Save or invest with your 3rd pillar: which option should you choose?

To help you make the right choice, let’s look clearly at both options with their pros and cons. 

Option 1. Saving in cash: maximum security 

Cash savings are like a reassuring safe where your money quietly sits. In practice, your savings are placed in a secure bank account and hardly fluctuate. If peace of mind is your top priority, this option could be the one for you. 

Pros: 

• Zero risk: your money is guaranteed, with no risk of loss. 
• Predictable: you know exactly how much you’ll have for retirement, with no surprises. 
• No effort required: no need to follow financial news or make decisions – you simply save and relax. 

Cons: 

• Low returns: interest rates are usually very low, sometimes close to zero. Over time, inflation can even reduce your purchasing power. 
• Not ideal for the long term: if you have 20 or 30 years ahead of you, you might miss out on the opportunity to make your money grow. 

Option 2. Investing: to boost your savings 

Investing is a more active way to manage your 3rd pillar. Your money isn’t just parked, it’s invested in funds, shares, or other financial products. The goal? To generate a higher return over time. 

Pros: 

• Higher return potential: over the long term, your money can grow much faster, helping you build up a stronger retirement fund. 
• Protects against inflation: your savings can better keep up with the cost of living. 
• Makes your money work for you: you let your capital grow while you go about your life - and that can make a big difference over time. 

Cons: 

• Market fluctuations: in the short term, your investments can go up or down depending on the markets. 
• Less predictable: it’s harder to know exactly how much you’ll have at retirement. 

But don’t worry: historically, over the long run, financial markets tend to offer stronger growth opportunities. Even after difficult periods, a well-diversified investment strategy can often more than make up for temporary losses. 

So, how should you choose? 

It all depends on you: your profile, your goals and your comfort with risk. 

• If you want maximum security and prefer to avoid any uncertainty, cash savings might suit you best. 
• If you’re young, with more than 10 or 15 years before retirement, and you’re comfortable with a bit of volatility in exchange for potentially higher returns, then investing is probably your best bet. 

 The middle ground: a mix of both 

The good news? You don’t have to choose all or nothing. You can combine both approaches: 

• Keep part of your savings in cash for a guaranteed safety cushion. 
• Invest the rest to boost your long-term performance and take advantage of higher returns. 

That way, you create a tailor-made balance: one that fits your goals and your appetite for risk. 

At Pilla, we help you find exactly that balance, based on your personal situation. Your 3rd pillar should reflect who you are, and most importantly, support your plans for the future. 

So, ready to make your retirement savings grow smartly?