The awful truth about Bausparen plans

111 posts in this topic

Thanks for mentioning that, Starshollow! I´ve been in the finance/insurance business for nearly 20 years and have never sold or even offered a Bausparvertrag. Ask the " salesman/woman " at the bank what ALTERNATIVES you have, whether for a mortgage or as a savings plan. They LOVE offering young people this crap with lovely pictures of a house they´ll never be able to afford with Bausparen. They do the same with VWL saving ( where many employers offer up to 39 euros a month as a free choice for employees to save/invest for 6/7 years, renewable.

 

To buy a house or ANYTHING expensive you need money :ie a higher yield long term than the inflation rate. Bausparen is automatically lower-yielding than inflation. It is only good business for the banks and currently again part of the Schublade selling ( guys and girls: sell X amount of this in the next month, ok ). That´s how banks operate.

 

Well pointed out, Starshollow!

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Thank you for this useful info! My bank offers a BHW Bauspar plan. Here's an apparent case of misselling (plus other reviews).

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Thanks for that info, Starshollow. I had a Bausparkonto years ago - not that I ever harbored any ambitions of buying a house, but I saw it as a way to get the VWL from my employer (was told it was the *only* way to take advantage of that) and save up over time. Must admit that it was a nice boost when came time to cash it in, although it was actually less than I thought it would be. Now I know why... and have immediately scrapped any plans to ever do that again!

 

On a related note: Do you (or John G) have any recommendations in terms of regular savings for my godchild? Not being terribly fluent in finance language, I had started a Sparbuch, until I realized that was not going to be very successful in terms of interest. Someone recommended the Wüstenrot Jugendkonto to me, are you familiar with that? Would you recommend it? Or do you know of other savings schemes - I need something where I can put a small amount away monthly, and hopefully leave it to earn a bit of interest as well.

 

Thanks in advance for any advice you can give!

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I am not very familiar with Bausparen. But in general any financial product in any country in the world that markets itself by saying that it takes advantage of certain tax exempts or deductions, is often more profitable for the bank / insurer than for the customer.

 

At least you should be extra critical on the terms, conditions, and life-time costs when these products are offered to you.

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Thanks for that info, Starshollow. I had a Bausparkonto years ago - not that I ever harbored any ambitions of buying a house, but I saw it as a way to get the VWL from my employer (was told it was the *only* way to take advantage of that) and save up over time. Must admit that it was a nice boost when came time to cash it in, although it was actually less than I thought it would be. Now I know why... and have immediately scrapped any plans to ever do that again!

 

On a related note: Do you (or John G) have any recommendations in terms of regular savings for my godchild? Not being terribly fluent in finance language, I had started a Sparbuch, until I realized that was not going to be very successful in terms of interest. Someone recommended the Wüstenrot Jugendkonto to me, are you familiar with that? Would you recommend it? Or do you know of other savings schemes - I need something where I can put a small amount away monthly, and hopefully leave it to earn a bit of interest as well.

 

Thanks in advance for any advice you can give!

 

I´ve had a look at the Wüstenrot Konto, the.frollein. 0.33% per cent interest p.a. It´s nothing but a giro account with a marketing name. It depends how long you want to save...if for at least 10 years on a regular basis, it´s mostly more profitable ( despite ups and downs ) to have an equity funds (Aktienfonds). There are, however, no guarantees or fixed interest rates...rather it´s based on the stock market(s). You can often expect to average 6-8% p.a. over a long period - the longer the better. Given the fact you mention you have a Godchild, may I assume you´re thinking long term

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Whoops: for some reason, my question mark is no longer working on my computer...!!!

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I´ve had a look at the Wüstenrot Konto, the.frollein. 0.33% per cent interest p.a. It´s nothing but a giro account with a marketing name. It depends how long you want to save...if for at least 10 years on a regular basis, it´s mostly more profitable ( despite ups and downs ) to have an equity funds (Aktienfonds). There are, however, no guarantees or fixed interest rates...rather it´s based on the stock market(s). You can often expect to average 6-8% p.a. over a long period - the longer the better. Given the fact you mention you have a Godchild, may I assume you´re thinking long term

Thanks John! I need something longterm, but I don't have a lot of money upfront, which as I understand it puts paid to the Aktienfond. Ideal would be something where I could pay in approx 10 Euros a month (plus a bit more for birthday and Christmas) over the next... erm... 16 years, I guess. He's just turned 4 now, so I'm thinking until 20. Or 18? Whatever, I'm sure you get the idea.

