Pension funds - invest or not?

    • SPeedFANat1c
      SPeedFANat1c
      Gold
      Joined: 04.01.2009 Posts: 5,071
      Hello,

      In our country relatively new thing such as pension funds, they are maybe like 15 years or less in there. I know in foreign countries this exist long time.

      And I have no idea is it worht to invest or not? When I see numbers, of the minimal guaranteed money back - it does not look so good.

      Or in another company there is just writen nice numbers, but somehing also written that this is aproximate and not guaranteed, which means if I understand well -my money can become zero.

      I did not check more companies. It takes a lot of time.

      BUt even lossing half of the money sucks. They say its long time, so I understand it is as in poker - over long time money grows and over short time they might fluctuate.

      Can you tell me something about this? Maybe you have real proff like grandma who is getting good amount of invested money back now?

      Unfortunally since this thing is new, there are no old people which I could ask about this.
  • 15 replies
    • RasTweet
      RasTweet
      Bronze
      Joined: 26.12.2009 Posts: 4,553
      Hey SpeedFan

      I started doing this last year. I'm from Belgium and we have one of the worst pensions in the world. So we kind of want to start saving for it ourselves. Some do it on their own, some do it like me.

      I do it at a company called "ergo" they are specialized in this. On 40% of my money there is a fixed % that it will increase for sure, the other 60% they invest in one of the biggest banks in the world. That 60% should never be lost but you never know… I guess it's a risk but I got the other 40% that backs me up. It's different to other companies apparently because usually you get 100% fixed or 100% investing.

      Why did I start doing this? For the obvious reason of course but also because our government pays back 30% of the amount we save each year. So I pay €90/month x 12 months/year = €1080, 30% of that = €324. That €324 is deducted from my yearly taxes.

      I hope this made sense?

      Regards

      RasTweet
    • VorpalF2F
      VorpalF2F
      Super Moderator
      Super Moderator
      Joined: 02.09.2010 Posts: 8,910
      In Canada, we can save or invest our money privately, and when we retire, purchase a product called an "annuity" that pays a monthly income until we die -- and there are types that continue to pay to the surviving spouse if any.

      That is option 1 -- and it is popular because the individual has some degree control over where the money is invested.

      There are also government pensions -- all employees pay into the Canada Pension Plan, and the employer must match the contributions -- it is more-or-less guaranteed, but the amounts are not great.

      Finally, there are pension plans administered by life insurance companies.
      There are also sponsored by employers and employees.

      There are two types -- defined contribution, and defined benefit.
      With the first, the amount you put in is specified, and you don't know at any given time what the pension will be.
      With the defined benefit version, the amount you will get is known at the outset, and the insurance company takes a bit off your paycheque each month to ensure that there is enough money to cover the benefits.

      The above is an oversimplification, but I'm guessing that there are similar things in all countries.

      Talk to your banker first -- or someone else you trust -- to find what each option is.

      At the very least, you should be setting aside a portion of your income each month -- you can decide later what you want to do with it.

      Best of luck
      --VS
    • SPeedFANat1c
      SPeedFANat1c
      Gold
      Joined: 04.01.2009 Posts: 5,071
      Thanks.

      There is also in my country company 'ergo'.

      The thing is - that at least with 2 companies which I talked to, they say I cannot see where they invest exactly. SO that sucks, then I dont know if they lie to me or not when they would say money is lost.

      BUt one guy from india showed that pension funds are showing data where they invest. But he showed some foreingn companies. I have not checked everything here in my country, maybe there are such also.

      But my parents from their experience say that I should not invest. There are various examples over those 20+ indepence from russia (I am lithuanina) years where companies just talk nice, everything looks serious and then they bust or whatever.

      we can save or invest our money privatel


      I could also save, that woudl be easiest way, but the problem is that money losess valua over years. Average loss maybe was about 5% per year, as inflation I guess.

      When it will be euro , then it should be about 2% inflation, at least they will be trieing to reach that as my sister says.

      Still its a loss.
    • RasTweet
      RasTweet
      Bronze
      Joined: 26.12.2009 Posts: 4,553
      Originally posted by SPeedFANat1c
      I could also save, that woudl be easiest way, but the problem is that money losess valua over years. Average loss maybe was about 5% per year, as inflation I guess.

