I will NOT do it.
Reason: It’s a well-intentioned idea, but I think it will just turn into yet another bureaucratic monster—if not right away, then later, when future governments start tinkering with it. And yes—over time, they’ll tweak the rules to advance their respective political agendas. “Green ESG,” “redistribution,” “social responsibility”—maybe even “German companies for German portfolios” at some point—you never know what issues might come up over an extremely long investment horizon.
I definitely wouldn’t rely on promises made today for the future. So many of those have already been broken.
I’d rather invest independently, put my money where I want, and be able to withdraw it at any time. Under no circumstances do I want a portfolio that ultimately dictates a specific age at which I’m allowed to retire. Maybe someone at 55, 50, or 45 has built up enough financial firepower to enjoy a carefree life overlooking a lake in Norway or the sea in Spain. In that case, a retirement portfolio with a fixed income starting at age 68 just gets in the way.
Reason: It’s a well-intentioned idea, but I think it will just turn into yet another bureaucratic monster—if not right away, then later, when future governments start tinkering with it. And yes—over time, they’ll tweak the rules to advance their respective political agendas. “Green ESG,” “redistribution,” “social responsibility”—maybe even “German companies for German portfolios” at some point—you never know what issues might come up over an extremely long investment horizon.
I definitely wouldn’t rely on promises made today for the future. So many of those have already been broken.
I’d rather invest independently, put my money where I want, and be able to withdraw it at any time. Under no circumstances do I want a portfolio that ultimately dictates a specific age at which I’m allowed to retire. Maybe someone at 55, 50, or 45 has built up enough financial firepower to enjoy a carefree life overlooking a lake in Norway or the sea in Spain. In that case, a retirement portfolio with a fixed income starting at age 68 just gets in the way.
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@NichtRelevant Well, that’s up to you. I’ll go along with it. Under current rules, you could get out. And as long as only the so-called “standard product” is affected by any ESG filters, I don’t really care. I could also be indifferent to the retirement age, since you can factor into your withdrawal strategy that another source of income will be added at 67, 68, 69, or 70.
For avid savers like many of us, though, it’ll always be a little bonus where the decision to “take it or leave it” will hardly change the outcome.
For avid savers like many of us, though, it’ll always be a little bonus where the decision to “take it or leave it” will hardly change the outcome.
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•@SchlaubiSchlumpf Of course, you can "take it with you." Still, I think the rules will change over time. I wouldn't put too much in there. 😉
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•@NichtRelevant Where do you get your "knowledge" that the rules will change over time?
In my opinion, this is just more baseless scaremongering. There’s such a thing as grandfathering, and if you look at how often laws have been changed retroactively for existing Riester contracts... oh wait
In my opinion, this is just more baseless scaremongering. There’s such a thing as grandfathering, and if you look at how often laws have been changed retroactively for existing Riester contracts... oh wait
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@Eggplant Well, yes. The taxation of pensions has been changed. The taxation of gains from pension insurance policies has been changed. The holding periods for stock transactions were changed several times and then abolished. Certain empirically supported trends can certainly be observed here. Those who relied on legal certainty and predictability have, in some cases, been left high and dry.
The same is true for other issues regulated by the state or set by local authorities. For example, the calculation of property tax was revised—the promise was a revenue-neutral reform for citizens with no additional burden. That was, of course, nonsense. As for the rent index, the criteria are changed every 2–3 years so that landlords who have adapted their apartments to the new criteria can be taken advantage of. During the COVID-19 pandemic, tenants were allowed to suspend rent payments for up to two months, while landlords were not permitted to suspend their mortgage payments to the bank.
These are all rules that were changed retroactively and that long-term investors suddenly have to swallow.
I have very limited trust in government programs and promises, especially when those promises extend far into the future and the politicians who made them will be retired by the time I reach the stage of drawing on my own retirement savings.
The same is true for other issues regulated by the state or set by local authorities. For example, the calculation of property tax was revised—the promise was a revenue-neutral reform for citizens with no additional burden. That was, of course, nonsense. As for the rent index, the criteria are changed every 2–3 years so that landlords who have adapted their apartments to the new criteria can be taken advantage of. During the COVID-19 pandemic, tenants were allowed to suspend rent payments for up to two months, while landlords were not permitted to suspend their mortgage payments to the bank.
These are all rules that were changed retroactively and that long-term investors suddenly have to swallow.
I have very limited trust in government programs and promises, especially when those promises extend far into the future and the politicians who made them will be retired by the time I reach the stage of drawing on my own retirement savings.
