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Your first steps on the stock market: DEGIRO Quick User Guide for beginners

In order to help you if you are new to either the stockmarket or DEGIRO I have written a small guide to help you get started. While its meant for beginners I believe it can also contain some good tips for the more advanced user.

In January 2020 I made the decision to move from Keytrade to DEGIRO as a broker. The low fees appealed to me. I noticed that its not yet clear to everyone how you can actually trade stocks / ETFs and funds on DEGIRO, so this entry guide will allow even the absolute beginner to start on the stock market.

disclaimer “Investing involves risks of losses”

DEGIRO Sign up process

The very first thing you will need to do is create an account (if you haven’t already). You can sign up for DEGIRO here. DEGIRO allows you to sign up from multiple countries. If your country is not in the list but you live in the EU then I suggest to pick a country where you speak the language. For example I live in Belgium and I signed up on the site of “Nederland”, and that works perfectly. Remember the account is 100% free. You only need to pay a small fee when you start to trade. I found that for the trading I do, DEGIRO is the cheapest stockbroker. I will explain this part further on.

Once you click on your country you will enter the sign up screen:

Click there on “Open a free account now”.

DEGIRO has a waiting list, the crisis has drawn a lot more people to the stockmarket. Don’t worry DEGIRO is processing the waiting list, but it can take some time for you to have an active account. Remember stock trading is for the long term, so don’t panic if it takes a while to sign up.

Once you filled in your details go to your mailbox to activate your account

In the email you just got click “Complete your registration” to activate the account

You then go to a page that says Email address verified

Click Login and type there the username and password that you entered before.

At this point you will know your place in the queue. At some point 30.000 people tried to sign up, so that means that 6431 is not a bad place.

Updating your profile

Once you are accepted, one of the first things you should do is to make sure all your personal information is correct.

To check that hover over the usericon at the lower left and click “Profile” (on the screenshot its in Dutch but its on the same location everywhere).

When you click there you come on your personal information page.

The first thing you need to update there is “Personal information” (Persoonlijke informatie on the screenshot).

In that Area you will be able to update your adress.

The second area that is important is the area just bellow that, where you can set your bank account. If you set your bank account then any amount of money that you write from your bank account to DEGIRO will be automatically added to your DEGIRO account. I noticed that this is a smooth process and takes only a few hours.

What I also highly recommend to do is to check out the “Security” Area. There you have the chance to set two-factor authentication.

Using two factor authentication is highly recommended. In this case you will need to download an app called “Sophos Authenticator” on your phone. You can just download this free app from the Apple store or Play store.

DEGIRO will present you with a QR code. Once installed just select scan QR code. This menu pops up if you click the three dots in the top right screen.

Then a camera will pop up and you just point it to the QR code that DEGIRO has supplied you.

From this point on you will see a DEGIRO icon on your app. That means that every time you login you will need to write whatever number is displayed there. That also means that only if a User has both access to your phone and your password they can access your account, making it impossible to hack your account from the outside since they would also need access to your phone to get in.

DEGIRO Pricing

Before starting with investing you might want to know how much it will actually cost you to invest.

First its good to know that the tariffs are very similar across the EU, with some minor differences. In the Netherlands I noticed they are slightly cheaper but the difference is quite small.

You can compare the fees with other brokers for Ireland here for example or for the Netherlands here. You can also find a cost calculator on that page if you want to know it exactly.

Generally I found the pricing of DEGIRO to be really competitive. Bellow is an example of the pricing in Ireland for stocks and ETFs (DEGIRO is at the left, you can see a comparison with some other brokers)

Stocks Pricing

For ETFs there is even a list of ETFs you can purchase once a month for free (conditions applicable, read those here). If you only invest small amounts like 25 EUR / month then this could be an option for you. You can find a list of all free ETFs here.

However keep in mind that they will come with a higher yearly cost. So make sure you check the yearly cost. There is a few on the list where the yearly cost is reasonable. One example would be the ISHARES MSCI WOR A, with only a 0.24% cost. Its a good ETF because you are covered worldwide which will lower your risk. Its also located in Amsterdam what should be good for Taxes. If you can invest higher amounts per month there is also ETFs that are not free that will be cheaper actually. In the next chapter I will suggest one. If you decide to buy an ETF with a purchasing fee, it could also be worth it to save up two months before purchasing.

I would advise against buying funds since they usually come with very high yearly costs up to 3%! This will be a big cut in your profit. I would also stay away from more futuristic investments such as options or the futures market. The majority of the people do not make a profit there.

