View Single Post
  #16  
Old 07.06.2008, 12:03
Jim2007's Avatar
Jim2007 Jim2007 is offline
Forum Legend
 
Join Date: Jun 2006
Location: Kt. Bern
Posts: 4,368
Groaned at 205 Times in 162 Posts
Thanked 7,082 Times in 3,161 Posts
Jim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond reputeJim2007 has a reputation beyond repute
Re: Pensions - how much are they really worth

Quote:
View Post
I agree with most of what you say - except, if I sold the house, I would probably move to the Philpipines. rent would be zero as my wife has a house there
I still think it is prudent to have a reserve. Not much point owning a home which belongs to the bank - it would be better just renting a nice place now rather than go throught the hassle of building up a perfect place to live.
This is my view anyway
Lets assume you have CHF5,000 to invest and your effective tax rate is 20%. If you put it in the pension fund, you'll save CHF1,000 in taxes, you now have another CHF1000 to invest, so the total is CHF6,000 - you are up 20% right away! If on the other hand you pay off part of the house loan, it is still just CHF5000. So now you have to hope that the CH5000 in the house is somehow going to out pace the pension's CHF6000 to at least break even - short of a bubble, that is a tall order.... Also remember that you have a more or less guaranteed min. return on the pension fund, which you do not have on the house - house prices can and do go down.

And the end of the day you can always cash out the pension fund and take it with you to where ever - easier than selling off the house.

Best Regards,

Jim
Reply With Quote
This user would like to thank Jim2007 for this useful post: