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PostPosted: Sat Sep 17, 2011 10:33 am 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

So, inspired by the book "The barefoot investor" (which has some good and some bad advice) here is my list of short- and longer term goals:


Starting position

I'm 32. I have a job.

I currently have 13k euros in savings and investments.

I am building a pension (which is an obligation in the Netherlands) that will already give me about 1100 euros/month after age 67. (Hopefully this number will also be corrected for inflation in the 35 years to come).


Plans for this year


Save 4k euros more. I have a bonus of 1.5k coming my way, some expenses for work that will be paid back shortly (hopefully), and of course I'll save part of my income. 4k is easy, maybe I can get it to 4.5 k or something. Not sure about all the exact numbers though.


Save about 6k for the expenses of my PhD thesis, which will be next year hopefully. I'll have to pay printing costs to print the thesis, a dress, a party, and a dinner for the thesis committee. Of course I'll try to make it as cheap as possible, but some corners can't be cut. I'm glad I'll also get a tax return for some of these costs. Again I don't know the exact numbers, saving as much as possible seems the best option.


A new computer. The current one is holding strong, but may not make it for two more years. I am happy to have a boyfriend who loves building computers, so I should be able to get one for relatively cheap (buy the components, only buy what I need).


Plans for the long term


Saving 240k more for financial independence. After next year's tight year (due to finishing PhD thesis and needing to work on that for free), I'll probably be able to get a well-paying fulltime job. This should thus be doable within 15 years. (That's my Early Retirement Extrem-ish plan).


Spending 1.2k euros a year on taking a month off work in the winter. Because I hate winter and would love to be able to spend at least one month of it cocooning inside.




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PostPosted: Sat Sep 17, 2011 1:33 pm 

Joined: Fri Sep 09, 2011 4:46 pm
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Yikes! 6K euros in thesis expenses! My committee chair hosted the party.


15 years from PhD to "retirement" is not bad. That is about where I'll be by the time I get "out". The first ten years was fun and went by quickly but the last couple not so much. I can now see the light at the end of the tunnel and it keeps me going.




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PostPosted: Sat Sep 17, 2011 1:56 pm 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

ksoto wrote (sorry I deleted it by accident): Yikes! 6K euros in thesis expenses! My committee chair hosted the party.


15 years from PhD to "retirement" is not bad. That is about where I'll be by the time I get "out". The first ten years was fun and went by quickly but the last couple not so much. I can now see the light at the end of the tunnel and it keeps me going.


My answer:


Here, you're supposed to pay all of it yourself. Except when you find a sponsor (a company or charity which wants to promote or end the thing you're researching). I will try to find one, or more. That's definitely worth the time you put into writing requests.


Also, my predecessor (the previous PhD student) was frowned upon for not taking his committee to dinner. Since I could also say "screw you, guys" as soon as I have my PhD (my future does not depend on these people), I could do the same and ignore the gossip. Or to make it a bit less obvious, we could go to a decent but not expensive restaurant...




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PostPosted: Tue Sep 20, 2011 7:06 pm 

Joined: Tue Sep 06, 2011 1:49 pm
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Haven't made much progress in the last couple of days. Salary's coming in this Friday; that's also when I divide the money over several accounts (savings, investments, shared account with boyfriend for the groceries, rent et cetera). I have several companies that need to pay me money, but they take their time. (It's really unfair... If I take my time they start sending threatening letters, but when they owe me, I just have to wait "patiently"... ).


I got a note from one organisation that is going to finance one of the trips I made for my PhD, that they'll pay next year. So until then it is a burden on my finances. Sigh. But anyway, in the end they'll pay, which is nice.




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PostPosted: Fri Sep 23, 2011 10:28 am 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

Hurray, my salary came in. It was "gone" again too, almost immediately. All the automatic payments are now done. I have some $100 left over for "fun" or "sudden" expenses; but I've covered everything from savings to groceries to transport to bills for the next month, so it's really $100 I could spend as I wanted. And now we wait... (That's a bit how I always feel after getting my salary: glad it's there, and then there's a whole month again before the next one comes in).


One company that owed me also paid up, but I'm still waiting for about $160 from two other companies. That's going straight to savings as soon as it comes in.


I had a small job on the side last year. I found out Wednesday that that company forgot to put me on the list of their retirement fund; while part of my paycheck WAS deducted for retirement savings. (I found out because I should have received a declaration from the retirement fund in August this year about last year's contributions, and I called them because I hadn't got it - turns out they didn't have me registered as a member/contributor last year). It's hilarious, because I've been pressing my boyfriend to take care of his retirement and finances, and I almost hadn't caught this error in my own finances (I think I contributed about $1000 last year; of course over time this could grow to a multitude of that).


