Friday, August 03, 2007

It’s all about the money

Just some local posting today, a tip on managing finances in the lowlands, being solvent, and getting the most of your hard earned money. So, if you are complaining why you don’t seem to earn from savings, listen up.

I have found this helpful site about savings: spaarinformatie

The website monitors, lists, and compares the savings interest rates of all banks in the Netherlands. Most of the banks with high interest rates on the list are the new generation banks: internet banks. With diminutive overhead costs, these online banks can afford to give higher rates to consumers who are keen and watchful of their money.

For example, AT Bank offers 4.50% interest while the local top banks, i.e. Fortis, ABN Amro, ING, Rabobank gives between 2.40% and 2.60% which is a far cry from the 4.50%! What is more, the Netherlands tax department imposes a 1.2% wealth tax on savings/assets above € 19.698.

Now, this is where the story gets a bit juicy.

Research says that many people just let their savings (and these run above the € 19.698 figure) sit in the corner cobweb vaults of their banks that only give a low 2.40% interest rate. Furthermore, they do not really care that at the end of the year they pay 1.2% wealth tax to the government. Hmm, perhaps this could be a case of, (a) laziness (b) lack of awareness (c) just being dumb? I don’t know?

Considering that we earn 2.40% from interest minus the 1.20% tax, how much then do we actually earn in total - net? Rather, let me rephrase the question -- Why are we voluntarily (and stupidly) giving our profits away?

It is time for people to become truly concerned, involved, and in control of their finances... because only the (take note: already rich) banks profit from all these financial brouhaha complexities. Not fair, eh?

Nevertheless, back to the spaarinformatie list, some concerns raised are that banks offering above the 4.00% interest rate were classified as dodgy financial institutions from Russia, Turkey, and so forth. I agree that trust is a valid issue and citical factor in this situation as every client’s nightmare is a bank run. When it comes to money matters, facts and figures are important, but trust indeed holds the pivotal role in our decision making.

But, here’s some good news though –

In cases of bankruptcy, the Dutch National Bank (DNB) guarantees 100% of the first € 20.000 for every account per bank, and 90% on the next € 20.000 which would mean a 10% risk. Above € 40.000 there is 0 guarantee.

Looking at the list of banks in offering high interest rates will reassure us residents in this country that we can always open a new bank account here, there, and everywhere, and without having to risk.

Ah, it is never too late... to switch banks and open new ones.

Last week I made the conscious decision to keep, close, and open a couple of bank accounts. It made me feel good.

This is one of the things I love about the Netherlands -- this country is wired inside out! Well, excluding credit cards which I am happy enough as I do not use them often anyway.

Banking and finance is done online. I never had to go to a bank branch, never had to call a bank representative, never had to rely on paper trail, never had to wait for ages for a transfer, never had to deal and talk face to face with anyone when paying, transacting, and even investing. All I need is my laptop, my bank cards, my passwords, the security identifier equipment, and the internet.

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