Savings are shrinking
The interest rates on savings in the Netherlands fell below 1 percent in early 2016. At the larger banks, the highest interest rates will also fall below this percentage. The inflation according to the consumer price index (CPI) stood at 0.6 percent in January. The IMF (International Monetary Fund) expects for the next five years an average inflation of 1.2 percent per year. Add to that the wealth tax and the conclusion is that in most cases keeping saved capital at the bank costs money and the capital slowly decreases in value. Anno 2016, we face historically low returns. After five years of taxation and inflation, the saver has become five percent poorer.
Financial economist Auke Platinga of the University of Groningen expects that the interest rates will continue to fall in the years to come.
So if saving does not pay, what does?
Investing and the associated risk is not for everyone. Being active in the stock market requires both knowledge and courage. Moreover, as an investor, you must have the time and you must be able to miss your money for quite a while.
An additional negative factor for Belgians is that the so-called speculation tax has been in force since 1 January 2016. Individuals who pay personal income tax in Belgium must pay 33 percent tax on the achieved price gain.
Investing in bricks may be a great alternative. Banks in the Netherlands expect that the value of real estate will rise. Not much, but the return is very likely to be higher than that from other investment categories. On top of that, real estate retains its value when inflation is high.