How to #PersonalFinance
EXPAT GUIDE 2022-23
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How to start investing Many people think they don’t make enough money to invest or simply don’t know where to begin. Gaëlle Haag, CEO of Startalers, a fintech startup, and Capitana, an investing app, shares these general suggestions.
What to know about home loans
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With a bit of self-education, starter investors can ‘do it yourself’. Haag recommends starting with exchange-traded funds. ETFs typically invest in several companies and sectors at the same time, which “allows you to diversify your portfolio even with a very small amount”. Check out Swissquote.
Charles Pletsch, vice president and head of business unit, retail banking, at the state savings bank Spuerkeess, shared these general tips on the mortgage application process.
First time homebuyers can “theoretically” get a zero down payment mortgage. Crucially for expats, only Luxembourg real estate loans count. But reflect carefully because you’ll have higher monthly payments. Then prepare your documents. Banks require the compromis de vente, “plans and pictures of the house or the apartment,” and detailed cost estimates for planned renovations. For each buyer, the bank will need identification documents, proof of revenue and own funds for the down payment, and, for new clients, previous bank statements. “If the file is complete,” Pletsch said that banks will typically provide an answer within a week.
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A robo advisor can select a portfolio for you. Minimum investments range from €10-€500 and then €10-50 a month. Check out Birdee, Capitana and Speedinvest. 3
Homebuyers nationally shelled out an estimated €912,000 for an apartment and €1.3m for a house in 2021. The market shot up sharply during the covid crisis: asking prices for flats were up by 38% and for houses by 36% between the end of 2019 and the end of 2021. Source
Observatoire de l’habitat
Don’t check your portfolio every day or you might be tempted to panic sell. Once a month should be good.
€1,317.4k
€1,200k
€912.2k €900k
€600k
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Only sell for a reason A slow and steady approach might not be glitzy, “but over time I would say it’s the most successful strategy”.
€569.2k €350.5k
€300k 2021
2010 Flats
Play the long game
Houses
Romain Gamba, Mike Zenari (archives)
Luxembourg property prices
Monthly contributions Put in a minimum amount each month to make “compound interest work for you”. Investing regularly means, on average, you’ve probably bought at the fair market price.
4 €1,500k
...Or use a platform
Photos
The first step is to talk to your bank before looking for property, Pletsch said. An advisor can fairly quickly calculate “the amount of the loan” the bank can grant, “so you’ll definitely know what price you can pay.” Talk to at least one other bank. Most people would comparison shop when buying a new car and it’s no different for a mortgage, he noted. Understand the compromis de vente (preliminary sale agreement) is a binding contract. Pulling out means paying a penalty of 10% of the sale price. Buyers can insert a clause that cancels the deal if their loan application is rejected, but this is not automatically included. Homebuyers typically need a down payment of 10% (or 20% for investment property).
Do it yourself...