once again, looking for Forum’s wisdom to deal with my current situation. After some months of garden leave, I am now officially unemployed, which means I have been able to transfer my second pillar vested benefits into Finpension and I am now able to invest them as I want (with the broad limits of Finpension/second pillar). We are talking about roughly 200k, out of a total family NW of 1.8M. Now the question is, what is the right allocation of this money?
I expect to be unemployed (thus, the funds to be invested in whichever way I choose) 6-12 months.
Of course, things could change one way or another, I may land a great opportunity earlier and decide to take it, or it could be that it just takes me longer to find something I like. So second pillar will not drive my employment situation, obviously it will be the other way around. I am quite certain it is not going to be less than 6 months, as per my wish unless a once-in-a-lifetime opportunity pops up and I’m not able to negotiate a delayed start.
So, no certainty in investment horizon for these funds, just a rough estimate of how long I can have them invested before having to transfer them to my new employer pension fund.
The precise moment markets are right now (with the Iran-Israel-US war just unfolding) means there may be significant buy opportunities (not yet, we’re not even -5% from ATH).
The rest of our NW is almost exclusively equities, broadly diversified (VT-like).
My proposed approach would be to keep my 2nd pillar as my home bias (as it was while employed), sort of defensive. 40% SMI, 40% CH small&mid caps, 20% gold. Questions:
General thoughts on plan.
How much would you wait the SMI to fall from ATH to trigger the investment? I know this is timing the market, but it is what I need to do here, as I can’t just buy and hold forever.
Does gold make sense? My rationale is sort of “non-correlated” equities, in case things go south and equities are tanking when I’m forced to sell/transfer my 2nd pillar.
Bonus question: once you start a new employment, I know I need to transfer all my vested benefits (I don’t plan on “forgetting” a second portfolio). However, is there a deadline? Can I just “wait” 3-6 months to transfer them from joining? This would give me some little flexibility to choose the exact moment to sell.
Thank you all for your thoughts!
PS: I would like to stress once again how useful the forum is and thank every member for their valuable inputs.
For 6-12 months I would just keep it in cash personally (or at least high cash proportion).
If you get gifted money that you ‘need’ 6-12 months down the line (i.e. lock it into a pension fund with limited upwards potential), you normally also wouldn’t throw it into the market unless you have a high risk appetite, no?
My humble opinion: 6 months is far too short for any kind of investment other than cash.
Again, my opinion: this is already priced in. I still expect a (smaller) crash from the overhyped AI investments, not from war activity.
I don’t see how this was possible. You don’t have any control over your investments in your 2nd pillar (unless you’re 1e). I’m quite certain your pension fund invests world wide.
Depends on your future pension fund. I don’t think there any deadline given by the current laws.
There’s one other option worth mentioning: While you are unemployed, you can (voluntarily) use a pension plan from the Substitute Occupational Benefits Institution.
Why this could make sense:
Fixed income, and the interest rate is higher than the current interest rates of vested benefits accounts.
You can continue to contribute to your pillar 2 and claim tax deductions.
Well, the investment horizon and risk appetite is different. The pension fund has extremely long investment horizon and low risk appetite, as they are just required, in the worst case, to provide (ensure) small returns. I have a shorter horizon in this situation and bigger risk appetite.
I knew about the Substitute pension fund, but I didn’t consider it because it only provides low interest rate (even if higher than alternatives). However, I wasn’t aware of the possibility of continuing to contribute while unemployed and claim tax deductions if using this alternative. How does this possibility work? What are the maximum amounts? Are they considered buy-ins or regular contributions? This could be a game changer for me.
The plan is called WO20. It comes in two versions:
Pension fund for old age benefits plus risk insurance (disability, death). If you use this plan, you can get an exemption from the pillar 2 risk insurance that is obligatory for unemployment benefits recipients.
Pension fund with old age benefits only.
Both let you contribute to your pillar 2 old-age benefits. You also have the option of buy-ins as with any other pension fund.
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