Cryptocurrency: What is it? Explanation

The most important thing to get started: if you haven’t had any experience trading cryptocurrencies, such as Bitcoin, Litecoin, Ethereum and others, I highly recommend reading through this article: Cryptocurrency Explained.

You can’t compare cryptocurrency to stocks!

Today everyone wants a diamond ring: learning from history

You can’t compare cryptocurrency to stocks, rather to a commodity that people attribute a high value to. For example, diamonds. Actually, diamonds are “only” colorless stones. But ever since Tiffanys made the engagement ring the absolute standard in the 70s, everyone knows the “value” of diamonds.

It is similar with cryptocurrency, for example, there are only 21 million Bitcoins. In the meantime, a whole generation has grown up with digital currency, bitcoin has existed since 2009. More and more are investing in digital currency, even countries are thinking about their own digital currencies. The triumph of cryptocurrency! Also described here, in my article on the future of cryptocurrency.

Is it worth investing in cryptocurrency?

Imagine you bought $5,000 worth of Bitcoins exactly 4 years ago (price at $1,000). Today, the price is $53,000. If you sold it today, you’d have $265,000 in your pocket. That’s a whole $260,000 in profit! Even after deducting capital gains tax (profits from capital transactions must always be taxed in Germany) of 25%, you would still have a net profit of $165,000, even after taxation. In case you haven’t paid any capital gains tax yet, this only accrues with your annual financial statements, so not directly when you sell the cryptos.

Example calculation: 24 months Bitcoin – 1,000 % profit

Even 24 months ago, you would have made + 1,000%. Here, the price was exactly $5,000, which would have bought you 1 Bitcoin. Today, you would get $54,000 right away, + $49,000 profit.

Example calculation: 48 months Bitcoin – 5,300 % profit

If you had invested today, exactly 4 years ago, you would have made a profit of 5,300%.

Profit in a few years:

• Buy for $5,000 at $1,000/ 5 Bitcoins
• Current price $53,000 * 5 coins = $265,000 value
• Profit: $260,000
• Profit (after tax): $195,000

PS: As I write this article, the price has already risen above $54,000. Direct update:

Profit in a few years:

• Buy for $5,000 at $1,000/ 5 Bitcoins
• Current price $54,000 * 5 coins = $270,000 value
• Profit: $265,000
• Profit (after tax): $198,750

So during the article, my profit would have increased again by +$5,000.

Now every entrepreneur starts to calculate!

Target price $100,000 ? Bitcoin and alternatives

Now you can say, that will soon stop! And believe me, I hear that very often. However, I also heard that five years ago, three years ago, two years ago, last year. Yet bitcoin keeps going up. Currently, there is speculation on the $100,000 mark. Reason enough to think about investing profits not only in stocks, ETFs and other financial products, maybe cryptocurrency is something for your investment portfolio too!

All cryptocurrencies have advantages and disadvantages.

Trade individual coins (currencies)

If you look at the development of share prices, of the stock markets in general, over the last few decades, you will see that there are profits to be made in the long term, as described in detail above in the example calculation for 24 and 48 months.

Cryptocurrency has now been around since 2009, over a decade. Prices have steadily increased from a few cents to $1, $10, $100, a thousand and maybe soon it will be $100,000. Digital currency is the future. So why not invest some of your profits in cryptocurrency?

ETF Cryptocurrencies: Crypto Port Foil

So-called ETFs (Exchange Traded Funds) bundle several individual stocks into one financial product. Instead of 1 product with 100% risk, you have 1 product that contains many individual stocks that minimize the risk of your investment. Instead of “Tesla”, in the example of stock trading, you buy an ETF that deals with electric automobility and, for example, in addition to Tesla, also contains stocks such as Nio (electric cars from China) and Niu (scooters). The risk is distributed.

Advantage: You have to invest much less time

Especially as entrepreneurs and business owners, a core competence is most likely not the financial products, but in other areas. As an entrepreneur myself, I trade most mornings, nights or weekends – believe me, you don’t have the time for day trading! Between new business, employees, taxes, only invest the money you have left. But if you have profits to spare, crypto trading is an interesting option for your wealth building.

Read more about “Crypto ETFs” here:

• ETF Cryptocurrencies

Trading App: Buy, Hold and Sell Crypto ETFs

With what you can easily trade individual cryptocurrencies but also such “crypto portfolios”? Lots of questions of course: what app do you trade with, what do I recommend? So today I want to share my favorite trading app, with you, eToro. 29.88% asset growth in 12 months, with low risk through “Copy People” and “Copy Portfolios” or up to 127.35% through active trading and trading strategies. Learn here step by step about the app, fees and much more. Of course, with all the criteria of valuation, costs and all trading options, from stocks to ETF, index fund, currency, cryptocurrency and commodities. Plus the ultimate eToro advantage: you can copy successful traders! Keyword “Social Trading”. In the end, you’ll know the app inside out for your first trades.