The Dutch government has also declared its plans for the next couple of years. Some of the things I was profiting from (like a deduction on your taxes for social or green investments) will go. From 2013 onwards, there will be a possibility to save €5000 a year tax-free. But the maximum is €20,000 (so that's four years of these savings); and it needs to be used to generate income later on - which will mean you'll also pay income taxes then. Still, 20k in there is better than nothing, so I'll definitely use that.




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PostPosted: Fri Sep 23, 2011 1:24 pm 

Joined: Mon Sep 19, 2011 6:55 pm
Posts: 40

Wow, that 5000€ sounds like quite a benefit. I don't know about your tax bracket but I'm guessing it saves you about 1000-1500€ /year??


Even if you have pay income taxes later, you still pay one round less of taxes in the end, right? Compared to how you would normally pay taxes when investing your salary to create income later, that is.


I'll have to check that we don't have anything similar.(Although I'm pretty sure I'd have heard about it if there was)




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PostPosted: Fri Sep 23, 2011 1:39 pm 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

Actually in the Netherlands income taxes are much higher. The income tax is about 33% for the first couple of bucks you make, but if you have income over 18.629 euros (yeah, I looked it up) it's 42% of anything you earn over that (until 55.694); and if your income is over 55.694 it's 52% of anything you make over that.


(So if you make 60.000 it's 33% of 18629, 42% of (55694-18629) and 52% of (60.000-55694) is roughly 6148+15567+2239=24000 is about 40% . This percentage is higher if you earn more, since then the 52% bracket weighs in more heavily).


Take that, Americans... (Luckily we don't have state taxes added to this; although we do have some taxes from the local community (sewage rights, waste removal, dog ownership if applicable). And of course, remember that we also have a lot more social security, so that's part of what we're paying for, too.


I will probably earn so much that some of my money is in the 42% bracket, so the deduction of 5000 probably means that I'll save myself about 2100. (But did I mention that they are going to tax it once you take it out? Could be that it's in the lower bracket then (the 33% one), though... And it has had time to grow, too).


The US of course have things like Roth IRAs and IRAs. I'm not sure I understand them fully but there are tax benefits involved in them. I don't know whether Finland (where you live) has anything similar.




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PostPosted: Fri Sep 23, 2011 6:11 pm 

Joined: Tue Jul 12, 2011 9:17 am
Posts: 27

That 5000 euros, is that the socalled 'levensloopregeling' or the 'spaarloonregeling'? I'm really just a beginner in the dutch tax area and I daresay it is complicated! If I understand correctly, you do not have to pay capital tax over that 5000 nor income tax (but this is delayed until you use the money). Is that how it works?




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PostPosted: Fri Sep 23, 2011 8:53 pm 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

Hey Suzanne,


It will be a new one called "vitaliteitsregeling" (vitality errr arrangement/agreement).


As I understand it, the spaarloonregeling will stop after this year (no more contributions from January 2012 onwards allowed) and the levensloopregeling will stop Jan 2012 or Jan 2013, too. People can still participate next year if they've got a positive balance by Jan 2012, and then it stops completely on Jan 2013. Unfortunately for me that means I can't participate. On the other hand: next year will be an expensive year for me, anyway, so maybe I would not be able to participate in any arrangement anyway.


The "vitaliteitsregeling" will start from January 2013. And yes, as I understand it you don't have to pay income tax on it. I'm not sure whether you'll have to pay taxes on the profits that you make with it, but let's see how further details are revealed next year...


By the way, I made some calculations already for the vitaliteitsregeling. It can be profitable, but you can also lose money on it. It really depends on how much interest you can make on it, how high tax rates are when you take the money out and how easy or hard they'll make it to get money out. So if you want to participate in the future, first make some calculations yourself.


(With the spaarloonregeling, I could not choose the bank, and the bank then had a very very low interest rate (because they knew I had no choice) and I wasn't allowed to take any money out either).


They say the new "vitaliteitsregeling" can for example be used for a few months off, or to cover a period between two jobs (yes, we also have social security, but that's only 70% of your salary, so the money from the vitaliteitsregeling can be used to keep that at 100% for a while).




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PostPosted: Fri Sep 23, 2011 9:51 pm 

Joined: Tue Jul 12, 2011 9:17 am
Posts: 27

Thanks for the info and the tip to calculate before taking part in those arrangements. I expect I will not be in the higher tax brackets anytime soon (part time teacher salary, what will I say...) so a thorough calculation is certainly worthwhile. Good tip!




