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Old 21.09.2015, 09:55
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Re: Buying apartment... questions about own capital

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I need a small advice regarding my mortgage.

I will be cashing out a part of my 2nd Pillar insurance. I have an option to take out just as much as I need, or take a larger part all at once. Which makes more sense and why?

as far as I know, 2nd Pillar pays less interest than 3rd Pillar for example, so perhaps it's better to use the chance to cash out and invest the money elsewhere?
Is this related to buying real estate in Switzerland? If so, then you're not going to be "cashing out" any of your 2nd pillar pension. If not, you've posted in the wrong place.

Your 2nd pillar pension probably does earn less than you could make on your 3rd pillar. It depends whether you have any say in how your 2nd pillar is invested. If your employer dictates the investment strategy, then it is probably invested very conservatively to achieve close to the minimum mandated return.
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Old 21.09.2015, 11:52
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Re: Buying apartment... questions about own capital

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Is this related to buying real estate in Switzerland? If so, then you're not going to be "cashing out" any of your 2nd pillar pension. If not, you've posted in the wrong place.
Yes, it's about buying in Switzerland.
I'm just filling out a document called "Application for advance withdrawal of retirement assets from the Pension Fund". I'm not pledging my 2nd Pillar. I'm withdrawing it.
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  #43  
Old 21.09.2015, 12:29
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Re: Buying apartment... questions about own capital

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You're forgetting that at the moment, with interest rates and house prices where they are, it's far cheaper to buy than to rent. I live in a beautiful house twice the size of my old rented apartment (and that's not counting the extensive and highly usable basement rooms), with a large garden, garage and additional parking, and pay 37% less in interest than I did in rent. The capital I've invested in my house was earning marginally more than nothing at the bank (during the time in which the stock markets around the world have plunged).


All in all, I'm quite satisfied with my investment decision.
No I am not forgetting interest rates are very low & house prices are very high. A Swiss mortgage is never intended to be paid off so your not just taking a 20 - 25 year bet, it's a bet forever which you will surely loose.

Your not putting any cost in your deposit which is at least 20%, so the most your saving is 17% a month before repair costs, depreciation, buying & selling costs.

I don't know what your holding time is for stocks, however I am up on 1 year, 3 years 5 years 10 years 20 years & since the 1987 crash. Only noticed a tiny fall in equities this year, which is good news as I am a net buyer than net seller of equities.

Even the Swiss CHF is plunging if you look on a short enough time scale, offsetting much of the stock market losses you fear so much

Edit if you value your house the same way stock market investments are valued your house has a value of 0, You don't have a bidder who will sign a purchase contract today. Obviously you won't sell your house for 0, so daily stock market variations in bid prices are nothing more than background noise if you believe your house has any value, the valuation being your opinion rather than fact.

Last edited by fatmanfilms; 21.09.2015 at 12:54.
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Old 21.09.2015, 12:35
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Re: Buying apartment... questions about own capital

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as far as I know, 2nd Pillar pays less interest than 3rd Pillar
No, 2p pays much more than 3p.

Tom
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Old 21.09.2015, 12:45
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Re: Buying apartment... questions about own capital

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No, 2p pays much more than 3p.

Tom
Certainly as a pension for the legally required contributions, however it's just possible that investment returns could be higher in a higher risk 3rd pillar fund. Paying 5% tax on exit of a second pillar & getting 25% tax relief on a Pillar 3 could 'just work' if your a high tax payer.
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