New dane in the forums

[emilm]

Hi all;

I am a 29-year old dane who 'just' finished my graduate studies last august. Rather late to start being a real adult with real jobs compared to the rest of the world it seems, however not an uncommon sight in Denmark.
I am new at the forum and in the community and arrived here due to an article citing Jacob, and a mystery-retiree living in Denmark, a few days back in a national newspaper.
I have never been particularly frugal. During my prolonged studies I have spend all my money and taken student loans on the side. My debt is in no way insurmountable (appx. 100.000 DKK / 15.000 usd at 1 %) but it does annoy me now that I have it.
Working as a highschool teacher for a year and a half now, I decided right away to not up my spending significantly. Initially not because I believed I could make savings that would be able to work for me, just because it seemed somewhat riddiculus to more than tripple my spending from one month to the next.
Having practically trawled a couple of the big blogs the last three days (ERE, MMM) I am more than intrigued of the idea of being able to make your money work for you, and I never even imagined it could be done on a normal salary. This I need to try.
That being said this is not my main goal of testing my abilities in extreme savings. What resonates really well with me is the search for happiness, by way of eliminating excess in my life. In this there is also a wish for health and longevity.
I will probably write up some more detailed plans and thoughts when I get them organised in my own mind. For now I just wanted to make my appearance known - also to keep myself engaged.

Thanks for reading

By the way. Is there a message board or the like specifically where danes exchange tips and tricks? I am somewhat scared of the whole investment and taxing-part of this endeavour and could really use some sparring shortly down the road. So far the only thing I can say for sure is that the danish system is NOT directly comparable to what I have read at ERE and MMM.

Regards

emilm

[wizards]

Welcome.

Sounds like a sound approach to life.

To my knowledge, there isn’t a special forum for Danes, but there have been a few threads here where some of the issued you mention have been discussed.

Our system is certainly different, with pros and cons, if you need answers go ahead and ask the questions 

[emilm]

Thanks wizards;

Well first of all I really wanna know if it makes sense to invest small-change in Denmark. For now I have appx. 50k dkk, and for starters I will just put them in a 5 % sallary account (GL are cooperating with Laan&Spar Bank). But soon I think I will have another 50.000, and the question is what to do with those. I like the idea of index funds, betting on the market rather than trying to beat it. But is there something I should be particularly aware of in a danish context? I get that I will pay 27 % of the dividends the first years and later 42 %. Can I do anything to bring this down?
Also, what services and why do my fellow danes use for investing? Nordnet? euroinvestor? Vanguard? Your local bank? There seems to be many possibilities.

[FBeyer]

Thanks wizards;

Well first of all I really wanna know if it makes sense to invest small-change in Denmark. For now I have appx. 50k dkk, and for starters I will just put them in a 5 % sallary account (GL are cooperating with Laan&Spar Bank). But soon I think I will have another 50.000, and the question is what to do with those. I like the idea of index funds, betting on the market rather than trying to beat it. But is there something I should be particularly aware of in a danish context? I get that I will pay 27 % of the dividends the first years and later 42 %. Can I do anything to bring this down?
Also, what services and why do my fellow danes use for investing? Nordnet? euroinvestor? Vanguard? Your local bank? There seems to be many possibilities.

Welcome. 'nice to see more Danes around here.
I was about to say that our 'local' tax resource is called wizards

What you should probably do is to sit on your money for a while and read some investing books to make up your mind about how to construct a portfolio.
My first recommendation would be The Four Pillars of Investing by Bernstein for the simple reason that it deals with all the shit that gets investors in trouble, namely all the shit that does not directly relate to mathematical/statistical considerations about how to build a portfolio that you're happy with.

The book will introduce you to The History ie all the crashes that have occurred in the past, (hint about one every thirty/forty years when a new batch of investors think they're smarter than their predecessors.)
The Theory - risk means rewards but also means not having money when you need them. This straightforward chapter outlines what you should be aware of when you reading more 'hard science' investing books.
The Psychology - All the reasons why you should make a system based on knowledge and not based on feelings, ever...
The Business; how people steal your money when you invest (and we are almost talking robbery if you don't know what to look for).

