19 october 2021, text: Martin Hügin, photo: Deposit
Anyone wanting to save money or invest a specific amount over a longer period will probably first consider a traditional savings account. But they barely pay any interest. And investing in shares also means accepting risks. What to do? Are there alternatives?
You need to know what you are saving for or why you want to invest money. If you simply want to put a little money aside over the next few months to treat yourself to something, why not use a good old piggy bank. But if you have a specific savings target such as accumulating capital to buy your own home or put it aside for retirement, you should give some serious thought to the matter. For example, about how long you intend to save and how flexibly you need to be able to access your savings. But also about what kind of securities should be in place when you save or invest and whether perhaps a tax-privileged savings or investment option might be suitable, such as under pillar 3a.
In general, the longer the savings or investment period, the more feasible it is to invest in vehicles with a higher share weighting which display greater volatility. While price fluctuations may occasionally be substantial, over a period of more than ten to fifteen years these will very likely even out. Anyone who is apprehensive about overly strong fluctuations should choose more defensive investment vehicles with a reduced share weighting or opt for investment funds with a diverse enough investment strategy to ensure a certain degree of risk spread. And ultimately, there are savings and investment vehicles that even come with certain minimum guarantees. On the basis of an investor profile drawn up specifically for you, the different forms of investment that may be a good long-term fit for you can be narrowed down.
When saving for your own home or retirement, it is essential that the savings target is actually met. If after an accident or illness only part of the original income can be achieved, the savings process and target are also jeopardized. Inclusion of a premium waiver ensures, for instance, that the savings process under a savings insurance policy will continue even in the case of incapacity to earn. Where it makes sense, an integrated death benefit will safeguard the savings target for surviving dependants as well. You decide how much security you require.
Thanks to the protection provided under inheritance and bankruptcy law, by specifically designating your beneficiaries you ensure that savings and investment capital (especially pillar 3b) is paid out promptly as stipulated. And pillar 3a savings insurance can be used for more than just financing your own home: You can also save on taxes with indirect amortisation.
Depending on your age, family status and life situation, it's not just your personal income that changes. Even your individual pension requirements and personal savings and investment goals frequently have to be tailored to your respective life situation. Only if everything is drawn up in budget agreements and periodically reviewed can the savings and investment goals be achieved. Comprehensive pension planning helps to make the financial objectives attainable – whether, say, for your children's education, your own home, or financial independence in retirement. So: Seek advice on a regular basis - it's worth it.