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Old 15.04.2021, 20:09
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3a pillar vs personal investing

Hi,

In a family where both parents are working you can easily cross the taxation border of 120000 chf a year. Then it arises questions about 3a pillar to deduct those costs.

The thing is, looking at interest rates - these are almost non-existent. So if you put on 3a pillar, but your money is not on the stocks it basically is losing value from inflation. Am I right here?

So what's a practical solution in that case? 3a pillar only with companies that allow really high amount of percentage in stocks?

Otherwise, I believe it would be better to put your money on some robo-advisors at least. The interest rate would be higher.

What's the practical approach here for the people who believe, that money needs always to work?
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Old 15.04.2021, 20:14
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Re: 3a pillar vs personal investing

Minimum you can do is investing with bank or other financial institutions in their products. For instance, CS offers different risk levels tied to your investment depending on what you can stomach. Many EF’s threads on it here.
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Old 15.04.2021, 21:04
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Re: 3a pillar vs personal investing

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Hi,

In a family where both parents are working you can easily cross the taxation border of 120000 chf a year. Then it arises questions about 3a pillar to deduct those costs.

The thing is, looking at interest rates - these are almost non-existent. So if you put on 3a pillar, but your money is not on the stocks it basically is losing value from inflation. Am I right here?

So what's a practical solution in that case? 3a pillar only with companies that allow really high amount of percentage in stocks?

Otherwise, I believe it would be better to put your money on some robo-advisors at least. The interest rate would be higher.

What's the practical approach here for the people who believe, that money needs always to work?
Finpension - 100% in world ex-ch quality pension fund. Either that or equity us blue or a mixture.
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Old 15.04.2021, 22:32
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Re: 3a pillar vs personal investing

I have my 3 pillars accounts with Viac and am happy! Good return and interface and free life or disability insurance with it.
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Old 15.04.2021, 23:56
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Re: 3a pillar vs personal investing

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Finpension - 100% in world ex-ch quality pension fund. Either that or equity us blue or a mixture.
So which one then? Finpension or Viac? Is there a really independent comparison/ranking of these? I also heard good opinions about "frankly"
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Old 16.04.2021, 07:38
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Re: 3a pillar vs personal investing

In my case I got 5 pillars accounts with Viac. 2 custom etf strategy and 3 with Global100 strategy. I am happy with it and the etf choice are much better than the BCGE funds where I used to have my pillars. Pillars fees do not exceed 0,50%+ some etf fees. A bargain compare to classic banks.
I got lazy but you could open 1 account in viac, finpension and frankly and compare their behaviour in the long run.
You better max pillar 3a each year to reduce your wealth tax.
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Old 16.04.2021, 07:55
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Re: 3a pillar vs personal investing

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In my case I got 5 pillars accounts with Viac. 2 custom etf strategy and 3 with Global100 strategy. I am happy with it and the etf choice are much better than the BCGE funds where I used to have my pillars. Pillars fees do not exceed 0,50%+ some etf fees. A bargain compare to classic banks.
I got lazy but you could open 1 account in viac, finpension and frankly and compare their behaviour in the long run.
You better max pillar 3a each year to reduce your wealth tax.
This is exactly what I am doing this year. Will open several accounts and compare ...

I got the idea by reading these reviews: https://thepoorswiss.com/?s=third+pillar

Thing is, depending on the Canton, you might be limited to the number of accounts you can withdraw each year. Several Cantons see the withdrawal retirement assets in stages as a big no no and are thinking of limiting 3rd pillar withdrawals to 1 (meaning all accounts will have to be withdrawn the same year). Nothing definitive yet, but depending on how old you are, so many things could change before we reach retirement!
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Old 16.04.2021, 08:41
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Re: 3a pillar vs personal investing

Might find this list helpful.
https://www.vermoegenszentrum.ch/rat...ftendepot.html
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  #9  
Old 16.04.2021, 09:43
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Re: 3a pillar vs personal investing

I also switched all my 3a funds into Viac a couple of years ago. I went completely custom and found the whole thing pretty easy so far, from account set-up, transferring over an existing account, and getting the annual tax declarations.
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Old 16.04.2021, 10:26
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Re: 3a pillar vs personal investing

Not sure why you would try to compare performance between different providers. What matters for investment performance is a) choice of investment b) fees.

VIAC have recently reduced their fees on equity heavy strategies, so are now broadly in line with Finpension as far as a cursory look tells me. The difference then is which funds you can invest in. They are broadly similar, but VIAC has some restrictions on minimum CHF and Swiss investments. Depending on your perspective, this is either an issue or it isn‘t. If you want to juice every last bit of performance Finpension is likely to be marginally better.

