I need your help to find out what to do with my 3rd pillar.
I currently have a deposit on which I can take out a lombard loan.
My 2 options are as follows:
I take out a lombard loan now and invest it in the stock market. For the next 2 months, I will max out the 3rd pillar with my salary.
I contribute the next 2 months with my salary to the stock markets and in mid-December I take out a lombard loan to max out the 3rd pillar and invest the balance in the stock markets.
In both cases, my risk is under control, as the amount of the loan (initially around 50% of the value of the deposit) would represent around 4-6 months’ savings capacity. So I’ll soon be at a reasonable margin rate after 2-3 months of monthly contributions to my portfolio. I also have the possibility of quickly having CHF 4-5k to tide me over if the markets collapse.
The 2nd option gives me greater leverage.
The interest rate on the Lombard loan represents VT’s dividend payment, so I’m not taking any money out. In any case, the amounts remain derisory, so interest is easily paid.
What do you think? Is it worth taking on (more) leverage?
I can get a bit more leverage with the 2nd option because of the 2 extra months of salary (1 extra monthly capacity invested). But yeah pretty similar.
No market timing because in any case I keep investing every months. Just the timing of the loan which I don’t really care.
Seems you thought this through, already. What happens if you do option 3. and not take out a loan?
If it’s between 1. and 2. and with the info you provided, I’d toss a coin.
Because the money in my 3a can’t count for the Lombard loan.
If I have for exemple 10k and 5k in 3a I can borrow 5k (50% of my deposit)
If I have 15k in my deposit I can borrow 7,5k.
So bigger leverage and same amount of money initially invested (deposit + 3a)
Seems like you’re low on liquidity. On a general basis, I’m all for maxing 3a. Preserving liquidity if needed is one exception I’d draw.
If your assessment is to go though with this, I’d preserve liquidity as long as I can and take out the loan mid december, to have knowledge of the additional two months of market history when making the actual decision.
Edit:
A 50% loan withdrawn (the loan is 50% of the remaining assets) is a common maximum for margin loan allowance. If your plan is to start there, you’d likely need the market to go up the following days to avoid the need to deposit more collateral. I’d make sure those extra 4-5k you can inject are extremely liquid (and preferably never get to or near to 50% of the portfolio value borrowed by end of day).
If we are talking about IB, this is a theoretical limit. Practically, 25% should be Okay short term, but not more. Otherwise you have good chances to get a first hand experience what is “deleveraging”.
The maximum loan is 60% that’s why in my opinion I have margin regarding that I already have 33% of the loan as really liquid assets and every month my savings’ capacity represent 20% of the loan. But yeah maybe I should prioritise liquidity.
My 2c: if you’re in the situation that you need to take out a loan in order to fill up 7k in your 3a, it seems to me that you are not in a situation where it would be wise to take out such a loan.
I understood she does have enough incoming money to max it out.
But not enough for 3a and additional investments.
But then the questions should rather be on whether to invest on margin in general. And not the order of it within 3 months.
Without any details on personal situation and their objective, the margin part is just impossible to comment on (and not even asked for).
Some good answers in here, though
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