Things to be aware of in DK include how bonds are taxed compared to stocks and how many mutual funds are 'lagerbeskattet', especially the foreign ones.
Lagerbeskatning is tremendously different from normal taxes in that you pay taxes whether you realize gains or not... How to build a portfolio that takes advantage of this, I do not know, but I know it's something I should look into. Some claim it forces you to rebalance as intended, which I guess is right, but I can't wrap my head around the idea of not having other income than my investments, and still have to pay taxes for an investment that yielded no cash-in-hand.
The interest rate on some annuities is negative at the moment, so stay away from 'indlaansbeviser' (certificates of deposit) for now

If you want a blow-by-blow view of how I'm currently trying to find out how to build a portfolio, then have a look at my journal, I think most of the things going on are investing/good-life related rather than extreme savings related.

Book recommendations for the good life would be (in that particular order)
A Guide to the Good Life: The Ancient Art of Stoic Joy
The Life Changing Magic of Tidiying (KonMari method).

If you read the Stoic book first, you'll realize why the Konmari method works so well as a philosophy, if you read the KonMari book first, you'll think it's a book about cleaning, a book about your stuff and a book about talking with socks. When you realize that one book is about philosophy and the other is about how to practice a particular branch of that philosophy, you're much better off.

Happy reading.

PS: So far I have about 170.000 sitting in cash somehwere. I'm not missing out on THAT much interest. I'd much rather be absolutely certain that I'm building a portfolio that I trust, that I can maintain, and one that will let me sleep at night for a long time. Know this: Every time you move money in or out of a fund, it'll cost you, so place and withdraw your money with utmost care (The Four Pillars of Investing will tell you how to navigate that particular morass).

[jacob]

In terms of investments, if you mostly read American blogs and commentary, it's very easy to get the impression that the only way to begin investing is to "go and buy some index funds preferably from Vanguard" and if that is difficult or impossible to do this in Denmark, then investing in Denmark is hard.

However, like with almost anything else regarding humans, investment strategies are subject to local fads and fashions, so just because index funds from Vanguard (it always amuses me when newbies specify that the fund-brand has to be Vanguard ... it reminds me of when people insist that their sneakers have to be Air Jordans) are popular in the US at the present time, it doesn't mean that "financial science" has arrived at the ultimate solution for all countries at all times. Index funds do extremely well in a rising market and therefore they have been supremely popular in the US since about 15-25 years. However, I bet the Japanese hate index funds.

I also noted that several comments on the newspaper article (on facebook) noted that the strategy was impossible given the current interest rates. I presume those commentators were only familiar with their bank accounts.

Point being, there is a local solution. But it's not derived from reading foreign blogs and nonfiction books. Rather it's derived from reading general books (first year stuff from handelshojskolen) and then seeking out local people---which you did here.

Check out this http://www.topyields.nl/omxc20-best-dividend-stocks/ ... I'm not saying this is a correct one or even a good one. I'm just saying that it exists. Actually, the journalist told me that after the article was posted online, she immediately got contacted by Dansk Aktionaerforening. Maybe they're worth checking out? I don't know anything about them but I did buy a lifetime membership of the American equivalent.

PS: NASDAQ's URL has a misleading title. These are not necessarily the "best". It's just the Copenhagen index sorted by yield.

[wizards]

It gives perfectly good sense to invest your excess liquidity, even though the return will not be much for a start.

Regarding the 50k in L&S - you will not find an investment that provides a similar return versus the non-existent risk.

You will have to pay some taxes when investing in Denmark, fortunately you properly will not hit the 42 % rate until later, so I would not worry about that right now.

The best and cheapest broker is Nordnet, so that is where I would recommend that you open an account.

I assume we are talking after tax money. Here it’s important to avoid funds which are subject to “lagerbeskatning” – unfortunately that includes all foreign funds. My standard recommendation is to place the money in this:

http://www.sparinvestindex.dk/afdelinge ... isiko.aspx

If you use Nordnet and their service called “månedsopsparing”, it costs you nothing to buy - there will only be fees when selling.

