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Created on 30.11.2020 | Updated on 20.12.2022

What is the right retirement fund for your circumstances? It is well worth comparing them!

Are you looking to save up for old age and contemplating a retirement fund, but you’re not sure which one is right for you? One important distinguishing feature is the equity component. How much this should be depends on your personal situation, as well as your own individual needs. This is shown by the four examples of Marianne, Reto, Lisa and David.

What is a retirement fund?

A retirement fund works like an investment fund where a large number of investors pool their money. When you invest in a retirement fund, you buy shares of an investment pot, which in turn is invested in various separate investments. Spreading the money across different investments spreads the risk. By investing in retirement funds, you can benefit in the long term from higher average potential returns than is currently possible with interest-bearing vested benefits and retirement savings accounts. However, you do have to be prepared to accept price fluctuations, which may be greater or smaller depending on the risk you are willing to take. Different retirement funds have different proportions of shares and bonds. You can choose the fund that suits you best based on your needs and your risk tolerance.

What retirement options are there?

Retirement funds come with a greater potential return than a normal pillar 3a account but are also associated with greater financial risks. The level of risk you wish to assume is determined by your choice of fund – and this is based on your investor profile and investment horizon. There are different levels of risk. For example, in a balanced portfolio with a 50% equity component, the fluctuations and therefore the risks are lower than with an equity component of 75% or 100%.

In general, there are different options for investment depending on the provider. To meet the individual needs of investors, PostFinance offers four different retirement funds that differ primarily in their equity component, and it is well worth comparing these funds carefully. At PostFinance, the equity component varies between 25%, 50%, 75% and 100%. 

What should I consider when choosing my fund?

As a general rule, the more time you put into saving and the greater your risk capacity and risk acceptance, the larger the proportion of shares in the fund can be. Marianne, Reto, Lisa and David have already opted for a retirement fund. Find out what influenced their choice here.

25% equity component: for everyone who accepts the lowest possible risk

Marianne, 55 years old, Office Administrator

  • Investor profile: prudent
  • Investment horizon: 5 years
  • Savings goal: additional security for old age and early retirement
  • Investment: portion of assets in a retirement fund with an equity component of 25%

“I’ve always worked and therefore rely heavily on retirement planning from the first and second pillars. For a long time, I’ve been thinking about the financial security of these two pillars. Now, shortly before taking early retirement, I’d like to ensure additional security and am therefore investing in a retirement fund with a 25% equity component. As my investment horizon is rather short compared to young people, I don’t want to assume too much risk so I’m leaving the rest of my assets in my retirement savings account. If the sale of fund units is not right for me at the time I retire, I can transfer them into a PostFinance custody account free of charge.”

50% equity component: for cautious investors such as Reto

Reto, 50, cook

  • Investor profile: balanced
  • Investment horizon: 15 years
  • Savings goal: financial security in old age
  • Investment: a proportion of assets in an investment fund with an equity component of 50%

“Before I turned 50, I realized that I should finally come round to thinking more about my retirement. AHV (old-age and surviving dependants insurance) and a pension fund already offer a solid retirement amount. But it could still be a little bit better. I still have 15 years to go until I retire. Seeing as I’m generally a fairly cautious person, I’ve decided to invest just some of my retirement assets. I opted for the retirement fund with an equity component of 50%, and the rest of my capital will stay in my retirement savings account 3a. This means I’m prepared to take on the risks of the stock markets with some of my assets in pillar 3a, and to benefit from a higher potential return on average over time.

Building up capital for home ownership: retirement funds with an equity component of 75%

Lisa, 25, nurse

  • Investor profile: risk-taking
  • Investment horizon: 10 years
  • Savings goal: home ownership
  • Investment: funds saving plan in retirement fund with an equity component of 75%

“I’d never have got round to thinking about retirement planning by myself. I’m 25 years old and it’s still forty years until I retire. But my best friend is constantly talking about how she has invested in pillar 3a so she’ll be able to buy her own home in the future. Although I do pay into my retirement savings account 3a now and again, it has hardly yielded any interest for a long time now. So I went and sought some advice, and was told I should invest the savings from pillar 3a in a retirement fund. To make my dream of home ownership possible, I've chosen a growth-oriented investment strategy and invested in a retirement fund with an equity component of 75%. To make sure I don’t start investing at a bad time, I’ll invest my retirement assets in stages by using a funds saving plan. This allows me to compensate for price fluctuations over time. With the fund, I am prepared to accept higher price fluctuations for higher potential returns.”

For all risk-takers: standing order into the retirement fund with 100% equity component

David, 36, project manager

  • Investor profile: risk-taking
  • Investment horizon: 29 years
  • Savings goal: not to make sacrifices in retirement
  • Investment: standing order for an investment fund with an equity component of 100%

“I’m David, I’m 36 and I work as a project manager in a large company. Next year I will be taking on an international project, and so will have less time to deal with everyday things. But seeing as my parents keep going on about retirement planning with me, I’m now looking into it. What’s more, there is a great deal of uncertainty about the AHV pension for my generation. So, I did some research online, and came across retirement funds. I like the idea that you don’t simply stash away money in a practically interest-free account – I can actually make it work for me. Seeing as I am still young, which gives me a long investment horizon, I decided – following a one-on-one consultation – to go for a retirement fund with an equity component of 100%. Thanks to the standing order, payments are made directly into my selected fund. This means I don’t have to worry about it. I am prepared to accept high price fluctuations, and if the prices should fall at some point, then it’s not the end of the world. This is because my long investment horizon allows me to ride out occasional losses and to wait for things to improve. In addition, the compound interest effect comes into play more with a longer investment horizon.”

What is the right retirement fund for you?

Every investor is different, and the profiles you see above are examples of individual opinions on the matter. We offer different retirement funds to cover all requirements. You decide which one suits you best. PostFinance recommends familiarizing yourself with the information about retirement funds, defining your investment strategy carefully and reassessing it regularly. The examples are not recommendations and are no replacement for advice. We would be pleased to give you personalized advice.

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