Build up long-term private retirement provision with shares

Those wishing to save capital for retirement reliably and sustainably will fare best with targeted investment in diversified shares.

Until not that long ago, saving capital for private pension provision through savings accounts or conventional life insurance was enough to ensure adequate retirement provision in addition to Pillars 1 and 2. However, persistently low interest rates and demographic trends in Switzerland changed the environment for planning retirement provision. Those wishing to save sustainably for retirement while also continuing their accustomed lifestyle in their old age should invest part of the paid-in capital on a return-oriented basis, such as in shares.

Performance of shares from long-term perspective

Swiss Performance Index (1994 to 2020)

Performance of Swiss Performance Index (SPI®), 1994 to 2020:

The long-term perspective clearly shows that despite crises, shares have performed significantly better over the long term than bonds and savings accounts. 

Over the last 25 years, shares have gained an average of about 7.2 % per year, while the average value of bonds has risen by 3.6 % per year and that of savings deposits has grown by 0.8 % per year.

What is the Swiss Performance Index?

The SPI®, Switzerland's most extensive index, comprises about 200 Swiss companies. The performance of this index also reflects the performance of Switzerland's economy. 

The four rules for saving with shares

Broad diversification

Those who invest smartly spread their capital between different individual shares and regions to avoid cluster risk. Those who invest in AXA’s SmartFlex pension plan, for example, will be cleverly building up their retirement provision and avoiding a pension gap. The investment funds are strongly diversified and investors can choose from four different investment themes.

Long-term investment horizon 

All good things are worth waiting for. Surprisingly, this maxim also applies to saving with shares. Keeping calm and thinking for the long-term is usually the best policy. This is because the long-term perspective on market trends of the Swiss Performance Index, for example, over the last 25 years shows that despite crises, equity investments fare much better than savings accounts or bonds in terms of appreciation.

Note the low investment costs

Those who also wish to invest in shares to achieve their savings goals should take a close look at the costs involved. Excessively high costs lead to a substantially lower return.  The total cost of an investment consists of the cost of fund management, fund administration and fees for buying and selling fund units. The SmartFlex pension plan which involves investing part of savings capital in equity investments is characterized by comparatively low investment costs.

Regular payments

The general principle for long-term saving is that regular payments and consistent savings discipline are the nuts and bolts for sustainable and continuous capital accumulation. But regular contributions into a return-oriented pension plan also make sense with a view to investing on the stock market. Because those who contribute regularly benefit from being able to buy when prices are low when share prices fall. Here the experts also talk about the average price method in this regard.