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-   -   How do people prepare for their pensions? (https://www.englishforum.ch/finance-banking-taxation/298500-how-do-people-prepare-their-pensions.html)

darkvater 07.06.2020 16:51

How do people prepare for their pensions?
 
Spin-off from this - https://www.englishforum.ch/3183618-post102.html - thread where there were quite a few comments on my pension choices (https://www.englishforum.ch/3183655-post110.html).

We save about 25% of our income into pillar 2 (mandatory and voluntary) and pillar 3. It might seem a lot but there is no real substantial pension anywhere else, nor do we own a house or other things. We chose this as the state pension in about 30 years looks woefully low and have no idea what else to do so that it is still feasible to stay in Switzerland after retirement.

What do other people do? Do you not worry about your pensions? Do you have a better way of putting money aside?

omtatsat 07.06.2020 17:20

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by darkvater (Post 3188789)
Spin-off from this - https://www.englishforum.ch/3183618-post102.html - thread where there were quite a few comments on my pension choices (https://www.englishforum.ch/3183655-post110.html).

We save about 25% of our income into pillar 2 (mandatory and voluntary) and pillar 3. It might seem a lot but there is no real substantial pension anywhere else, nor do we own a house or other things. We chose this as the state pension in about 30 years looks woefully low and have no idea what else to do so that it is still feasible to stay in Switzerland after retirement.

What do other people do? Do you not worry about your pensions? Do you have a better way of putting money aside?

Better to live for the day and let the future take care of itself

doropfiz 07.06.2020 17:36

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by omtatsat (Post 3188793)
Better to live for the day and let the future take care of itself

That kind of saying is typically spoken by those who are totally cushioned by being well-off in the first place, or by those who have someone they can count on to bail them out if ever they fall on hard times, or by those who are simply irresponsible.

Or... maybe that's just a lovely dream of how nice it would be, if life could only be like that, and still be safe.

Island Monkey 07.06.2020 17:37

Re: How do people prepare for their pensions?
 
Yep, I know a couple of people who saved and waited for retirement To do everything, then died just before. Live whilst you can!

Phil_MCR 07.06.2020 17:38

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by darkvater (Post 3188789)
What do other people do? Do you not worry about your pensions? Do you have a better way of putting money aside?

I put minimum into my pillar 2 as I don't like the inflexibility of having the money locked up for so long (and having limited investment options).

I've invested in property and also in taxable accounts.

fatmanfilms 07.06.2020 17:42

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by darkvater (Post 3188789)
Spin-off from this - https://www.englishforum.ch/3183618-post102.html - thread where there were quite a few comments on my pension choices (https://www.englishforum.ch/3183655-post110.html).

We save about 25% of our income into pillar 2 (mandatory and voluntary) and pillar 3. It might seem a lot but there is no real substantial pension anywhere else, nor do we own a house or other things. We chose this as the state pension in about 30 years looks woefully low and have no idea what else to do so that it is still feasible to stay in Switzerland after retirement.

What do other people do? Do you not worry about your pensions? Do you have a better way of putting money aside?

www.fundsmith.co.uk allowed me to retire early, Swiss pension returns are very poor. Since retiring 5.75 years ago & spending my capital I have roughly twice as much money as I had when I retired, this is lucky as I got married & my expenses have doubled. :msnnerd:

Island Monkey 07.06.2020 17:43

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by doropfiz (Post 3188795)
That kind of saying is typically spoken by those who are totally cushioned by being well-off in the first place, or by those who have someone they can count on to bail them out if ever they fall on hard times, or by those who are simply irresponsible.

Or those that don't have enough money. You can choose to do things now, or save all your money for a time that may never come.

fatmanfilms 07.06.2020 17:58

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by Island Monkey (Post 3188799)
Or those that don't have enough money. You can choose to do things now, or save all your money for a time that may never come.

You were not listening at school when compound interest was explained.

100 a month for 40 years growing at 12% gives 1,400,000, Fundsmith will likely return substantially more in the last 9.5 years including the recent crash it's compounded at over 18% in both £ or Euros.