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Hmm, not sure off the top of my head whether 10 euros a month would be enough. 25 would work...plus stocking up with birthday and Xmas money. Are there any extras you could do without (eg, eating, paying rent) ? :)

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the frollein: I hear that often that people who want to do something with their VWL (VErmögenswirksame Leistungen) are being told that they can only use BAUSPAR... which again is total BS. If you are risk adverse, you can use a simple savings plan with any bank, if you like to see your money really work for you long term, you can put it directly into investment funds, too - hundreds of options available for far little initial costs than a bloody BAUSPAR contract.

 

With regards to saving 10 EUR per month... as John said, that is a wee bit too short for an investment fund. 25 to 50 EUR each month is usually required. I have one more idea what you could perhaps do instead, but Ihave to check some details first in order to figure it out - will let you know later today or tomorrow

 

Cheerio

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I don't understand the dilemma people face. If you want to save money, open a second "normal" savings account, separate from your daily expense account, and deposit money every month in it.

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Thanks for the info Starshollow - I like the way your article reads if you treat 'BS' to mean Bauspar and also 'bullshit'. Apparently the difference between the two isn't so great ;)

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I don't understand the dilemma people face. If you want to save money, open a second "normal" savings account, separate from your daily expense account, and deposit money every month in it.

 

Yeh, and get a whopping 2% interest on that money, meaning that you're actually losing money when taking inflation into consideration.

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oh and if you ever do stuff to minimise your tax do not expect your tax return back in less than 8 months. I just found out after 6months that the finanzamt tried to stuff me over. I wanted to claim all my initial costs on buying an investment building. and then using the note from my accountant showing what I was going to get back to finance number 2. the finanzamt changed my all in one year claim to claiming it over 20years. hence sending me a big fat bill. after contemplating burning down the accountants office for getting me in huge fiancial shit and lying I approached him calmly and he said they do this all the time and now we have to fight them. it could take months again.

 

I will the tool who tried to fuck me over a visit after I get my return and say thanks for doing business I cant wait for next year when I get a tax return larger than your yearly salary again. :)

 

In australia its common to get your tax back in less than a week even with strange investments. my record was 2 days after submission. the accountant said he has had cases go one for over 18months that he finally won. here they dont even give you interest on the withheld tax you get back. In australia you do.

 

thanks and welcome to germany

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Sorry to hear of your predicament - each Finanzamt is different, the Munich one is getting better year on year, and at an alarming pace. Same with most of the civil servants round here - sometimes I can hardly believe it.

 

Where did you find your tax accountant? This is not a topic for this thread, so please feel free to start another, but there is a huge spectrum ranging from the criminally inept & greedy to the wonderfully honest & creative. Yours could be somewhere in the middle, tending towards inept - it's all about how he presents your case. If he does it in a manner that arouses suspicion then the FA will bugger you around, a more competent guy may achieve the same results with less hassle.

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well he is a member of the lohnsteuerhilfeverein so is partially subsidised by the govt :) I chose him coz his office is under my apartment and i travel a lot so its a great convenience.

 

I was told people in these institutions generally are more reliable than some dude sitting in a home office in a dodgy part of town.

 

I also live right near the finanzamt so the short stroll in a few months with a huge grin and the "i told you so" will be more rewarding than the money isself

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They LOVE offering young people this crap with lovely pictures of a house they´ll never be able to afford with Bausparen. Well it worked for us.

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Thanks for posting this Starshallow - very helpful information contained within. We are very grateful to you for helping us out of a sticky Riester/Bauspar situation, and hopefully information such as this will help others from falling into this trap.

 

As an aside, it is astounding how pushy these fellows can be - it must really be good business for them, or otherwise they are not very intelligent... After our first negative experience (where the broker didn't want us to make another meeting at my request, but encouraged us to sign on the day), a second broker tried to sell us this programme. And that was after my husband said explicitly that we didn't want a Riester scheme. Unsurprising, we saw such persistence as a warning light, and didn't want a bar of his offers! So, rather than offer us something we might actually have been interested in, he continued down the Riester path, thereby totally alienating us - not very smart...

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