How to optimise my finances?

[OxygeN]

Hi all.
As I don't really know where to start, please bear with me for the possibly "confused" description of my situation and potential goals :-(

So here I am, in my mid-forties, working 80% and owner of a big apartment which I live in by myself.
I've got only one bank (UBS), where I have all my money. There's the usual couple accounts and there's also my mortgage and my 3rd pillar.
The primary thing I wanted to look into is the 3rd pillar - specifically I would start splitting it up on more than one single account (to optimise taxes when I'll be retiring). The UBS account, which in fact is not just an account but it's an investment fond (Vitainvest - TER 1.50%), is now around 50k, therefore I'd like to start another one (at least). I've been reading that VIAC and Finpension are the best options as of 2024. So, first question here: do you think it's a good idea to stop/freeze the UBS 3rd pillar by the end of 2024 and start with either VIAC or Finpension in 2025?

Next come the "investment" part: with UBS I've invested quite some money and apparently it's doing good so far. Still, I am wondering how much do I pay UBS for this. Can you help me understand and find the amount of money I'm paying UBS for their job of managing my fonds/portfolio? As far as I could read, there's a "Mandatspreis" of 1.70% which I pay...
I might imagine that UBS is quite expensive or more expensive than other solutions. And here comes the next question: would you suggest looking at some other investment solutions outside UBS? If yes, which ones?

Last but not least: I'm getting dividends from the company I work for, as I'm also holding shares of it. What's an intelligent way of using the dividends? I mean, of course after I've used money for my hobbies, vacations, home furniture/decoration, taxes and so on...

Thanks in advance for any hint/input - I'm just starting to dive into this part of life and have probably 1% knowledge, so happy to learn!

OxygeN

 

[Max]

So, first question here: do you think it's a good idea to stop/freeze the UBS 3rd pillar by the end of 2024 and start with either VIAC or Finpension in 2025?

And here comes the next question: would you suggest looking at some other investment solutions outside UBS? If yes, which ones?

1. Yes. Actually, you don't have to wait until 2025. And you can also transfer your UBS 3a account to VIAC or Finpension.
2. Yes, at IBKR. See https://thepoorswiss.com/interactive-brokers-review/

 

[Baptiste Wicht]

Welcome to the forum!

And well done for thinking about these questions. A lot of people never bother.

So, first question here: do you think it's a good idea to stop/freeze the UBS 3rd pillar by the end of 2024 and start with either VIAC or Finpension in 2025?

Yes, as soon as possible.

As far as I could read, there's a "Mandatspreis" of 1.70% which I pay...

That sounds about right for UBS. And you may even be paying some product price on top of that.

would you suggest looking at some other investment solutions outside UBS?

Yes. There are many choices. If you want to invest by yourself, IBKR is the best one. If you prefer a Swiss broker, Saxo, Swissquote and Neon Invest are interesting. And if you want a Robo-advisor, Finpension Invest is very nice.

What's an intelligent way of using the dividends?

Reinvesting them is the best way to build wealth.

But of course, you must ask yourself what you want your money to work for? What's your goal and what the term of that goal. Knowing that will help you decide how to deal with your money.

 

[OxygeN]

Hi @Max and @Baptiste Wicht - thanks for welcoming me and for your replies.

• 3A account: would it be best if I transfer the actual 3A from UBS to FinPension and there I would open a second 3A account (and maybe a third one when the time comes)? Splitting is again something I've been told should be done to avoid paying too much on taxes when I will retire - am I right?
• Investing: what do you mean by "if you want to invest by yourself"? I've read that IBKR is very good and it has the same safety/guarantee as a Swiss broker.
• Mortgage: am I right understanding that there's no way to transfer a mortgage from one bank to another? Would it even make sense to transfer it away from UBS?
• Neon: do I get it right, that this is a Swiss online bank, where the fees are almost zero? What advantages would Neon bring in my actual situation (UBS mortgage and accounts, for which I pay CHF 8.- per month)?

The final question @Baptiste Wicht suggested I should ask myself is not an easy one. I do own my home (apartment), I don't have any expenses related to mobility (I'm using a company car, for which there's a detraction from my monthly salary), I spend some thousand CHF yearly for my hobby. I have no interest in buying a sports car. Therefore, there's no real goal (yet?!) for the money I'm making. This is the reason why I'm now trying to figure out at least how to put that money at work - as it is not generating any value just lying around on my bank account.
What I had in mind last year, was to buy an apartment in Italy (in the region where I come from) and make it a B'n'B. What do you think about this idea? Is it nowadays still a good choice to invest in real estate?