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•@NichtRelevant This isn’t about changes that move us forward, but rather changes that take us backward. Of course, a government can, will, and should make changes. And a state of emergency is always a special case and temporary.
Regarding your rent example (and without me passing judgment on it right now): In the event of an emergency, the rent could have been deferred for 3 months. Not waived—which suggests the landlord would never see that money again during that time. The fact is that the rent wasn’t lost, but had to be paid at a later date. The (private) landlord was allowed to enforce similar rules with the bank.
Property tax—why was that nonsense? “Income-neutral” doesn’t mean things will get better for everyone! To get that out of the way first, yes, I know people whose property tax has gone down.
Grandfathering means that existing rules continue to apply to current contracts and assets. There were times when selling stocks was tax-free. If you still hold those stocks today, those rules apply to that portion of your portfolio—meaning you don’t pay taxes on the capital gains.
I wonder where this general—and, in my opinion, unfounded—skepticism toward the government comes from.
To anyone who wants to jump in here and say, “Not everything the government does is good”: Yes, I agree. But it’s not as universally bad as it’s increasingly being portrayed.
A current example of why the government can’t please everyone: 33 rules for pension reform.
Everyone knows the pension system needs to be reformed and wants that to happen. Moreover, it should be clear that there MUST be (unpleasant) changes. By the way, that’s one reason why no one really wants to tackle this issue.
The result: grumbling and attempts to cherry-pick benefits
Once again: Yes, I’m negatively affected. Nevertheless, the proposals still don’t go far enough for me, and I hope at least that they’ll pass this comprehensive package—that would be a step toward stabilization. There won’t be a solution that benefits everyone; mathematically, that’s simply not possible.
Regarding your rent example (and without me passing judgment on it right now): In the event of an emergency, the rent could have been deferred for 3 months. Not waived—which suggests the landlord would never see that money again during that time. The fact is that the rent wasn’t lost, but had to be paid at a later date. The (private) landlord was allowed to enforce similar rules with the bank.
Property tax—why was that nonsense? “Income-neutral” doesn’t mean things will get better for everyone! To get that out of the way first, yes, I know people whose property tax has gone down.
Grandfathering means that existing rules continue to apply to current contracts and assets. There were times when selling stocks was tax-free. If you still hold those stocks today, those rules apply to that portion of your portfolio—meaning you don’t pay taxes on the capital gains.
I wonder where this general—and, in my opinion, unfounded—skepticism toward the government comes from.
To anyone who wants to jump in here and say, “Not everything the government does is good”: Yes, I agree. But it’s not as universally bad as it’s increasingly being portrayed.
A current example of why the government can’t please everyone: 33 rules for pension reform.
Everyone knows the pension system needs to be reformed and wants that to happen. Moreover, it should be clear that there MUST be (unpleasant) changes. By the way, that’s one reason why no one really wants to tackle this issue.
The result: grumbling and attempts to cherry-pick benefits
Once again: Yes, I’m negatively affected. Nevertheless, the proposals still don’t go far enough for me, and I hope at least that they’ll pass this comprehensive package—that would be a step toward stabilization. There won’t be a solution that benefits everyone; mathematically, that’s simply not possible.
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@Eggplant I appreciate that someone is taking the time to write detailed responses. However, I don’t think we’ll be able to reach a consensus here.
Of course, everyone is free to take advantage of the newly created pension and investment structures and to trust in the predictability and reliability of the government. And yes—in principle, it’s a positive development that the pension system is to include a pillar that utilizes the capital and stock markets and encourages citizens to plan for retirement and actively explore their options.
Nevertheless, I simply won’t do it. Because I want to be completely free to choose my own investment vehicles. Because I want the freedom to buy and sell at any time and then use the money as I see fit—for retirement, for other investments, for entrepreneurial ventures, or for any other expenses. And all of this without having to fill out any applications or provide justifications (I know the government just wants to protect me from myself. But I’d like to manage my own risk).
A quick note on COVID-19 and the rent deferral: True, the rent didn’t disappear; it “just” had to be paid later. But the reason the government introduced this deferral as a relief measure was precisely because tenants might face financial hardship due to the crisis. So the default risk was simply shifted to the investor; there was no government guarantee for the tenants’ deferred payments. The private landlord simply couldn’t suspend his monthly obligations as well. With two rental units at three months’ rent each, the landlord was left scrambling—and on top of his own problems caused by the COVID-19 crisis, he also had to deal with his tenants’ problems. Could he have negotiated with his bank and asked for a payment deferral? Sure. Would a bank have agreed to that? Most likely not. They would have lost all creditworthiness for the future and then faced problems renewing the loan.
