Whether you want to be independent in retirement, buy a house, finally want to afford a new car or a multi-month trip around the world, it can be worthwhile to build up wealth. We have examined for you how you can do more with your money.
Keep an eye on income and expenses
Various apps can help you keep an eye on your expenses, your income and your total assets, including the Apps Expense Manager -Tracker, Budget Book: Money Manager and SayMoney – Budget Book. You can also record your income and expenses in a classic household book in the classic way. You will be surprised at what you spend all the money on. If you pay off loans, the repayment should take priority over expenses for investments and purchases that are not absolutely necessary. If you service several loans or pay high loan interest, it can be worthwhile to reschedule in the current low-interest phase. When rescheduling, you take out a loan at better interest rates and pay back the current loans early with this.
Open themed accounts
Open multiple accounts to keep track of your expenses and plan each month in advance. Your salary account is your basic account, basically the base camp under your accounts. From this you can pay current expenses, for example for rent, insurance and groceries. If the necessary costs are covered, you can transfer a fixed amount every month to an account that you have set up specifically for your financial freedom. For example, this could be an ETF savings plan account with Oskar . At Oskar, the savings start at 25 euros and you invest profitably in thousands of companies worldwide – also in growth markets and in future issues such as demographic change, urbanization and digitalization.
The account should give you financial freedom at a later date, for example when you retire. It also makes sense to open a separate risk account and a fun account, to which fixed amounts are also transferred from your salary account by standing order. With the money in the risk account, you can pay for unexpected expenses such as repairs and additional payments. With your fun account, you can cover expenses for your free time, for example for holidays or the larger television.
It is often difficult to reduce large, fixed expenses, such as rental costs and car insurance. We are happy to maintain our habits and stick to them. But with the fixed costs, money can be saved well. With insurance companies in particular, you can compare fees and conditions with one another on various online portals. It is also worth taking a look at cheaper providers with the Internet and telephone. Services such as Amazon Prime, Netflix and Spotify always offer discounted subscriptions. And with the cancellation of membership in the club or in the gym, which you rarely use, you can often save a lot. The comparison of auto repair shops and similar service providers can also be worthwhile. Small workshops often offer better prices. When traveling, it is worth the Travelzoo newsletter, holiday pirates. de or Kurzurlaub.de to subscribe. Here you can often find cheap flights, deals and travel deals.
Determine a savings rate, i.e. a fixed amount that you can dispense monthly after deducting all fixed costs. You should comply with the 10% rule. You transfer at least this amount to your savings account per standing order every month. As you get older, the percentage of your income you save should increase. While it should be 10-15 percent in the 20s and 15-20 percent in the 30s, the savings rate increases up to 30-40 percent in your 50s. However, always keep in mind that you can only save what you do not urgently need to live. Based on historical experience, you get a higher return if you invest the savings amount instead of in a fixed-term deposit account with the Robo-Advisor from Oskar. With the Oskar ETF savings plan, you are also broadly diversified and therefore particularly secure. With the ETFs from Oskar, you invest in companies in the USA, Europe, Asia and emerging countries – also in small caps.
Investment: Define goals
As for other areas of life, the following also applies to wealth accumulation: First define goals. This includes, for example, being clear about how much wealth you want to build up and how long your investment and savings horizon is. Among other things, you should be clear about how long you can forego the money invested and how much loss you can take in the meantime. Setting realistic goals is also important. For example, a 20 percent return every year is an unrealistic expectation. Our Oskar 90 strategy has even achieved a return of more than 8 percent in the past 15 years. If you had paid EUR 150 into the Oskar savings plan every month for an assumed annual return of 8 percent, your assets would be around EUR 146,000 after 25 years – even though you only invested EUR 45,300 thanks to the compound interest effect. For example, if you want to go on a multi-month trip around the world that costs 30,000 euros in ten years, you should adjust the savings amount and the payment duration to your destination and the corresponding costs. To get from the amount you need to the deposit amount or the deposit duration, you can use various interest calculator that you can find online.
Discover and reallocate hidden assets
Many people don’t even know how wealthy they are. For example, it could be that you own property, such as valuable art objects, jewelry or antique furniture, which dust in the basement or in the drawer. It can be worthwhile here to sell these pieces online or in a specialty store and invest the money, for example in an ETF savings plan. It can also be worth separating from real estate, such as the holiday apartment that you hardly ever use – provided that the real estate prices on site do not rise continuously and in the long term. You should also use ETF savings plans such as Oskar for money that is in overnight deposits or fixed-term deposit accounts or that goes into expensive bank savings plansrearrange. Especially with overnight and fixed deposit accounts, the negative real interest rate (interest minus inflation rate) slowly eats up your real assets. This is how we calculated that, based on an inflation rate of 1.5 percent (in July 2019: 1.7 percent), the purchasing power of all cash and demand deposits (quickly available money, for example in overnight deposits and time deposit accounts) will change over the next five years. would reduce by 7.3 percent. Since the Germans have over 1,500 billion euros in cash and sight deposits (as of early 2018), this would correspond to a loss of purchasing power of over 100 billion euros.
The area of sharing economy is becoming more and more important and the topic is broader. This is where good money can be saved: If you live in a larger city, doing without a car can be worthwhile. Instead, you can use car sharing offers. Small towns, but increasingly also municipalities, are increasingly offering such carsharing cars. Renting your own room or apartment at short notice via Airbnb when you are on vacation can be really worth it. There are now also portals for the inexpensive or free loan of tools or machines. With free or less expensive online courses, but also complete online courses from renowned universities, you can save a lot of money compared to traditional and analog offers. The providers include Coursera, Iversity and Udacity.
It can be worthwhile not to make the tax return yourself, but to seek professional support. You can easily expect a tax refund of hundreds to several thousand euros. If you are employed, it is worth hiring an income tax relief association for a small annual fee. You can find such an association in every federal state. If you pay sales tax and trade tax in addition to income tax because you are a sole trader or self-employed, the correspondingly more expensive tax consultant is usually also worthwhile.
With the ETF savings plan from Oskar, you invest in up to ten ETFs worldwide – so you also benefit from developments in growth markets. Oskar is independent, tax-smart and particularly affordable. With the complete package from Oskar, you can also choose from five investment strategies. This is how you find the right strategy for you.