What will I do with my pension money?
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What options do you have I painted in the posts earlier there are already as many as 4 of them. It is up to you to decide what to do with the money, and in this post I will describe my plan.
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I decided to take the money and have already applied for withdrawal. By the way, all good minds tried to challenge and undermine my decision, and they are generally right that the decision is very dubious from the point of view of financial literacy. They have iron arguments - I immediately lose 20% of the amount, and this is a very impressive amount in my case, and besides, I also lose 4% every month from the brutto salary paid by the state. Such a strong kick back can not weakly give odds to those who leave money in the pension pillar and continue savings together with the state.
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So why did I make such a financially stupid decision? The biggest reason on my part is that I manage my finances on my own. I have already become very adept at understanding the movement of the markets and follow the news every day. During the year of my activity in the financial markets, I managed to win back 38% of the value of my portfolio today, while making 204 transactions (purchase and sale), which is already 2 times more than what SEB or LHV pension funds have earned for me over 10 years of activity with amounts in funds that were 2-3 times larger.
Of course, you can’t talk about my constant success because the markets this year showed a record growth for the entire time of their existence and it’s impossible to draw unambiguous conclusions that I will be able to win back 38% every year. But I believe that I can definitely beat the measly 3% per year that the current pension funds gave me. It's just ridiculous how SEB Progressiivne and LHV L funds moved, which have a risk class almost the same as stocks. When reading this text, you should understand that these claims are from a person related to finance, if you do not have this experience, then it will most likely be difficult for you to take on the management of your finances and take care of your pension from a professional point of view.
The second reason why I do this is an experiment. I will take all the money and invest either in stocks, while compiling a special portfolio, or I will buy real estate with this money and I will monitor how these financial assets move further. To some extent, I challenge those who leave their pension savings in the 2nd pillar or in the Pension Investment Fund, trying to outperform the future value of their portfolios.
I want to compare after n years, whose solution was the best, and this will be my experiment. I will not spend this money and will not go on a trip, I will simply transfer from mast A to place B, relying on my experience and probably intelligence. This will be another interesting aspect, why it will be interesting for you to follow this profile.
As I said, I will put together a portfolio with the pension money, and the audience will be able to follow the course of this experiment.
To consolidate, EXIT from the pension pillar in Estonia and the waste of this money is your signature in financial illiteracy. Taking money and closing existing mortgage-housing loans is a stigma of financial illiteracy for life, from which it will be difficult to wash off later (I apologize in advance for such emotional colors :)). Just because I'm out doesn't mean it's a good idea.
If you want advice, leave the money alone in the second pillar and the most you can do is move everything from existing pension funds to index funds, you will definitely not lose if you do this anyway.
Will you follow the progress of this experiment? Want to also see what other people have already written in the comments on this topic? Then take another look here