Some subjects just aren’t very sexy, but there comes a point when you can’t avoid them. Retirement planning is a classic case in point for me. I mean, retirement seems a lifetime away. The point is, that doesn’t mean that right now isn’t the best moment to engage with it. Let’s be honest here: who can really guarantee our pension in this day and age? It really can’t hurt to take matters into one’s own hands, at least to a degree, by saving a little. That’s particularly true for freelancers, who are not obliged to pay into the government pension funds in Germany (BK1). That said, the pension system is being eroded for all of us, which means stable government pensions are by no means secure for you, whatever your current profession. It’s an inescapable reality that hits home as soon as you look at the demographic shift in our society. Private pension provisioning makes sense. But how and where to start? When I first engaged with the subject, I found it all extremely complicated.
How to accrue savings in a way that my money wouldn’t lose value?
Where best to invest?
How exactly do you buy stocks?
What are funds?
How to minimize the risk with stock investments?
How to trade?
What are ETFs?
What are shares? A share is a financial holding. As a shareholder, you are a co-owner of a company and, depending on the type of share, you are granted corresponding co-determination rights, but also the right to participate in the profits of “your” AG.
What is the DAX? The DAX is an index weighted by market capitalization. To calculate the index value, the 30 most important shares are included according to the total value of the respective freely tradable shares.
What are funds? A fund is not a single security, but a kind of pot with many different securities. As a fund investor, you buy units in such a portfolio.
What are assets? Assets provide a passive income. They can include real estate, stocks, bonds, commodities, precious metals, funds, art, antiques, vintage cars, ships, corporate investments, luxury cars and much more.
What are ETFs? The so-called Exchange Traded Funds (ETFs) are passive funds which, unlike actively managed funds, are not actively managed or compiled by any fund manager. Most ETFs are based on market indices. With a DAX-ETF, for example, you buy shares in a portfolio that contains the shares of the 30 largest companies in Germany. This allows you to profit not only from price gains but also from dividends from these companies. Advantage: The fees are usually significantly lower than for active funds. Disadvantage: Since the portfolio follows the model of the index, you can achieve the maximum return of the market with them and not more.
How is a return calculated? The yield is generally displayed in the securities account of your online broker, i.e. you save yourself the hassle of arithmetic.
You can find more information here and in the app!
For some this may be common knowledge, but studies show that these are areas in which women tend to be less educated than men. Generally speaking, women tend to be less knowledgeable when it comes to finances (as per now). And recently published figures show how much of an adverse effect this lack of knowledge has: according to the European statistics office Eurostat, about one million women more women than men were in danger of falling into poverty. In other words, it is crucial that we engage more with financial subjects, and that we become more courageous when it comes to investment and long-term planning.
According to a study conducted by the Center for European Economic Research (ZEW), only 15% of women invest their money in stocks, compared to 22% of men. And when women invest, they tend to opt for less risky exchange traded funds [BK3] (ETFs), rather than individual stocks. In other words, the stock market is considered a domain of men with some justification. Far be it from me to claim that I am expert on the field, but I did what I could: I consulted experts. Namely, I turned to a group called finanz-heldinnen (financial heroins)!
A short while ago I recorded a podcast with finanz-heldinnen, in which I discussed my own finances with them and used the opportunity to ask some important questions. You can hear the whole thing in my podcast.
Finanz-heldinnen is an initiative of comdirect, and was founded by smart women who set themselves the goal to aid women in taking charge of their finance. And that’s exactly what they do, with profound knowledge, great ideas and dedication. Backed by comdirect, finanz-heldinnen have founded a podcast that provides information on financial subjects. The format also includes occasional interviews with people like myself. Finanz-heldinnen have also launched an app to that end, in which the most common and important questions are answered. Knowledge, transparency and education are always necessary first steps towards letting your money work for you. Invested smartly, even small amounts can go a long way.
Just this month, finanz-heldinnen have also launched a new current account product for their community.
With perks like free deposit management and affordable stock savings plans, as well as a highly diversified investment portfolio, it’s a great tool for retirement planning. Opening a new account is quite a serious step, of course. Personally, I am of the opinion that it’s important to leave the beaten track sometimes, especially when it comes to finances. If you don’t feel happy with or well-advised by your bank, for example. Often enough, women have different goals than men when it comes to finances. Our life realities are often quite different, which of course informs our outlook and goals. It’s important to have advisors who are able to provide impulses based on mutual understanding.
Finanz-heldinnen offer a bonus of EUR 75, which can be invested immediately in stocks. Moreover, new clients receive an interactive e-book, which includes a step-by-step guide to the first stock investment, which makes it easy for your to set yourself goals and track them. It’s a bit like a bullet journal, aiding you in the process of becoming a financial heroin – a finanz-heldin – yourself.
There are no excuses. The time to take your future into your own hands is now.
This post is also available in DE