Your first purchase on DEGIRO

Transferring money

Transfering money is quite simple. You just need to transfer from the bank account you coupled to your DEGIRO account in the last chapter.

At the top right you normally see an icon to book money in and out.

When you click on that you should see the option to transfer money manually. This is the option you should use.

When you click on it you will get the bank details of the account you need to write to.

I suggest you first try with a small amount (1 EUR) and test that it works. Once it works you can transfer a larger amount. Remember you can only transfer money from the account you have added in DEGIRO.

On the same screen you have the option to book money back to your bank account, should you need it in the future. It can be interesting to also test this option and write the 1 EUR back to your bank account.

Get the right information on the ETF you are interested in

If you already have a stock or ETF in mind then I suggest to search for that stock. If you haven’t then go to the search box and enter SPDR MSCI WORLD UCITS. This is an ETF that invests in the top stocks in the top developed countries. I will show you how to get this information from the ETF itself.

When you search for this ETF you will get two results. One is in USD and the other in EUR. Lets choose the one in EUR so we do not expose ourselves to a currency risk.

Once you click on the ETF you will end up on the overview page of the ETF. If you like to see how the ETF performed in the past you can play around with the buttons bellow:

  • YTD = how it performed this year
  • 1D how it performed the last day (standard)
  • etc

First we would like to get more detailed information about this ETF. We want to know for example how much the yearly cost is, if it

For that click on the documents tab on your screen.

Once you are there you can click on the download button to go to the documents:

I noticed that there is no direct link to the document but once you are on ssga you can search for the ETF

In the top right type SPDR® MSCI World UCITS ETF and click the first one that pops up.

Now you are at the overview page of the ETF.

We can for example read the desciption of the Index:

The Index captures large and mid cap companies across Developed Markets countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country. Securities are weighted by market capitalisation.

If we scroll down (or click on “Holdings”) we can see the Geographical weights, so you should realize that this ETF is focusing more on the developed countries.

Other things you can see is what stocks it exactly invests in currently and what sectors they are in. The thing with ETFs is that a bigger stock such as Microsoft and Apple will also carry a bigger weight. A much smaller stock that is at the bottom. Apple for example has 3.35% weight, while the smallest stock (HEICO Corporation) at position 1579 only has weight of 0.000068%.

Now scroll further down and open the document called KIID

Click on KIID

This is actually an overview of the ETF in a standard format. Apart from some general information you will be able to see the yearly cost and the risk factor.

In this case the fund has only a 0.12% yearly cost and that is why it is one of my favorite ETFs.

We can also see that the ETF is not handing out dividends. How? Because it does not have Acc (=accumulating) in the name. If you are in a country where they have taxes on dividends then you want to avoid Acc ETFs. If it does not matter for taxes then I would go for Acc ETFs since its always encouraging to slowly see your dividends go up over time. Should you receive dividends you will also be able to see in this file how often you get the dividends. Usually this is quarterly but there is some ETFs that give it yearly or monthly.

Dividends are a sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).

Your first purchase on DEGIRO

Now that you are armed with more knowledge about the ETF or stock you want to purchase its time to do the actual purchase.

You can do that by going back to the ETF in DEGIRO and click the green button that says “Buy” (or “Koop” in Dutch)

In the next screen you will need to then set how many stocks you want to purchase and at what price:

I usually will set the purchase price a bit higher then the actual price. The system will still buy at the lowest possible price but then you are sure it will go trough fast.

You need to enter the max purchase price in the box next to Limit Order. Under the box limit order you need to enter the number of stocks or ETFs you want to purchase. The system will then calculate the max purchase price

For example I have entered the following and the system has calculated that it will cost me MAX 985 EUR, but most likely I will pay less.

Remember unless you chose a free ETF you will need to save 5-6 EUR for taxes and fees from the DEGIRO. Once you click on “Place Order” you will find out exactly how much the costs for DEGIRO is.

I can also see the impact on my free space, so I can actually see that I could have actually purchased 3 stocks more.

Once you are ready confirm your purchase, you will then have placed an order on the market. If you put your limit high enough, it will be purchased really fast.

Checking your current wallet

Now that you have some stocks in your wallet you can click on Portfolio to find out how your stocks are doing.

In my case I can see that I currently have an 8% loss, but we need to keep in mind that this blog was written during the corona crisis. At the height I was actually at a much higher loss in March 2020 as stocks had dropped 30%. Its good to note I have not lost one night of sleep over this drop as I know that ETFs cannot go bankrupt and if you pick one that is spread over multiple countries and sectors it will always reward in the long term. Always invest for longer periods. Five years is really the minimum but preferably you should be investing for a horizon of at 20 years. The stock market goes up average per year 6-7%. Also remember: the best time to invest was yesterday. The second best is today.

