๐Ÿ’ฐPersonal Finance & Insurance

Emergency fund

  • Do you need an emergency fund? (the poor swiss)

    • tldr; Good to have but less important than one would think if you already have a good financial standing. The opportunity cost of having a large sum of money that is not invested is high/expensive. Even in a savings account it is likely to lose value due to inflation. Whereas in a real emergency you can easily get a "good" (1.7-2.5%, IBKR 2023) margin/lombard loan against your invested securities. In the worst case it's also always possible to sell off securities - although this may force you to sell them at an inopportune time.


Third Pillar

  • How many 3a accounts are useful in Switzerland

    • tldr; 6-10 accounts since they can be paid out from 5 years before pension age until 5 years after (provided you keep working), not all cantons handle tax progression the same way so it might not matter, but it's better to be safe than sorry.

    • Dividend Optimisation: The money in a 3A account gets taxed only when withdrawn. Whereas dividends from a normal investment portfolio are taxed when they are paid out. This means there is a slight tax advantage to keeping dividend yielding stocks/etfs in your 3A account. In 3A the entire dividend payment without tax deduction is re-invested and therefor also yielding compound interest for many years.

    • Home Bias / Swiss stock Optimisation: Since buying swiss stocks & etfs is more expensive than international / US ones it can be advantageous to buy them via your 3A. With most 3A providers you're paying a flat fee (e.g. 0.39% for finpension3a) regardless of what kind of index funds you choose to put in. So by picking the more expensive swiss stocks for 3A and keeping the cheaper US stocks in a normal brokerage account you can optimise the fees you pay for the same overall portfolio.

Second Pillar

First Pillar

  • Should the first pillar be counted towards net worth?

    • tldr; no. The system is based on direct "Umverteilung", e.g. young paying for old / rich paying for the poor. There is also no real guarantee that the system will still exist by the time I reach retirement age.


Personal Liability & Household insurance

  • Do you need additional glas breaking insurance as a renter in Switzerland? From what I can gather you don't. Glas breakage of all building glass (e.g. windows, ceramic stove etc.) is covered via personal liability insurance since you don't own the thing that breaks. (see https://www.helvetia.com/ch/web/en/private-customers/guide/living/glass-breakage.html) If you want to cover additional stuff that you do own, e.g. aquarium, glass table etc. or you are the owner of the house then you may need additional glass breaking insurance.

  • Notice period for cancelling Personal Liability & Household insurance in CH: 3 months

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