Tips for investing in pension plans
Posted: Wed Dec 11, 2024 10:55 am
In a context in which public pensions are increasingly under scrutiny, savers must take action. And, in this sense, investing in a pension plan is one of the best instruments to supplement your retirement.
However, it is not enough to invest in any product, in any way.
There are a number of tips for investing in a pension plan so that you can establish an intelligent strategy and reap the greatest possible benefits when you retire.
Table of Contents
The sooner you start, the better
Choose the pension plan that best suits your lifestyle
Take advantage of tax deductions
A plan with the lowest possible commissions
Invest in an indexed pension plan
Invest in a Pension Plan through inbestMe
The sooner you start, the better
It's one of the maxims of any investor: The sooner you start investing, the better, even if you're not thinking about retirement yet.
The reason is twofold: firstly, because you have more time to recover from possible losses and, consequently, you can invest in a variable-income pension plan. In addition, they provide greater returns .
But, above all, you will take better advantage of the full potential of compound capitalization.
And the differences are significant: an investor who starts overseas chinese phone number data investing at age 30 and invests €100 per month in a pension plan until retirement at age 65 will be able to obtain a total capital of almost €178,000.
However, if you started 10 years later, at age 40, the capital would drop to €81,000.
Choose the pension plan that best suits your lifestyle
Depending on the stage of your life, it is more advisable to choose one pension plan or another.
For example, if you are a young person, it may be more interesting for you to choose a variable-income pension plan with which you can obtain greater returns while assuming greater risk.
If, on the other hand, your retirement is close, it would be better to opt for a fixed-income or mixed pension plan.
In any case, the ideal is to shape your investment profile to your life stage. Since transfers between pension plans are exempt from taxation, you can change your profile according to your preferences. In this sense, a portfolio of pension plans is, for all intents and purposes, a better option than a single pension plan. As the years go by, your plan adjusts to your investor profile.
Download Pension Plans Guide
Take advantage of tax deductions
Pension plans are the only investment instrument with a beneficial impact for the taxpayer in the income tax return.
Contributions are deductible from the personal income tax base, up to a maximum of €1,500 per year or 30% of the sum of net income from work and economic activities received individually during the fiscal year.
Ideally, you should invest as much as possible up to the aforementioned €1,500 in order to take full advantage of this tax benefit. After all, this corresponds to a monthly contribution of €166.67, although you can always distribute it over other different periods.
A plan with the lowest possible commissions
Costs are one of the most important factors to consider when choosing a pension plan. Currently, the maximum fee that can be charged to a pension plan participant is 2% for the management fee and 0.5% for the deposit fee.
But this doesn't mean that these are the fees you have to bear.
There are more and more options for investing with minimal fees, below 1%. For your future profitability, it is essential that you choose a pension plan with the lowest possible fees.
Invest in an indexed pension plan
The investment strategy for pension plans should not be different from that for other financial products, such as investment funds.
You should seek the greatest possible diversification with the lowest possible costs, in order to ensure that your portfolio can obtain the maximum profitability with the lowest possible volatility.
And indexed pension plans are unbeatable here, because they not only have the lowest fees, but they also offer the best returns.
In fact, according to a study by IESE , an investment in an indexed pension plan that replicated the IBEX 35 would have achieved a return 252.6% higher than the average of active pension funds marketed in those years.
Invest in a Pension Plan through inbestMe
If you want to open a pension plan , but don't know where to start, thanks to inbestMe, you will have a portfolio of pension plans instead of a single product.
inbestMe will keep the portfolio adjusted to your investor profile and, if your personal situation changes, we will lower (or raise) the profile of the plan so that you do not have to look for another fund that fits your new situation.
In short, a plan for life.
However, it is not enough to invest in any product, in any way.
There are a number of tips for investing in a pension plan so that you can establish an intelligent strategy and reap the greatest possible benefits when you retire.
Table of Contents
The sooner you start, the better
Choose the pension plan that best suits your lifestyle
Take advantage of tax deductions
A plan with the lowest possible commissions
Invest in an indexed pension plan
Invest in a Pension Plan through inbestMe
The sooner you start, the better
It's one of the maxims of any investor: The sooner you start investing, the better, even if you're not thinking about retirement yet.
The reason is twofold: firstly, because you have more time to recover from possible losses and, consequently, you can invest in a variable-income pension plan. In addition, they provide greater returns .
But, above all, you will take better advantage of the full potential of compound capitalization.
And the differences are significant: an investor who starts overseas chinese phone number data investing at age 30 and invests €100 per month in a pension plan until retirement at age 65 will be able to obtain a total capital of almost €178,000.
However, if you started 10 years later, at age 40, the capital would drop to €81,000.
Choose the pension plan that best suits your lifestyle
Depending on the stage of your life, it is more advisable to choose one pension plan or another.
For example, if you are a young person, it may be more interesting for you to choose a variable-income pension plan with which you can obtain greater returns while assuming greater risk.
If, on the other hand, your retirement is close, it would be better to opt for a fixed-income or mixed pension plan.
In any case, the ideal is to shape your investment profile to your life stage. Since transfers between pension plans are exempt from taxation, you can change your profile according to your preferences. In this sense, a portfolio of pension plans is, for all intents and purposes, a better option than a single pension plan. As the years go by, your plan adjusts to your investor profile.
Download Pension Plans Guide
Take advantage of tax deductions
Pension plans are the only investment instrument with a beneficial impact for the taxpayer in the income tax return.
Contributions are deductible from the personal income tax base, up to a maximum of €1,500 per year or 30% of the sum of net income from work and economic activities received individually during the fiscal year.
Ideally, you should invest as much as possible up to the aforementioned €1,500 in order to take full advantage of this tax benefit. After all, this corresponds to a monthly contribution of €166.67, although you can always distribute it over other different periods.
A plan with the lowest possible commissions
Costs are one of the most important factors to consider when choosing a pension plan. Currently, the maximum fee that can be charged to a pension plan participant is 2% for the management fee and 0.5% for the deposit fee.
But this doesn't mean that these are the fees you have to bear.
There are more and more options for investing with minimal fees, below 1%. For your future profitability, it is essential that you choose a pension plan with the lowest possible fees.
Invest in an indexed pension plan
The investment strategy for pension plans should not be different from that for other financial products, such as investment funds.
You should seek the greatest possible diversification with the lowest possible costs, in order to ensure that your portfolio can obtain the maximum profitability with the lowest possible volatility.
And indexed pension plans are unbeatable here, because they not only have the lowest fees, but they also offer the best returns.
In fact, according to a study by IESE , an investment in an indexed pension plan that replicated the IBEX 35 would have achieved a return 252.6% higher than the average of active pension funds marketed in those years.
Invest in a Pension Plan through inbestMe
If you want to open a pension plan , but don't know where to start, thanks to inbestMe, you will have a portfolio of pension plans instead of a single product.
inbestMe will keep the portfolio adjusted to your investor profile and, if your personal situation changes, we will lower (or raise) the profile of the plan so that you do not have to look for another fund that fits your new situation.
In short, a plan for life.