Thats right under 5 Chf per work day will give you over 1 million

wantone 07.06.2020 18:14

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by fatmanfilms (Post 3188798)
www.fundsmith.co.uk allowed me to retire early, Swiss pension returns are very poor. Since retiring 5.75 years ago & spending my capital I have roughly twice as much money as I had when I retired, this is lucky as I got married & my expenses have doubled. :msnnerd:

I don't understand how you calculate that you have double money now. If you are talking about net worth it is not cash and could be illiquid especially real estate. Funds, stocks etc the valuation can change any day.

Can you please explain?

fatmanfilms 07.06.2020 18:35

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by wantone (Post 3188806)
I don't understand how you calculate that you have double money now. If you are talking about net worth it is not cash and could be illiquid especially real estate. Funds, stocks etc the valuation can change any day.

Can you please explain?

I had the majority of my net worth in the fund, now split with Smithson. The price has more than tripled since I first invested so my net worth has more than doubled since retiring after living costs. It’s been a great investment. At 31/12/19 property & cash represented less than 20% of my net worth, that will change as I bought another property in March but I have one to sell.

KiwiSteve 07.06.2020 19:24

Re: How do people prepare for their pensions?
 
You can have your cake and eat it (in Switzerland at least). Live for today, but cheaply.
The Swiss AHV has lost real value over the last 40 years and probably will continue to do so. It is no longer something that would afford you a basic retirement in Switzerland and comfortable retirement abroad. However the social net will pay the bills if you are short, you just do not get to decide where you live.
As to what are good investments; your children, teach them well. If you don't, they will teach you (Apologies to CS&N).

Medea Fleecestealer 07.06.2020 19:39

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by fatmanfilms (Post 3188798)
www.fundsmith.co.uk allowed me to retire early, Swiss pension returns are very poor. Since retiring 5.75 years ago & spending my capital I have roughly twice as much money as I had when I retired, this is lucky as I got married & my expenses have doubled. :msnnerd:

Which fund do you use: Fund class T Acc or Inc? And could I invest in the UK one, even though based in Switzerland? I have a UK bank account with money I could invest sitting doing nothing atm.

omtatsat 07.06.2020 19:51

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by doropfiz (Post 3188795)
That kind of saying is typically spoken by those who are totally cushioned by being well-off in the first place, or by those who have someone they can count on to bail them out if ever they fall on hard times, or by those who are simply irresponsible.

Or... maybe that's just a lovely dream of how nice it would be, if life could only be like that, and still be safe.

There are some people who spend there whole life in the pursuit of safety. They never really live

BasP72 07.06.2020 19:53

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by fatmanfilms (Post 3188798)
www.fundsmith.co.uk allowed me to retire early, Swiss pension returns are very poor. Since retiring 5.75 years ago & spending my capital I have roughly twice as much money as I had when I retired, this is lucky as I got married & my expenses have doubled. :msnnerd:

This looks like a cheesy non-trustworthy tell sell commercial...?

roegner 07.06.2020 20:04

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by BasP72 (Post 3188831)
This looks like a cheesy non-trustworthy tell sell commercial...?

Nah, I have Fundsmith as well and am stocking up 😀

doropfiz 07.06.2020 20:13

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by omtatsat (Post 3188830)
There are some people who spend there whole life in the pursuit of safety. They never really live

Yes, you're right about that, and it's tragic. Some folk simply have no other option, when each little corner of safety is hard won, against high opposition or dire circumstances.

Those who are in a better place than that, have the opportunity to plan. So they may as well do so wisely.

fatmanfilms 07.06.2020 21:06

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by Medea Fleecestealer (Post 3188825)
Which fund do you use: Fund class T Acc or Inc? And could I invest in the UK one, even though based in Switzerland? I have a UK bank account with money I could invest sitting doing nothing atm.

Phil_MCR has invested in the UK fund directly, I have also but only as a transfer of an old PEP/ISA from 25 years ago. As you can choose to reinvest the dividends it makes no difference, the dividend from accumulation units is in theory taxable in CH, however I never realised (I only held accumulation) & the tax office never noticed the error.

The majority of my UK holdings are held via Hargreaves Lansdown, this account was opened whilst Swiss resident. I also hold the Luxembourg fund directly.

Guest 07.06.2020 21:16

Re: How do people prepare for their pensions?
 
It all depends. We're not willing to cut down on our expenses to save up extra and have no problem with moving elsewhere if needed to lead a proper life.

