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About Starshollow

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  • Birthday 02/02/1967

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  • Location Starnberg
  • Nationality German
  • Hometown Munich
  • Gender Male
  • Interests finance, investment
    Tennis, Golf
    Reading (especially history, but also poems)

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  1. Now this is a surprise... (10 minutes with Elton and you are gay as a maypole!)   Ok, so far the legal situation in Germany was this: if you wanted to get into the German public health insurance as voluntary member (i.e. for instance as a self-employed person), either from the outside of the EU with no prior public/state health insurance coverage within an EU memberstate's public health insurance system or as a person who choose private health insurance in Germany initially and somehow regretted it, you had to become a compulsory member (or dependent family insured member) for 12+ month before you could then continue your public health insurance as a voluntary member in your own right.   In the wake of the new legislation since August 1st, this, too, has changed...and nobody noticed, not even me (and I read the law) !!! Wow! I just did some online research in some other experts forums for health insurance and stumbled about this info, which then was confirmed by checking out a website of one of the larger public health insurance groups in Germany, BKK:[bkkl-item]=159909,0 You have to scroll down pretty much to the end to get to the gold nugget of this new legal information:   <h2 class="stw_gld1_head" id="gld3."></h2>     So, what says here is this: do to the new regulation which is supposed to prevent people who were family insured to drop out (because as young folks the exceeded the age limit, for instance), the rule is now that if you have been compulsory insured or family insured and this status ends, you'll become a voluntary member no matter what. And especially (bold in the above quote): you don't have to fulfill any prior insurance time/period.   What does this mean?   Case 1: you are employed with a gross salary over the legal threshold and decided to take on private health insurance because you were young, single and could save a lot of money. Now you meet this girl/guy whom you gonna marry and he/she bring three children into the happy marriage and he/she has no job/income. So far you were in the bad situation that even if he/she already was in public insurance, he/she would have to pay up to 50% of the max premium in public health insurance because half of your income would have counted for computing his/her premium while for each child you guys would have to pay the min contribution of 150+ EUR per month.   Now you only have to convince your boss to reduce your gross salary for 1 month (!!!) under the legal threshold JAEG, by which you become compulsory public insured again (in the past you had to do this for 12 months, which is a bit more complicated and also means more loss of income). After the one month, you can go back to your prior salary but still remain in the public health insurance as voluntary member. And add your wife and kids for free as dependent family members...   Case 2: you have been self-employed in Germany and with private health insurance. Now you only need to find someone for 1+ month for an employment with compulsory public health insurance (midi-job or more) and after that you can go back to being self-employed while keeping this public health insurance as a voluntary member for all it is worth.   Case 3: you come as a self-employed person from outside the EU with no prior public health insurance in an EU memberstate. Therefore you can't enter the public health insurance in Germany as a compulsory member. All you need now is to find someone to hire you (Visa permitting, of course) as an employee for 1+ month and you have every right to stay in the public health insurance system later as a voluntary member.   Case 4: you have been privately insured and are over 55 years old. Not even employment gets you back into public health insurance anymore. But if you become a family/dependent insured member thru your spouse while having no income at all higher than 385 EUR p.m. for just one month, you can afterwards continue to stay in the public health isnurance even as a voluntary member in your own right when you work and earn money again.   this will help solve a lot of problems for people who have a good reason to want to go back into public health insurance. It will. unfortunately, also invite more abuse of the system, because now it is much easier to contemplate going with private health insurance (and save money for yourself while opting out of the social welfare system) because the way back if your situation changes is much easier. But it is the law...make the best out of it. And find a good professional and independent advisor to help you with that, because it will take a long time till the last employee in a public health isnurance has learned and understood this.   Cheerio
  2. The awful truth about Bausparen plans