      When it will be euro , then it should be about 2% inflation, at least they will be trieing to reach that as my sister says.
      This is also why I started. Plus saving private is hard I think. If you need something and don't have the money for it people very quickly go to that savings account to withdraw some of that money.

      It might be a hard decision for you, but for me it was a snap call.
    • VorpalF2F
      VorpalF2F
      Super Moderator
      Super Moderator
      Joined: 02.09.2010 Posts: 8,910
      Originally posted by RasTweet


      This is also why I started. Plus saving private is hard I think. If you need something and don't have the money for it people very quickly go to that savings account to withdraw some of that money.

      It might be a hard decision for you, but for me it was a snap call.
      I have an automatic transfer set up so that xx dollars are transferrred to savings every month. At the end of the year, I tranfer them to an account that pays better interest.

      So it is easy -- I never miss the money, because I never see it.

      --VS
    • SPeedFANat1c
      SPeedFANat1c
      Gold
      Joined: 04.01.2009 Posts: 5,071
      Talked yesterday with the woman who works at ergo, cool thing she said that in ergo there is possibility to have only 3 years and then cashout. So I guess if I would start to invest, I would choose 3 years. Which is not available at other companies or I dont know such yet.

      In 3 years they will not cheat on me and also the sum will not get as high so less risk.
    • RasTweet
      RasTweet
      Bronze
      Joined: 26.12.2009 Posts: 4,553
      I know I can stop it when I want to but I will lose a bit of money if I do.
    • ThatGuyMatt
      ThatGuyMatt
      Bronze
      Joined: 03.12.2010 Posts: 3,758
      I'm always being told by the parents that I should setup some sort of Pension Scheme but I never get around to it, I'm hopeful that I'll be some sort of millionaire by then I guess :rolleyes:
    • RasTweet
      RasTweet
      Bronze
      Joined: 26.12.2009 Posts: 4,553
      Originally posted by ThatGuyMatt
      I'm always being told by the parents that I should setup some sort of Pension Scheme but I never get around to it, I'm hopeful that I'll be some sort of millionaire by then I guess :rolleyes:
      Thats also my plan, but I have a back up plan with this pension thing.
    • mtr1g08
      mtr1g08
      Bronze
      Joined: 08.12.2013 Posts: 15
      Hi,

      I work in finance and did actuarial maths at Uni. You need to speak to an expert as pensions are extremely complicated. Delaying the start has huge consequences, if for example to pay x per month until you retire, delaying the start by 5 years reduces the amount of pension by approx 50%.
      You need to look at the tax laws so it depends what kind of tax payer you are because in England for example you get tax relief within certain limits. It also depends on things such as if your company will give additional contribution, the fees for handling the fund, the mechanism for retrieving the pension eg just annuity or annuity plus lump sum , type of pension eg final salary or based on the growth of the fund, penalties for leaving/transferring and any other relevant legislation.
      It also depends if you have spare funds to invest, even if you become a millionaire a pension can be a way of avoiding a lot of tax depending on your countries laws.
    • h3llscr3am
      h3llscr3am
      Bronze
      Joined: 04.02.2012 Posts: 33
      Hi guys,

      I'm not any kind of an investment guru but here's what I think/do about pension stuff.

      Originally posted by RasTweet
      I'm from Belgium and we have one of the worst pensions in the world. So we kind of want to start saving for it ourselves. Some do it on their own, some do it like me.
      RasTweet
      I don't know how it is in Belgium but let me tell you about Bulgaria :D
      My grandma's pension is 140 E per month.
      The maximum pension you can get is around 350 E.

      That is set by the law. You can't have more even if your salary was 5000 E.This is regarding the government pension fund or whatever it is called.
      I used to work for 5 years and the money they took from me for the pension fund is as good as lost to me. I can't withdraw it or anything like that(I think in some countries you can withdraw the money with some tax of course and do whatever you want with the rest). I will probably never have pension coz I have to work for 30 years or smth like that. Anyways that money is gone.

      @SPeedFANat1c

      I don't really trust governments and banks. The most fresh situation was in Cyprus May 2013 I think, where they just took people's money from there bank accounts.. google it if you missed it.