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PostPosted: Mon Sep 26, 2011 9:15 am 

Joined: Sun Sep 04, 2011 9:28 pm
Posts: 101
Location: NL

You are generally right about the tax rates, except that your first part of (working) income is tax free. So in effect your net rates are lower. And the first tax bracket of 33% is actually only about 2-3% tax. The rest you pay for state pension (AOW, ANW) and state health insurance (AWBZ).

So if you earn below 18.629 you pay only about 2% tax, but you also have to pay a hefty amount for social security.




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PostPosted: Mon Sep 26, 2011 1:15 pm 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

Yeah, you're right, there's a difference. But since you need to pay them anyway and the money's "gone", I put them under "taxes".


Now excuse me while I try to put a picture here; which should be possible...



Hurrah, it worked.


Jaar = year. Inleg = input. Eindbedrag = amount of money at end of that year. Inkomstenbelasting = income taxes.


These were my calculations for earning 60.000 euros per year and putting 5k a year aside into the "vitaliteitsregeling" until you've reached the maximum of 20k; and assuming 3% interest rate and, at the end, 42% taxes on the amount taken out (scenario 1); or choosing not to do that and instead put the 2900 (after taxes) into your own savings account with 4% interest but 1.2% of that taken away again because of dividend taxes (scenario 2).


The first scenario "wins", in this case, but it does depend a lot on how much interest you can get in both scenarios. With the vitaliteitsregeling, you have limited options on how to use the money - we don't know yet, but it could be that your employer decides which bank you have to use; or that the banks offer only certain savings or investment options within this "vitaliteitsregeling". With the money in your own hands the options are endless, of course.


It also depends, I assume, on the number of years that you can leave the money in.


What's nice about this "regeling" is that you could use it to bridge a period between two jobs. So I think I might put in 5k in the first year, anyway; just as an emergency fund which can then grow until I need it.




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PostPosted: Mon Sep 26, 2011 2:20 pm 

Joined: Tue Jul 12, 2011 9:17 am
Posts: 27

Nice table! From what I understand, the first 20K (or for couples: 41K) or so that you save on a private savings account is free from dividend tax (1.2%, box 3). This could indicate that it is more profitable to save the first 20K / 41K on a private savings account and after this (or at the same time, maybe?) also save 5K per year using the vitaliteitsregeling (VR), as capital in the VR is free from tax ('vrijstelling box 3') as long as it stays there.




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PostPosted: Mon Sep 26, 2011 4:33 pm 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

I hope to have 20k in savings already by 2013!!! Sorry, the number of "!'s" is just because I'm so happy about that. I never have been so rich :-) . So that's why I haven't taken it into account.


The numbers above are my potential numbers; if somebody earns less or more or has less savings, then yes, the results will be different. Also, we don't know yet whether the profit in the account is taxed, whether the account can hold more than 20k because of the profit (I assume it can, I think it would be weird if you had to take money out every year because you made a profit?) and what kind of investment/savings plans will be offered.




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PostPosted: Thu Sep 29, 2011 6:59 pm 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

I'm reasonably happy with my finances this week. I have spent 8 euros of those 100 euros play money on a pedicure (necessary, more or less, because of toe nails that are behaving badly and are growing into my skin, ouch). Of the $160 owed to me by several companies, $120 has finally come in. $40 still pending, but I did get a phone call the other day from the company stating that they are working on it.... It is good that I write these things down, here, by the way, because I had completely forgotten again about the retirement fund from last year... The guy I talked to hasn't called back yet, so I guess I'll be calling again tomorrow.


Next month or in two months (I don't know, depends on the company I work for) I'll get a lot of extra money. I'm thinking about how to allocate this money. My preferred asset allocation (is that the right term?) would be 2000 euros in a cash emergency fund, and any other money divided over these assets as follows:


Stocks 20% (but is 10% currently)

Equity 5% (is 1% currently)

Bonds 35% (is 13% currently)

Long-term savings 40% (is 76% currently)


So yeah, apparently I have been quite scared to invest in anything that carries even the slightest risk. Maybe it's time to woman up... Since the total amount is around 10k euros right now, I'll probably just take the new money coming in and put it in stocks and bonds to get a better balance.


PS The few stocks I have are fluctuating like mad. One day it's 980 euros, the next it's 1002 euros, and then back to 980 again... I think you "big investors" out there will now laugh at me; but please keep in mind I'm not yet used to this...




