Investing for retirement

Almost all developed countries use a pension system built on "pillars" — several sources that complement each other, so you don't depend on just one. Here's how each one works: who puts in the money, where it goes, and who manages it.

And is your own investment a fourth pillar? No, not officially. The model has 3 pillars (sometimes extended to 5, with a base "pillar 0" and a "pillar 4" that means informal support: family, owning your home). The investment you make on your own for retirement isn't a separate pillar — it's part of Pillar III (voluntary provisioning), except that you manage it yourself, instead of a fund.

Unlike countries with developed pension systems, Moldova doesn't have all three pillars. In practice, you have the state pension and, only recently, a voluntary private option. Here's what's available to you.

Participating in the voluntary fund doesn't affect your state pension — it's something extra. Funds of this kind are supervised by the CNPF, the non-bank financial market authority. We compare it at length with investing on your own in chapter 11.

(The data about the fund come from its official prospectus, approved by the CNPF in February 2026.)

To see just how small the pension is, we compare it with the salary. But the "average salary" you hear about in the news needs to be understood correctly: it's just a statistical average — you add up all the salaries in the Republic of Moldova and divide by the number of employees. It doesn't tell you how much you need to live on (that's a different indicator, the minimum subsistence level), only how much people earn on average. And it's misleading, because well-paid fields, like IT, pull the average up. The figure closer to reality is the median — the salary "in the middle," with half the population earning more and half earning less.

Figures from official sources: National Bureau of Statistics (salary distribution, September 2025) and CNAS (average pension, end of 2025; minimum pension as of April 1, 2026). The institutions publish and periodically revise these figures.

This isn't an idea of ours — it's how it's done across the entire developed world. In the United States, for example, 62% of adults own stocks, most of them precisely through pension accounts and investment funds (Gallup data, 2025).

Why do people invest the most in precisely the world's largest economy? Because their state pension (Social Security) is only a base — it isn't enough on its own. Just like in Moldova, actually. The difference is that Americans have systems that push them to invest: workplace pension accounts (401(k), where the employer often adds money on top of your own contribution) and individual accounts, encouraged through tax exemptions. That's how almost everyone ends up investing. Americans hold over $30 trillion in these accounts today.

We, in Moldova, don't have such systems — so, to cover the same gap, we have to do it ourselves. The mechanism is simple: you regularly set aside an amount and invest it. The stock market suits any amount — large or small — and especially small, regular amounts, which is why we focus on it here. A natural question: is a personal pension built only through the stock market? Not only. You can also use rental property, bank deposits or a business of your own.

Yes, the first step takes a bit of effort — unlike a fund, where you "set it and forget it." But you learn it once, something that's part of your financial education anyway, and then you use it forever. In exchange, you don't give away a share of your profit every year in fees for something you can easily do yourself.

The gains you reinvest produce, in turn, more gains. At first, capital grows slowly; after years, faster and faster — like a snowball rolling downhill and picking up more and more snow. That's why when you start matters more than how much you start with.

Where do we get a reference return from? The US stock market has an index called the S&P 500 — the 500 largest US companies, calculated by the financial agency Standard & Poor's. It's the best-known and most-watched index in the world, considered a kind of standard in global investing, which is why we use it as a benchmark. It has delivered, on average, around 10% per year since 1957 (the year the index launched), with dividends reinvested. After inflation, the real gain has been closer to around 7% per year.

An example calculation. You put in 1,500 lei every month, for 30 years. Out of your own pocket goes a total of 540,000 lei. The rest depends on the return:

• at ~7% per year (a cautious estimate), the capital would hypothetically reach around 1.7 million lei;
• at ~10% per year (the historical average of the S&P 500), around 3.4 million lei.

In both cases, the largest part doesn't come from what you deposited, but from the gains reinvested over time.

The good part: there have been many years with returns well above average — in 13 of the last 30 years the index rose more than 20% in a single year (for example +31% in 2019, +26% in 2023, +25% in 2024). The average of the last 30 years has been around 10.4% per year. The good years have outweighed the weak ones.

And a "growth" index: the Nasdaq 100 brings together 100 of the largest US companies listed on the Nasdaq exchange, most of them from technology (Apple, Microsoft, Nvidia), but not all. It has had higher historical returns (for example ~17% per year over the last decade), but also stronger swings — better suited to the years when your capital is growing, when you're young, than to the years right before retirement (see the chapter on allocation by age).

Because of this same effect, someone who starts at 25, instead of 35, usually ends up with almost double at retirement, for the same monthly amount — because those extra 10 years are exactly the years when the snowball is at its biggest. You can try your own numbers in the calculator in chapter 11.

