7 Reasons Why You Need To Start Investing Right Now
Categories: Finance
The world of investing tends to be seen as a ball of confusion for most living in the Netherlands and throughout Europe. After all, in the Netherlands only about 1 million (out of 17 million) seriously invest. With numbers like that, we guess you’ve got questions as to why it’s so urgent to get start investing right now? For the all-important answer, we consulted our partners at Iban Wallet. They really broke it down and helped a layman like us understand why, when it comes to investing, time is of the essence.
Reason 7: Super Low Interest Rates
If you’re in the Netherlands and receive e-mails from your bank, you’ll know that the interest rate on your savings account has been decreasing. About 20 years ago it was as high as 5%. Which means with 50k euro in your account you’d earn about 2.500 Euro just keeping your money there. Long gone are those days though, so it’s important to look for returns in other areas as your savings account ain’t giving it to you now!
Reason 6: Dutch Wealth Tax
A wealth tax is one on an assumed rate of return (yes, the government makes that assumption). Simply put, if you have 50.000 Euro or more sitting in a bank account (anywhere in the world) earning close to 0% return, you’re losing money big time. Dutch tax authorities will assume a return of 2-3% and tax that amount. Furthermore, if the amount is higher (approximately 100.000 Euro), the deemed rate of return is between 4-5%. So essentially, you’d be paying tax on an extra 5k euro per year, which you didn’t even earn! Imagine this: not getting a raise and paying taxes on one anyway. If that doesn’t get you started with investing, we don’t know what will. Ideally, to offset the effects of the wealth tax on your net income, you actually have to get a return on your money.
Reason 5: The Coronavirus
Most European countries have a created massive bail-out package in an effort to save jobs and their economies from the COVID-19 pandemic. Of course, this will create larger government deficits and, therefore, increased debt. Do you know who pays the bill for government debt? You do, the taxpayer! Knowing this, it is no secret that the tax code, healthcare, and the overall cost of living will increase in coming years. It’s important to make what money you have work hard for you, because there may be little alternative relief in the future so start investing right now.
Reason 4: You Want to Buy Something Cool (or Important) in the Future
If you would like to buy something really cool, you may feel a bit guilty splurging on it today. However, if you plan for it, and save diligently, the reward is so much more awesome. Investing needs time to work, so putting money aside and using the power of compound interest/returns over time can help you get those things you’ve always wanted (eventually).
Reason 3: Inflation
Ever wonder why your parents or grandparents complain about everything being super expensive nowadays? It’s the old “back in my day” speech. Well, that’s mostly due to inflation. The value of goods and services inevitably go up over time. Our imposed economic system is designed to do this (European Central Bank’s target inflation is about 2% per year on the short – medium term). If you’re not investing your actually not using the system to your advantage. In fact, the system in using you.
Reason 2: Dude – Where’s My Pension?
Think you’re going to be able to retire on a state pension? Maybe 50 years ago, but not these days! Today in The Netherlands, pensioners receive about 700 – 1000 Euro per month on average. Ask yourself: if you can’t live on that amount today do you think you will be able to in 30 years when the cost of living is doubled due to inflation? Of course not. If you start investing right now you can properly prepare for your golden years and actually enjoy them. Some best practices include putting aside money on a regular basis toward retirement in the Netherlands and securing an investment fund.
Reason 1: It’s Fun When You Can Do it Yourself!
Investing via your phone can be loads of fun! It’s a hell of a lot better than obsessively checking social media, right? At least you’ll be watching your money grow and not hit with a barrage of former classmates’ new baby photos. With the proper knowledge, investing through Iban Wallet can be relatively low risk, fun, and easy.
The app is beautifully designed and provides an enjoyable experience for investors both new and old. In acting as an intermediary in the lending process, Iban Wallet bridges the gap between investors and loan originators!
So, with all that in mind what are you waiting for! Get out there and effortlessly track your investments on the go. Download the app today and put your money to work with Iban Wallet.