Thank you for your thoughts, it made me think about the matter too.
So, let’s assume I’m oppening up one 3a-account at Viac (Global 100) and keep paying max. amounts each year. Is it then not the case that the compound interest of one account outweighs the massive tax at age 65?
To my knowledge the compound interest is working really great, if sums keep getting bigger over a long time.
On a sort of “normal” 3a account with 0.3% interest I definitely agree with your idea, since there won’t be much compounded interest but still massive taxes. So opening up multiple accounts is wise, but with Global 100 I am not to sure about it.
Please let me know what you think about this - thank you!
Read my post again, you got it the other way around.
If you don’t invest it and there is 0% interest, then you can just pay the maximum for 6 years in the 1st account and then open up a 2nd etc. Because there is no interest, all 5 accounts will have the exact same balance in 30 years. So no point in splitting it up from the beginning. But if you invest it, compounding will lead to a very uneven distribution of your 3a accounts.
You need to understand this: Investing 1k/month into a single account will lead to the same compounding effect as investing 0.2k/month into 5 seperate accounts. So you don’t lose anything with splitting it up.
I have a related question: if my 3a is invested as I have it with VIAC Global 100, is it better to pay every month the small amount of around 580 CHF or is it better to pay the full amount beginning of the each year? I guess the latter but I’d like to be sure as January 2021 is soon arriving
Let’s try this perspective: It’s January 2021 and you have 6.8k in your VIAC portfolio (already invested). Would you sell it and dollar cost average into it again over the next 12 months? Because in the end it’s exactly the same as splitting a lump sum into monthly investments. Cash is fungible! I would always look at it this way. You inherit 200k in cash for example. Now you might think “I don’t want to invest it all at once, might be a bad moment” and cost average it in the following 12 months. It’s the same thing as selling 200k VT (already invested) and reinvest it monthly the following 12 months. Nobody would do that, so why should we/you? That’s why “Invest it according to your desired asset allocation as soon as it’s available” is a great investment philosophy.
Either way, we don’t get our yearly salary all at once in January, so we are of course forced to invest what we save monthly. So that’s why I can’t pay the full amount in January and I have a standing order (max/12).
Thank you all for your answers. I was confused because I mixed up DCA with your typical end of month investment in your favorite ETF. But it all makes sense now because time in the market wins with a lump sump.
@yakari I checked bogleheads and this topic is largely discussed, my favorite post is definitively this one
So to sum up in January 2021 I will try to lump sum my 3a for the year but that’s not guaranteed because around that time of the year there are more than usual expenses and bills to pay…
I had 2x BCGE pillars moved to viac with custome strategy 2 years ago and open 3 new global 100 at Viac.
I have now an automatic monthly transfer to invest the same amount on all of them.
As my first 2 pillars got 30k chf additional to the latest 3, I am not sure if I should kept investing in the latest until I reach the same amount on all of them.
How do you keep yours in balance?
Stupid question: why would you open multiple 3a pillars and max them all out every year if only 5.628 chf is tax deductible?
What I mean is, if only 5.628 chf is tax deductible, why not invest the rest of the money into a global ETF which has a higher return than 3a pillars? Also, there is no capital gains tax in Switzerland when you sell this ETF in 20 years. What am I missing?
I have 5 (since this year). As there‘s a heavy swiss bias in the Viac Global IMHO it makes sense to put a lump sum into it at the start of the year (or have it invested by march) due to dividends in march/april from the big swiss corps.
What’s the reasoning?
I think the dividend payout date won’t make any difference. If you buy a stock just after dividend distribution the stock price should be lower by the same amount. And the dividends are automatically reinvested anyway.
Oh, so you are all putting 6883 ÷ 5 = 1376.60 chf in each of the 5 accounts? I get it now…
Is anybody married here? Nobody mentions their wives In Switzerland if you are married, you only file one combined tax return for both of you I learned. So does that mean that only 1x 6883 chf is tax deductible from your combined income or 2x 6883? In other words, should both me and my wife open five 3a accounts, so 10 accounts all together?
The current maximum of 6883 CHF per year is per person. So if you are married both of you can each contribute the maximum, so 13766 CHF in total. And yeah, both to 5 accounts, so 10 in total.
Nobody knows if this will make sense once you are able to withdraw them (law changes and everything), but better to have the option than not.
@Cortana what do you think for 2 people close in age as far as a withdraw plan goes? Since you have to take out the whole 3a each time, wouldn’t it be better to have say 2-3 accounts each and alternate years (thinking simplicity) or still better to take 5 each? Totally assumes health, marriage and laws are constant of course…probably easier to time the market but lets say I’m optimistic…
It really depends on the canton and age difference of both. Some cantons will tax 3a withdrawals individually and some will tax them combined (in most cases). Assuming you have both the same age and withdraw the 3a accounts in a canton with combined taxing, then there won’t be any benefit for having more than 5 in total. So you could withdraw them like him, her, him, her, him in 5 years.
But we don’t know how law will change and where you will end up living. So I would just stick to 5 each with the same amount (standing order splitted into 5).
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but lets say I’m optimistic…