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PostPosted: Thu Sep 29, 2011 7:34 pm 

Joined: Mon Sep 19, 2011 6:55 pm
Posts: 40

It's probably a lot easier if you don't look at the stocks each day, although it may be tempting. The price of a stock at a given day does not really matter at all. The markets have a huge amount of "noise", ie seemingly random fluctuations in short time periods. Think like bumps in a path or signal disturbances. It is the general direction that matters. One days changes does not give any useful information at all, because a human brain is not built to comprehend it. Things like these are explained very well in talebs book "fooled by randomness" if you're interested.


Take a habit of checking it once per month, and you'll probably be a lot less stressed about it :)


Anyways, looking good with moneys, keep it up!




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PostPosted: Wed Oct 05, 2011 2:46 pm 

Joined: Fri Sep 30, 2011 2:40 pm
Posts: 13

Hi Dutch Girl, congratulations on the progress so far. I know all about how tough it is preparing for ER in the Netherlands as I'm based here too.


Just a small comment on your investment breakdown, maybe if you kept a larger cash emergency fund of say 6 months living expenses you could afford to be a little more risky with your protfolio. This would provide you with a strong emergency fund, although interest rates are generally 1.5 or 1.6% and don't even nearly keep up with inflation.


Incidentally, where/how do you invest, directly via your bank or through a FA? I've struggled to find a decent FA and almost got stung more than once with what turned out to be terrible advice (guess it's my own fault for originally speaking with a no-fee FA)




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PostPosted: Wed Oct 05, 2011 6:21 pm 

Joined: Tue Sep 06, 2011 1:49 pm
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Thanks for the advice, seeker and Country Hopper.


@Seeker: I'll try to look at my investments a bit less often. Although today I put all my details into a free morningstar portfolio. So I can look at it some more :-) . It does fluctuate indeed.


@country hopper: Thanks. I do have a savings account with 2.6% interest, so that's a bit more than you have? Mine's at ASN bank. They have been giving 2.5% interest for the last couple of months, a few days ago it went up to 2.6%. I'll try and keep checking in the future how the interest rate is doing, also compared to other banks. I know I need to build up some more liquid savings. Still, I would hate to lose money on my portfolio, even if I don't need it right away.


I invest via my bank, yes. I chose the funds myself, but I also have to admit it's not so much money, yet (about 3000 euros) so I still feel comfortable making my own decisions. I invested in funds, not in single stocks or bonds, so I felt confident enough to make these choices on my own.


As for financial advisors... I don't know. My boyfriend has a small company and thus meets with an accountant about three times per year. I've taken up the habit of visiting the accountant together with him. Also because we'll be filing taxes together from this year onwards. This does help a bit with where to put the money, since the accountant knows the tax rules. He doesn't advise on investments, though.




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PostPosted: Sun Oct 16, 2011 8:33 pm 

Joined: Tue Sep 06, 2011 1:49 pm
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I was on holiday for a week. It was a small holiday, to a cabin on a small island in the north area of the Netherlands. It was great to be away from home, to rest, to walk along the beach and clear my mind. Tomorrow my new job is starting; and I have to wrap up my old job (finish my thesis). I'm not really looking forward to that last part. I could refuse and stop working on it, in which case I won't get my title (and don't have to spend 6k on the booklet and the party), but I've worked on this for so long now, I think I want to finish it.


Salary's coming in this Friday. We did pretty good on the holiday expenses, but still I'll have to be careful this week to not overspend. I don't know yet whether this salary will be the last one from my old job, or whether I'll have some more salary coming in next month. They normally pay one month late. We'll see.


The problems with the retirement fund of the small job I worked last year should be solved, now. I got a phone call last week that they arranged it. I'll wait a week more for the paperwork they should send me, if that doesn't come I'll phone them to check what has happened. Keeping my fingers crossed.


PS. Stocks are up again :-)




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PostPosted: Sat Oct 22, 2011 9:11 pm 

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Salary came in this Friday. I was glad to see that a lot of the extra income I was expecting, was in this paycheck (end-of-year-bonus, given early because my job ended now). However, when studying the information slip on my salary in more detail, I was also quite disappointed. I was assuming that my salary was paid for the previous month. So the salary of October 21 would be for my work in September. Instead, it turns out, the salary I was paid this month was for the half month that I worked at this job, in October. So I was actually expecting a full month's salary (and another half month's one next month), and now I'm left with a half month's salary this month, instead. Edit: I now have looked it up in some old files (from when I started working there, five years ago) and they indeed started paying me in the same month as I started working. So they are right in paying me only half a salary now, and I was wrong in expecting more next month...


