Hi all,
As I am from Europe I try to explain as good as possible. In my country you can invest a monthly amount, say 100 bucks, and an insurer invests this money on the stock market. On top you receive a premium from the government. Sounds too good to be true, right? It’s supposed to be a tool for citizens to build for retirement.
But: Fees are high (administration, sales, ..) and returns have been very low. I did the math and likely this deal will make me 1,5% a year until I retire in 27 years. Before taxes though!
That is a very low return and I think I can beat this over the next 20+ years by simply ETF investment. I have two options now:
A) suspend contract: no more payments from me go into this contract, however I still have to pay some fees. In the end the amount already in my pension fund will continued to be invested for a poor 1,5% and will likely reach 30k in 27 years.
B) Cancel contract: I will get all the money back, minus premiums I have received and minus taxes I need to pay on current capital gains.
->If I cancel I get 10k net today. So i loose 20k immediately. ->If I simply suspend contract it will be worth 30k in 27 years
Would you take the 10k now and take the chance to make more than 30k in 27 years? This means I would take chance/risk of either outperforming this deal in place or screw up and do worse.
Technically I just need to wait for another big correction and buy an ETF, that should triple my investment alone. On the other hand I don’t want to feeds an insurer with fees for poor returns.
Thank you very much
Submitted August 09, 2021 at 08:20AM by Many-Coach6987 https://ift.tt/3xJbDzr
