Do you prefer retirement or not?

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pension or capital? As experience shows, many future pensioners find it difficult to answer this question. In recent years, the conversion rate in some pension funds has declined. Therefore, the pension is less. This certainly increases the incentive to pay back capital rather than settle for a lower lifetime pension.

But now to the key question: how should money be invested? Banks and insurance companies are not short of offers. The consumer magazine Saldo recently reported on an adventurous case. An insurance agent recommended to his client that he invest 200,000 francs in two investment products: the first product is called the Capital Certificate Tranche 17, the second is the Zurich Invest Payment Plan.

The latest word “Certificate” should alert the uninitiated. Did the Lehman bankruptcy teach you anything? At that time, 15 years ago, many private investors in Germany were looking down the drain because they had Lehman Brothers certificates in their portfolio. In the case of a capital certificate, the issuer is the French bank BNP Paribas. As we now know, “too big to fail” banks can also fail. It also should not have escaped the attention of insurance consultants.

Certificates are bearer obligations and, like bonds, can be fully defaulted if the issuer sets sail. On the other hand, investment funds do not appear on the balance sheet of the bank in question. They are protected special assets.

The second product, described in the “Balance” section, is less risky: the “Zürich Invest Payment Plan”. However, being less risky also means there isn’t much imagination at the top. Here, money is invested in securities and then paid out regularly over a certain period. But only for a certain period, and not for life, as with a PC pension.

The question here is whether you can really invest money so well that there is a positive return after spending. Maybe, maybe not. Either way, it will be difficult. And the return, if any, will be small compared to the risk, because the insurance agent wants to make money selling this product.

The alternative would be to leave the money in the account and withdraw a certain amount year after year. The bottom line is that this is likely to be a cheaper and certainly more reliable version than a payment plan issued by a financial institution.

In any case, it’s a good idea to think about how you should invest the proud portion of your pension fund before withdrawing the lump sum. Maybe retirement is better.

Source: Blick