Investment – An investment is made when there is an amount left after deducting all monthly expenses. You can transfer a single amount into a cash investment, or you can choose for regular monthly payments. Banks and savings institutions offer various forms of financial investment. They mainly differ by their availability. The goal is to earn interest on the money.
Financial investments: savings account, cash account and fixed deposit account
As well as the classic savings accounts, you can also choose to invest in securities. The interest rates are higher. However, the disadvantage is that you cannot calculate as precisely with the money. It is not known in advance how the interest rates will develop, as they depend on prices in the capital markets. In contrast, the classic investment of money in the form of a savings account, cash deposits or fixed-term deposit account can be calculated exactly in advance. However, the interest rate may be significantly lower than if you invest in stocks or securities.
Pay attention to the availability of the investment
If you have saved reserves for the financing of construction, it is advisable to coordinate the investment of money with your planning. This applies especially to investments in securities and fixed-term deposits. The capital is of no use to you if it is not available on the maturity date. If you liquidate the investments in cash before time, you usually lose part of the interest or are charged fees.
Investing the money from the sale of real estate in a financial investment
In the same way, you can transfer the money you receive from the sale of a property into a cash investment. This is possible in the short or long term. Since most banks no longer pay interest on the positive balances of current accounts, it is advisable to transfer any positive balances that are not needed immediately from your current account into an investment. With the large amounts received from the sale of a property, even low interest rates can have a positive effect and generate a positive return. If you would like individual advice on financial investments to be used in connection with the sale or purchase of a property, we would be delighted to offer you our services.
Shares and stocks are considered a flexible and highly profitable investment. You can buy individual shares, or you can decide to invest in a fund. In this case, different shares are grouped together. The fund is managed by experts. In principle, you can buy or sell shares at any time at the current daily price. However, you should always keep an eye on the development of the value increase. Also, you should be aware that the securities account at many credit institutions is subject to fees. Additionally, the purchase price of a share is higher than the issue price.
Value development: consider the risk in the calculation
Unlike a classic savings investment, the performance can not only rise but also fall. You should also take this into account in your calculation. Compared to other financial investments, you can achieve the highest returns by investing in stocks and securities. However, this can take time. Market knowledge is an advantage. If you want to save money for a construction loan, stocks and securities are only a good option if you plan for the long term. Short-term gains are theoretically possible. However, unlike classic fixed investments, they cannot be planned.
Fixed investments with classic interest rates
A fixed-term deposit has a predetermined term. The interest rate is also fixed, so you know in advance how much money you will have at the end. This is an advantage for financing construction. The disadvantage is that interest rates are consistently at a low level. This is especially true for short-term financial investments. You should also keep in mind that you usually do not have access to the money during the fixed term. You can cancel a fixed-term deposit regularly. However, you must respect notice periods of up to a quarter of a year and will lose part of your interest.
You should only deposit money into a checking account if you need it with short notice or if you don’t know exactly when you’ll need to withdraw it. Checking accounts are usually linked to your savings account. Transfers and returns to the savings account usually take one business day at the bank. The advantage is the immediate availability of money. The disadvantage is the low interest rate.
Home loan
The financing of construction differs from the classic consumer loan in that the interest rates are more favorable and the term is longer. In financing, the property serves as collateral. The debt is registered in the land registry. If the installments cannot be paid on time, the bank has the right to terminate the mortgage loan and proceed with foreclosure. In this case, it recovers its money or a large part of it. Thanks to this deposited guarantee, the bank has the possibility to offer more favorable conditions for real estate financing than for a consumer loan granted without a deposit guarantee.
