3a (3rd pillar) account > 50kCHF

gaijin

gaijin

Member
If I remember correctly there is a general consensus that one single 3rd pillar account should not exceed 50k CHF. Unfortunately (or maybe fortunately) one of my 3rd pillar account is now at 76k CHF. This is due to stock investments which skyrocketed in the past 5 years.

I guess there is nothing I can do to reduce this account to 50k.
 
Buy a house, become self-employed or leave Switzerland. ;)
Don't think there is an option to shift money between different accounts.

On the other hand, given the discussions about 3a in Swiss politics last year, I could imagine that it soon won't matter anyway whether you have all the 3a in one portfolio or split up into several (tax-wise).
 
gaijin said:
I guess there is nothing I can do to reduce this account to 50k.
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Nothing easy (@Michael has outlined the non-easy techniques).

50k is not really that important, the actual numbers will vary canton by canton. What is important is balancing. So, you should aim to not invest in this account until the other 4 reaches the same level and then balance the 5 again.
 
gaijin said:
If I remember correctly there is a general consensus that one single 3rd pillar account should not exceed 50k CHF. Unfortunately (or maybe fortunately) one of my 3rd pillar account is now at 76k CHF. This is due to stock investments which skyrocketed in the past 5 years.

I guess there is nothing I can do to reduce this account to 50k.
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In my understanding, the 50k amount is a rule of thumb for 3a savings accounts. It is hard to implement for investment accounts.
 
Baptiste Wicht said:
So, you should aim to not invest in this account until the other 4 reaches the same level and then balance the 5 again.
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Yes, I should have paid more attention at the beginning. I currently have three 3rd pillar accounts. The other two are at 25k and 35k. So I guess I should start the 4th and 5th account now. I will probably not be able to reach parity on all five accounts, since would mean to pay another 238k CHF into my 3rd pillar accounts.
Assuming I will have the same salary during the five years that I will withdraw the money from my 3rd pillar accounts, I assume it is best to try to reach parity on the four 3rd pillar accounts. This would leave me with one 3rd pillar account of (currently) 76k and four accounts of 35k each. The four accounts of 35k each can then continue to grow equally, while the one account with 76k will continue to be out of reach.
 
Also, reading your DCA article, I assume I should fill my 3rd pillar account as soon as possible and as soon as the money is available. So far, I went for a monthly investment into 3rd pillar.
 
I don't think it matters whether you invest once a year or once a month. What matters is that you do not forget and you fill it up. If you are also investing in a free account on the side, whether you put the money in your broker or 3a makes no difference to me.

What would make no sense to me is this strategy: keep the money in cash during the year (accumulate each month) and then invest in December.

As for balancing, my strategy is to get 5 accounts as quickly as possible. Then, each year, I invest (at once), in the account with the lowest balance.
 
gaijin said:
Isn't this exactly what DCA claims: invest once you have the money to invest, don't wait or split it up into chunks? Or is this only valid for regular investments?
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Here is what I mean with two examples:
  1. In January, you Invest 7256 CHF in your 3a and then you invest 7256 CHF every month into your free assets
  2. Every month, you invest 604 CHF in your 3a and 6652 CHF into your free assets
These two examples are exactly the same for me.
 
Baptiste Wicht said:
Here is what I mean with two examples:
  1. In January, you Invest 7256 CHF in your 3a and then you invest 7256 CHF every month into your free assets
  2. Every month, you invest 604 CHF in your 3a and 6652 CHF into your free assets
These two examples are exactly the same for me.
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I would rate option 1 as easier in a later stage of wealth accumulation (where 7k added liquidity early in the year dont matter much compared to the existing 'liquid' free assets amount).

But for starters, option 2 might be better as 7k added liquidity make up more % of total NW. Especially if someone has a very low emergency fund.
 
Baptiste Wicht said:
Here is what I mean with two examples:
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Thanks for these examples. I think I now understand. One comment: these investments total up to CHF 87'072. Assuming I have the full amount of 87'072 available on January 1, I guess your advise would be to invest 7256 in my 3a and 79824 in my free assets in January. Correct? (Yes, I am still at the point where I have more liquidity that I'm hesitating to invest all at once.)
 
Michael said:
I would rate option 1 as easier in a later stage of wealth accumulation
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Fair point indeed. What is important to invest all you can at once. In what you invest it does not matter much.
gaijin said:
Assuming I have the full amount of 87'072 available on January 1, I guess your advise would be to invest 7256 in my 3a and 79824 in my free assets in January. Correct?
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Yes. This is the long-term strategy that worked the best historically (because the stock market goes up on average more than it goes down). But of course, it's not easy to pull.
 
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