Before you go farther, perhaps check that your retirement income will still qualify you for your current mortgage.
From conversations here on EF and IRL many, perhaps most, seem to have no problem continuing with their mortgages despite reduced income. But a few folks have had to top-up their deposits to get the borrowed amount down to what their post-retirement income allows.
I can't see much rhyme or reason, as I know two couples with the same bank, one had to top up, the other not a peep from the bank.
You likely would not be affected, but perhaps keep this in the back of your mind as you determine what to do with the cash.
Now over to the investment savvy folks...
I already checked with the bank regarding my mortgages in my retirement years. Since the holiday home generates income through holiday rentals, plus I rent out a room in my regular home, they said I shouldn't have to be concerned. Also, I understand banks don't actually want their clients to pay back mortgages!!
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As now even Postfiance has setup a fund-based Pillar 3 product and ETFs are basically on page 3 of 20min once a week, I believe the popping of the bubble can't be too far away ;-)
That, and the surge in "alternative currencies" like BitCoin and Ether.
How are you going to pay for them if rates skyrocket (they're already trending up), house prices accordingly drop, and your bank makes a margin call or refuses to refinance your mortgage after retirement because your yearly income drops?
It's cash that it seems you can't afford to lose given your mortgage situation, so I wouldn't put it into stocks.
Not impressed, so I've signed up for a virtual demo account with them, asked specifically for high risk allocation and they still managed to lose almost 1% YTD in it, before their fees. Vanguard Total World on the other hand is up 5-6% YTD in CHF terms and comes with only 0.11% expense ratio, not 0.50% + third party charges that truewealth charges.
Their default portfolio heavily overweights Switzerland and uses SMI index for Swiss stocks, which is practically mostly about just 3 companies with only a tiny percentage of revenues from Switzerland - not a bright idea at all IMHO.
Well, you better get some, start reading. Without knowledge, people have been known to lose money even in highly profitable funds.
"Peter Lynch. As manager of the Fidelity Magellan fund, he generated average annual returns of 29% per year over his 14-year tenure. The average investor in the fund, however, managed to lose money -- selling the fund at its lows and buying high."
The holiday home does very well in rentals, bringing in 20K+ CHF a year while allowing me to use it a few weeks during high season plus lots of weekends here and there. It also has emotional value, having been in the family for almost 50 years. The plan is to sell my regular flat if keeping both isn't sustainable.
I've been reading, mostly to understand investment vocabulary. Gaining strategy insight feels a bit tricky.
I'm thinking low to mid risk investments - I would find a net 2% gain great. Possibly True Wealth performs better at the low end than the high? I'll try their virtual investment tool and will also look into Vanguard.
Keeping finances in CHF, I'm settling on CornerTrader. Seems that there are a lot of lukewarm feelings about TrueWealth.
i would not like to have debt in retirement.
also fees for robo advisers are too high
If I pay down the mortgage, I consider the money to be "gone forever", in that it's unlikely I can "re-mortgage" if I need retirement money. As it is, the mortgage covers only 40% of the property value, so I already own a substantial portion.
I've paid the maximum amount into the third pillar for all of my 10 years in Switzerland.
Since writing the original post a couple of years ago, I've done absolutely nothing with my cash, except keep it in the bank at 0% interest. I'm trying to overcome an aversion to investment caused by a pretty bad experience. Now I'm ready to have another go at it.
I've bought a book put out by "Beobachter" called "PloĢtzlich Geld - so legen Sie richtig an" which seems to be fantastic at explaining investment basics in Switzerland. I'm in the low to middle risk category and a "small investor". I've determined my mix should be 20% cash, 40% stocks and 40% bonds and should limit to about 10 different stocks/bonds. Now it's time to choose what to buy.
I myself am using td Ameritrade in the states.
As for getting a better deal then the banks that are all burdened with negative interest rates and are try hard to mask it with more fees, you may want to consider Oiko Credit:
https://de.oikocredit.ch/geldanlage-privatpersonen
On average one gets a 2% dividend.
Better then any Swiss bank and it nice to know that your money is used for a good purpose, helping others who really need it.
personally, if i were in your position, i'd keep part as cash, sell the holiday home and use the funds and rest to pay off the mortgage.