Conclussion

If you are new to investing I really hope this was a good overview for you. Please let me know in the comments if there is anything else you would like to know or if there is any place I can improve. And if you like to know more about investing then leave your email so we can stay in touch.

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My first apartment | Real estate property #1

At University I lived at first in a 12 m2 student room. It was big enough to fit in a small bed, a closet, lavatory, 2 person couch, desk and tv.

I actually found an old picture of the room:

Image result for home astrid
My first student room. Cute isn’t it?

It looks a bit like a jail room but I had some of the best years of my life inthere! Despite it’s size I actually managed to fit 10 people inthere. Granted some did had to sit on the floor but when you are in your early twenties. Rent was paid by my mom at 190 EUR per month.

After a few years I put myself on the waiting list for a bigger room and got a 16 m2 room for 2 years. My very last year I spend in a studio that was about 25 m2. The studio was a bit more expensive at about 260 EUR. So I moved up and up very slowly over the years.

When I started to work I stayed inscribed at the university so I could rent my studio for one more year.

I used the time to search for a new place. I searched for privately rented studio’s, but they were small and costed 400 – 500 EUR. Way overpriced. I knew I had to search for a home for myself.

The search commenced

And time was running out, after one more year I was going to have to leave my university rented studio. I needed something fast and did not had to many demands:

  • Close to a Freeway of some sorts, so I could drive everywhere easily
  • Close to the station, which was also the neighborhood I studied at
  • In Gent, its a beautiful city, I was born there, had my family close and most of my friends live there or around there
  • A place to store my car would be a plus
  • Cheap. I didn’t want to pay to much.
  • One bedroom, I didn’t think I would need more
  • Outside space would be a plus but not a requirement
  • I wanted to live at the South of Gent, also because it was much easier to go on the Highway from there

The easiest way to buy a place is when you really need one. I didn’t had that many demands. I searched for homes on the lowest segment of the market and ended up seeing about a handful. Here is a few things I checked out that stuck with me:

  • A small duplex apartment close to the center with a terrace. One bedroom. It was listed for about 130.000 EUR. Eventually it sold for a bit more I heard.
  • A house where when you entered you were conveniently in the living room, that also had a shower for some reason. It had 3 floors, but it was very narrow and steep. I remember thinking this place was only good to break down. It was listed for 140.000 EUR. It needed a complete renovation, but the location was excellent, located between the station and center
  • A house that was Crooked. My sister was with me when we looked at it. She noticed it from the outside. I figured she was imagining it, until I went inside. It did had a garden. It was listed for 180.000 EUR and located at a good neighborhood.
  • An apartment right outside Gent. It had a parking spot. It was pretty good and around 130.000 EUR, but I decided it was to far from the city center for what I wanted at the time

One reminder, these are all prices of 8-9 years ago. It will be impossible to find houses or apartments at these prices these days. Consider around a 3-5% rise in prices per year.

Purchasing my first property

At some point my eye fell on a one bedroom apartment, not far from where my Studio was located. It was listed for 140.000 EUR, and one garage was included. It was not so big, just 55 square meters. But knowing I came out of a Studio of 25 square meters it felt pretty big.

The entire building was bought up by a company who was making high level renovations and then selling off each apartment. In total there is 5 one bedrooms and 6 two bedrooms if I recall correctly, spread over 2 buildings, so pretty small scale.

The apartment itself had new well isolated windows, and the electricity was checked and approved for 25 years. There wasn’t really a kitchen and the heating was a bit old and communal. The walls were all purple with even a grey ceiling. In other words anything but my style!

I thought about it for a day, and then made an offer of 130.000 EUR for the apartment. I was not nervous at all when doing this. I needed a place, and this was one of the best I found in the last months searching in terms of price / quality.

This was a time when you could still try to lower the price in Gent. I got a counteroffer of about 136.000 EUR and accepted it the same day.

Once your offer has been accepted you have 10 days to put down a 10% deposit. In Belgium once your offer is accepted you are required to pay the 10%, even if you change your mind. Additionally you need to go to the bank to get a loan. I got a loan at 3,45% interest rate, which was considered low at the time.

