Strategy versus emotion
Behavioral economics studies issues such as how to invest correctly and which emotional stumbling blocks to avoid. Savers who take the most important insights of behavioral economists to heart are well on the way to becoming successful investors, even when it comes to pension planning. Overconfidence is a familiar stumbling block: many people tend to put investment success down to their skills, but claim that failures are due to chance or external circumstances. The most important rule that can be derived from this is that you should replace emotion with strategy in your investment decisions.
The investment horizon makes all the difference...
Time is also a crucial factor: if you want to build up assets, you need a long-term investment horizon. The number of years depends on the type of investment. This means that you should only invest the proportion of assets that you aren’t likely to need during this period. The investment horizon is often very long, especially for pillar 3a. This makes your pillar 3a assets suitable for benefiting from the higher return opportunities offered by investment solutions.
...a good mixture is vital too
A strategy also involves taking into account your own risk capacity and risk tolerance when making investments. The result is a portfolio that suits you. Your personal risk capacity can be determined on the basis of objective criteria, for example your situation in life, investment goals, investment horizon, savings rate, planned investments, financial obligations. Your personal risk tolerance, on the other hand, indicates how much risk you are willing to take, and may be higher or lower than your risk capacity.
It makes sense for your portfolio to be broadly diversified. If, as well as this, you plan to invest over a long-term investment horizon, you have a good chance of achieving above-average returns.
There is no such thing as the right time
Less experienced investors often wonder when is the right time to invest their assets. The short answer to this question is that there is no such thing. It is virtually impossible to extrapolate current trends into the future, and forecasts are subject to uncertainty. The somewhat longer answer again has to do with strategy: investors who invest at regular intervals spread the risk of price fluctuations and rely on the cost average effect. This allows them to gain maximum benefit from financial market trends.
Pension planning with foresight
Are you wondering how to invest your pillar 3a assets to benefit from higher earnings opportunities in the longer term? With the UBS “Fisca” Investment Plan, you benefit from an interest rate of 0.5%. The capital is invested into a UBS Vitainvest Investment Fund of your choice in 24 monthly installments. The resulting cost average effect reduces the risk of investing at an unfavorable time. This interesting investment opportunity is available to you until 30 September 2020. Contact your client advisor. He will be happy to help you.