Monday/ money questions (in Germany)

The Frankfurt Allgemeine newspaper that I brought back from my trip, has a 6-page supplement with 40 questions about money (in Germany, and for 2018).
Below are short answers to the questions, that I roughly translated to English.
1. Can saving be fun? Yes. Start early in life and save consistently. It is fun to see one’s money grow.
2. Should I spend my money before inflation comes and everything becomes more expensive? Yes. On the whole, and for durable items, it’s a good time to be a consumer.
3. When will there again be interest paid on savings accounts? The bitter answer is: it will still be a number of years. 
4. Is it wise to buy Bitcoin? Probably not. It is very risky. 
5. What kind of insurance does everyone need? Germans are fearful. Still, insure for ruinous events only, such as one’s home and the life for the bread- winner. (My note: Germans have universal healthcare).
6. Is it a good idea to buy (German) government bonds? No, not worth it in these times. 

7. What are the benefits of corporate bonds? Some of these bonds could yield 3%, but it is not without risks.  
8. How useful are life insurance policies? They make a lot more sense for young people. 
9. Is the Riester pension worth it? Yes, for most people it is. (My notes: Riester pensions are voluntary, but heavily subsidized private pension schemes in Germany. They were designed as a matching defined contribution scheme to fill the emerging “pension gap” that is being generated by the gradually declining generosity of the public pay-as-you-go pensions in response to population aging).
10. Is it worthwhile to voluntarily pay more money into the statutory pension insurance? Yes. At the moment it is more attractive than ever.
11. How much money can I earn at retirement age? The good news is that if you have started on a regular retirement pension, you can earn as much extra income as you want. (My notes: Up to age 65, some 18% of one’s salary goes to statutory pension insurance).
12. How can I tell if real estate is too expensive? It is complicated, and depends on specific situations and locality. Compare rental costs and draw up a budget. 
13. Where is it worthwhile to buy an apartment or home? Berlin, Hamburg or Munich are the most attractive large cities. Smaller ones are Leipzig, Passau and Bamberg.
14. How do I secure a low home mortgage or construction loan interest? Obtain the loan sooner, rather than later, before interest rates start to rise. Also: It is important not to spend more than 40% of net income on this loan.
15. Stocks are high risk – is that true? Yes, there are short-term risks – but stocks are the most attractive investment, long-term.
16. Should I invest my money in ETFs? Yes. They are ideal for investing small amounts on an on-going basis.
17. Which fund should I buy: the one with the lowest fees or the one with the best performance? Investing in funds is generally a good idea. The value proposition of the investments of the fund is more important than the fees.
18. Which DAX share has the best prospects? (Software maker) SAP.  (My note: DAX is the German stock exchange).
19. What could we expect from the DAX in 2018? Nobody knows for sure.
20. Are shares of Chinese companies attractive? Yes, indeed.  Alibaba is the Chinese version of Amazon, and Tencent the Chinese version of Facebook. 
21. Is Tesla stock a good idea? Tesla stock is expensive, with production volume risks and other risks. The move to electric cars is a major trend, though. A better investment might be the component suppliers for electric vehicles.
22. Are stocks suitable for older people? Yes, of course.
23. Are crowdfunded investments worthwhile? Funds obtained this way are for start-ups, which make these kinds of investments very risky.
24. What does ‘sustainable investing’ mean? Investing in companies that comply with environmental, social and ethical guidelines for sustainability.
25. Are robots better investors? It is still unclear if algorithms make better investment decisions than humans. People prefer humans as advisors.
26. Can I fight back if my bank introduces penalties (such as negative interest rates for deposits)? Your options are limited, but the Consumer Council is fighting it.
27. Where are checking accounts still free? Several banks such as Commerzbank and Targobank, still offer free checking.  If yours do not, change your bank, or draw money and pay in cash at Aldi and Rewe. (My note: these are grocery stores).
28. Is on-line banking safe? Risks are all around us in life. As long as you follow basic sound practices, it will be safe.
29. What is money, really? Money is a purchase and trade medium. The parties using it need to have confidence in its value and validity.
30. For how long can I still pay in cash? The simple answer is: cash will be around for as long as people still want to have it.
31. Why will the 500 Euro bill disappear? It is not used much by ordinary people, and removing it will curb cash financing of terrorism and criminal activities. (My note: the 500 Euro note will be retired at the end of 2018).
32. Is (investing in) gold good advice? Probably not. Gold (now around US $1,300 per ounce) is not poised to soon again reach the US $1,900 highs of 2011.
33. When is the best time to ask for a raise from the boss? At the start of an employment contract, or a new project.
34. Will there be more net (taxes) paid on gross (income) in 2018? Yes.
35. Do I need to know what my colleague earns? Not necessarily, but you should know what the mean compensation for your type of work is.
36. Will petrol (gas) and heating oil become more expensive? Yes, probably.
37. How can I save electricity costs? Negotiate new contracts or switch providers. (My notes: Electricity is 3x more expensive in Germany, than it is in the USA. Germany’s grid operators sometimes struggle to keep the balance between how much energy people are using, and how much is being produced, when there are high amounts of wind generation).  
38. How reputable are zero-interest loans?
39. Which travel destinations are the cheapest? Many, many factors affect traveling costs. Consider package tours from travel agents. 
40. Does money make one happy? Of course it does not!
Earning money is hard, and growing one’s money is even harder, says the side bar. Questions by the pictures: Is Bitcoin the new gold? Answer: No, or at least not yet. What is the downside to zero-percent credit? Answer: Few people qualify for it, and one may end up paying more, than if one had paid in cash.
Questions by the pictures: Will cash soon disappear? Answer: No. When will the interest doldrums end? Answer: Not anytime soon.
Questions by the pictures: How do I protect myself against punitive measures by my bank? Answer: Change banks, or appeal to the Consumer Council. Should I invest in electric vehicles? Answer: Invest in the component suppliers, rather than the car manufacturers.
Questions by the pictures: Are last-minute travel plans beneficial? Answer: Not necessarily. Which stocks should I buy? Answer: In Germany, software maker SAP is a good buy right now. Questions by the pictures: How do I protect myself against punitive measures by my bank? Answer: Change banks, or appeal to the Consumer Council. Should I invest in electric vehicles? Answer: Invest in the component suppliers, rather than the car manufacturers.
Questions by the pictures: Are robots better investors? Answer: They have not proven that they are, yet. Humans prefer human advisors.
Questions by the pictures: Is crowdfunded investing dangerous? Answer: Yes.

Leave a Reply

Your email address will not be published.