Additional costs:

  • 4000 EUR costs for the notary arranging the deal
  • 500 EUR costs for the bank arranging the deal (if I remember correctly)
  • 500 EUR Insurance for when I would die and not pay my loan
  • 6,5% taxes (low tax rate because of the small side of the property and because it was my first house)

A few days later I signed for the apartment and paid the deposit. Three months later it was mine. At the time it was rented out, so I had to give notice to my renters. You can give them a 3 months notice, but only if you decide to move in yourself. Which I was planning to so I did. They eventually moved out a bit sooner then expected, although I did had to live back home for 1-2 months to bridge the gap between renting my studio and moving to my apartment.

In the next years, as far as my budget allowed it I would do a few renovations:

  • The walls and ceilings would get painted almost totally white, with an exception of one wall per room (one green wall in the living room, one blue in the bedroom)
  • Also the bathroom tiles would be painted white
  • The heating would stop being communal, and everyone in the building (5 apartments) would get their own gas – lower energy boiler (cost 3000 EUR)
  • A new kitchen from Ikea would be put in (cost about 3500 EUR)
  • A new floor would be put in the bedroom
  • Put in a new front door (Fire safe and extra secure for Burglars) (1000 EUR)
  • New bell system in the entire building (my share was 200 EUR)
  • New roof on the building, including isolation (my share was 7000 EUR)
  • One radiator was leaking so I replaced it (cost: 800 EUR)
  • Of course I added furniture, but I kept it relatively cheap. I don’t think I spend more then 3000-4000 EUR on furniture in the end.
  • Not part of renovation, but worth to mention: because its a small building with no elevator, the communal costs are rather low. Apart from the renovations they are about 400 EUR per year.

After the renovations…

In the end it looks like this:

Apart from the outside improvements such as the roof, I do believe the inside had also improved considerably.

Some things I did not do (yet?):

  • I did not put in a new floor in the living room / kitchen. Now doing it would mean removing and placing back the kitchen. I think my floor is ugly but at the same time its in good condition. However I its possible I will still do this the coming years.
  • I didn’t put in a new bathroom. I only take a bath once a month and shower every morning. It would make sense to put in a shower, and renew the place, but I am not sure the little extra comfort is worth the investment

Most investments have been on the outside, and less on the inside, although I am very satisfied with the kitchen and bedroom right now.

I do hope to keep this apartment for a very long time. Its in a fast growing city, with faster growing prices so in the long term this investment will pay off.

Future plans with the property

I no longer have the same need to live in the city as I had before, and would prefer to move outside a bit and have some more space. Of course I would miss the ease I have to go to the center, shops and the station, but the additional space would make up for it. On top of that most of my family are living outside the city.

In the case that I purchase a second property, I believe I could rent this apartment out for 600 EUR / month (before I moved in it was rented out for 470 EUR), and that would be a nice boost to my passive income goal.

Of course I do need to find a second property first! The search is going on as we speak so stay tuned for a future blog about my current search.

The best way to stay tuned is of course by subscribing 😉

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The market is collapsing and I’m losing everything | What the 2008 crash can learn us today

October 10 2008

I have been retired for 10 years. I am one who has said over and over again. Stay the course. Look for the long term. Yeah, sure. That’s fine until today. Today did it. I am just starting to be scared so that I won’t tell my wife what happened today…stocks down…bonds down…I’m down. Our retirement funds are sucking down the drain. I lost today alone a year’s worth of normal distributions for expenses. I keep thinking tomorrow will be a turn around. I have said that for 30 days.
I am 25% capitulating tomorrow, maybe 50% to money markets….maybe all.

This is not me. I will see tomorrow.

This is exactly what was written in an old post I came across at bogleheads. It is a reminder that even if you reached Fire that does not mean that the market cannot collapse and this could have a high impact on you.

Its easy to say that these examples show that you more then ever need to hold the course, but at the same time, the people who were heavily invested in 2008 did not knew that. As far as they knew the market went down today 5%, and it would go down another 5% and then another. In total the market went down 90% over a period of just 18 months.

In comparison, in the 1929 crash the market went down a similar amount, but over a period of 3 years.

As far as they knew the entire bank system could collapse!

Fifteen things the 2008 crash can teach us

Lesson 1: Do not put all your eggs into one basket

I was just out of university and did not had much investments. I was invested mainly in three stocks, two of which were bank stocks. One fully crashed, to never recover, and one crashed 60-70% and did recover. Bank stocks were considered a safe investment at he time. We were told there is so much mechanisms put into place that a bank cannot crash. It can.

While I was very low invested at he time it really did scare me, and did not make me return to the stock market for a while. When I did return I was not eager to buy stocks anymore. I first focused on funds, believing this would be a safe spread investments. Later I added ETFs to the basket. I did learn my lesson. Investing in one stock is not for me.