For a long horizon, there are a few standard instruments, and they're usually combined for diversification:

• Index ETFs. An ETF is a basket of assets traded on the stock exchange. An index ETF includes, in a single purchase, dozens or hundreds of companies (for example, the companies in the S&P 500). You buy diversification automatically, at low cost — the reason they're popular for long-term investing.
• Dividend stocks. Mature companies that periodically share part of their profit with shareholders. They can provide a regular income, on top of price growth. More in What Passive Income Is.
• Bonds. You lend money to a government or a company in exchange for interest. They're more stable than stocks and are used to temper a portfolio's swings, especially close to retirement.
• Government securities (VMS) from Moldova. You lend money to the Moldovan state in exchange for interest. They're a local, low-risk option, and the interest has been tax-exempt since August 15, 2024 — useful for the conservative portion of your retirement money.

If you're starting from scratch with the basics, read What is investing first.

The general rule: while you're young and have many years left until retirement, you can hold a larger share in stocks — they grow more over the long term, but swing along the way (growth indices like the Nasdaq 100 can fit here too). As you get closer to retirement, you gradually shift toward bonds and stable instruments, to protect what you've built up. This mechanism is called a "glide path" — the gradual lowering of risk. It's the principle behind "target-date funds," widely used in US pension plans.

The age bands are indicative and depend on your risk tolerance and personal situation. You'll find portfolio models (60/40, All-Weather) at Investment portfolios.

• Choose a regulated broker. The safety of your money is the first rule: at a regulated broker, your assets are held separately from the firm's own.
• Open the account online and go through identity verification.
• Set a monthly amount and invest it consistently, regardless of how the market moves. For retirement, many people periodically buy the same broad ETF (for example, on the S&P 500) — simple, without needing to be an expert. Investing fixed, regular amounts smooths out your average purchase price over time and takes the emotion out of the decision.

See and compare regulated investment brokers at Investment brokers.

You don't have to start alone, from scratch. In a consultation or a course, we show you step by step how to choose your instruments, build your portfolio and manage it yourself — you learn it once and use it for a lifetime, without paying a fund year after year for something you can just as easily do yourself.

In short, for long-term investing:

• Capital gains (from selling assets at a profit): the taxable base is half the gain, and the rate is 12% — meaning an effective tax of about 6%.
• Filing is done through Form CET18, by April 30 of the following year.
• Foreign dividends are taxed at 12%; domestic dividends and interest are taxed at 6%, withheld at source. Interest on government securities is tax-exempt.

These are indicative rules; for your exact situation, see Is stock market profit taxed? or ask a specialist.

Both options are valid. We put them side by side, with real figures, so you can make an informed decision.

All the costs of the DIY option, so you know them: the trading commission (on buying and on selling), the spread, sometimes a flat custody fee that matters more on small accounts, the ETF's own annual fee (very small for index ETFs, ~0.1–0.2% per year) and, at some brokers, a small stamp duty on transactions. Added together, at a well-chosen broker, they stay well below a fund's annual cost — but that's exactly why choosing the right broker matters.

The biggest difference is in costs. A 4% commission on every deposit, plus annual fees of up to ~3.5% per year on the entire capital, applied over decades, add up. On your own, even at a pricier broker, the annual cost stays well under 1%. You can see for yourself what the difference looks like:

In general, doing it yourself costs less than paying someone else to do it for you — provided you learn the minimum necessary to do it right. That's why the answer is different for everyone: on one side of the scale sits the effort of learning and doing it yourself, on the other, the money you save. You decide which way the scale tips.

• Putting it off. "I'll start next year" is the costliest decision — you lose exactly the years when time was working hardest for you.
• Stopping at the first market downturn. Downturns are part of the process; whoever sells in a panic misses the recovery. The same thing happens in a fund — its value falls when the assets it bought fall — except you don't see the movement day to day.
• Early withdrawals from money meant for retirement, for current expenses.
• Chasing promised high returns. Any "guarantee" of a high profit is a sign of a dubious scheme. A guaranteed return doesn't exist — not in a fund, not on your own. Everyone invests in the same markets, just possibly in different assets.
• Lack of diversification and ignoring costs, which add up over 30 years.

You've built up capital over 30 years. What do you do with it? You gradually shift the money toward more stable instruments (bonds, deposits) and withdraw only a portion each year, so it lasts as long as possible.

A rule widely used around the world is the 4% rule, proposed by American financial planner William Bengen in 1994 and later confirmed by a Trinity University study (1998): in your first year of retirement (when you start withdrawing) you take about 4% of your capital, then adjust the amount for inflation in the following years. If the remaining money stays invested, the capital has a good chance of lasting for decades without running out. With capital of, say, 2 million lei, that would mean around 80,000 lei a year — about 6,700 lei a month, on top of the state pension.

But does it make sense to keep all the capital intact? Not necessarily. The 4% rule is designed to make your money last for decades and, usually, leave an inheritance too. If that's not your goal, you can spend more: you plan your withdrawals to gradually draw down the capital as well, over the years you have left to live. In Moldova, where life expectancy is lower than in the West, many people choose, after a certain age, a more relaxed plan — to enjoy the money, not just preserve it. What matters is having a plan, so the money runs out neither too soon nor stays entirely unused.

We cover the withdrawal phase and the 4% rule at length in Financial independence.