Do you want to build up capital for early retirement, buy a house or simply improve your retirement income? The 3rd pillar is in your opinion the most effective solution to achieve this and you are right.
The 3rd pillar allows you to benefit from several advantages in addition to making your savings work. You can benefit from tax savings, protect your family in the event of death or integrate pensions in case of disability in addition to the first 2 pillars. However, it is necessary to make a choice: Should you take the 3rd pillar in banking or in insurance?
The bank system:
Banks offer two types of investments At present, so-called classical and investment fund solutions.
With the choice of a classic 3rd pillar bank account, you have the opportunity to make your money work safely. However, the current very low interest rates do not suggest big gains.
With a 3rd pillar banking solution linked to investment funds, you have the opportunity to benefit from the returns of the financial markets and hope to earn much more. Be careful, however, the risks of losses are for your wallet,
The insurance system:
You have the same opportunities to save as in the banking system. However, be careful, the third pillars in the form of insurance pay you an amount called cash value, which in the event of interruption of the contract, can penalize you if you take back your money before ten years or so.
With interest rates being low and investment funds risky, insurance companies have developed 3a hybrid solutions. You have a minimum guarantee and, depending on the evolution of investment funds or stock market indices, a very significant earning potential. In addition, some companies now offer protection against negative returns.
The risks of life:
Banks are supposed to know financial risks, but who better than insurers know life risks?
Insurance offers protections that allow, in the event of disability or death, not to draw on accumulated savings to remedy the drop in income related to these events.
If you want to pledge your 3rd pillar in order to make indirect amortization, it is better to turn to insurance, which will offer greater security and guarantees than banking.
In summary:
For a long-term investment (more than 10 years) and to cover your income, there is nothing like a 3rd pillar in the form of insurance with advantages on taxation, inheritance and on your savings.
For a short-term investment and without the need to cover your income, the 3rd pillar in the bank will be the most suitable.