Lesson 2: stay the course

People who decided to sell, and did not return to the stock market have regretted up to this day. The market had a huge rebound, such as we haven’t seen in a long time.

When the market collapses, do not throw away your habbits to regularly invest

Lesson 3: automate

My early days of investing was mainly to find something I liked, and when I did I transferred some cash, bought the stock, and following it every day, waiting for the right time to buy.

What I should have done is automating my investments. That way when the stock market collapses you actually can use the collapse as leverage to regrow your portfolio faster to its normal levels. Automate and hold the course!

Lesson 4: Ignore your investments for 2-3 years

This might seem a bit contradictory. You may want to take action, reshuffle, re-invest, get out those bad stocks.

But if you followed point 1 and 2, you know you will have your investments spread and automated.

When the entire world is on fire seeing your investments in red all the time is not fun. You might get emotional (just like the guy in the start of this blog) and do something you will regret.

What you need to do is hold the course. Your investments are automated and spread out, so its okay to take a moment and focus on other things. Why not start a blog about a different topic?

Lesson 5: Do not give financial advise to Friends

Remember I told you about the Stock that crashed I invested in? I actually told my friends that I invested 1500 EUR in this stock, and advised them to do the same. Lucky they didn’t!

I still do tell friends about my investments when they ask. But I will always add that investing is risky and its at their own risk. Especially the case when I do decide to invest in one stock (oops, yes it happened this year – but I am already back out now), and when I buy high risk investments such as Startups or Peer to peer lending.

Lesson 6: its going to get worse before it gets better. But it will get better.

Those who have stayed the course, and kept investing their monthly amount, and did not panic sell, recovered after just 2-3 years. And any year after that is pure profit.

In the latest 20 years alone there have been 13 (small) bear markets, and 3 much bigger (including the banking crisis, the debt crisis, and the dot com bubble). And yet the markets have always recovered and are higher then ever.

Lesson 7: pin down your thoughts

Blogging, vlogging, keeping data in your excel, keeping a dairy.. it is much more motivating to pin down your thoughts when your portfolio is on a 7 year strike of only going up. But when its in red all the time how can you still give any financial advise? Fire is further away then ever and that is what your blog is about?

Keep in mind that while the fun is gone, writing down your thoughts is more important then ever! It will prove vital knowledge for you and others when the nightmare is over.

Lesson 8: follow this blog

When the storm hits, I will be here to report on the front line, so follow me and face it with me!

Lesson 9: no you cannot see the storm coming

Stock prices have reached what looks like a permanently high plateau … I expect to see the stock market a good deal higher within a few months. – Irving Fisher (a few days before the 1929 market crash)

Nobody could see the 2008 collapse coming. When the storm hits you, it comes out of a black fog so you can’t see it, and it comes so fast that you can’t prepare for it.

Only a really really small percentage of people manage to time the market, and since its such a small number its probably caused more by luck then by being some wonderchild who can predict the market as if this person has a glass orb.

You can’t see it come, but one thing is certain, it will come.

Lesson 10: nobody will tell you when the market hit rock bottom

Just like you can’t time when a stock market crash is coming, you cannot time when the stocks will go back up. That’s why Lesson 2 and Lesson 3 are so important., and the rise will be just as steep as was the fall. When people talk the most about that the crisis is over that’s when its about to drop hard!

Lesson 11: have some cash reserves

If you are living on a passive income remember to keep some cash reserves that can keep you going for a few years. Like that if one of your income sources suddenly drops away then you have something to fall back to.

Some recommend an “emergency fund” of a few years, but its might be better to have really enough to use for 2-3 years in case the stock market collapses.

Lesson 12: diversify

Its similar to Lesson 1, but where lesson one is focusing on the stock market, it can be good to have alternative incomes. Think of p2p lending, real estate and side hustles. Read my portfolio to get some ideas on what you could purchase!

Lesson 13: it’s always a good time to start investing

Even at the all time high before the 2008 crash, the market then is still much lower then it is today. If you could buy in 2008 at this all time high during the crisis people would say you were crazy. If you could do this today you would buy instantly as much as you can!

So its never to late to get in. Get in now, invest, and hold the course!

Lesson 14: you probably will forget some lessons!

In theory these lessons all make sense. If you follow them you can cut out emotion and trust on what has worked for over 50 years. But that’s easier said then done when you are losing 70% of your assets in a few weeks. Remember to come back to this blog when this happens.