It's easy when you come here when you're young and basically are able to do as the Swiss do, but if you already spend half your labour life elsewhere and are not in the position to set aside big bucks it likely will hurt to pension here, and many people leave the country when retiring since half a Swiss pension already gives a very decent life in many other places.

fatmanfilms 07.06.2020 21:18

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by BasP72 (Post 3188831)
This looks like a cheesy non-trustworthy tell sell commercial...?

People have been saying as much since 17/11/2012 when I first mentioned the Fund on the forum. https://www.englishforum.ch/1719119-post39.html

Closing price on 15/11/2012 £1.2732 Ä12.4649

Closing price 5/6/2020 £491.97 Ä42.19

in £ increased 3.86 times, in Ä increased 3.385 times. You were a member back then, shame you did not join in on the ride

Urs Max 07.06.2020 23:07

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by fatmanfilms (Post 3188854)
People have been saying as much since 17/11/2012 when I first mentioned the Fund on the forum. https://www.englishforum.ch/1719119-post39.html

Closing price on 15/11/2012 £1.2732 €12.4649

Closing price 5/6/2020 £491.97 €42.19

in £ increased 3.86 times, in € increased 3.385 times. You were a member back then, shame you did not join in on the ride

To be fair, their track record a couple years ago (or today for that matter) is quite a bit different from 6-8-10 years ago. The far-from-great progress of FEET (managed by the same team, with the same investment approach, but invests in different world regions and markets) supports the notion that one should want a multi-year track record before getting tooo excited.

That said Fundsmith's track record speaks for itself, and looks like it will be very difficult to beat.
Quote:

Originally Posted by fatmanfilms (Post 3188849)
Phil_MCR has invested in the UK fund directly, I have also but only as a transfer of an old PEP/ISA from 25 years ago.

Same, paid in from IB(London). Still, took unexpectedly long to get my first T(acc), multiple back-and-forth. The top-ups went smoothly.

wantone 08.06.2020 06:49

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by fatmanfilms (Post 3188812)
I had the majority of my net worth in the fund, now split with Smithson. The price has more than tripled since I first invested so my net worth has more than doubled since retiring after living costs. Itís been a great investment. At 31/12/19 property & cash represented less than 20% of my net worth, that will change as I bought another property in March but I have one to sell.

ok but net worth is not the same as money. From net worth you can get capital gains and dividends (or rent or yield in general) minus related expenses and taxes. What it matters is how much net cash you can get from all these plus your fixed pension (state or company) and that will determine your lifestyle. For example if in 2015 your total income was 3000 a month and now is 10000 a month and the future looks good then you can say you do much better now.

EPMike 08.06.2020 08:56

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by Urs Max (Post 3188875)
To be fair, their track record a couple years ago (or today for that matter) is quite a bit different from 6-8-10 years ago.

SSON might give you the returns of early days fundsmith

Quote:

Originally Posted by Urs Max (Post 3188875)
The far-from-great progress of FEET (managed by the same team, with the same investment approach, but invests in different world regions and markets) supports the notion that one should want a multi-year track record before getting tooo excited.

That said Fundsmith's track record speaks for itself, and looks like it will be very difficult to beat.

Well another candidate is SMT. Almost 100 years of track record.

Quote:

Originally Posted by Urs Max (Post 3188875)
Same, paid in from IB(London). Still, took unexpectedly long to get my first T(acc), multiple back-and-forth. The top-ups went smoothly.

How did you manage to invest into fundsmith via interactive brokers?

Chuff 08.06.2020 08:59

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by omtatsat (Post 3188793)
Better to live for the day and let the future take care of itself

This attitude is probably a good contributor as to why you are so miserable as a pensioner. :D

slammer 08.06.2020 09:12

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by omtatsat (Post 3188793)
Better to live for the day and let the future take care of itself

Agreed, but I would like to add that a lot of people have no option other than to let the future take care of itīs self.

Others, like my father have worked hard all thier lives (mine had a 10 stint in Indonesia) have paid off the house and was looking forward to a life of a pensioner with enough to see him through.
Died at 68, two years into pension.
And as for me? Well at least I donīt need to worry about who to invest with to get the most dividends...

erikdebest 08.06.2020 09:22

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by darkvater (Post 3188789)
Spin-off from this - https://www.englishforum.ch/3183618-post102.html - thread where there were quite a few comments on my pension choices (https://www.englishforum.ch/3183655-post110.html).