Since my monthly salary was about 1800 euros, I now have to recalculate my savings for this year, they will be about 1800 less. Damn. My next salary, in November, will then probably only be from the half-month I worked at my new job (love it, by the way!), which will not be enough to cover that month's expenses (even rent + groceries + insurance is more, and I have to travel for my job as well, et cetera). So I'll have to dive into savings for that month. After that, I should be fine again. My new income will hopefully be around 1600, a bit less than before because I work less hours because I'll also have to spend time on writing my thesis.


However, I'm also glad that I have now put away the whole bonus of 2000 euros into savings accounts (for now). 1200 in deposits (I like them, and it's 3.8% interest), 200 in investments for my retirement, and the remaining 600 in savings accounts with 2.6% interest. I may have to use a bit of those last 600 for next month.


My new job has been great so far. I like the interaction with (nice!) people (I'm a shy extrovert, or something, maybe I'm smack in the middle between being an extra- and an introvert - I'll have to do the character test one day). I like my colleagues. I like it how I'm appreciated by them. Already! I like the fact that my salary depends on how many hours I work (wasn't the case in my old job - many extra hours, no extra salary). I like how the materials I have to work with are of good quality, that used to be different in the lab I worked in.




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PostPosted: Sun Oct 23, 2011 11:57 am 
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Joined: Sat Mar 05, 2011 12:43 pm
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Interesting how you classify yourself as shy extrovert. I say to my wife that

she is exactly this: shy extrovert. I am introvert but not shy by any measures,

quite the opposite these days. Dealing with people is easy to me but I don't

like it much, I get tired of it.




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PostPosted: Thu Nov 03, 2011 4:04 pm 

Joined: Tue Sep 06, 2011 1:49 pm
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Hey all,


The big financial stuff has happened for this month (salary, rent, bills), now I have to wait until the 24th of November, when my next salary is coming in. Luckily I was asked to work some extra hours these last couple of weeks, which means more salary. I'm estimating my salary from the last half of October will be enough or almost enough to pay for my expenses from Nov24 until Dec22 (when the next salary comes in). I may be a 100 euros short (depending on how much my salary actually will be), but not 400 euros as I was fearing.


I'm a bit bored. This is a dangerous situation for me, because it could mean I go around and spend money I don't have. That has been my response in the past, at least. I don't want it to happen this time, since I am "tight" on the money that I would like to spend (I know I have some back-up money, but I don't want to use it, since I don't need to use it).


What I do like is that I calculated that I now get 300 euros per year in interest from the money that is in deposits. I am almost making one euro a day by sitting on my ass and doing nothing with that money. I like that, although 1 euro a day is of course nowhere near FI... It is, however, the most interest I can ever remember receiving in one year. And it is 100% more interest than I got 3 years ago, because back then I spent everything I earned right away.


I made another 45 euros this month with my investments, but that may be minus 90 euros next month, you never know.


And now I should go work on my thesis, damn it (I don't want to, actually, but hey...).




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PostPosted: Thu Nov 03, 2011 5:36 pm 

Joined: Tue Jul 12, 2011 9:17 am
Posts: 27

1 euro a day ain't bad! That's like a free lunch, or 1/6 of your daily groceries for free. Do you save up some amount of money and then deposit it all at once? Or do you 'create' a deposit every month or so?

Good luck with the (potentially expensive) December month on the doorstep! Sinterklaas and all that ;-)




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PostPosted: Thu Nov 03, 2011 6:59 pm 

Joined: Sun Jul 10, 2011 5:49 pm
Posts: 220

Stay strong DutchGirl and don't spend out of boredom!! Occasionally I have this feeling too. I suppose it is a holdover from our spendthrift past or at least mine. I usually end up not acting on the urge, but sometimes it's hard. I have faith in you...




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PostPosted: Thu Nov 03, 2011 7:44 pm 

Joined: Tue Sep 06, 2011 1:49 pm
Posts: 738

Thanks, both :-)


Suzanne, I usually try to deposit (or invest) as soon as I have some money ( >500 euros). This time I was aided by the fact that my salary included the end-of-year-bonus. I have been terrible at "just" saving up 100 or 200 euros per month until I reached enough to deposit again (often there's a minimum deposit of 500 euros). That 100 or 200 euro would just disappear quickly if it was sitting in a readily accessible savings account. However, I'm going to try it again... :-)




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