Keep breathing. Re – read. Automate, and take a step back. Go do some sports, and pick up a new hobby

Lesson 15: final advise from sheepdog

I would like to close with some final advise. Sheepdog who made the original post at the top did not sell his stocks in the end. He did had to sell some bonds, and many years later he has this to say for those who are open to listening

When I started that conversation on 10/9/2008, I was in a bind, as you can read in my comments, but I did learn something and perhaps other retirees or near retirees did as well. When a person must take distributions to meet expenses, and I do monthly, an adequate “cash” account should be maintained so that they don’t “have to” sell at market lows. Keep a sizeable cushion. I am doing what I said I would do…..I maintain the “cash” account from which I take distributions at a minimum of 3 years of needs. I sell stocks and bonds every few months to keep it up. When the next big downturn occurs, and it will, I will not have to sell any investments for at least 3 years. I won’t get caught again.

So it looks like Sheepdog turned out to be okay afterall. He eventually also told his wife, but many many years later.

But the main thing is…he kept the course (something he always advised on the forum he uses before 2008), and did not had to sell any stocks he had purchased. His final words here might just be the most valuable lesson of all!


Liked it? Also check out some of my other blogs


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  • Savings rate July 2020: slight increase to 33.99%

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Early Retirement

Increase your pension and lower your retirement age

Legal versus actual retirement age in OESO countries

When we look at the actual retirement age versus the legal age, we can see that the real age is in most countries, especially Western countries, bellow the legal age. The government cannot force anyone to work, but at the same time they are not required to provide a pension (until the legal age) when you decide to stop earlier.

Green = legal retirement age, orange = actual retirement age

I live in Belgium, in Belgium the age to retire is 67, although the real retirement age is 59 (average) in Belgium. So you can decide to stop earlier, but then you face some consequences:

  • The pension you receive at 67 will be lower
  • You need to provide your own funds to bridge the gap between when you get a government pension and when you actually retire

The majority of the Fire blogs are aimed at getting enough funds so you are self-sufficient when you retire. Up to at least until you get a legal pension, and preferably even beyond (as there is no certainty the government will not be bankrupt when you reach 67).

It also pays to look at how you can increase your legal pension when you reach age 67.

First its good to know that a standard retirement exist out of what we call three pillars. The basis here (like in the picture) is very similar in most countries.

  • Official pension from the government – first pillar
  • Employer sponsored pension funds – second pillar
  • Personal pension funds – third pillar
  • There is also a fourth pillar, which is basically anything you have personally saved up or invested. The fourth pillar is actually what most Fire blogs are focused on but they forget about the first three!

The third pillar

I am going to start at the back. The third pillar you can increase only by adding funds to an official refinement funds. It is your personal funds, but you cannot access it until you reached the retirement age (unless you pay a fee).

In the case of Belgium, a total of 1270 Euro per year can be deposited here, and can be withdrawn from your taxes for 30%.

Basically you really should max this out every year. The 30% is just to high to ignore. Ideally you deposit it in January. This really is the best time. If you do not do it in January the second best is depositing it monthly. December is the worst timing to do it.

If you deposited in January, you have potentially 6,5% more profit at the end of the ride. Bellow you can see the difference for a period of 30 years, depending of when you deposit.

Second Pillar

The second pillar is harder to control. You usually need to be lucky with your job that your employer has what they call a group insurance. It has a fiscal advantage in Belgium (you keep about 75% after taxes, while with normal wage its about 30% – yes taxes are huge in Belgium), but still not all employers do this. If 3-4% of your wage goes to a group insurance its usually considered quite high.

First pillar

The first pillar is the legal pension. Most people think the only influence they have on this is the age they retire and the wage of the last years they worked. In Belgium you can actually increase it further, especially if you retire before the legal retirement age this is beneficial.

On my pension of the Belgium government, you can actually request (against a fee) to make 4 years that you studied part of your pension, so they count as if you were working this year. This costs about 1500 euro per year that you request this for, but you do get 50% back from taxes. So for 4 years it in total costs you about 3000 Euro.

If you decide to retire at the legal age of 67 and you have a high wage, this is most likely not beneficial for you. But if you decide to stop working before the legal age, this will actually have a huge effect on your pension.

On mypension of the government I did the calculation. If I retire at age 67 without buying the years I would earn only 13 euro/month more then when I decided not to buy the years. This would then take me 19 years to get the 3000 back. Obviously I can invest my money myself much better then this.

