Proper retirement planning in middle age

 

Are you in employment, have a family and plan to buy a property in about five years?  Let us show you how you can make the most of your retirement savings with frankly. The following example refers exclusively to private retirement planning.

Example: Roger, 40 years old, in employment, plans to buy a property

Let's assume you are Roger, 40 years old, and you work in a managerial position at a government administration in Lausanne. You’re married and you’ve just had your first child. You don’t retire for another 25 years, and your big dream is to buy an apartment in just over five years. You don’t have enough capital though, and you want to use your 3rd pillar to cover the cost.

Possible investment product:
Gentle 20 Index

Roger would like to use his pillar 3a assets to buy property. This can be done. Pillar 3a assets can be used to finance the purchase of owner-occupied residential property or to renovate/convert the home or to repay a mortgage on it.

 

The selected investment product with a low equity component of 20% pursues the objective of mirroring the development of the market as closely as possible and, if possible, achieving moderate long-term investment gains.

To the investment products
ZKB_frankly_contentseite_5tipps_ziele_605x510px_201012_jdh

It makes sense for Roger to open several pillar 3a accounts with frankly instead of just one, and to distribute the money or pay it in on a staggered basis. If you pay your retirement savings into several different pillar 3a accounts, you can save on tax later on when you withdraw your money, because the payout is staggered over several years.

 

Tip: We advise Roger to check the fees and performance of the providers of his current pillar 3a assets! frankly is 60% cheaper than comparable securities savings offers (source: moneyland.ch). Compare for yourself, and switch your current pillar 3a assets to frankly now.

To the comparison with competitors

What kind of savings could Roger achieve with frankly in five years?

Based on the initial situation, Roger could achieve the following savings with frankly in five years’ time compared to a traditional pillar 3a banking product:

Statement of changes in net assets:

Reveal card

Calculation and risk information

Reveal card

Statement of changes in net assets:

If Roger were to leave his money in his original normal 3a account, in five years’ time and assuming interest rates remain low at 0.05% he would have CHF 114,666. If he were to save in securities, however, with a hypothetical return of 1.90% this could rise to CHF 121,300.

The possible savings with securities are worth much more than just a few hundred francs. Roger, for example, is 40 years old and in employment. He pays the maximum amount of CHF 6,883 each year into his pillar 3a account with frankly for five years, and he selects an investment product with an equity component of 20%. He transfers an additional CHF 80,000 from his former pillar 3a over to frankly. 

Calculation and risk information

Assumptions: equity component 20%, hypothetical return per year 1.90% (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 0.05%. Please note that inflation and the taxes payable when the balance becomes due are not included in this forecast.

Additional tax savings:

Based on the above values (living in Lausanne, married with one child, no religious affiliation, deposit CHF 6,883 per year) and a possible taxable income of CHF 120,000, Roger can save an additional CHF 1,920 per year in taxes with each pillar 3a solution! Source: Zürcher Kantonalbank tax calculator

tax calculator - Zürcher Kantonalbank

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