As you can see there are fees to sparindex - 0.50% - significantly higher than many of the foreign funds, but lower than other Danish alternatives.

o-o-o-o-o-o-o

I have great respect for FBeyers approach and everyone should do what makes them comfortable.

However I would recommend to start placing money as described above, it doesn’t hurt to get some practical experience + you learn to live with the fluctuations of your investments.

o-o-o-o-o-o-o

And +1 to Jacobs post – it’s not impossible to do this in Denmark – it’s just a different game.

Actually I believe that:

Learn the tax code > reduce fees > choice of specific investments

[emilm]

Wow, thanks for all the great replies.

@FBeyer: Great book recommendations. I just started out on the introduction to stoicism and it seems to be a great read. The history buff in me loves the stories and insight into ancient culture
Besides that I am aware that I really must learn more about investments, portfolio etc. and am looking forward to reading the Four Pillars.

@Jacob: Wether the fund be Vanguard or other really doesn't matter to me. Well. I do prefer a danish investeringsfond, at least for a start, why wizards sparinvest index is something I will look further into. I will give Dansk Aktionærforening a closer look as well.
No matter what I am still months away from buying my first værdipapirer, and before I do I want to know - or at least have an inkling of - what I am doing
As with regards to taking advice from foreign-language blogs, I agree, I need to taylor something to my own specific situation.

@wizards: Great recommendations. One last question for you specifically: where would you start if you had to learn the danish taxsystem all over again? I've read most of skats homepage, so is that it? I have this sneaking feeling that there is A LOT more to it than their own - admittedly - quite easyread descriptions.

[FBeyer]

...

I have great respect for FBeyers approach and everyone should do what makes them comfortable.

...

...is another way of saying: that approach surely isn't for me

[wizards]

@emilm: Great question, I need time to answer this... It's approx 18 years since I started to learn taxes...

@FBeyer: Courtesy is my middle name

[knap82]

Hi,

Great thread - I am a fellow dane who got inspired by the article in Berlingske and are now implementing some of the thoughts from ERE - so I am going the light version at the moment with reducing my monthly spend and giving my investments (which I started lats year) a bit more thought.

I am an investment newbi but learning a lot from reading Børsen, different blog-post - and I can highly recommend Shareville there is a social forum with in Nordnet - here I find inspiration to specific stokes, learn from comments - and ask a lot of stupid questions in the group for newbies.

I have heard that the courses in Aktionærforeningen is quite good and I think I will give a membership a shot as an investment in my investment )

It would be great to have som kind of discussion on how people are investing their money in Denmark to reach their ERE plan -

For instance:
Is going for Danish and foreign dividend investments the way?

Invest in Danish funds?

How about gold as a investment to balance the volatility of the stock market?

At the moment I am planning to establish a foundation of high dividend stocks from both Denmark and USA - but it can of cause change as I learn more about investments.

Well, my first 50 cents in this Forum

/knap82

[wizards]

Hi knap82 and welcome

Feel free to add me at shareville - same alias as here. (how ever not all my investments are at nordnet/shareville)

I don't think there is a correct answer to your questions - there isn't a one size fits all solution

a) Optimize your taxes
b) Keep fees low

are the most important IMO

[knap82]

@Wizards found you on Shareville.

Have a small follow up question on your comments above:

a) Can you give a few details on where/how to look to optimize taxes?
- I am looking into adjust the payment at my company pension due to 'top-skat'

Where else to look for tax-optimization for dummies?

/Knap82

[wizards]

For a start:

1) Avoid top-skat - option are: pensions/annuity, investment in assets which offer depreciation for tax purposes, "iværksætterosparing" etc.

2) Understand the pension taxation both when saving and when paid out.

3) Understand the tax brackets - e.g. income fra equities taxed at 27/42%, tax brackets for "kapitalindkomst, the different value of different tax credits etc.

4) Plan ahead - and understand what taxes your future income will lead to.

5) Understand that there is not a "one solution fits all" - it depends on your personal circumstances.

[ether]

Welcome! I agree with you, the end goal is freedom and happiness, and money makes a great down payment!
I think because taxes are so high in Denmark you should look into real estate for becoming wealthy.
Just save up for a mortgage and then you can either avoid paying rent, or become the landlord yourself!