However if I retire at the age of 52, so 15 years earlier then the legal age, I would make about 50 EUR/month more. So it would take me 6 years to get my money back and anything after that is pure profit. You could argue that if I invested 3000 euro myself, at a compound interest of 5% this would be about 6800 euro at age 52. But nothing is certain in investing, and its good to spread your investments and diversify. The fact that I probably will retire before 67 and this made me decide to invest some money in this plan.

What do my pillars look like so far?

  • I invest the full 1270 EUR every year as early as possible (I recommend to start doing this as early as possible when you start working)
  • My first employer, a job that I did for about 4 years, invested about 1% in the first pillar
  • My current employer invests about 3% (I am doing this job for a little over 5 years)

In my case I have 65% in the second pillar (spread over 2 jobs) and 35% in the third pillar. The first pillar, is the legal pension as you know.

Now you can also see the difference between 1 and 3%. So it does matter a great deal of how much your employer is investing there. To be honest when I see this graph I am even amazed of how fast my second pillar at my current job is growing compared to the third pillar.

Unfortunately you can only access these funds at age of 67, however they are invested into funds, and will benefit from compound interest. Even after you withdraw them from your account it would be wise to invest them into Dividend EFTs/Stocks/Funds to make sure you get a regular income from them (and maybe they grow a bit more).

How do I plan to bridge the gap, if I were to retire, at say age 52? For that take a look at my goals page and check how I slowly plan / experiment to increase my passive income, at a reasonably young age (I am 34 at time of writing), to fully utilize compound interest.

Some things I have experimented with and still am:

What about you? Let me know if it works different in your country, or what your plan is to increase your pension at the legal retirement age. Also any other tips would be welcome!

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Financial Independence

My Startup investments and how can you invest in Startups?

Last updated 12-12-2019: one of my startups has gone bankrupt, namely viviDoctor where I had invested 525 EUR in. After the tax incentive this leaves me with a loss of 300 EUR. Just a reminder that this is indeed a high risk investment

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.” – Warren Buffett

I mentioned in an earlier of my posts (check it here) I invest in startups. This is mainly because of the 45% Tax incentive that the Belgium government is providing. In this blog I will give an overview of the startups I have invested up to date, show how they are doing so far, and eventually will explain you how you can invest in if you are still interested after reading this blog.

How does it work?

I invest in startups using a site called Spreds. Spreds is a crowdfunding site for startup company’s (so called Seeds).

To be able to get funded, firstly a company needs to apply to Spreds to be able to apply for a funding round. Only 3% of all company’s that apply actually go trough to the next round.

Then this company can search for investors. They need to market both to single investors (such as me/you) and find at least one professional investor.

One interesting note is that professional investors invest at the same conditions as you. So if 100 euro is worth 0,0001% equity this will be the same value to you. Apart from this, this gives you the certainty that someone professional with probably more experience then you will also check the startup.

This does not mean that you do not need to do your homework of course. Check the Financials, team, plan of the Startup before you invest!

Read bellow on how you can invest yourself if you are interested in trying it out yourself.

Long term / High Risk

 “Chase the vision, not the money; the money will end up following you.”  –Tony Hsieh, Zappos

Keep in mind these are long term (6-8 years) and high risk investments (30-40% of the startups fail according to statistics!). There is no guarantee you will see any of your money back (apart from the Tax incentive) , so do not invest anything you cannot afford to lose! I see this partly as a hobby, and that makes it easier when I would lose my money.

List of my investments

In total you can see 15 startups I invested (or tried to) invest in. The very first startup I invested in (Slimbox) actually did not get a professional investor on board, so failed its crowdfunding. I did notice such an occurrence is quite rare.

Future goals

I do plan to purchase a few more Startups this year. I am both reinvesting the Tax Return I got this year (800 EUR as you can read on my goals progress page). I do not know how high it will go, but the expectation is my portfolio will go above 5000 EUR and I do hope to be able to share a success story with you guys in 1 year from now.

I told one guy from Poland about the Tax Shelter we have in Belgium. His reaction was…”What? If they had this hear I would just invest all my money into startups” .

Of course I would not recommend to follow my Polish friend’s advice, but its an interesting perspective.

Multiple rounds of Financing

Interesting is that some startups undergo multiple rounds of financing. This is actually not uncommon for startups, and one startup I invested in has gone trough this. If you have already invested in a startup you get first choice to invest again. If I recall correctly this happened to Shiftmeapp. I decided not to invest in the second round, although looking at it back now, I probably should have. One other of my investments is considering a second round (nirli). Not because they are doing bad, but simply to fund their growth faster. And if they do I would invest again.

