What strategy should you choose to invest your 3a?

In Switzerland, we are lucky to be able to deduct our taxes by investing the money saved. By using a 3rd pillar A account. But what strategy should you choose to invest your 3a?

Table of Contents

Recommended products

⚠ This article is not investment advice. Only research on past performance. Investments can cause loss of money.

Account 3a in brief 🔍

First of all, if you don't understand what a 3a account is and the importance of investing in a 3a. I suggest you read my articles on my page investment.

To summarize, a 3a account is an individual pension savings account to contribute to retirement or certain financial projects. With certain conditions.

Note that payments into a 3a account are tax deductible. As a result, saving in a 3a account improves the tax situation of the Swiss taxpayer.

In addition, with certain 3a accounts, it is possible to invest in the stock market and other financial investments.

Where should I place my 3a account? 🔍

I wrote an article on this subject.”Types of third pillar 3a accounts”

In summary, there are 3 solutions:

Insurances
Banks
Provident fund

In my opinion, which is not investment advice. I prefer to invest my money each year, with regular payments up to the ceiling permitted by the confederation, in a pension fund.

For example, Viac or Finpension.

Possible strategies 📈

👉 Regarding the strategy for your 3a. Broadly speaking, 3a accounts suggest investing your 3a mainly in:

Cash 💲 (That is, in a bank account with some annual interest)
Stock market 📈 (company shares)
Real estate 🏠
Raw materials 🌕 (e.g. gold)
Bond 💲 (That is, loans requested by states that repay with interest)

Overall, strategies vary between:

100% liquidity
99% stock exchange and 1% liquidity
A mix between cash, bonds, stock market, real estate or raw materials

Once you understand this, I think what you will be interested in is the return in order to grow your money 😜

Exactly, how much will I be able to earn with my 3a investments? 🧐

As you can imagine, I'm not a soothsayer 😇.

I can't become the performance in the future. On the other hand, in this article I have summarized the past performance of some strategies 😉.

This is not a guarantee, but a research 🧐

Comparison of strategies 📈

▶ 100% liquidity 💲

By searching on a 3a savings account comparator¹. OWe see that the majority of accounts offer annual interest rates of around 1%.

Which is not bad compared to 2022, because the interest was very low... around 0.5%.

Note that this is the least volatile strategy. On the other hand, the past performance is very minimal.

Moreover, it did not compensate for inflation in Switzerland,

Expected performance
Approximately 1% – 1.5% (at the time of writing)

▶ 99% on the stock market 📈

For this strategy, the 99% from your 3a account is invested in the stock market ❗

👉 When you invest your 3a in the stock market, the accounts generally offer you 3 different stock market strategies:

100% Swiss shares
Global (a mix of Swiss stocks and international stocks).
Sustainable (investment only in actions of an ecological and social nature).

If we are interested in past profitability. At the time of writing this article. Here is a summary of the performance of the Viac account for each strategy. From 2013 to 2023.

Global 100	7.6% annualized in 5 years	6.7% annualized in 10 years
Switzerland 100	7.7% annualized in 5 years	6.4% annualized in 10 years
Sustainable 100	8% annualized in 5 years

In order to be able to compare, I included the results from Finpension. It is a 3a account which also allows you to invest 99% in the stock market.

Global 100	7.9% annualized in 5 years
Switzerland 100	7.8% annualized in 5 years
Sustainable 100	7.8% annualized in 5 years

Attention ⚠ The written numbers are based on the day I write these lines. That is to say, early 2024.

➡ If you want up-to-date figures when you read this article, here is this page by Viac. Or, this page of Finpension.

➡ As a result, we see that the average return invested in the stock market is much higher compared to a cash strategy. In fact, if we base ourselves on past results, the return is almost 8 times higher ❗❕

On the other hand, you have to be aware that money in the stock market fluctuates. That is to say, investing in the stock market is a volatile investment,

Which means that it is possible that your yield is at -10% one month and the next month it is at +10%. Therefore, it is a strategy only useful in the long term (more than 5 years).

▶ Mix between several strategies 💲🏠🌕📈

Now we will analyze the past performance of several simultaneous investments.

Let's start with a strategy (global 20). This strategy invests mainly in cash (68%). But also 20% in the stock market.

In addition, with this stock market strategy, there are some relatively stable financial investments such as real estate or raw materials.

As a result, the investor in this Viac portfolio has a very diversified financial heritage!

In this case, the annualized return is 2.3% annualized over 10 years.

Now let's compare this strategy with a lower percentage in cash and a higher percentage in stocks. For example, with the global 60.

In this case, the annualized return is better. 5% annualized in 10 years.

Here is the annualized return in 10 years 💲💲

Global 20	2.3% annualized in 10 years
Global 60	5% annualized in 10 years

To summarize, we observe that investing 60 % in the stock market yielded double the profitability compared to investing only 20% in the stock market (based on the years 2013-2023).

However, the yield of global 60 remains lower than global 100 🧐

Always based on the results between 2013-2023. The diversified portfolio of global 60 (5% a.) remains lower than the 99% equity portfolio (6.7% a.)

Global 100	6.7% annualized in 10 years
Global 60	5% annualized in 10 years

Provident fund commissions 📈

When we invest our money, we must pay particular attention to the commissions and management fees of our 3a pension fund.

Ideally, the 3a pension fund would be fee-free. Since this is not possible, you have to select the cheapest one. At the time of writing, the cheap pension accounts in Switzerland have total commissions of less than 0.45%.

Note that 0.10 % more in commissions can correspond to thousands of CHF lost in the long term! Depending on the amount of savings.

Conclusion

When you open a 3a account, you have to choose between a strategy:

100% liquidity
99% shares
Mix between cash, shares, real estate, commodities and bonds

In broad terms, based on Viac's results (at the time of writing this article). Here is the annualized profitability result between the different strategies 😉

➡ To conclude, based on past performances (2013-2023). Investing 99% of your 3a in the stock market is the most profitable strategy ‼

And you ? What strategy will you choose to invest your 3a?

Note ❗ This article is not investment advice. Only research on past performance. Investments can cause you to lose money.

Subscribe for the latest news ✍

You have a frugalist or minimalist project and you want a training? Click ”here”.

My pages

Lastest Post

How does this blog live?

Overall, this blog lives on sharing a frugal and minimalist lifestyle.

For a question of transparency towards the readers. All recommended products are in order to make life cheaper, simpler and to promote the essentials.

Basically, my only income with this blog comes:

Trainings that I realize
Promo codes for the products I use
Donations that readers make in exchange for neutral information.

About me

I decided to create this blog to develop and help readers who are looking for a simpler and more economical life.

Compared to before, I was a person who consumed a lot until the day I realized that my consumption made me sadder and poorer 😑

Now I prefer the minimum of my needs to be happy and achieve my financial freedom.

Without realizingI started to focus on saving and investing to depend on a boss for as little time as possible and to speed up my personal projects.

As a result, I am getting richer in a way that I never imagined since I have an average salary in Switzerland.

What is the purpose of this blog?

The goal is to share and learn with others who seek freedom and simplicity 😉

Are you more of a minimalist or a frugalist?

I am as minimalist as I am frugalist. However, there are situations where I lean more towards an art of life.

To conclude, I think the most important thing is to feel comfortable in your lifestyle 😊

Which strategy to choose to invest your 3a?

Minimalism and Frugalism

Your basket (items: 0)