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How does Wealth Care work in the Netherlands?

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Planning for your financial future doesn’t stop managing your student loan debt and maintaining a good credit score. Investing in the market is an essential element of any financial plan, whether you’re planning for the short or long term.

Some of us may be hesitant to invest because we don’t know how to get started or are afraid it will require a lot of money upfront. Wealth management accounts are one way to make investing more accessible for those new to the game and experienced professionals.

What is Wealth Care?

Wealth care is an investment service where external professionals manage accounts. These accounts are meant to help people who want to plan for their future but do not have the knowledge or time to do it themselves. It means they can include services like budgeting and insurance (such as annuities) in the account.

Financial experts will manage your money when you decide to take on this type of product. They will know which products suit you best and give advice about important issues such as taxes and pensions.

Why invest with a wealth management account?

Whatever your goals are, keep in mind that investing might assist you in achieving them sooner. Consider this example: Assume you start saving $100 each month at the age of 25, and you continue to save that much each year in a coffee tin can under your bed. By retirement, you’ll have $48,000 in your coffee can after 40 years of savings.

What would happen if you kept $100 each month but rather than stockpiling it under your mattress, you invested it? To grow and build wealth, your money must be put in the market. Rates of return are unknown, and it’s conceivable that assets may lose value over time. Cash generally expands when left in the market since rates of return are not certain, and it’s possible that assets might depreciate over time.

By the time you’re 65, long-term market growth, as well as an obscure component known as compounding interest, will ensure your assets are worth considerably more than $48,000.

Who manages Wealth Care?

Many different institutions offer Wealth Care/management accounts, each with benefits. Some of these institutions are banks, but there are also independent brokers that offer this service.

Because the Netherlands has a deposit guarantee of € 100.000 per person per bank branch, some banks choose to run their Wealth Care product together with an insurance company. So if you have more money than the guaranteed amount, it is wise to check which institution manages your account.

How do you open a Wealth Care account?

You can apply for a Wealth Care/management account via Saxo Bank. You should be at least 18 years old, and you cannot already have one of these accounts with the same company.

Is your investment safe with Wealth Care?

Experts will handle your money because you will not manage your investments yourself. You do not have as much control as you would with a regular investment account. However, the institution where your money is handled will always keep it separate from theirs, and there is still an insured amount.

Is it possible to withdraw your investments?

Yes, but this is only possible if the account rules allow for this. It may involve a cost, and the institution can refuse to pay out if they think doing so will endanger the rest of your assets or be approaching retirement age. Some products give you access to part of your investment after a specific period without any withdrawal fee’s, but some accounts are meant for long-term use. What happens when I reach the age of retirement?

Your money will be handled by someone else once you reach retirement age. You can opt for an annuity or a pension paid out every month until the end of your life. Or you can put your money into other investments designed to generate an income during this period.

How should I plan my future with Wealth Care?

It is best to ask yourself how much money you would like to have at retirement and then work back from there. Try not to take any unnecessary risks by investing too much in one product because you might lose all your savings if there are financial problems within the company where your account is handled. If you are unsure which product suits you best, speak with a financial adviser.

Pax Heber
the authorPax Heber