My 2020 and prior investments are with VIAC:
5% CSIF SMI
10% CSIF SPI Extra
5% CSIF Pacific ex. Japan
10% iShares Nasdaq
15% CSIF US
5% CSIF World ex CH
17% CSIF World ex CH hedged
5% CSIF World ex CH small cap hedged
15% CSIF Emerging markets
5% CSIF Gold (swapped into when the hedge fund option was closed)
5% iShares listed PE

2021 and onwards are with FinPension
69% CSIF Equity World ex CH ESG
10% CSIF Equity Emerging Markets
10% CSIF Pacific ex. Japan
10% CSIF Equity World ex CH small cap

I also have to pay into a CS 3rd pillar for mortgage amortisation. I have the Mixta 75 index portfolio and I have no complaints about the performance so far, if you don‘t want to choose your own funds.
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Old 16.04.2021, 10:37
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Re: 3a pillar vs personal investing

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Not sure why you would try to compare performance between different providers. What matters for investment performance is a) choice of investment b) fees.

VIAC have recently reduced their fees on equity heavy strategies, so are now broadly in line with Finpension as far as a cursory look tells me. The difference then is which funds you can invest in. They are broadly similar, but VIAC has some restrictions on minimum CHF and Swiss investments. Depending on your perspective, this is either an issue or it isn‘t. If you want to juice every last bit of performance Finpension is likely to be marginally better.

My 2020 and prior investments are with VIAC:
5% CSIF SMI
10% CSIF SPI Extra
5% CSIF Pacific ex. Japan
10% iShares Nasdaq
15% CSIF US
5% CSIF World ex CH
17% CSIF World ex CH hedged
5% CSIF World ex CH small cap hedged
15% CSIF Emerging markets
5% CSIF Gold (swapped into when the hedge fund option was closed)
5% iShares listed PE

2021 and onwards are with FinPension
69% CSIF Equity World ex CH ESG
10% CSIF Equity Emerging Markets
10% CSIF Pacific ex. Japan
10% CSIF Equity World ex CH small cap

I also have to pay into a CS 3rd pillar for mortgage amortisation. I have the Mixta 75 index portfolio and I have no complaints about the performance so far, if you don‘t want to choose your own funds.
I also have CS’s MIXTA 75 with 3a and don’t complain. Opened VIAC account recently.
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Old 16.04.2021, 11:21
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Re: 3a pillar vs personal investing

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You better max pillar 3a each year to reduce your wealth tax.
You actually max it out to reduce income tax which is much more impactful!
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Old 16.04.2021, 11:22
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Re: 3a pillar vs personal investing

For me the requirement to have 40% in Swiss equities in viac is onerous.

Another advantage of finpension is that they allow you have 99% in equities rather than 97%.

A 3rd is that they don't have an fx spread.

The 4th would be viac doesn't have the msci world quality index which is my preferred index in finpension.

Finally, if you ever leave Switzerland, finpension is situated in low tax Schwyz, so you withdrawal rate would be lower than viac, based in Basel.

The app is undoubtedly clunkier than viacs, but the offering in my view is marginally superior.
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Old 16.04.2021, 11:34
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Re: 3a pillar vs personal investing

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Not sure why you would try to compare performance between different providers. What matters for investment performance is a) choice of investment b) fees.

VIAC have recently reduced their fees on equity heavy strategies, so are now broadly in line with Finpension as far as a cursory look tells me. The difference then is which funds you can invest in. They are broadly similar, but VIAC has some restrictions on minimum CHF and Swiss investments. Depending on your perspective, this is either an issue or it isn‘t. If you want to juice every last bit of performance Finpension is likely to be marginally better.

My 2020 and prior investments are with VIAC:
5% CSIF SMI
10% CSIF SPI Extra
5% CSIF Pacific ex. Japan
10% iShares Nasdaq
15% CSIF US
5% CSIF World ex CH
17% CSIF World ex CH hedged
5% CSIF World ex CH small cap hedged
15% CSIF Emerging markets
5% CSIF Gold (swapped into when the hedge fund option was closed)
5% iShares listed PE

2021 and onwards are with FinPension
69% CSIF Equity World ex CH ESG
10% CSIF Equity Emerging Markets
10% CSIF Pacific ex. Japan
10% CSIF Equity World ex CH small cap

I also have to pay into a CS 3rd pillar for mortgage amortisation. I have the Mixta 75 index portfolio and I have no complaints about the performance so far, if you don‘t want to choose your own funds.
Does this mean that you are paying in more than the Fr.6.8k that is tax deductible? And if so, is it because it is cheap way to invest in index funds?
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Old 16.04.2021, 11:50
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Re: 3a pillar vs personal investing

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Does this mean that you are paying in more than the Fr.6.8k that is tax deductible? And if so, is it because it is cheap way to invest in index funds?
No, I’m paying the 6.8k max tax deductible per year split across CS Mixta and now Finpension (Previously VIAC).
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Old 16.04.2021, 13:00
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Re: 3a pillar vs personal investing

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Not sure why you would try to compare performance between different providers. What matters for investment performance is a) choice of investment b) fees.

