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I am a 28 year old Swedish citizen living in Switzerland as a PhD student. It is possible that I will move internationally one or more times before settling down. I will stay for at least 3 years, possibly longer. It is also possible that I will stay for the rest of my life.

The Swiss system is based around three different pillars where the first and second are mandatory.

The third pillar allows tax deductions and can be used for buying property, making it an interesting choice. However the interest rates seem very low, ZKB for example has an interest rate of 0.125%, which seems to low to even bother.

Another alternative would be to purchase index funds or similar every month. The downside is that there is no protection against bankruptcy and I might be tempted to use the savings at some point in the future. The benefit is that these funds can be accessed without having to worry about changing retirement rules, limitations when moving, etc.

How can I build a sustainable retirement saving which is mobile, safe and efficient?

I am looking to save 100-300 CHF per month right now, a number which I will increase as my salary grows.

Further info

I have student debt amounting to ca 250000 SEK (roughly 27000 CHF or $). This is low interest and I am paying it off at the standard pace ~1000 CHF/year. Other than this I am debt free.

I have a monthly salary saved in cash and somewhat less than a yearly salary in various funds and stocks.

I intend to purchase a house and land (forest) within the next 5-10 years.

A similar question focused on the USA case: Effects of moving around on pension

  • Thank you for the accept, BTW where are you doing your PhD? I am a material scientist, the community in Zürich for metal scientist is pretty small so I might know a few people you are working with. – Lucas Raphael Pianegonda Dec 17 '18 at 9:06
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I suggest the following:

Since you are not sure yet if you want to stay in switzerland, figure that out first. I would suggest to pay off the debt first and apply for permanent stay permission (Ausweis C). Without it you cannot take full advantage of the third pillar tax deduction. And since you are a PhD student you are probably making 65 k max a year which is not much by Zürich standards. So you are probably not paying too much taxes anyways. Then if you are done paying the debt and have decided to stay in this beautiful country forever, you do the following.

Build a cushion of 3-6 monthly spendings. Then you set up two third pillars. One with an insurance and one with a bank. The insurance will tell you the bank is shit and the bank will tell you the insurance is shit. Don't believe them they are sales people. They both have advantages and disadvantages. You pay regularly into the insurance (monthly usually) and you pay into the bank at the end of the year if you have money left over and don't need it for long. The result of this is that you will safe (depending on your income) 10-25% of your payed in money in taxes. Thats pretty much a 10-25% return on investment right away! Since you have two third pillars you will be able to "split" them when you want to pull them out. That means you then get to save taxes when you take the money out.

You may also want to buy an index fund on a regular basis on top of that. After my calculation your plan should then play out like this:

Build an emergency fund

3-6 monthly spendings probably 10-20 k cushion for emergencies.

Debt Free Phase

27 kCHF debt -> 1000 kCHF a year + 300 CHF a month = 4600 kCHF a year => 5-6 years

Probably faster because your will be earning more after you finish the PhD and get a better paid job.

Tax Saving Phase

You have a well paid job now and have to do a tax declaration, this means you want to save taxes. Without kids the third pillar is a great option to do so. You set up two pillars and deduce upto ca. 6.7 kCHF a year => tax saving of 1-2 k depending on your income.

Investing Phase

With the left overs every month you buy ETFs and get some return on investment. You might also want to gamble on crypto making a great comeback but thats your thing. Don't put money in investments you need ever again. And first build your emergency fund and pay back your debts.

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There are also retirement saving plans, including free or heavily investing in the stock market. Over a long duration, it is very safe and has the same protection as savings plans which also means you have to struggle to get the money earlier. When stocks lose over 30 years, most likely your amassed money will lose a lot of value too. If make your own decisions where to invest, consider switching into a less volatile investment a few years before your retirement.

I would also understand if you go for property first, which can help you live well after work times.

  • Thanks for the answer. What would be the implications of using the retirement saving plan (do I get it right that this is not a third pillar?) if I move out of switzerland? Can I use the funds to purchase property (also outside of switzerland)? What would be the name of the retirement saving plan option in German (or French)? – Hektor-Waartgard Sep 17 '18 at 6:02
  • Without a guarantee, if you move out of switzerland you can get your invested money at once even when you a too young for a pension. On the other hand, when you aren't in switzerland, you didn't get your pension from it. I am talking about the pillar 3a (as clarification it isn't all invested in stocks but a reasonable amount) – chris Sep 17 '18 at 6:22

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