Those who invest conservatively must be satisfied with a low return. Depending on the constellation, partial amortization of the mortgage can also be worthwhile.
Posted today at 5:30 am—
There has to be a bit of risk: Even with conservatively managed investment vehicles, there is no risk of price fluctuations.
Illustration: Christina Baeriswyl
I am married and own a condominium with a mortgage of CHF 445,000. According to the ZKB consultant, I don’t have to amortize. I will retire in 3.5 years and my wife in 60 years. She receives a transition pension. I have 125,000 francs of free capital and have been paying in the full 3a pillar for 18 years. My house bank advises me that I should invest part of the free capital in
Swisscanto (CH) Portfolio Fund Responsible Relax AA CHF. I thought about 50,000 francs. Since I am not at all willing to take risks, I have great concerns. Am I taking a very big risk? Readers question from PH
The Swisscanto (CH) Portfolio Fund Responsible Relax AA CHF is a conservatively managed fund and focuses on preserving capital over the long term and generating regular income. The fund
invests primarily directly and indirectly in bonds and other fixed or variable interest debt securities and rights of private and public debtors worldwide. Around 40 percent of the money is parked in Swiss franc bonds, around 20 percent in foreign currency bonds and 10 percent in real estate in Switzerland. Only around 14 percent of the capital flows into shares,
The largest positions here are Swiss quality stocks such as Nestlé, Roche, Novartis and Zurich. This equity component is important because otherwise there is hardly any decent return in the current low interest rate environment
would be feasible.
With Swiss franc bonds from good debtors, you currently get no or only a measly interest rate. An investment would no longer be worthwhile for you and you could leave the money in the account right away. The Swisscanto (CH) Portfolio Fund Responsible Relax AA CHF is distributing. On the basis of the last distribution of CHF 5.80 per unit, the current rate would result in a return of slightly less than one percent. This fund does not yield much either, but the fluctuations are fairly limited.
Nevertheless, a partial amortization as an alternative
The fund held up well in 2020 despite the Corona crash. In my opinion, you are not taking any great risks with this vehicle. Of course, you could buy dividend pearls like Nestlé, Swisscom, Zurich, Swiss Re or Novartis yourself and benefit from a dividend yield of two to three percent. But then you would have to accept significantly stronger price fluctuations, which contradicts your desire for security. However, the fund suggested by your bank will not work without price fluctuations. That is why it is important that you have an investment horizon of at least four to five years, during which you neither need nor touch the money invested. It is also positive that the fund invests sustainably and the investment activity is aimed at reducing CO2-Emissions of at least four percent per year is targeted.
An alternative for you would be a partial amortization of your mortgage. You are not forced to pay off by the bank. But if you lower your mortgage, you save on mortgage interest. The bottom line is that you would be better off as you are likely to be paying more mortgage interest than you will get in returns from a conservative investment.
However, the question arises as to how much other reserves you have with regard to your age. Partial amortization only makes sense if you still have enough financial leeway in old age. Since you will also receive pillar 3a payments when you retire, this could be the case with you.