Hello from Denmark!

[Rune]

Hello everybody!

I've always been somewhat frugal and occupied with not getting attached to things. After discovering ERE maybe a year ago, and reading up on the subject of FI, especially in the last ½ year, I've become increasingly interested in frugality and getting more time for my personal pursuits - drawing, reading, wood cutting, swimming and spending time with family and friends rather than the drama of university academia and politics. Right now I'm in the accumulation phase until I get a better understanding of investing - taxation on investments seems to be a bit different here in Denmark than in the US and England. Any pointers to good specific readings on investing in Denmark is much appreciated

It's nice to join such a lively and rationally argued forum as this!
I hope to be able to contribute to the forum and learn a lot from you lovely people.

Kind regards,

Rune

[chenda]

Welcome

[wizards]

Welcome on board - glad to se another Dane joining

In regards to investing in Denmark, knowing how the tax code works is really important. A lot depends on your currenct income.

If you don't want to write the numbers here - feel free to drop me a PM and I will give my recommendations based on your numbers.

[Rune]

Thanks Chenda & Wizards

Wizards, thank you very much for the offer! I think I'll take you up on it and PM you a bit later. Though if there are other Danes (or Scandinavians?) on the forum, it might be interesting to keep it open to get more input & discussion? (I'll have to reflect on what I'm comfortable posting of course).

Right now I'm considering investing in index funds within a couple of years (through the 'Nordnet' portal I think based on my current knowledge), though it's not decisive yet. I still have a very small amount of study debt, that I consider paying out - just to be totally free from debt - but haven't made the calculation if it's worth it yet. (My savings account pays 5% on the first 50.000 DKK, and paying the student debt would bring the savings under that threshold). As I've only just begun accumulating money, I don't want to rush anything.

[wizards]

Nordnet and index funds from http://www.sparinvestindex.dk/ will be the default suggestion. Due to "lagerbeskatning" foreign based index funds are not very attractive to after-tax savings.

Retirement account on the other hand don't have these tax issues, so go ahead and buy the cheapest index funds (Vangard, ishares etc.)

The 5% on your savings up to 50.000 dkk is pretty attractive - you will not find any investement with this risk/reward ratio- so this is a fine place to hold some cash.

In regards to student debt - is this "SU-loan"? - if yes I would just pay the minimum on these as you only pay 1% on these loans.

[Jande05]

Hej Rune, and welcome !
Will you be doing a journal? I'm super curious to follow ERE's in Denmark and other European countries to see how easy/difficult it is to realize there... I'm pretty new here also, but I think it must be harder to realize ERE in DK with the much higher living costs, taxes etc... But maybe not. I'll also end up in Europe myself again, so any tricks I can learn or share with you would be great !

[AHL0509]

Hi Rune and Wizards

Great to see other danes on this board Especially thanks for for the notice about "lagerbeskatning" on foreign based ETFs. It is a shame that rule exists here in Denmark, as a lot of the foreign based ETF are so much cheaper than almost all Danish investment funds.

I currently have threes ETF from iShares that i bought through Nordnet, but i plan to change them to some other danish funds to avoid some of the problems with taxation. I like the index fund with global stocks from Sparinvest.dk, but do any of you know if there are other investment funds like these in DK but with an emphasis on foreign bonds and corporate bonds? Sadly most investment funds in DK are very costly in fees...

I plan to invest my savings as this: 50% global stock index fund, 33% danish government bonds (i use Langholt Invest - very cheap and reliable), 10 % foreign based bond index and 7 % global corporate bonds. It is based upon the book: Investing Demystified by Lars Kroijer, which i like very much.

Anders

[wizards]

@Jande05 - Don't know if it is harder, it is just a different game. It all comes down to what your priorities are. Sure higher COL and taxes have a negative impact, but I don't have to worry about Health insurance and my kids will receive a free education.

@AHL0509 - Glad to see one more Dane.
In regards to putting money into danish government bonds - this is (IMO) not attractive at the moment - yield on the short terms are negative at the moment and yield on 10 year bonds are below one percent (http://www.investing.com/rates-bonds/de ... bond-yield).

In regards to investments funds - have a look here - http://www.morningstar.dk/dk/fundquickrank/default.aspx - but I don't think you will like what you will find...