Thanks!

 

[Max]

• 3A account: would it be best if I transfer the actual 3A from UBS to FinPension and there I would open a second 3A account (and maybe a third one when the time comes)? Splitting is again something I've been told should be done to avoid paying too much on taxes when I will retire - am I right?
• Investing: what do you mean by "if you want to invest by yourself"? I've read that IBKR is very good and it has the same safety/guarantee as a Swiss broker.

• All yes. See https://thepoorswiss.com/staggering-withdrawals/
• It means as opposed to investing through a robo-advisor.

As for the goal: An often goal is early retirement. Consider if you wish one.

 

[The Roving Rodent]

Congratulations on having reached a good financial position already. My take on the goal is this: even if you are happy in your job and can't now imagine retiring early, it's very reassuring to have a decent financial cushion, in case things change. All sorts of things can come along: serious illness in the family, redundancy, a new partner overseas, a deteriorating work environment that turns the job you once loved into a daily torture (been there, done that!) and the financial cushion gives you options. If you never need to tap the funds, great, give the money away to good causes and party hard in the retirement home!

 

[Baptiste Wicht]

3A account: would it be best if I transfer the actual 3A from UBS to FinPension and there I would open a second 3A account (and maybe a third one when the time comes)? Splitting is again something I've been told should be done to avoid paying too much on taxes when I will retire - am I right?

You would save on fees by transferring your 3a and then have all your 5 accounts there.

Investing: what do you mean by "if you want to invest by yourself"? I've read that IBKR is very good and it has the same safety/guarantee as a Swiss broker.

IBKR Is really good and is safe. Investing by oneself means picking ETFs/stocks while using a Robo-advisors means delegating that task.

Mortgage: am I right understanding that there's no way to transfer a mortgage from one bank to another? Would it even make sense to transfer it away from UBS?

UBS is not too bad for mortgages. They can have some good conditions.

Usually, you can transfer the mortgage at each renewal, since that's the end of the contract. You can redo a mortgage contract with another bank at this point.

Neon: do I get it right, that this is a Swiss online bank, where the fees are almost zero? What advantages would Neon bring in my actual situation (UBS mortgage and accounts, for which I pay CHF 8.- per month)?

There would be two advantages: free monthly account and cheaper to use abroad or in foreign currencies.

But this is a much less important optimization than savings on your custody fees for instance.

Therefore, there's no real goal (yet?!) for the money I'm making.

You could also simply save for standard retirement to be sure to have enough on top of the three pillars.
You could also save for Financial Independence, to be safe in the event you lose your job.

Or, if you are really frugal, have a good job and financial situation and have no real plans for the future, you could simply invest to avoid your money being eaten away by inflation. If you are saving money anyway and do not really need it, investing it properly makes sense.

As for whether buying a property in Italy makes sense, I have no idea.

 

[OxygeN]

If you never need to tap the funds, great, give the money away to good causes and party hard in the retirement home!

Thanks for your feedback. I will continue keeping money invested so that should represent my "cushion".

 

[OxygeN]

You would save on fees by transferring your 3a and then have all your 5 accounts there.

I've registered an account on FinPension and after my vacation I'll proceed with the transfer from UBS to FP.

IBKR Is really good and is safe. Investing by oneself means picking ETFs/stocks while using a Robo-advisors means delegating that task.

As I've never done something "by myself" (and as of today relied on what UBS was suggesting), would you say it might be better to start with a Robo-advisor first?

UBS is not too bad for mortgages. They can have some good conditions.

Usually, you can transfer the mortgage at each renewal, since that's the end of the contract. You can redo a mortgage contract with another bank at this point.

Right - I forgot about this. I'll keep track of the renewal date and try to prepare accordingly my moves.

There would be two advantages: free monthly account and cheaper to use abroad or in foreign currencies.

But this is a much less important optimization than savings on your custody fees for instance.

