Legal pensions already are not covering 50% of the gross salary anymore and the trend is falling. Anyone who wants to avoid gaps in provisions and wants to spend their remaining years without financial worries has to save single-handedly. There is no best solution as personal situations such as professional and family planning, risk tolerance and financial capabilities always influence decisions. “Speculative Investments like options, futures or derivates are not suitable for pension provisions. This applies regardless of the amount that one can build up in pension savings, the monthly savings from the net salary or of inherited money that is available” say Portfolio Managers of Swiss asset manager Genève Invest.
The independent asset manager considers conservative investments with low risk a better alternative for long-term wealth accumulation. He suggests fixed-interest investments to build a basis for pension provisions. They are considered as an attractive alternative to the usual fixed-term deposits that banks offer. When the investment horizon is fixed up to ten years, fixed-interest investments like bonds can produce definite returns of 7 to 8 percent. The crucial point is to provide security by a broad distribution of bonds. “The investment can be complemented with other financial products depending on the personal risk tolerance. Therefore it is a possible opportunity for younger investors in their 30ies to take a calculated risk and to check in individual situations if an additional mix of shares for example of value shares could be considered.”
An investment of capital in fixed-interest bonds allows a continuous fixed interest income. Companies issuing bonds grant a fixed annual payment of the interest coupon. In addition to this, the nominal value of the bond will be paid back at the end of maturity. Furthermore the interest payments can be paid out or can be reinvested. “Exceptionally important is the characteristic that bonds in case of need can be sold at the current market price. So if unexpected expenses arise, the money is not blocked for the maturity of the bond.” Freiberg explains. After all, the most important aspect should always be to retire without debt, reminds the expert.