Are you just getting started in your career? Let us show you how you can get started with your pillar 3a even without much money. The following example refers exclusively to private retirement planning.
Let's assume you are Fabienne, 25 years old, and you’ve started your first job as a graphic designer after finishing your degree. You’re single with no children. Your retirement date is still 39 years away, but you are aware of the importance of retirement planning. To keep the pension gap as small as possible you would be best advised to start now, even if you don’t have so much money available to save.
Fabienne opts for a sustainable, active investment product. Due to her long investment horizon and her pronounced risk appetite, she opts for a very high equity component (95%). The objectives of the investment product are to achieve long-term capital gains and to generate income. Fabienne is prepared to accept considerable price fluctuations in the process. Thanks to her long-term investment, securities offer her the prospect of higher return opportunities than a pillar 3a bank account, where interest rates are likely to remain very low for a long time.
Based on the initial situation, Fabienne could achieve the following retirement savings with frankly compared to a traditional pillar 3a banking product:
If Fabienne were to leave her money in a normal 3a account, in 39 years’ time, assuming interest rates remain low at 0.25%, she would have CHF 94,592. If she were to save in securities, however, with a hypothetical return of 6.10% this could rise to CHF 263,900.
The possible savings with securities are worth much more than just a few hundred francs. Fabienne, for example, is 25 years old and in employment. She pays CHF 2,400 into her pillar 3a account with frankly each year until her expected pension age of 64, and she chooses an investment product with an equity component of 95%.
Assumptions: equity component 95%, hypothetical return per year 6.10% (net after costs). The future returns and risks presented here are for illustrative purposes only. Securities savings may fluctuate, the hypothetical return cannot be guaranteed, and tax effects are not included in this forecast.
Economic models and statistical methods are used for calculation purposes. The forecast corresponds with the most likely performance, and can be predicted for an investment horizon of up to 10 years. In the event of a longer investment horizon the calculations are continued using the same values, whereby no statements can be made about the probability of the calculated results occurring. In the event of very unfavourable market developments, the performance may be lower than the nominal savings value. The calculated values are net of the frankly all-in fee, and are based on an interest rate on the pillar 3 account of 0.25%. Please note that inflation and the taxes payable when the balance becomes due are not included in this forecast.
Based on the above values (living in Winterthur, single, no children, no religious affiliation, deposit CHF 2,400 per year) and a possible taxable income of CHF 65,000, Fabienne can save an additional CHF 501 per year in taxes with each pillar 3a solution! Source: Zürcher Kantonalbank tax calculator
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