For foreign currencies, I primarily use EUR and I've already two different online accounts (Wise and Revolut). How would Neon compare to these two in relation to EUR and a credit card for that currency?
Also: would it eventually make sense to reduce the accounts at UBS and transfer them to Neon? I actually would just need a way to keep the mortgage payments automated (today UBS takes the money from one of my UBS accounts)...

You could also simply save for standard retirement to be sure to have enough on top of the three pillars.
You could also save for Financial Independence, to be safe in the event you lose your job.

Financial Independence: that's a very interesting topic/goal. Do you think it's achievable from now (mid-40ies)?

Or, if you are really frugal, have a good job and financial situation and have no real plans for the future, you could simply invest to avoid your money being eaten away by inflation. If you are saving money anyway and do not really need it, investing it properly makes sense.

That's what I'm going to do at first, in fact.

As for whether buying a property in Italy makes sense, I have no idea.

Yeah - that's a big topic. I'm Italian myself, but the situation in Italy is going down south - in every possible way and in every part of life. So maybe having anything to do with Italy is not a good idea...

 

[Baptiste Wicht]

As I've never done something "by myself" (and as of today relied on what UBS was suggesting), would you say it might be better to start with a Robo-advisor first?

Not necessarily. Investing by yourself is easy to learn. But it requires dedicate and control that not everybody has. If you are dedicated and can trust yourself not to panic, this is the best option by far.

For foreign currencies, I primarily use EUR and I've already two different online accounts (Wise and Revolut). How would Neon compare to these two in relation to EUR and a credit card for that currency?

Neon can sometimes be slightly cheaper than Wise and sometimes slightly cheaper than Revolut (when you reach over the maximum free allowance). But it's not life-changing. You seem to be well prepared already.

Also: would it eventually make sense to reduce the accounts at UBS and transfer them to Neon? I actually would just need a way to keep the mortgage payments automated (today UBS takes the money from one of my UBS accounts)...

Maybe. But since you will have a UBS account anyway, I am not sure it will make much difference.

Financial Independence: that's a very interesting topic/goal. Do you think it's achievable from now (mid-40ies)?

It's achievable in less than 20 years, yes. But you need a very high savings rate and a lot of dedicate.

 

[OxygeN]

Not necessarily. Investing by yourself is easy to learn. But it requires dedicate and control that not everybody has. If you are dedicated and can trust yourself not to panic, this is the best option by far.

Thanks for your feedback. Do you think it might make sense to start with a robo-advisor and switch to "manual" or it'd be more efficient to learn how to invest by myself already at first? I'm not the panicking type of guy, what might bother me more is the amount of time (daily/weekly hours) I would need to spend. Can you roughly make an estimate/indication?

Neon can sometimes be slightly cheaper than Wise and sometimes slightly cheaper than Revolut (when you reach over the maximum free allowance). But it's not life-changing. You seem to be well prepared already.

OK. As my "Privatkonto" at UBS doesn't have any interest rate and my "Sparkonto" apparently has 0.75% (but by calculating what I "earned" last year, I came to 0.45%?!): would it be better to have my CHF mainly/only on the Sparkonto? Is there eventually any other "Sparkonto" where I might get more than the reported/calculated interest rates above?

Maybe. But since you will have a UBS account anyway, I am not sure it will make much difference.

It's achievable in less than 20 years, yes. But you need a very high savings rate and a lot of dedicate.

Where could I learn more about "savings rate"?

BR.

 

[Baptiste Wicht]

Thanks for your feedback. Do you think it might make sense to start with a robo-advisor and switch to "manual" or it'd be more efficient to learn how to invest by myself already at first? I'm not the panicking type of guy, what might bother me more is the amount of time (daily/weekly hours) I would need to spend. Can you roughly make an estimate/indication?

It might make sense if you are not sure you want to dedicate the time to learn it.

The learning at the beginning takes times (20 hours maybe, rough) but then once you have it started, it takes 5 minutes a month.

OK. As my "Privatkonto" at UBS doesn't have any interest rate and my "Sparkonto" apparently has 0.75% (but by calculating what I "earned" last year, I came to 0.45%?!): would it be better to have my CHF mainly/only on the Sparkonto? Is there eventually any other "Sparkonto" where I might get more than the reported/calculated interest rates above?

These days, you can find accounts at 1%, but the SNB is slowly reducing rates again, so I would not want to chase rates anymore.

Where could I learn more about "savings rate"?

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