but the way it’s written “transferring your pension assets” can be interpreted verbatim and may well be interpreted verbatim by autistic people like me
If they mean that then I don’t see any benefit other than more eggs in the same basket. The reason I chose FP was exactly the fact they offer institutional mutual funds which can’t be obtained elsewhere.
Hold your horses. Finpension will first need to proof that their free Investment offer will still be around in 2-3 years. I would not be that sure about this. Most robo advisors start, and close their offices soon again. FP does not do what was required to successfully attract money inflows.
And some don’t close offices, such as Selma, but they just charge way higher fees from the beginning.
If I were using a Robo-Advisor, I would definitely take the currently best one. Even if it might possibly not exist in X years anymore (though I think it will).
Robo advisor customers don‘t take the best advisor - they take what they THINK was the best. Unfortunately, robo advisor customers don‘t really know what was the best (otherwise they wouldnt use robo advisors any more). Conclusion, they go for Big Names, Marketing and referrals.
Finpension doesnt invest in Marketing (like VIAC or Frankly do). They further don‘t have the long built up reputation that Truewealth got as a first mover. Plus, the can’t build up much reputation as thay among laymen simply don‘t exist. Average people know VIAC and Frankly from their 3rd pillar and they will probably use the VIAC Free Investments (once launched) as the already trust the brand. Finpension however has a fairly different customer base in their 3a solution (people that either know what the are doing and hence don‘t buy robo advisors and/or are executives with an 1e solution or material Freizügigkeit). These customers will give FP some Robo Volumes but I doubt they will exceed 200-300 M over the next 2-3 years. Their break even was however probably at about 500M plus. So yes, I don‘t think that the FP robo will survive.
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