Denmark: Fees on deposit accounts.

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FBeyer
Posts: 1069
Joined: Tue Oct 27, 2015 3:25 am

Denmark: Fees on deposit accounts.

Post by FBeyer »

For the Danes:
I tried reading through the regulations for Sparekassen Sjælland and it looks like they're charging an annual 0.5% fee according to the size of my depot. Nykredits seems to have the same kind of fee, except it's 0.125%.

Tell me that's not the case. I must be missing something?

If indeed they are stealing vast amounts of money from their own customers, where can I create a depot that doesn't siphon my investments like that and are there any potential gotchas when my depot is with one company and my other accounts are somewhere else?

wizards
Posts: 122
Joined: Sun Mar 31, 2013 8:24 pm
Location: Denmark

Re: Denmark: Fees on deposit accounts.

Post by wizards »

Nordnet.dk

DrBrain
Posts: 4
Joined: Sat Mar 05, 2016 5:56 am

Re: Denmark: Fees on deposit accounts.

Post by DrBrain »

I have looked at the homepage of Nykredit, I can't find the fee, but I can find a similar fee for "paper stocks". It's not common in Denmark with an annual fee on a depot of stocks (at least for Danish stocks, I don't know about foreign stocks).

I use Danske Bank and there is no annual fee on Danish stock. The reason I use Danske Bank are when I was changing job, they gave me quite a good offer if I did move my stocks and pension over to them.

Look into Nordnet, they should be quiet cheap, and gets very good review from their customers.

FBeyer
Posts: 1069
Joined: Tue Oct 27, 2015 3:25 am

Re: Denmark: Fees on deposit accounts.

Post by FBeyer »

Wiz: Thanks. Are there any things to be aware of when your depot is located somewhere else than your regular bank?
Transfer fees when moving money around. Latency on transactions, anything like that?

Forskaren
Posts: 189
Joined: Sat Nov 07, 2015 4:04 pm

Re: Denmark: Fees on deposit accounts.

Post by Forskaren »

In Denmark and Sweden the central banks have a negative interest rate on money that the banks deposit. By law the banks are forced to deposit a proportion of their customer's money in the central bank, so the banks cannot lend all money to house owners. Therefor the banks in Sweden will try to take fees from small depositors and give large depositors negative interest rate. In Denmark the central bank got an even more negative interest rate (-0.65%) than Sweden's rate (-0.50%), so the effects are even greater.

http://www.riksbank.se/en/

http://www.nationalbanken.dk/en/marketi ... yContainer

wizards
Posts: 122
Joined: Sun Mar 31, 2013 8:24 pm
Location: Denmark

Re: Denmark: Fees on deposit accounts.

Post by wizards »

@FBeyer

No fees - but you can't make instant deposit - so you will have to wait one day for the transfers to go through.

Nordnet is the way to go - by far the best and cheapest place to invest as a Dane:

https://www.nordnet.dk/kampagner/arets- ... =nordnetdk

chol03ac
Posts: 12
Joined: Mon Apr 11, 2016 8:22 am

Re: Denmark: Fees on deposit accounts.

Post by chol03ac »

Be aware of what it will cost you to move. I could normally save you money with selling your stocks, move the money and then buy your stocks again. https://www.nordnet.dk/mux/web/nordnet/AFadmin.html
Last edited by chol03ac on Sun Oct 30, 2016 3:25 pm, edited 1 time in total.

sesquipedalian
Posts: 4
Joined: Fri Jun 03, 2016 7:04 am

Re: Denmark: Fees on deposit accounts.

Post by sesquipedalian »

I see there are a couple of Danes here. I have a hypothetical question. How would you go about investing 1 million DKK if your purpose was to live off the interest?

FBeyer
Posts: 1069
Joined: Tue Oct 27, 2015 3:25 am

Re: Denmark: Fees on deposit accounts.

Post by FBeyer »

What's your required rate of return? Broad question is broad. Need more info. Do you have a million and want it invested NOW? Risk tolerance?

sesquipedalian
Posts: 4
Joined: Fri Jun 03, 2016 7:04 am

Re: Denmark: Fees on deposit accounts.

Post by sesquipedalian »

I like to play with the hypothetical million. I wish I had it. If I had 1 million dkk and invested in Nordnet with a 50-50 percentage of bonds/stocks, I could easily live off the rates (5% return rate might even be a little low?). With 50.000 a year I could live off the rates (I'm spartan) and even have a little job on the side in order to increase the total investment further. If I had a good year and earned 50.000+ I would just invest that money as well.

Is a 5% return rate feasible? What would you do with the hypothetical million?

FBeyer
Posts: 1069
Joined: Tue Oct 27, 2015 3:25 am

Re: Denmark: Fees on deposit accounts.

Post by FBeyer »

As long as it's hypothetical, then all of it on junk bonds.

sesquipedalian
Posts: 4
Joined: Fri Jun 03, 2016 7:04 am

Re: Denmark: Fees on deposit accounts.

Post by sesquipedalian »

What exactly do you mean by "junk" bonds? You only invest in stocks?

Dragline
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Joined: Wed Aug 24, 2011 1:50 am

Re: Denmark: Fees on deposit accounts.

Post by Dragline »

"Junk bonds", also known as "High Yield", are lower grade (i.e., more risky) corporate bonds with relatively high yields.

However, given these negative interest rate environments, the best investment right now in such countries might be companies that make safes. This is the one item that is currently selling like hot cakes in Japan as people take all of their money out of the banks and store cash in their homes to avoid the fees.

The "paradox of thrift" in action.