ROI

My ROI

For those who do not know, ROI means Return on investment. I realize my calculation is not correct. I would be better off to wait until its realized and then calculate it per year. But as I am an early investor and nothing is realized I decided to use a simpler method of my own.

So far I have an unrealized ROI of 11,5% return per year. Although I am aware this means very little, it is just an indication. The only thing that was realized is the Tax return I got. Once I have the first startup that actually gets sold out I will change the calculation of this column, and keep date of investment in mind so you can see the ROI per year.

ROI if you invested in 124 startups

Spreds showed an interesting calculation on their website. If you as a person invested 100 euro in all 124 startups that were shown on their website so far then combined with the Tax Shelter you would have an IRR of 6,12%. Which is not bad in the current market.

There is a flaw in their calculation however and that is that I have the impression that they did not include the 5% fee every time you invest. They didn’t really put down a detailed calculation so its hard to figure out how they came to a 6.12% IRR and if its a total amount of a yearly ROI. Yearly it would be quite low since the site has been running for a while (4-5 years?), although the Tax Shelter is only from 2016.

Patience is needed

You usually have to wait for that which is worth waiting for – Craig Bruce

That being said it does take 6-8 years for startups to mature, and I prefer that the startups mature to get a higher valuation then a quick sell at a small profit margin. The buy outs have been low so far (maybe just 5 startups out of 124?). As I said I see it partly as a hobby, and I have only invested small amounts. The only certainty is the Tax Shelter.

You need to be aware your investment can turn out negative

In the early days when Spreds was still called Microinvest on of the first buyouts was for the news site called Newsmonkey. Newsmonkey is still alive and running, I think doing fairly well, but at the time of the exit it was not doing so well and investors ended up making a (small) loss. This was also before the Tax Shelter was in place, and it wasn’t until that came up that I decided to start investing. Before that I never would have invested.

Successes are where you least expect them sometimes

Starting your own business is like riding a roller coaster. There are highs and lows and every turn you take is another twist. The lows are really low, but the highs can be really high. You have to be strong, keep your stomach tight, and ride along with the roller coaster that you started.–Lindsay Manseau, photographer and entrepreneur

Some of the companies I chose not to invest in because they didn’t fall under my main sectors I like to invest in I saw having a succesful exit in the end. One example is Jumpsquare. Jumpsquare had an exit that gave investors a 35% profit only 9 months after the crowdfunding closed! Jumpsquare is a trampoline hallway. I didn’t see the idea as rapid scalable but it turned out that there was a huge demand for this.

So morale of the story, don’t put all your apples in one basket and spread out your investments. Nobody can predict what startups will do well in the end, its better to invest a little bit in many startups then a lot in just one.

How can you invest?

If everything you read here has not scared you and you want to try it out, if only to support a company you believe in and want to follow it then head over to Spreds and try it. And remember I do not get any benefits from posting this, if anything I will now have more competition!

On the main page you can see different startups.

You can recognize the Tax incentive to this icon:

It will either say 45% (for Seeds – really small startups) or 30% for bigger startups. If it doesn’t say anything.

Once you click on a startup you will always see a short movie, and more in detail what the idea is, how the market is, financials and discussions.

Once you are convinced this is a good investment click “Invest Now” and the system will take you trough a wizard to invest. The minimum amount is 100 Euro. Spreds takes a 5 euro fee to every note you buy. You do not actually buy equity you buy a participatory note. Its Spreds who holds the actual Equity.

Dont forget to click Yes to invest in the Tax Shelter.

Should you have decided to invest, remember to file the amount of investments once you file your taxes! If you forget to report it when you do your taxes you will miss your return!

Find more information about the Belgian Tax Shelter

Should you like to know more you could read more about this incentive on the site of the Belgian Goverment:

https://www.vlaio.be/nl/subsidies-financiering/subsidiedatabank/tax-shelter-voor-startende-ondernemingen

Interesting to note is that Spreds is not the only approved site where you can invest. You also have Bolero Crowdfunding and LITA.co

Please comment!

I know that I am not alone investing in Startups, and a lot of people will have a more diverse and bigger portfolio then me. I am eager to hear about your experiences with Startups . So please mail me or comment bellow!

Since this blog is focused on the Belgian market (where I have most experiences) I am also eager to hear experiences from other countries, and if there is any Tax Incentives there. Also if you want to testify about any good or bad experiences with Spreds or any other startup site, let me know!

And remember… subscribe if you want to be informed about the successes or failures of the startups I invested in