Read more about my recommendation here:

• Trading App

New cryptocurrency with potential?

Which cryptocurrency is the best? The question is also asked so often that I have written a practical, simple overview of the world of cryptocurrencies for you here:

• Cryptocurrencies

Also interesting, what does the future hold? How have the prices of coins performed recently? Read the analysis here:

• Future cryptocurrency

Credit cards – types and uses

The classic credit card got its name from the fact that it granted the customer a loan. Thus, the classic lending of money is only possible with a real credit card. Since a loan always carries risks, you should bear in mind before applying for a classic credit card account that the bank can cancel the account at any time. It is a framework credit, which does not have any notice periods. The will usually make use of this if the customer’s credit rating deteriorates.

The credit is granted as a credit line on the card account. You decide yourself whether you settle the outstanding amount at the billing date in one sum or in monthly instalments. The bank often requires a minimum amount, which is ten or 20 percent of the credit amount used. Alternatively, a minimum payment of ten or 20 euros may be required.

There are so-called black credit cards, which do not have a credit limit. However, these are only issued to customers with a very high income or a very high solvency.

You can increase or reduce the credit limit. Both are possible upon application. You can dispose freely within this limit. This is the advantage of a classic credit card. The limit can be used in full or only in part. Interest is only charged on the amount used and is calculated on a daily basis.

Unlike an instalment loan, the negative balance on the credit card account can be completely cleared at any time in order to save interest. However, you pay for this freedom with an interest rate that is often more than double that of an instalment loan. For this reason, the use of the instalment facility should be weighed up carefully.

Credit cards on credit basis

In addition to the classic credit card, there are other models that, strictly speaking, no longer live up to the name because no credit is granted at all. With these models, however, the credit institutions are accommodating the high acceptance of credit cards. For example, the Girocard or the Maestro card have not yet become established in online retailing. However, most retailers do accept credit cards. If this works on a credit basis, it can also be issued to customers who do not have a high credit rating.

Credit card with link to current account

Many banks offer credit cards that are directly linked to the current account. There are accounts for which a Girocard can be requested as an alternative. Abroad, the Girocard is not known. Within Europe, the Maestro card is used. Modern and young smartphone banks no longer work with the Girocard at all, but only issue credit cards and Maestro cards.

When paying with a credit card linked to the current account, the amount is debited directly. With modern smartphone accounts, this even happens in real time. This means that the amount is immediately reserved in the account. The advantage is that the customer can take advantage of the high acceptance of credit cards and still keep a very good overview of their finances. The credit card’s credit limit is based on the balance on the current account and is constantly updated. Credit cards that are linked to a current account as a means of payment are often issued free of charge.

Prepaid credit cards as an alternative

Prepaid credit cards can only be used as a means of payment if they have been loaded in advance. They are not linked to the current account, but there is a collective account for all customers who have such a credit card with the bank. The transfer must be made to the collective account and assigned to the customer based on the number of his credit card. This can take one or two days. Only then is the credit card ready for use. Another disadvantage is the high fees that have to be paid for the prepaid credit cards. The prepaid credit card should only be applied for if other options are out of the question.

Credit card types with high acceptance in Germany and worldwide

In Germany and Europe, Mastercard and Visa credit cards have a very high acceptance. Mastercard is very often issued in connection with a current account, while Visa is often chosen as a prepaid solution or as a classic credit card.

Those who like to travel to America often, choose American Express or Diners Club. However, both credit cards require a good credit rating. They are usually only issued as a classic credit card linked to a credit account and cost an annual fee, which is not very cheap. Since there are cheaper offers in Europe with Mastercard and Visa, American Express and Diners Club are not so highly frequented in this country. This is also confirmed by the acceptance, which is limited to hotels, restaurants, gas stations and shops that sell high-priced goods.

Different calculators for individual needs

When calculating a construction loan, different tools are used. It always depends on what values you want to determine. Just having construction financing is not enough in terms of calculations. Before you take over the property, it is important that you know the cost of maintenance. Unlike a tenant, as a homeowner you are solely responsible for paying the utilities. This does not take the form of a payment on account, but you pay the bills individually to the energy suppliers, the city or municipality and to the chimney sweep. Further costs arise from charges to waste cleaning, winter service and street cleaning.