    From what I see what old and new clients show me when having talked with their banks about either investment/savings or mortgage financing, German banks accross the board are now for several months already pushing BAUSPAR contract left and right on everyone.   I think there are two reasons for banks to do so:   1. In contrast to pension plans or other insurance based investment products they otherwise loved to sell at high costs to their clients, BAUSPAR is the one product left on the market where they do NOT have to disclose the actuall and total effective costs for the plan in full. This loophole in the laws makes the BAUSPAR plans far more attractive to sell thru German banks than some other investment tools where they have to disclose the costs or otherwise face dire liability claims if not. Thus BAUSPAR seems to have become one of the last niches in finance for banks and others to milk unsuspecting clients…   2. At the same time, the very low current interest rate makes mortgages now or later very attractive for people and since they also have not really to disclose the effective interest rate for the total BAUSPAR plan (only for the actual mortgage loan which is only part of the equation) folks are attracte by the seemingly even lower interest rates from BAUSPAR plans   The development I see and some cases I recently had on my table are reason enough for me to disclose the awefull total bad truth about BAUSPAR plans which I will abbreviate in the further text as BS which also fits because mostly it is pure and unadulterated BullShit what clients are offered.   Following I show you to typical cases which are currently offered: I. BS as a savings tool if you want to invest money regularly for you or even your children/grandchildren. II. BS as part of an immediate mortgage financing. This has puzzled me for some time why anyone would want to do that. But its been offered often and at first glance looks so attractive that I have to explain why it is not and why a normal mortgage financing virtually always will beat the upfront BS mortgage financing     I. Why BS is usually a poor savings instrument   The problem with BS as savings instruments is that during the entire period of saving money you get only a very low interest awarded on your savings while you do usually have to pay immediately upfront costs based on the total you are going to save in this plan. So, you are incurring a lot of costs initially and then lose on profits of your savings for many year in order to get a (potentially/hopefully) lower interest rate for a mortgage in the future – and on top of that often in cases where people do not even know if they ever will actually use the mortgage option or not.       Typical case I was presented the other day is this: someone wants to invest 200 EUR per month to build up capital mid-term. He/she might want a mortgage in some years but it not entirely sure. The offer from a large German bank is to invest into a BS plan like this:   Pay 200 EUR/month for 7 years 10 months and then become eligible in October 2019 for a total mortgage of 38.500 EUR at an interest rate of 3.75% (effective 4.34 %)   Here now follow the list of smokescreens put up to confuse the client:   a) The quote mentions two different interest rates for the savings period of 7y10m, the typical 1% plus as it looks another 2% and another bonus of 616 EUR at the end. What the bank advisor conveniently forgot to mention to the client (I asked) and which is hidden in the small print a couple of pages later is this:   The extra interest rate is only available IF you do not upon finishing your savings period decide to actually take the mortgage option. So, the still rather meagre 3% p.a. plus bonus are only available to you if use this plan only as a savings plan for your money and nothing else.   When looking at the numbers stated in the quote (total investment during 7y10m = 19.416 EUR increases to max 21.705 EUR at the end in this case) you are looking at an effective interest rate for your investment of 2.7% p.a. – why would anyone want to do that? Of course if you’d tell people right away these fact, nobody would, which is why the truth is so nicely hidden in the small print. Btw: the bank charges an initial 616 EUR in fees out of which they get their commission.   Second smoke screen: you pay in about half in order to get the full 38.500 EUR mortgage, so the actual mortgage amount you gain theoretically is only 18.971 EUR (after fee deducting and all).   c) Third smoke screen is the interest rate for the mortgage – because it leaves out the interest costs you incur during the savings time. There is a really excellent tool publicly available at the German consumer protection agency’s STIFTUNG WARENTEST website here:   If you download the easy to use spread-sheet computation and use the numbers like in my case, you find out this: If comparing the BS plan – now under the assumption that you actually use the mortgage option and thus only get 1% interest rate p.a. for your investment during the 7y10m period of saving – with a simple other form of investment where you generate, say, 4 % p.a., and down the road you’d get 7 years 10 month from now a mortgage from any other bank for, say 4.5% p.a. you be better off by more than 2.000 EUR in comparison to the BS plan. Or, phrased differently, you could afford a mortgage in 7y10 month from now with an effective interest rate of 7.74 % p.a. and just break even with the BS plan.   So, the long and short of it, there are very few scenarios imaginable where a BS plan with using the mortgage option is really better than saving the money in other ways and forms and then get yourself a normal mortgage later.       If you have received recently a BS plan offer, try to hack the numbers from this quote into this excellent tool from Stiftung Warentest and find out yourself. If you are uncertain about certain numbers, ask here in this thread for explanations or, if you are too shy for public, send me a PM or better even an email and I’ll explain you how.       II. BS as immediate mortgage instrument (i.e. without prior saving up for years)   This is also something I see recently quite often, especially when people came to me to get a mortgage quote and then went to their “Hausbank” to see if they can get a better deal (which is entirely normal and fair, no problems there from my side, best quote wins the deal, period). Because often the banks cannot compete with the mortgage quotes I got my clients, they are trying to muddy the water with these instance BS mortgages as part of the deal.   Most recent case looks like this:   Client wanted to purchase a property for 444.000 EUR plus costs. Mortgage was sought for about 377k EUR. My best offer from a German bank came down to an effective interest rate across the board (including subsidized KfW mortgage parts) of 3,97 % p.a. fixed mostly for 15 years.   The client’s bank worked out an offer that was comprised out of a “normal” mortgage with fixed interest for 15 years with 3.92 % effective per year AND a BS about 138k EUR with an effective interest rate according to quote of 3.10 % - so, obviously much better than what I offered…… until you do the math. Which is pretty hard even for a professional which is why again I recommend using a tool offered by STIFTUNG WARENTEST for such instant mortgage BS quotes here:   As the STIFTUNG WARENTEST points out there, the BS quotes never (!) show the true effective interest rate as they conveniently forget to include the interest losses you have from the savings part. In this case they lend you the money at once but still you have several years of “savings” first with little interest before you pay off the mortgage entirely.   In the client’s case, when using this computation tool which, because it comes from such a well-respected and unbiased source as STIFTUNG WARENTEST is certainly beyond any doubt – when puniching in all the number from the quote it turned out that the actuall, real effective interest rate was indeed 4.41 % and thus much worse than anything a normal bank mortgage had to offer. Plus, there even was a risk that it could get worse or more expensive for the client later down the road because the fixed interest rate was only guaranteed for a given time and then the BS plan “assumed” a further financing again based on 2.85% after the guarantee time run out – which is, phrased friendly, highly unlikely or, phrased differently, another total BullShit.   If you got yourself recently some quotes along this line, try out this excellent computation tool. If you are uncertain about certain numbers which need putting in (where to find, which ones to use) contact me, happy to help.   So, now I have given you, I hope some interesting facts why an independent financial advisor like me will virtually never offer anyone a BAUSPARPLAN at all and why, if you receive such offers, you should be aware that the person or institution offering them to you has only their own best interest in mind and not yours…the BAUSPAR fox ( an icon of German marketing introduced many years ago by one of the major Bausparkassen and such something most Germans know by heart) is in the end just another predator after your money. Looks cute, though.       Cheerio