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Retirement Planning And Investing As A Student


In your early 20ies, when you start your college or university career, there are topics far sexier to consider than retirement planning. Especially, if you have little money to invest in the first place. And yet, early investments are the best basis yet to gain financial independence in the long run. This is important, in particular, for young women. And this ist why it’s worth the while to think about retirement planning and investing as a student. The advantage: once you’ve set up your savings plan or your investment strategy, students don’t have to make a lot of effort to grow their funds. Basically, your money multiplies passively – if, that is, you leave it alone.

Is Investing As A Student Worthwhile?

The answer to this is a no-brainer, really. Investing as a student, is definitely worth the while!

The earlier you start investing money, the higher and more profitable the compound interest effect, and, hence, the yields at the end of duration.

Maybe you’ve even been paid out a life insurance or received money from building society savings as a young adult? This would be a great ground to start from. You might consider how much of this money you could do without and invest it as a small capital contribution. Just stay aware so that your investment doesn’t leave you without means to make ends meet during your studies. Rather invest a little less in the beginning. Usually it is never a problem to increase the amount later. And, if you become aware of the fact that you won’t need your remaining money in the medium run, you might still effect a second small capital contribution, if you like.

Little Money As A Student: Is Investing Even Possible?

Now, this one’s a little bit trickier. Of course, investing as early as possible is always a good thing. But obviously only, if you can spare a little monthly rate. Kicker: There are investment products such as ETF accumulation plans that require as little as 25 Euros each month. Some micro investments can be effected with even less money, some as little as 10 Euros.

What Students Should Be Aware Of When Investing

  1. Make a list or a table with the amount of money you have available each month. Write down your fix expenses and leave a little room for fun spendings, too, so you won’t have to completely renounce shopping or going out. This money serves in case of unforeseen expenses, too, like your utilities statement.
  2. How much money do you have left after subtracting and planning your monthly expenses?
  3. Don’t ever invest all of the remaining money!
  4. Read up about various investment products that allow for smaller accumulation rates.
  5. Choose rather medium-length durations of maybe 3 to 5 years, so that by the end of your university career you know, either how much money your investment generated or that your investment won’t financially burden you during your orientation phase and job search.
  6. Absolutely consider the risks investments pose. Especially with small investments, high and unpredictable risks are not worthwhile.
  7. Check fees and charges that come along with the investment you chose. Many banks ask a fee for opening or maintaining a deposit. If you decide for actively managed funds to be the right investment type for you, this means further charges for you. Sometimes these are applied against the monthly savings rate, sometimes they come on top, other times they only apply when in case of investment payout or share selling.
  8. Get impartial and independent counseling. FinMarie provides you with real experts that offer you a free assessment on your ways, means, and possibilities of investing as a student:

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Savings Tip For Students: Make Your Tax Declaration

Whether you make a little money on the side as a research assistant, whether you draw on a student loan, or whether your parents support you: as a student, you and your savings can benefit from a regular tax declaration.

The Most Important Tax Assets For Students

  • Study expenses: In Germany, you may write up to 6.000 Euros of your cost of education off against tax. This includes university fees, possible user fees for the library, purchase costs for specialized literature and office supplies.
  • Work material: If you buy a computer or laptop for your studies, you might also write off these expenses against tax. In case you use the computer privately, too, which you most likely will, however, only 50:50 lump.
  • Travel costs: You can write off your student ticket or the journey to university by car off against tax, too, and will be reimbursed 30 Eurocents per kilometer for every single trip. This goes for excursions, educational trips, and drives to your study group, too.
  • Accommodation costs: Register your shared flat or your dormitory as a secondary residence. This way, you might get the entire rent reimbursed. If you spend weekends at home in your main residence, the drives there, apply as travel costs, too.
  • Loan interests: Have you taken out a student loan? Then write the accruing interests off against tax.
  • Income: Side job, research assistant position or capital revenue — in Germany, this is all considered income and needs to be declared accordingly. Even during university studies. Take a look at our tips on the German income tax declaration, where we gave you some insight on what to consider when writing capital yields off against tax, too. Good news is: as a student, you especially benefit from tax breaks, if you do have an own income. So, an extra income from a student side job or an investment can well be worthwhile twice as much.

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Investing Despite Public Education Support?

As a student, you can invest money, even if you receive Federal Support in Education, so-called Bafög. You should, however, know the exemption amount limit. Yields and returns from your investment (savings assets, building loan contracts, life insurances, bonds, and securities) might be construed as chargeable fortune — this can reduce your support rate.

For married students or studying moms there are other exemption amount limits in effect, so that you might counterbalance smaller investments better. Our FinMarie experts are happy to lend you their support:

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Investing Despite Student Loan?

Maybe you’ve already heard about one of the basic rules for investing: don’t invest, if you have current liabilities to deal with. Generally, a student loan is not a bar to your investing. But, of course, you should know your math.

What’s the interest rate? What’s the entire loan sum? How high are repayment rates?

An investment with small yields will later merge completely into the high loan liabilities. Remain aware of that and weigh up well, whether a larger or longer-term investment during your loan-funded studies really makes sense. This also depends on your investment objective, of course. Maybe you’re putting money aside for this exact reason?! So that you can later pay off your loan debt faster?! In this case, do not lose time. Because, the earlier you redeem your liabilities, the earlier you can invest anew afterwards to build up your fortune.

Since interest rates in Germany for student loans are mostly lower than interest rates for regular loans, investing as a student provides fewer losses than as if you’d be investing while paying back a regular loan. This means, it could be worthwhile to invest money even though your studies are funded by a student loan. Do you need support on the weighing up? No problem: Our financial experts give competent, impartial, and free advice on everything you need and want to know about investing as a student:

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