[Jande05]

@Rune - how/where have you gotten a 5% savings account? That's a really good deal, ideal for parking your money while accumulating.

[jacob]

Ha! Yeah, I'm wondering about that 5% account as well.

[wizards]

@Jande05 + Jacob - It's offer only available if you are a member of certain unions.

https://www.lsb.dk/ida/content/produkte ... om/Artikel (danish)

Further you need to have all your banking business with this bank (don't know how strict this is handled)

Im not a union member and don't want to have all by banking business in one bank, so can't use this offer my self.

[Jande05]

Thanks, that makes sense. I do recall getting some pretty significant discounts on insurance and other things while being a union member (for free) even during studying. I wouldn't want to have all my business with one bank either, but then again, its a killer deal for accumulation. Wonder if they would not allow you to have a broker account somewhere else... I'd take the chance...

[jesr]

Great that there are so many Danes in here:-)

@wizards - I guess dividend investing would also be a poor strategy during accumulation, because it's taxed, unless it's in a retirement account?

Another thing I'm wondering about: Since the first 6,400 usd of income are not taxed in Denmark, one might invest in passive income from something like websites through ones own company. I think this would count as income and not as capital income which is taxed a lot in Denmark.

[wizards]

@jesr

It's hard to avoid taxes completely. Dividends (income from equities) are taxed at 27% for the first usd 7,500 (usd 15,000 if you are married) and then 42 % for dividends above this number. Alternatives such at index investing will not eliminate taxes, as the funds needs to pay a certain part of their gains as dividends.

In regards to the first usd 6,400 which aren't taxed - this can be used to almost all other sorts of income than dividends/income from equities – such as income from bonds, income from foreign funds (lagerbeskatning) etc.

My solutions is to spread my income between many sorts of income - both for the sake of diversification - but also to use nearly all kind of tricks/deductions to reduce my taxes...

Despite earning well above the limit for the top tax bracket (topskattebegrænsen) I have managed to avoid this every year (except one year when leaving Denmark for Malta due to receipt of some unexpected holiday allowance money).

[jesr]

@wizards - Thanks for the reply!

In regards to the first usd 6,400 which aren't taxed - this can be used to almost all other sorts of income than dividends/income from equities – such as income from bonds, income from foreign funds (lagerbeskatning) etc.

That's really interesting! I thought the interests from bonds where taxed the same as income from equities. I'll make sure to look into that:-)

[asil]

Dear all
I have been reading through your messages as I am researching on an article about ERE for the Danish newspaper Berlingske.
So far I have been corresponding with Jacob Lund Fisker as well as spoken to a bank consultant, whom firstly turned down the entire concept in Denmark and the day after wrote me back to tell that she had given ERE second thoughts and seriously considered to stop working...

I am very interested in hearing more about how ERE is practically feasible in Denmark and what motivates you.
Would any of you be willing to share your experiences? Either in a regular interview, as an anonymous source or even just for background information?
Please contact me either here or on: asil at berlingske dot dk

[jacob]

Here's the resulting article from the above interview. I think it's the most positive article I've ever seen about ERE in a mainstream news outlet (even more than the one from PBS).

The article has remained the most read article on b.dk for some 6+ hours now.
http://www.b.dk/livsstil/bliv-oekonomis ... -fylder-40

It also appeared on bt.dk
http://www.bt.dk/penge/svaert-men-mulig ... -fylder-40

[jennypenny]

The English translation through google produced some interesting phrases like "extremely early economic withdrawal" and "acknowledge the car". Is that the author or the translation? I like 'economic withdrawal' a lot.

Great article.

[FBeyer]

JP: withdrawal, rather than retirement was most likely a very good turn of phrases. I'm positive that everyone who contributed to the article emphasized that people are not looking to retire, as much as financially withdraw from the job market.

[jacob]

Is that the author or the translation? I like 'economic withdrawal' a lot.

That's the author. I harped on the importance of the right term for ER and she came up with that. If you translate "early retirement" directly into Danish you end up with a word that suggests that one is on SS disability. (Our former prime minister made that mistake while giving an economic speech once.)

As for the car, the correct translation is "Quit the car".