FIRE: Pillars 2 & 3

Or as a separate asset class by itself. I have run an analysis of my 2nd pillar returns (there is one data point per year, so not many of them) according to this template:

And here are the results: CAGR 2.85%, arithmetic rate of return 2.86%, annualized volatility 1.1%, correlation coefficient with MSCI ACWI IMI in CHF 0.9!

If one thinks about it, it actually makes lots of sense that the returns of the 2nd pillar are strongly correlated with stocks market returns. It is not relevant that the 2nd pillar returns are always positive, even if the stocks market return are negative. What it says is that the 2nd pillar return tends to be higher than average if the stocks market return is higher than average.

So not a bond and not a good diversifier. 2nd pillar decreases volatility of your wealth, but it is not going to provide you with more than average return when the stocks market returns are bad.

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