FBeyer
Posts: 1069
Joined: Tue Oct 27, 2015 3:25 am

Re: Denmark: Fees on deposit accounts.

Post by FBeyer »

sesquipedalian wrote:What exactly do you mean by "junk" bonds? You only invest in stocks?
Question number 1:
http://www.investopedia.com/terms/j/junkbond.asp


Question number 2: Yes, for now, for tax reasons, not because I like it :)


Investopedia is a nice place to get a very simplified introduction to a lot of concepts.

bestintentions
Posts: 9
Joined: Mon May 16, 2016 8:29 am

Re: Denmark: Fees on deposit accounts.

Post by bestintentions »

sesquipedalian wrote:I like to play with the hypothetical million. I wish I had it. If I had 1 million dkk and invested in Nordnet with a 50-50 percentage of bonds/stocks, I could easily live off the rates (5% return rate might even be a little low?). With 50.000 a year I could live off the rates (I'm spartan) and even have a little job on the side in order to increase the total investment further. If I had a good year and earned 50.000+ I would just invest that money as well.

Is a 5% return rate feasible? What would you do with the hypothetical million?
https://retirementplans.vanguard.com/VG ... ggCalc.jsf

Stocks: 80%
Bonds: 20%
Withdrawing 5% annually is succesful 80% of the times. (30 years)
Withdrawing 4% annually is succesful 91% of the times. (30 years)
This is of course only looking back on history, who knows what the future brings? Maybe worse returns, maybe the best we've ever seen?

How can you live on 50,000 DKK ? :) That's really good! Personally I would invest 1 million in C20 because of the low fees and tax implications.

FBeyer
Posts: 1069
Joined: Tue Oct 27, 2015 3:25 am

Re: Denmark: Fees on deposit accounts.

Post by FBeyer »

Personally I'm aiming more for 1.5 mio split into five equal portions. The basic idea is to build a semi-global portfolio like the Golden Butterfly, but switch gold with Real Estate investing (active part of portfolio) and split the passive part into stocks and bonds. Stock are split into one global/stable, one somewhat region centric and variable. Bonds are split between short term and long term and corp/govt bonds. These were the lowest cost funds I could find that meet my 'global' criteria. Although the Investment Grade corporate bonds is not very cheap, if you know of a similar fund with lower ÅOP, I'm all ears.


Part 1 LCB:
300K in Sparinvest Safe (SPIGLAMRI)

Part 2 LCV:
150K in Sparinvest EU large cap value (SPIEUV)
150K in Sparinvest US large cap value (SPIUSV)

Part 3 Global Bonds:
300K in Majinvest Global Bonds (MAJGO)

Part 4 Bonds Padding:
150K in BankInvest Short Term Danish Bonds (BAIKDOBKL)
150K in Danske Invest Global Investment Grade Corporate Bonds, EU focus

Part 5 REIT:
300K in flipping Copenhagen based fixer-uppers.

sesquipedalian
Posts: 4
Joined: Fri Jun 03, 2016 7:04 am

Re: Denmark: Fees on deposit accounts.

Post by sesquipedalian »

bestintentions wrote: How can you live on 50,000 DKK ? :) That's really good! Personally I would invest 1 million in C20 because of the low fees and tax implications.
Perhaps I'm self-deprecating... perhaps I'm just willing to go that extra mile through a sewage pipe in order to emerge a free man in sunlight. Since I was a child I realized we are all in shackles. We just get used to the chain. I merely ask for a chain long enough that I can walk around. I want to write all day and do humanitarian electronics projects.

My plan is to live in an apartment that I own. One that is fully paid off.
I plan on having 1000000 DKK ish in stocks/bonds and I am trying to figure out the strategy.

Thank you all for your input. I would love some more advice, especially from Danes :)

FBeyer
Posts: 1069
Joined: Tue Oct 27, 2015 3:25 am

Re: Denmark: Fees on deposit accounts.

Post by FBeyer »

So it was definitely NOT a hypothetical question, you really wanted to ask: How do I learn how to invest my money?

DrBrain
Posts: 4
Joined: Sat Mar 05, 2016 5:56 am

Re: Denmark: Fees on deposit accounts.

Post by DrBrain »

Interesting plan you got there FBeyer

My plan is to buy stocks, until I get 50.000 DKK in yearly dividends from stocks (the low tax rate of 27%).

What I will do when my yearly dividends will pass 50.000 DKK I don't know yet, any good suggestions?

bestintentions
Posts: 9
Joined: Mon May 16, 2016 8:29 am

Re: Denmark: Fees on deposit accounts.

Post by bestintentions »

DrBrain wrote:Interesting plan you got there FBeyer

My plan is to buy stocks, until I get 50.000 DKK in yearly dividends from stocks (the low tax rate of 27%).

What I will do when my yearly dividends will pass 50.000 DKK I don't know yet, any good suggestions?
In some cases it might be wise to invest 50,000 DKK a year in a pension account. However, this will mean you cannot access the money until the age of 67.

About the taxes, you will only pay 42% in tax of dividends as long as you have more than 50,000 DKK in capital gains AND you are working and have other income. In many cases once you ER the tax rate will be much lower. Here are my tax calculations given you have retired and you only have dividend income:


Total (dividend) income: 50,000 DKK
Taxes: 13,500 DKK
Tax rate: 27%

Total (dividend) income: 100,000 DKK
Taxes: 18,000 DKK
Tax rate: 18%

Total (dividend) income: 200,000 DKK
Taxes: 60,000 DKK
Tax rate: 30%

Total (dividend) income: 300,000 DKK
Taxes: 102,000 DKK
Tax rate: 34%

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