      I personally invest in physical gold/silver (that's for the long run.. kind of secure IMO) and bitcoin(high risk/reward ratio).
      I buy silver coins from tavex as that's the best price I can get in BG but the problem with silver is that there is VAT on it which in my case is 20%. For gold there is no VAT. I'm telling you this because I saw there is http://www.tavex.lv/ (I don't know if that's Latvia or Lithuania though pls forgive my ignorance :f_love: )
      I really don't think it is a good idea to keep your savings in fiat currency(USD, Euro.. whatever) but I can't really give you a financial advice :)
      If you are serious about it find someone to talk to like economist or smth like that. Also I've heard there are courses/coaches regarding investing but I've never done that so I can't give you any feedback.

      Good luck
    • maheepsangari
      maheepsangari
      Gold
      Joined: 08.06.2010 Posts: 2,163
      Don't invest in any fund that doesn't show you its portfolio. Thats just ridonkulous.

      As the guy above mentioned, tax implications are very important there might be some kind of instruments where your country gives tax benefits, might as well go for that asset classes.

      I know you guys from Europe will disagree with me but the safest investment out there is still govt. bonds. Maybe just start buying some mutual funds that invest in govt. bonds. If you don't trust Europe, invest in some bond that invest in other countries that invest is govt. bonds.

      See its really simple in countries outside Europe, if govt. can't pay the debt back all they gotta do is print some more money hence safe. Warren Buffet warned you buggers about that now then didn't he when you went out forming ECB.

      Start picking up mutual funds that invest in govt. debt. later pick up other asset classes as you feel comfortable.
    • SPeedFANat1c
      SPeedFANat1c
      Gold
      Joined: 04.01.2009 Posts: 5,071
      I'll be some sort of millionaire by then I guess rolleyes


      optimist :) Are you having some serious plan how to achieve it? ANd necesarry skills? Unless of course you get lucky- ship some tournament or win at lottery or someting like that.


      I don't really trust governments and banks. The most fresh situation was in Cyprus May 2013 I think, where they just took people's money from there bank accounts.. google it if you missed it.


      Heard such things about greece.



      For gold there is no VAT. I'm telling you this because I saw there is http://www.tavex.lv/ (I don't know if that's Latvia or Lithuania though pls forgive my ignorance fish love )


      .lv is latvia. .lt is lithuania


      talked about this with maheepsangari and he mentioned good point - to spread money acrross different places where to invest. SO proabbly its ok to invest some to governments, just not the whole 'bankroll' so if somethings goes wrong, another thing will win, and if you are lucky you still make profit. While putting everythign in one spot even in relatively safe one - can make make your money gone even it its low probability to happen so.
    • DonkeyDirk
      DonkeyDirk
      Silver
      Joined: 15.06.2010 Posts: 522
      Originally posted by VorpalF2F
      In Canada, we can save or invest our money privately, and when we retire, purchase a product called an "annuity" that pays a monthly income until we die -- and there are types that continue to pay to the surviving spouse if any.

      That is option 1 -- and it is popular because the individual has some degree control over where the money is invested.

      There are also government pensions -- all employees pay into the Canada Pension Plan, and the employer must match the contributions -- it is more-or-less guaranteed, but the amounts are not great.

      Finally, there are pension plans administered by life insurance companies.
      There are also sponsored by employers and employees.

      There are two types -- defined contribution, and defined benefit.
      With the first, the amount you put in is specified, and you don't know at any given time what the pension will be.
      With the defined benefit version, the amount you will get is known at the outset, and the insurance company takes a bit off your paycheque each month to ensure that there is enough money to cover the benefits.

      The above is an oversimplification, but I'm guessing that there are similar things in all countries.

      Talk to your banker first -- or someone else you trust -- to find what each option is.

      At the very least, you should be setting aside a portion of your income each month -- you can decide later what you want to do with it.

      Best of luck
      --VS

      The problem with Belgium is you never know when they are going to raise taxes on this. If could well be true that within 25 years they tax it for 50%. :'( Living in Belgium aswell and the amount of changes to different taxes is just LOL ?(
    • RasTweet
      RasTweet
      Bronze
      Joined: 26.12.2009 Posts: 4,553
      Originally posted by DonkeyDirk
      The problem with Belgium is you never know when they are going to raise taxes on this. If could well be true that within 25 years they tax it for 50%. :'( Living in Belgium aswell and the amount of changes to different taxes is just LOL ?(
      This is true. But right now we get 30% we invest back. This week they said they were going to stop this. Which would suck big time! But then our pension in general would be higher. It's still better then paying taxes on it I guess...