Nest egg – Looking to the future with financial security

Name: findependent
Brand: findependent
Rating: 5.0 (80 reviews)

We’ll show you why it makes sense to have a nest egg and how to plan the amount of your reserve

Your car suddenly breaks down or the washing machine stops working? Your employer throws you out the door overnight? These are all examples of unforeseen events that can quickly put you in financial difficulties. In Switzerland in particular, it is important to always have a nest egg ready. These reserves are necessary because the cost of living here is above average and an unforeseen incident can put a heavy strain on your wallet and shake up your financial budget.

A nest egg is a reserve that helps you to maintain your financial independence, even if the unexpected happens.

Who is a nest egg particularly suitable for?
What is the best way to store a nest egg?
What should I pay particular attention to with a nest egg?
How much money should my nest egg contain?
If I have very high monthly expenses, can I set aside a slightly lower percentage for my nest egg?
Can I invest my nest egg in a pillar 3a account?
Does the rental deposit count as a nest egg?
Advantages and disadvantages of the nest egg
Conclusion

What characterizes a nest egg?

Quickly available
Covers your expenses for several months
Gives you financial security and independence
Equips you for emergencies
Lets you sleep peacefully

Who is a nest egg particularly suitable for?

According to the latest data from the Federal Statistical Office, unforeseen expenses are the greatest risk of falling into poverty in Switzerland and around 20% of households in Switzerland cannot afford to cover expenses of CHF 2,500. (BFS 2023)
A nest egg is therefore suitable for anyone seeking a certain level of financial security. A savings reserve is particularly suitable for people with an unstable income, such as the self-employed or people with fixed-term employment contracts. However, people with a stable income can also benefit from a nest egg, as it is quickly available in the event of unforeseen circumstances.

What is the best way to store a nest egg?

There are several common ways to store a nest egg:

A savings account is a commonly chosen option because it’s safe and easy to manage. However, interest rates are usually low, so the money doesn’t generate much income or, as in the current situation with high inflation, even loses value. However, as a return is not the primary aim of a nest egg, the low interest rates are not a problem. Nevertheless, a distinction must still be made between a savings account and a private account. While both accounts are currently handled in the same way due to the low interest rates, your savings account may have a notice period of up to 6 months if interest rates rise. Keep this in mind when building up your nest egg so that you still have quick access to your money.

An investment can be an option if you are prepared to invest in riskier assets in order to achieve higher returns. However, we clearly advise against investing your nest egg in the stock market. Although your investment in ETFs, for example, can be liquidated quickly, it is particularly important to have a longer investment horizon when investing in ETFs. Otherwise, you may have to sell your nest egg at a high loss in difficult economic times.

You can also keep your reserve in cash at home, where it is quickly and easily accessible, but the nest egg is also exposed to a higher risk of theft or fire and the possibility of simply forgetting the amount after a long period of disuse is not negligible.

To avoid the aforementioned risks at home, you can also deposit your cash in a safe deposit box, but this is often associated with high costs and is therefore also not suitable for you to deposit your nest egg.

When choosing how to store your nest egg, it is important to ensure that your money is available quickly and easily in an emergency.

What should I pay particular attention to when it comes to my nest egg?

It is always advisable to regularly review your nest egg and adjust it if necessary to ensure that it meets your current needs. Especially in the current situation with constantly rising inflation, your money in your savings account or at home is continuously losing value and your monthly expenses are slowly increasing at the same time. So make sure you always have enough money on the side and resist the temptation to spend your money on other things!

How much money should the nest egg contain?

To find out what amount is appropriate for your nest egg, the first step is to carefully compile your monthly expenses. Take into account all regular expenses such as rent, electricity, water, telephone and internet bills, food, transportation costs and other expenses that you have every month.

It has proven to be a good guideline to have three to six months’ expenses ready as an iron reserve, i.e. with monthly expenses of CHF 3,000, your nest egg should be between CHF 9,000 and CHF 18,000

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If I have very high monthly expenses, can I set aside a slightly lower percentage for my nest egg?

If you have very high monthly expenses, it can be more difficult to build up a sufficient nest egg. In this situation, it can be tempting to put less money aside as a percentage for your nest egg. However, this is not a good idea as the size of your nest egg will depend on how much money you need to cover your monthly expenses if you suddenly have no income.

If you’re struggling to set aside enough money for your nest egg, you should carefully review your monthly expenses and possibly make savings to have more money available for your nest egg. We have a blog post on the subject in which we discuss the topic of budget planning.

Can I invest my nest egg in a 3a account?

The pillar 3a is a long-term investment for old age. This means that the amount you invest is not available at short notice and is not suitable for covering financial emergencies.

However, it is a good idea to consider your 3a account as part of your general financial planning. As it is a private pension plan, it can help to increase your financial security in old age by providing additional income. You can find more information on pillar 3a in this blog post. But as previously mentioned, the pillar 3a is not suitable for a nest egg.

Does the rental deposit count as a nest egg?

No, the rental deposit should not be counted as a nest egg as it is deposited for a specific purpose – namely as security for the landlord – and is not accessible to cover unforeseen expenses.

In short, the nest egg has the following advantages and disadvantages for you:

Advantages of a nest egg	Disadvantages of a nest egg
Quick and uncomplicated source of money in emergency situations	Mostly as interest-free assets in an account
Less uncertainty over the financial future
More financial independence

Conclusion

A nest egg is an important financial safeguard and should not be neglected. It is better to be able to fall back on a sufficient nest egg if you find yourself in a financial emergency than to sink into a maelstrom of problems due to a lack of financial security. After all, debt is much more expensive than putting your money aside.

Haven’t saved enough yet? Find out more about our investment solutions