VIAC have recently reduced their fees on equity heavy strategies, so are now broadly in line with Finpension as far as a cursory look tells me. The difference then is which funds you can invest in. They are broadly similar, but VIAC has some restrictions on minimum CHF and Swiss investments. Depending on your perspective, this is either an issue or it isn‘t. If you want to juice every last bit of performance Finpension is likely to be marginally better.

My 2020 and prior investments are with VIAC:
5% CSIF SMI
10% CSIF SPI Extra
5% CSIF Pacific ex. Japan
10% iShares Nasdaq
15% CSIF US
5% CSIF World ex CH
17% CSIF World ex CH hedged
5% CSIF World ex CH small cap hedged
15% CSIF Emerging markets
5% CSIF Gold (swapped into when the hedge fund option was closed)
5% iShares listed PE

2021 and onwards are with FinPension
69% CSIF Equity World ex CH ESG
10% CSIF Equity Emerging Markets
10% CSIF Pacific ex. Japan
10% CSIF Equity World ex CH small cap

I also have to pay into a CS 3rd pillar for mortgage amortisation. I have the Mixta 75 index portfolio and I have no complaints about the performance so far, if you don‘t want to choose your own funds.
You picked and chose your investments yourself, I suppose?

I am just curious to compare both VIAC and Finpension, but I am just weird. I know that there are differences, but considering the amounts I am going to invest, I don't expect a huge difference.

If there is, it's easy enough to move money from one 3rd pillar to the other

Question: do VIAC and/or Finpension do active management or once they bought whatever it's in the strategy, that's it?
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Old 16.04.2021, 13:10
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Re: 3a pillar vs personal investing

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You picked and chose your investments yourself, I suppose?

I am just curious to compare both VIAC and Finpension, but I am just weird. I know that there are differences, but considering the amounts I am going to invest, I don't expect a huge difference.

If there is, it's easy enough to move money from one 3rd pillar to the other

Question: do VIAC and/or Finpension do active management or once they bought whatever it's in the strategy, that's it?
They rebalance it every once every so often to the %s outlined in your original strategy. Of course, in Finpension you can buy only a single index fund, in which case no rebalancing needs to take place.
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Old 16.04.2021, 13:58
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Re: 3a pillar vs personal investing

In my opinion it really depends on your tax rate.

You'll save X% on your taxes depending on your personal circumstances.

Using a pillar 3a account, even a decent one, can be expected to have higher fees and lower overall return than investing directly. You can have some control over the assets but not much.

So there's a balance between taking that almost immediate % return by reducing income, vs. paying tax now and then investing the money how you please, with no restrictions to access. The balance depends on your circumstances.

Pensions including the 3a also reduce your wealth tax and you pay no tax on dividends, so that's another benefit. However, you'll pay a (usually lower) rate of tax when you finally withdraw.

Personally, I'm happy to do both. Use the pensions but also invest aside from them.
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Old 16.04.2021, 14:28
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Re: 3a pillar vs personal investing

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In my opinion it really depends on your tax rate.

You'll save X% on your taxes depending on your personal circumstances.

Using a pillar 3a account, even a decent one, can be expected to have higher fees and lower overall return than investing directly. You can have some control over the assets but not much.

So there's a balance between taking that almost immediate % return by reducing income, vs. paying tax now and then investing the money how you please, with no restrictions to access. The balance depends on your circumstances.

Pensions including the 3a also reduce your wealth tax and you pay no tax on dividends, so that's another benefit. However, you'll pay a (usually lower) rate of tax when you finally withdraw.

Personally, I'm happy to do both. Use the pensions but also invest aside from them.
I think pre-VIAC it was generally a bad idea to invest in 3a unless you were close to withdrawal (with the definition of "close" dependent on tax rate as you say).

Now if you aren't close to retirement and with options like 99% MSCI World Ex-CH Quality, its a much closer call.
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Old 16.04.2021, 16:16
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Re: 3a pillar vs personal investing

Hi, nice to meet you, I'm Christian and I'm new in the blog.
That's my fifth year in Zurich and I don't have the 3a pillar.
I prefer to "invest" money on my self, and I know that advisors don't explain the 3a pillar as an investment but everybody know that we'll leave them blocked for several years, 20/30 ? we don't know exactly.
Personally I prefer to control my "capital" and decide how to invest it.
Otherwise, the 3a pillar it's a perfect way to "safe" your retirement.
Do you like to play with moneys, or you prefer that somebody plays for you ?

Thank you very much, and sorry for my mistakes, I'm trying to improve my English, and this is one way to do that!
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