We save about 25% of our income into pillar 2 (mandatory and voluntary) and pillar 3. It might seem a lot but there is no real substantial pension anywhere else, nor do we own a house or other things. We chose this as the state pension in about 30 years looks woefully low and have no idea what else to do so that it is still feasible to stay in Switzerland after retirement.

What do other people do? Do you not worry about your pensions? Do you have a better way of putting money aside?

A question: in your calculation you say you pay 2500 on taxes. is that amount calculated on the basis of the 200k income? Consider that all your savings in pension funds can be deducted from the taxable income, which will be therefore greatly reduced.

fatmanfilms 08.06.2020 09:28

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by wantone (Post 3188903)
ok but net worth is not the same as money. From net worth you can get capital gains and dividends (or rent or yield in general) minus related expenses and taxes. What it matters is how much net cash you can get from all these plus your fixed pension (state or company) and that will determine your lifestyle. For example if in 2015 your total income was 3000 a month and now is 10000 a month and the future looks good then you can say you do much better now.

I live off capital, not income. This has huge tax advantages if you live in a country with zero CGT.
Buying 'income' is a poor decision with negative interest rates, what is important is the 'total return' of your investments net of any tax liability.

fatmanfilms 08.06.2020 09:36

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by EPMike (Post 3188917)
SSON might give you the returns of early days fundsmith

The earlier days of Fundsmith was the Tullet Prebon pension scheme, the Early performance & preFundsmith was very good, as I said earlier there has never been a 12 month period outside 1st quartile for Fundsmith, something I would have never imagined possible..
Smithson will with a 99% probability beat Fundsmith, however with higher volatility & hugely less liquidity. Once you trade over 10,000 shares the spread gets less competitive, you cant even get a quote for 50,000 shares , whilst you could easily sell £ 1 Billion in Fundsmith, they could deliver without the market blinking. That poor liquidity allowed a member to pick some shares up for £9.00 at a huge discount to NAV in March it's £14.84 this morning.

EPMike 08.06.2020 09:41

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by fatmanfilms (Post 3188931)
The earlier days of Fundsmith was the Tullet Prebon pension scheme, the Early performance & preFundsmith was very good, as I said earlier there has never been a 12 month period outside 1st quartile for Fundsmith, something I would have never imagined possible..
Smithson will with a 99% probability beat Fundsmith, however with higher volatility & hugely less liquidity. Once you trade over 10,000 shares the spread gets less competitive, you cant even get a quote for 50,000 shares , whilst you could easily sell £ 1 Billion in Fundsmith, they could deliver without the market blinking. That poor liquidity allowed a member to pick some shares up for £9.00 at a huge discount to NAV in March it's £14.84 this morning.

Well 10,000shares is 140K GBP now. I don't think I will need more than that/trading session(day) :-)

fatmanfilms 08.06.2020 09:46

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by EPMike (Post 3188933)
Well 10,000shares is 140K GBP now. I don't think I will need more than that/trading session(day) :-)

Thats per order....., I have exceeded that size per day when accumulating my position.

If you wanted to cash out in a falling market you could well be stuck, as we saw a member bought at 900 on a bad day & it was a tiny order, I wonder what 10,000 shares would have achieved then 600?

EPMike 08.06.2020 09:50

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by fatmanfilms (Post 3188935)
Thats per order....., I have exceeded that size per day when accumulating my position.

If you wanted to cash out in a falling market you could well be stuck, as we saw a member bought at 900 on a bad day & it was a tiny order, I wonder what 10,000 shares would have achieved then 600?

How is that possible with a fund almost 2Bn now?

I guess I need to do some more reading on how investment trusts work. Apparently I underestimated the liquidity aspect.

fatmanfilms 08.06.2020 09:59

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by EPMike (Post 3188939)
How is that possible with a fund almost 2Bn now?

I guess I need to do some more reading on how investment trusts work. Apparently I underestimated the liquidity aspect.

You need to match sellers with buyers, if no buyer exists you get a poor price or possibly close to zero.
The investment trust does not make any sales on your behalf it's share capital does not change.

Axa 08.06.2020 10:16

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by Island Monkey (Post 3188796)
Yep, I know a couple of people who saved and waited for retirement To do everything, then died just before. Live whilst you can!

