Author Topic: Building a Stache in the Netherlands  (Read 2422 times)

prognastat

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Building a Stache in the Netherlands
« on: May 12, 2017, 07:21:39 AM »
Hi Everyone,

My parents live in the Netherlands and my mom recently talked about them being unsure where to put their money as they rightly feel that a savings account is not a good place to park their money beyond some emergency money. Unfortunately I do not live there and am not very familiar with the options available there.

I was wondering though if there might be some dutch Mustachians that have looked in to this and might have some tips as to the optimal place to put your money to work in the Netherlands.

Would it be best to put it in retirement accounts? From what I read they are so highly penalized if accessed before retirement age as to make it useless for anything but use after retirement age.

Are taxed savings vehicles worthwhile even with the extra taxes?

Is buying rentals maybe more worthwhile?

Thanks for any help you can offer.

prognastat

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Re: Building a Stache in the Netherlands
« Reply #1 on: May 17, 2017, 01:13:02 PM »
I was afraid this might be the case, haven't seen a large amount of Dutch people around here.

bigchrisb

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Re: Building a Stache in the Netherlands
« Reply #2 on: May 17, 2017, 06:18:45 PM »
Sorry to see the lack of responses.  I'm also curious - I'm Australian with my stash here, but will be living in the Netherlands for three years soon, and trying to figure out any geo-arbitrage opportunities!

prognastat

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Re: Building a Stache in the Netherlands
« Reply #3 on: May 18, 2017, 07:47:25 AM »
Sorry to see the lack of responses.  I'm also curious - I'm Australian with my stash here, but will be living in the Netherlands for three years soon, and trying to figure out any geo-arbitrage opportunities!

Yeah I was hoping I might get lucky, but had tempered my expectations already since I hadn't seen many posts by dutch people. Hopefully things work out for you during those 3 years.

Tetsuya Hondo

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prognastat

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Re: Building a Stache in the Netherlands
« Reply #5 on: May 18, 2017, 01:48:55 PM »
See: https://forum.mrmoneymustache.com/meetups-and-social-events/any-dutch-mustachians-here/

Thanks for the link.

I don't really check the meetups and social events forum so had never seen that.

Mr FrugalNL

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Re: Building a Stache in the Netherlands
« Reply #6 on: May 19, 2017, 05:37:12 AM »
Would it be best to put it in retirement accounts? From what I read they are so highly penalized if accessed before retirement age as to make it useless for anything but use after retirement age.

You're right about the early withdrawal penalties. But if your parents don't need to access their money until retirement age then yes, putting it into retirement accounts will probably be worthwhile. Their contributions to such accounts (up to an income-dependent ceiling) are tax deductible. The Dutch income tax brackets are 36.55%, 40.8% and 52%, so that could be a big savings right there. Retirement accounts are also exempt from the annual asset tax of 0.86%, 1.38% or 1.62%, which adds up too over the years. The downsides are very strict rules that may be subject to unexpected change. And at retirement age the money in retirement accounts has to be used to purchase an annuity, which again may not be ideal.

Are taxed savings vehicles worthwhile even with the extra taxes?

Yes, because the tax-advantaged retirement accounts are inflexible and it's impossible to put all your money into them anyway.

Is buying rentals maybe more worthwhile?

It could be, but your parents should be aware that this will probably cost them more time and effort and expose them to more concentration risk than if they were to open an investment account with a bank or broker and invest in the stock and bond markets. They should also be aware that the tax treatment of rentals depends on the amount of time the landlord puts into them, with more time generally resulting in unfavourable tax treatment: rental income taxed at 36.55%, 40.8% or 52% depending on their marginal tax bracket.

chrisgermany

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Re: Building a Stache in the Netherlands
« Reply #7 on: May 19, 2017, 06:15:47 AM »
Are they familiar with MMM ideas?
The dutch couple Hanneke van Veen and Rob van Eeden introduced an adapted version of  "YMYL" in dutch and german language in 1995.
The books are "Je geld of je leven" and "Hoe word ik een echte vrek?".
They might be available second hand.
Their blogs and website seems not to be updated for several years, which is sad.

Mr FrugalNL

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Re: Building a Stache in the Netherlands
« Reply #8 on: May 19, 2017, 06:49:14 AM »
Even better, Je geld of je leven is available as a free pdf download.

Cereal

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Re: Building a Stache in the Netherlands
« Reply #9 on: May 19, 2017, 07:28:53 AM »
Take a look here: https://gathering.tweakers.net/forum/list_messages/1628483
It's a thread on a well known tech forum with a lot of tips and discussion.

One of the steps could be to pay an additional sum towards the mortgage, depending on the mortgage, you can payoff upto a certain percentage per year.