I understand the issue of changing the rules for the future. But when it comes to certain long-term decisions, it doesn’t help me if the rules are “only” changed for the future. If my retirement income depends on renting out an apartment building and I already own the building, it’s simply a problem if, after a certain cutoff date, the landlord is required to contribute to tenants’ heating costs based on specific energy ratings—because that destroys an investment plan that was designed to span decades. Or if laws are introduced “effective immediately” that prohibit sudden rent increases when a unit is re-leased. The person who didn’t raise the rent for 15 years for an elderly woman on a small pension is suddenly the fool, because measures like rent caps, etc., suddenly prevent this.
Much of what is decided in the Bundestag is well-intentioned, but in my view, it’s poorly executed or hasn’t been thought through to the end.
Of course, everyone is free to take advantage of the newly created pension and investment structures and to trust in the predictability and reliability of the government. And yes—in principle, it’s a positive development that the pension system is to include a pillar that utilizes the capital and stock markets and encourages citizens to plan for retirement and actively explore their options.
Nevertheless, I simply won’t do it. Because I want to be completely free to choose my own investment vehicles. Because I want the freedom to buy and sell at any time and then use the money as I see fit—for retirement, for other investments, for entrepreneurial ventures, or for any other expenses. And all of this without having to fill out any applications or provide justifications (I know the government just wants to protect me from myself. But I’d like to manage my own risk).
A quick note on COVID-19 and the rent deferral: True, the rent didn’t disappear; it “just” had to be paid later. But the reason the government introduced this deferral as a relief measure was precisely because tenants might face financial hardship due to the crisis. So the default risk was simply shifted to the investor; there was no government guarantee for the tenants’ deferred payments. The private landlord simply couldn’t suspend his monthly obligations as well. With two rental units at three months’ rent each, the landlord was left scrambling—and on top of his own problems caused by the COVID-19 crisis, he also had to deal with his tenants’ problems. Could he have negotiated with his bank and asked for a payment deferral? Sure. Would a bank have agreed to that? Most likely not. They would have lost all creditworthiness for the future and then faced problems renewing the loan.
I understand the issue of changing the rules for the future. But when it comes to certain long-term decisions, it doesn’t help me if the rules are “only” changed for the future. If my retirement income depends on renting out an apartment building and I already own the building, it’s simply a problem if, after a certain cutoff date, the landlord is required to contribute to tenants’ heating costs based on specific energy ratings—because that destroys an investment plan that was designed to span decades. Or if laws are introduced “effective immediately” that prohibit sudden rent increases when a unit is re-leased. The person who didn’t raise the rent for 15 years for an elderly woman on a small pension is suddenly the fool, because measures like rent caps, etc., suddenly prevent this.
Much of what is decided in the Bundestag is well-intentioned, but in my view, it’s poorly executed or hasn’t been thought through to the end.
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•@NichtRelevant I don’t want to make you paranoid, but I think it doesn’t matter at all whether it’s a retirement savings account or a regular investment account. At the end of the day, the government can always change the rules. Introducing a flat-rate withholding tax, revising the taxation of investment income, tax exemptions…
Things are constantly changing. The government isn’t static. At some point, there could be a far-left government that believes capital gains are always bad unless they’re used for retirement planning, and that makes regular investment accounts even less favorable compared to retirement savings accounts.
But seriously: whether you opt for the retirement savings account or not makes only a marginal difference for most of us. So you should probably just do what you think is right.
Things are constantly changing. The government isn’t static. At some point, there could be a far-left government that believes capital gains are always bad unless they’re used for retirement planning, and that makes regular investment accounts even less favorable compared to retirement savings accounts.
But seriously: whether you opt for the retirement savings account or not makes only a marginal difference for most of us. So you should probably just do what you think is right.
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@SchlaubiSchlumpf Anyway—everyone can and should do whatever they want.
But as for being paranoid: I’ve already started making my first investments in the Czech Republic (though I don’t have a shotgun or any ammunition). 😅
But as for being paranoid: I’ve already started making my first investments in the Czech Republic (though I don’t have a shotgun or any ammunition). 😅
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@NichtRelevant 😂 You can still buy a little piece of land there and bury some gold
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@SchlaubiSchlumpf Great idea!!! 😀
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