Short-term investment and 3rd pillard advices : buying a house in 3-5 years

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Hi 'yall !

I already posted my same story on the french part of the forum, but since most of the users are on the English-speaking part, I decided to post it as well and hopefully get the advices I desperately need to start on my journey to financial optimization.

So I’m in my 30, was reading the blog from time to time since last year. I recently bought @_MP 's book which I loved.

The idea
I’m in a relationship, but not married yet. We obviously plan on long-term, and are willing to buy an appartment/house in the next 4-5 years (in Geneva regions, or Vaud, depending on the evolution of the market …)

The details
5 years ago, I finished university and started working. By that time a financial adviser explained to me that a 3rd pillard would be the great opportunity to lower my taxes. So obviously I followed his advice and oppened a 3rd pillar … in an insurance … with life-insurance policy of course (I really did everything wrong, I know, I know …). It’s called Swiss Life FlexSave Duo, in which I give 250 CHF/month, the rest I put … in a banking pillar (I know, I know …).

The question
Looking at the short period of time, what would you recommend me to do ?

Clear as soon as possible the insurance 3rd pillar I’m in and invest it in VIAC ? But mostly in obligations, to insure the minimum of risk since we’re talking about a 3-5 year investment period ?

In the same time I’d like to start investing some of my money in ETFs.

But I have to admit I don’t exactly know how I should handle all the variables.

Any clues ?

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Bonjour! Two suggestions for you to consider:

  1. Before you invest in ETFs of stocks (the generic long term strategy), ask yourself if you would be OK delaying your purchase by up to a decade in case of a market downturn. If not, maybe this is not the appropriate risk level for you.
  2. Consider making voluntary contributions to your second pillar. If I recall correctly, these can be deducted from your taxes and invested to buy your main residence three years later.

Good luck!

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I know this is not your question but you mention “depending on evolution of the market”. Are you 100% certain to buy in 5 years?

I live in Geneva area and I know many people who say the same thing and keep large amounts of cash at the bank, but never buy.

Prices are high relative to rents and taxes are unfavourable (especially in Geneva) which makes it difficult to add up and people don’t make the jump

Of course the emotional aspect of owning your own home is another matter

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Thank you for your answers .

Obviously we’re not in a rush and could delay buying for a few years (some variables are still pending : location of stable job position, realestate opportunities, …)

Yes you can indeed pay for years of 2nd pillar, which are totally deducted from taxes, are blocked for three years.

I also heard one can use his 2nd pillard as a guarantee and that makes it possible to lower the funds you put in to 10% (instead of the 20%).

In a more general question, I fail to see how I should organize my savings :

  • Build up general fortune and keep it in the bank
  • Put some of the monthly savings into buying ETFs (especially because I heard that next year we won’t be able to invest in US-based ETFs if they don’t provide à KIID document (in all the languages of countries member of EU …)
5

Let’s stick to fact and not continue to propagate unfunded rumors. (That one is even worse than the usual priips fud :grinning:).

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Well that’s what I read here, but again, I have trully no idea if its true or no. Probably no one really knows, you’re right :wink:

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It doesn’t mention anything about providing KIID in all EU languages (which is definitely not a thing for the Swiss implementation, e.g. English KIID only is fine).

Also I don’t think the author really grasps the regulation besides a very superficial level (I don’t either but at least I know it’s not as simple, e.g. the deadline for a lot of it is much earlier than 2022 which is the reason UBS dropped US ETFs back in the fall last year).

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You might consider making small, fixed amount per month investments out of your salary into the stock market (Dollar Cost Averaging).

It does not eliminate the risk that stocks may crash but if you have no fixed date when to buy perhaps it is a good idea. It would reduce the risk of buying at the peak of the stock market and if the stock market crashes whilst you are accumulating you are actually happy because you buy more shares when prices are down

If you keep 100k in the bank the average opportunity cost vs. stocks based on history is 6-7k per year (but with volatility)

This is my opinion and not financial advice. You need to make your own research take a decision based on your tolerance to risk which may be different to mine.

This is a minor detail. It is solvable by selling ETFs and buying alternatives, if necessary

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