Well, the dead don't have any problems at all......I want to believe in that. Back to the living, never met anyone in a bar complaining about saving too much. All the complains are about lack of resources, not being able to help the family, travel, retire, how damned expensive the bar is, etc.

I'll pay 2 beers to listen the sob story of the guy who saved too much :D

Karl 08.06.2020 10:22

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by omtatsat (Post 3188793)
Better to live for the day and let the future take care of itself

In Switzerland if you run out of money in old age, the state pays to keep you fed, housed and looked after, courtesy of tax-payers. You are essentially saying "Better to spend all my money on myself now because in the end I can bum off the state." Not a responsible outlook on life, and one I see quite commonly in the UK, but not here.

axman 08.06.2020 11:49

Re: How do people prepare for their pensions?
 
I have Fundsmith too, directly with Luxembourg. Opening the account was a bit of a pain, but since then topping up via fax and then sending EUR via Revolut is pretty easy, and they have been very good about sending statements via email and post.

I have about 25% of my holdings in Fundsmith, and about 15% in SSON (via IB).

jamon8 08.06.2020 12:00

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by axman (Post 3188987)
I have Fundsmith too, directly with Luxembourg. Opening the account was a bit of a pain, but since then topping up via fax and then sending EUR via Revolut is pretty easy, and they have been very good about sending statements via email and post.

I have about 25% of my holdings in Fundsmith, and about 15% in SSON (via IB).

I found SSON shares in IB. Is this the thing?

fatmanfilms 08.06.2020 12:18

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by axman (Post 3188987)
I have Fundsmith too, directly with Luxembourg. Opening the account was a bit of a pain, but since then topping up via fax and then sending EUR via Revolut is pretty easy, and they have been very good about sending statements via email and post.

I have about 25% of my holdings in Fundsmith, and about 15% in SSON (via IB).

They take KYC & money very seriously

axman 08.06.2020 12:54

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by jamon8 (Post 3188990)
I found SSON shares in IB. Is this the thing?

yes

eyebeebe 08.06.2020 13:16

Re: How do people prepare for their pensions?
 
Quote:

Originally Posted by Karl (Post 3188957)
In Switzerland if you run out of money in old age, the state pays to keep you fed, housed and looked after, courtesy of tax-payers. You are essentially saying "Better to spend all my money on myself now because in the end I can bum off the state." Not a responsible outlook on life, and one I see quite commonly in the UK, but not here.

I see this frequently on another U.K. forum Iím a member of. Lots of talk on how to ensure the council donít force your parents to sell their house to fund care homes and the like, as they think it is stealing either from someone who has worked all their life to own their house or stealing the inheritance. I certainly donít want to rely on the state to look after me in my dotage and I think the general expectation in the UK is wrong, but where I do have some sympathy is the amount of tax you pay in the UK. I can see why if you are paying 40%+ tax for most of your working life, you might expect some return. IMO the lower tax rates here allow you save to better provide for yourself.

fatmanfilms 08.06.2020 14:07

Re: How do people prepare for their pensions?
 
I thought I should check performance from Tullet Prebon start date 4/12/03 - 31/12/12 where £1 became £3.1176 net of fees, if that had been invested in Fundsmith on 31/12/12 it would have grown to £11.82 on Friday or a compound rate of return of 16.15% over 16.5 years with 2 spectacular market crashes thrown in!

In simple turns £84,000 became £1,000,000 in 16.5 years.
Funnily enough Terry Smith had back tested 30 years from 2010 & came up with 16% compound as a long term growth of the sort of stocks he was proposing to invest in.

omtatsat 08.06.2020 16:13

Re: How do people prepare for their pensions?
 
Quote:

It all depends. We're not willing to cut down on our expenses to save up extra and have no problem with moving elsewhere if needed to lead a proper life.

It's easy when you come here when you're young and basically are able to do as the Swiss do, but if you already spend half your labour life elsewhere and are not in the position to set aside big bucks it likely will hurt to pension here, and many people leave the country when retiring since half a Swiss pension already gives a very decent life in many other places.
Well so many older Swiss live on just their pension. And a small one at that. They dont just pack up and leave. Its sad that living becomes so expensive in CH-the country is quickly becoming only a place for the good earner.


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