Costs and fees

Specifically, the costs and fees you have to pay as a homeowner can vary greatly. There are cities and municipalities in which the individual homeowner does not have to pay any costs for cleaning the streets and roads or for winter services. Usually, this is only the case with private roads. Find out in advance what the monthly utility costs will be. Also include in your calculation the fees that do not accrue monthly, but annually, semi-annually or quarterly. Together with the loan, the service charges make up the total amount for running the house. This is then equal to the warm rent for an apartment or house that is not owned. Interest calculators and repayment calculators, but also household calculators and budget calculators help you to keep a very good and realistic overview of your finances even before you move into your own house.

Read also:

• Offer comparison calculator
• Budget calculator
• Budget calculator
• Incidental purchase cost calculator
• Rent calculator
• Repayment calculator
• Interest calculator

Do not neglect incidental purchase costs

With the purchase price of the house you have not yet acquired ownership. Every real estate purchase comes with ancillary costs that you should be aware of and factor into your construction financing. These ancillary costs include the estate agent’s fees, the land transfer tax and the costs for the notary. More about agents and commissions: hiring an agent. Further costs may be incurred if you need interim financing and have to pay the loan costs at the same time as your rent. In addition, as a builder, you are required to take out insurance. Also calculate the basic completion of the garden into your construction financing. This includes the creation of paths, a patio and a lawn. The garden plot should be levelled in advance. Many builders neglect these costs and initially have no money to complete the garden project after the build is finished. This leads to annoyances as soon as the house is occupied and to a reduced quality of living.

The same applies to the purchase of kitchen furniture, bathroom furnishings and home insulation. Time and again it is noticeable that builders who have calculated too tightly initially forgo the exterior insulation. For houses that are built using solid construction methods, the insulation is only installed as the completion of the exterior work. You should never forgo this measure because the building can take lasting damage from damp. In addition, there are regulations for new buildings in terms of energy efficiency. It is imperative that you comply with these regulations. Otherwise, you may be denied approval for the house during the building inspection, and you may not receive subsidies.

Set priorities correctly

Kitchen and bathroom are rooms that you need every day. Don’t forgo finishing them for lack of money, because this also means a lack of living quality. Rather calculate a little cheaper and use the calculator to determine your savings potential.
If you have realistically calculated the total costs for the construction in advance and the construction financing has been placed on a secure foundation, you will have no problems bearing the financing. In addition, you can completely finish the construction before moving in because the individual works have been well calculated and financially secured. This is the right way to get a good start in life as a property owner.

All calculators at a glance

Below we provide a listing of calculators that can help you calculate the cost of construction financing and the ongoing cost of maintaining the home. Take advantage of the opportunities to calculate all costs and fees in advance. This is an important basis for a solid construction financing that you can carry for years or decades:

Offer comparison calculator

Use a quote comparison calculator to determine which financing is the most favorable for you. The calculator lists the loan amount, the interest and the costs incurred and presents the total amount. In addition, you can find out about the monthly instalments that are due depending on the term. Learn more about the offer comparison calculator.

Budget calculator

A budget calculator should be used at the beginning of any home financing by the builder. It determines the budget that is available to you for the construction financing. The basis for the calculation is your income, the equity that you bring with you and the personal contribution that you plan. At the end of the calculation is a monthly rate that you can safely afford. From this rate you then determine the price you can pay for the purchase of a property. All about the budget calculator.

Budget calculator

The budget calculator is an important element that is not only used in the context of buying real estate. You have the possibility to compare all income and expenses. In this way, you can find out whether you can pay the loan from your income in addition to the running costs. Find out everything about the budget calculator.

Incidental purchase cost calculator

Incidental purchase costs are an important factor in construction financing. They are quickly underestimated by builders. Since they can amount to a five-figure sum depending on the location and size of the property, they should definitely be calculated in from the outset. The ancillary purchase costs calculator helps you to calculate the costs exactly. More information on the ancillary purchase costs calculator.

Rent calculator

You use a rent calculator if you can rent out all or part of a property that you own. Use the local rent to find out what amount you can demand from your tenant. You can also use the rent calculator to find out the service charge percentage. Everything about the rent calculator.

Repayment calculator

If you have taken out a traditional bank loan or a subsidised loan as part of your construction financing, you pay monthly instalments. These consist of the interest and the repayment of the loan. With the repayment calculator, you can determine what amount you pay off per year. The ratio of interest and repayment shifts over the years, because the interest is always calculated on the outstanding amount. At the beginning of the term, the share of interest is very high. This reverses month by month in favor of the repayment. However, the rate you pay to the bank always remains the same. Find out all about the repayment calculator.

Interest calculator

Use the interest calculator to determine the cost of construction financing. It will help you to choose a low-cost financing. Even a small difference in the interest rate by a few percentage points behind the decimal point can amount to several hundred euros per year over the term of the loan. You can save these if you have determined the costs with an interest calculator and decide on a favourable offer. More information about the interest calculator.