My mom has a german retirement portfolio called "Riester-Rente". Portfolio is mix of bonds and an international fund (DE0008491051).
Long explanation:
As part of legal compliance, they need to make sure your portfolio value is never below what you paid in. Therefore if the market drops like 40% in case of my mom, they "sell low" all of your fund shares and buy bonds with it. If that happens they also never buy back in for you (you have 0 control!), so you hold bonds forever. (stupid imo)
My mom has still 20 years+ to retire and wants to hedge this downside. So she basically needs a payout of 40% of her current fund shares value, if and only if the fund DE0008491051 drops 40% from today. As long as her retirement Account still holds the fund shared, everything is ok; she just wants to protect against the downside of liquidating at a low price.
TL;DR:
- Need to protect from downside of MSCI World-like fund
- If and only if fund drops 40%
- In this case want to get the 40% (or less) as money
Idea: I basically thought she could buy "Protective puts" on her normal depot outside of her retirement account (Thought of Put Options on MSCI World with a strike price of sth. like (CurrentPrice-30%) ). Having looked up, it seems like the premium for that is something like 25-35% of the insured amount. That seem's not worth it. Is a cheaper option?