If you are looking for indexbeleggen, www.degiro.nl has a list of ETF's that are without transaction fees (Fair use policy, 1 buy/sale per etf per month).
www.meesman.nl is also often recommended in NL for ETF investments

you can also look at www.evivanlanschot.nl to have a managed portfolio, but be aware of the costs (around 1% per year over the total sum). www.evipensioen.nl is their pension proposition.
brandnewday is also something I read about a few times as a  'pensioen in eigen beheer'.

How about your own plans? :)


Tetsuya Hondo

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Re: Building a Stache in the Netherlands
« Reply #10 on: May 19, 2017, 07:49:02 AM »
See: https://forum.mrmoneymustache.com/meetups-and-social-events/any-dutch-mustachians-here/

Thanks for the link.

I don't really check the meetups and social events forum so had never seen that.

No problemo. For some reason, many of the non-USA country specific discussions end up in that forum.

prognastat

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Re: Building a Stache in the Netherlands
« Reply #11 on: May 19, 2017, 09:47:21 AM »
Would it be best to put it in retirement accounts? From what I read they are so highly penalized if accessed before retirement age as to make it useless for anything but use after retirement age.

You're right about the early withdrawal penalties. But if your parents don't need to access their money until retirement age then yes, putting it into retirement accounts will probably be worthwhile. Their contributions to such accounts (up to an income-dependent ceiling) are tax deductible. The Dutch income tax brackets are 36.55%, 40.8% and 52%, so that could be a big savings right there. Retirement accounts are also exempt from the annual asset tax of 0.86%, 1.38% or 1.62%, which adds up too over the years. The downsides are very strict rules that may be subject to unexpected change. And at retirement age the money in retirement accounts has to be used to purchase an annuity, which again may not be ideal.

Are taxed savings vehicles worthwhile even with the extra taxes?

Yes, because the tax-advantaged retirement accounts are inflexible and it's impossible to put all your money into them anyway.

Is buying rentals maybe more worthwhile?

It could be, but your parents should be aware that this will probably cost them more time and effort and expose them to more concentration risk than if they were to open an investment account with a bank or broker and invest in the stock and bond markets. They should also be aware that the tax treatment of rentals depends on the amount of time the landlord puts into them, with more time generally resulting in unfavourable tax treatment: rental income taxed at 36.55%, 40.8% or 52% depending on their marginal tax bracket.

Thanks for the in-depth response even if it confirms some of the things that had me worried. It sounds like it is best to simply manage enough in retirement savings to cover from retirement on and invest the rest either in taxed accounts or possibly rentals depending on how the taxes and hours invested comes down to.

Are they familiar with MMM ideas?
The dutch couple Hanneke van Veen and Rob van Eeden introduced an adapted version of  "YMYL" in dutch and german language in 1995.
The books are "Je geld of je leven" and "Hoe word ik een echte vrek?".
They might be available second hand.
Their blogs and website seems not to be updated for several years, which is sad.
Even better, Je geld of je leven is available as a free pdf download.

Sort of I would say. They haven't read MMM themselves, but have heard some of what I am focused on so they have some kind of idea at least. Thanks for the recommendations.

Take a look here: https://gathering.tweakers.net/forum/list_messages/1628483
It's a thread on a well known tech forum with a lot of tips and discussion.

One of the steps could be to pay an additional sum towards the mortgage, depending on the mortgage, you can payoff upto a certain percentage per year.

If you are looking for indexbeleggen, www.degiro.nl has a list of ETF's that are without transaction fees (Fair use policy, 1 buy/sale per etf per month).
www.meesman.nl is also often recommended in NL for ETF investments

you can also look at www.evivanlanschot.nl to have a managed portfolio, but be aware of the costs (around 1% per year over the total sum). www.evipensioen.nl is their pension proposition.
brandnewday is also something I read about a few times as a  'pensioen in eigen beheer'.

How about your own plans? :)

Thanks for the links. They did recently purchase the house they were renting so this is probably one of the worthwhile things they could do to reduce their recurring expenses. Given that achieving a large amount of passive income is harder that reducing spending is made all the more worthwhile.

As far as my own plans I moved to the US in my very early 20s so it is completely based on the US and similar to a lot of the US based advice seen on these forums. I work at a company that offers a 401k retirement  account and put most of my savings in that planning on using the Mega Roth Conversion Ladder strategy to get the money out at a reasonable rate before retirement age. I'm planning on also putting some in Roth and after tax accounts before then to cover the 5 year period for the ladder to fully go in effect. Finally once I have a sufficient stash to last at a 4% SWR I'll probably switch my savings towards paying off my mortgage and FIRE once that is paid off(this is more for my wife to help her feel more secure). I'm about 1/4th of the way to my stash being at FIRE levels. If all goes according to plan it will likely be another 7-8 years to completion.

Also my parents are around 50 so either way super early retirement isn't on the table, but if they could take it easier the years leading up to the official retirement age or even retire a few years before that it would be nice.
« Last Edit: May 19, 2017, 09:49:17 AM by prognastat »