Austria: FynUp Website - ETFs vs Pension Products... Thoughts?

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Topic Author
nomadboglenoob
Posts: 30
Joined: Wed Aug 04, 2021 2:18 pm

Austria: FynUp Website - ETFs vs Pension Products... Thoughts?

Post by nomadboglenoob »

Hi boglegang!

In my research into the best ways to invest in Austria, I've come across a digital insurance broker called FynUp. They have a tool to compare the returns of investing via a cheap broker like FLATEX vs investing via a unit-linked pension product when the funds return the same interest rate:

https://www.fynup.at/c/pruefen

MY QUESTION TO YOU ALL:

how accurate/trustworthy does that calculation on their website seem using this tool?


I compared investing a 40k lump sum and then 1k per month for 27 years, and with 7% interest return. With all taxes considered the tool suggests if I was to invest in the iShares Core MSCI W.U.E.USD A (IE00B4L5Y983) fund in Flatex vs with Standard Life - I'd take home 649k profit with Standard Life vs 526k with Flatex...

Speaking to FynUp they seem to offer much better cost ratios with the pension products they offer vs normal insurance brokers. At face value, it seems they manage to overcome the issue that the savings on the Capital Gains Tax that comes from investing via a pension product is usually eaten away by the costs from the insurance company. But I don't feel like I have the knowledge to verify these claims...
Last edited by nomadboglenoob on Thu Oct 21, 2021 8:39 am, edited 4 times in total.
Topic Author
nomadboglenoob
Posts: 30
Joined: Wed Aug 04, 2021 2:18 pm

Re: Austria: FynUp Website - ETFs vs Pension Products... Thoughts?

Post by nomadboglenoob »

FYI, these are the funds I've found within the pension products offered by FynUp that seem to match bogle ideals. Paid into within the pension wrapper you'd only owe the insurance tax of 4% on funds paid in and no capital gains tax on withdrawn funds at the end of the policy... any comments?:

HDI LEBEN
  • iShares Core MSCI W.U.E.USD A (IE00B4L5Y983)
  • iShares Core MSCI EM IMI U.E.USD A (IE00BKM4GZ66)
Standard Life
  • Vanguard Global Stock Index EUR (IE00B03HD191) - cost: 0.18%
  • Vanguard Emerg.Mkts.Stock Index EUR Acc (IE0031786696) - cost: 0.23%
In both, I'd add a bond based index fund to diversify somewhat
jg12345
Posts: 427
Joined: Fri Dec 11, 2020 12:03 pm

Re: Austria: FynUp Website - ETFs vs Pension Products... Thoughts?

Post by jg12345 »

Hi OP,

You ask about us checking whether the calculations on a website are correct.

Some comments:
1) the fynup website you link is in German, so only German-speaking people can reply

2) I doubt they would put "false" information. Somewhere there will be little words on how they made them.
If you want a tool to check those, maybe https://www.portfoliovisualizer.com/backtest-portfolio could help

3) the only comment I have is that adding bonds to a global equity portfolio is usually done to provide ballast, rather than "diversify" your equity investment

Best of luck
Topic Author
nomadboglenoob
Posts: 30
Joined: Wed Aug 04, 2021 2:18 pm

Re: Austria: FynUp Website - ETFs vs Pension Products... Thoughts?

Post by nomadboglenoob »

jg12345 wrote: Thu Oct 21, 2021 12:18 pm 1) the fynup website you link is in German, so only German-speaking people can reply
My bad. Here's a translated screen shot of the projection they run with the scenario in the first image.

Image

Image

Researching on reddit, it seems that some people question the projection based on the lack of transparency on how they calculate it and what factors are considered. So I've asked FynUp if they can provide more information on their calculations and what conditions they apply. I imagine they won't share this given it's their sales model, but you never know!
jg12345 wrote: Thu Oct 21, 2021 12:18 pm 3) the only comment I have is that adding bonds to a global equity portfolio is usually done to provide ballast, rather than "diversify" your equity investment
Good point, thanks.
manu
Posts: 8
Joined: Wed Aug 26, 2020 10:04 am

Re: Austria: FynUp Website - ETFs vs Pension Products... Thoughts?

Post by manu »

Not planning to look at the details, but I'd first dig into the difference in returns/profits. Why are they higher for their own product? If you answer that, you may find the answer. 😇
Topic Author
nomadboglenoob
Posts: 30
Joined: Wed Aug 04, 2021 2:18 pm

Re: Austria: FynUp Website - ETFs vs Pension Products... Thoughts?

Post by nomadboglenoob »

manu wrote: Fri Oct 22, 2021 8:30 am Not planning to look at the details, but I'd first dig into the difference in returns/profits. Why are they higher for their own product? If you answer that, you may find the answer. 😇
In Austria, capital gains tax is 27.5% on profit (and with funds a proportion of that paid yearly on accumulated profit and the rest paid on exiting the fund).However, pension products that invest in funds/ETFs don't get capital gains taxed. Instead, you pay an 'insurance tax' on the money paid in @ 4%. Obviously, that would give you a better return most of the time, but the pension products often add a lot of different charges despite being little more than wrappers.

This graph supposedly shows that if you invest in a fund using a via a pension product vs a cheep online broker, you can get a higher return due to the avoidance of capital gains tax and the lower fees FynUp has agreed with the pension companies.

My concern is the tax and pension fee system is quite complicated with a myriad of factors effecting growth - so I wanted to see if anyone could vouch for the calculation or offer any words of advice.

For now, I've asked them if they are able to share what has gone into the calculations that's produced this chart - given the fund it shows isn't actually available within the Standard Life pension product.
jg12345
Posts: 427
Joined: Fri Dec 11, 2020 12:03 pm

Re: Austria: FynUp Website - ETFs vs Pension Products... Thoughts?

Post by jg12345 »

Not possible to say given the information they share is quite vague/not specific, so you did well in asking them for details

1) the "regional spread" should be the same, given it's the same fund
2) the risk level should be the same, given it's the same fund
3) they should show a gross return and net return, or at least specify how return is measured
4)... and so on

5) the return should be net, I suppose, and then the only difference in cost

From what you say, I'd say that so long that the pension fund costs are below 23.5% (27.5% CGT - 4%), then it's better to invest through them (no difference in fund access or in other words same ETF considered).
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