So you have more of the savings
You should keep your available assets invested as long as possible so that you at least beat the inflation. The opportunities and risks.
—
GaYou can’t do without speculating: In the current low interest rate environment, there are no returns without risks.
Foto: Getty Images
My wife and I will retire in 2025. For reasons of professional biography, we will have a joint pension that will not cover our living expenses. Conversely, we have built up a number of 3a accounts and also available assets in bank accounts. From next year we would like to gradually close down the various 3a accounts.
In total we will be around 500‘000 to 550‘000 francs that we have to park in such a way that we can then get 25‘000 francs to cover the gap in our cost of living. We also have a residential property and a holiday home with mortgages, but from my point of view it makes no sense to dismantle them because otherwise the money will remain tied up. What would you advise us to do? Readers question from C.N.
If you use the saved amount of 550‘000 francs every year 25‘With a withdrawal of 000 francs and taking into account neither a return nor inflation, the money would be completely used up after 22 years. But since you cannot count on the fact that there will be no inflation in that time, you are absolutely dependent on your money bringing a return. So you have to put it on.
In addition, every percent of the return that you generate with the capital over and above the inflation gives you more financial leeway. thanks to bigger Returns would last longer on your saved capital to fill the void in your cost of living. Against this background, I think your intention is to invest the money in a broadly diversified manner in various funds. This will also prevent a dangerous lump risk.
At the same time, however, you write to me that a small return would be helpful, risky financial investments but don’t be her thing. This is where you get into a conflict of interest that many investors are currently confronted with. On the one hand, you are dependent on a return, on the other hand, you do not want to take a lot of risk, which I understand very well because you certainly do not want to gamble on your retirement benefits.
In a low interest rate environment like the one we currently have, you will not be able to avoid stocks entirely.
The problem, however, is that investments are very safe at the moment – maybe in ten years the interest rates will be significantly higher again, but at the moment you have to reckon with the current low interest rates – bring only a measly return or no return at all. You can illustrate this with Swiss franc bonds from very secure borrowers: The yield on federal bonds from the Confederation, one of the best borrowers in the world and therefore a very secure investment, is negative. You would be losing money right now. Also bring bonds from other very safe borrowers in the corporate bond segmenton hardly any return in Swiss francs.
If you cut back on the quality of debtors or take foreign currency bonds into your custody account, there is a little more return, but your risk also increases. You can solve this dilemma by using different investment funds, which are very broadly diversified and can therefore achieve a good risk-reward ratio. Nevertheless, you will hardly be able to avoid accepting a slightly increased investment risk if you do not want to forego returns to a large extent. In plain language: In a low interest rate environment like the one we are currently experiencing, you will not be able to avoid stocks because you cannot even beat the inflation with first-class Swiss franc bonds. However, this is feasible using a fund strategy that also includes dividend pearls.
At the same time, you always need to have enough cash to make 25‘000 francs from the assets to be able to draw. This must be taken into account when weighting asset classes such as stocks, bonds, real estate, commodities and liquidity. You can either do this weighting and invest it yourself using investment funds and exchange-traded funds ETFs. This is inexpensive, but requires not only specialist knowledge, but also a willingness to take care of your financial investments. Or you can delegate these tasks as part of an asset management mandate or a fund withdrawal plan.
With a fund withdrawal plan, you can also have an amount paid out monthly – similar to a pension.
Most banks now offer the latter. In doing so, all your specifications are so in the fundsStrategy built in so that a large part of your money remains invested as long as possible and can generate returns, but a smaller part is available immediately and more parts are available in the medium term. With a fund withdrawal plan, you can also have an amount paid out monthly – similar to a pension. Unlike the pension, however, you do not have to tax the amount paid out from the assets as income.
However, such fund withdrawal plans are not available for free. They cost fees of around one percent, depending on the provider. This money ultimately goes away from your return and has to be compensated for by a higher return, which, however, requires a little more willingness to take risks.
In your situation, I would not continue to amortize the mortgages also mentioned, as long as the bank does not ask for this, as you need the existing saved funds and these would otherwise be blocked in the apartments. In any case, you should consult your bank so that you are sure that you can keep the mortgage to the same extent over the long term. At the same time, you can work out a proposal for a fund withdrawal plan from the bank – as well as from other providers – and also have the fees and risks that you have to reckon with.