Currently I am a student and planning to finish in about 6 month. At the moment I have a monthly income between 1000 EUR and 2000 EUR and are saving about 70% of it. I have savings of about 52k EUR and now want to bank this money more properly. Currently I have about 12.000 EUR in two small funds. Combined they produced about 11% in return in the last 13 years (I do not own all of them since then but to give you an idea of the return rate). About 30k EUR I have stashed in an overnight loan account currently giving 0,75%. The rate has fallen in the last few month more and more. The remaining 10k EUR are stashed in a fixed-term deposit with currently 0,2% return rate. It will be running until September.

When I finish my degree I will have to find a new flat and my parents will stop supporting me financially, so that I expect my monthly expenses to raise (rent, insurance, etc.) I already have a job in prospective and expect to earn about 40k-45k EUR / year before taxes.

I already had a discussion with my local bank. They advised me to keep around 7k EUR in liquidity so that I would have 45k EUR to invest. They made an analysis of my readiness to assume a risk and found out that I am willing to take only small risks. I would agree with this analysis. Afterwards they advised me to put about 15% of my 45k EUR (i.e. ~6k) into the stock market. About 60% (i.e. 27k) into bonds, fixed-term deposits, etc. and about 15% (i.e. ~6k) into real estate. They proposed two different bonds to me.

  • The first one is not a real bond but a "standardized" property management, more or less lika a fund of funds. The concept seemed good to me at first but I got a bit skeptical about the costs. It has an issue surcharge of 1,2% a managing fee of 0,2% p.a.. Additionally it may have additionally fees when trading other funds and it has a performance fee of 20% with respect to the ECB central rate (hurdle rate 1%). Since its start the gross return rate was 14,1 % (i.e. 3,29% p.a.). Its net return rate in the last year has been 5,6%.
  • The second one is ISIN/WKN LU0136412771/764930. This fund is even more expensive and might have a too risky orientation for me.

For the real estate part they proposed a real estate fund ISIN/WKN DE0009809566/980956. It has a issue surcharge of 5,26% and a yearly fee of 0,77%. It may issue more fees for building outlays of 2%. In the last year it had a net return rate of 2% in the last year. I know that real estate is a long term investment for at least 5+ years, but I am not so convinced of this one because of its low performance and high cost.

Now to my question. Is the proposed partition of my money my bank advised me to suitable for me in my current situation? I am especially skeptical about the real estate part. Is 6k really enough to invest in real estate? Or would I need more to be able to do it properly what does not fit me? Are the proposed funds suitable for me? I fear a bit that the only one really benefiting from them is the investment company and not me. On the other hand I don't have the time (and knowledge) to manage everything on my own and know that there is nothing I get for free. Are there any investment possibilities with lower costs that would suit me?

  • 1
    Fund fees can be a major drag on your investment returns, so you're right to be concerned about costs. Commented May 3, 2015 at 15:13
  • over 5% initial charge run away high street banks never have very good value for funds/investments
    – Pepone
    Commented Sep 6, 2015 at 12:38

2 Answers 2


They made an analysis of my readiness to assume a risk and found out that I am willing to take only small risks. I would agree with this analysis.

You really should rethink this part. At your age, you have no rational reason whatsoever to be risk-averse! Especially since any reasonably diversified fund already eliminates actual risk (of complete loss) almost completely. Going into bonds and real estate does not reduce risk at all; it reduces volatility - and you're giving up a lot of money merely to avoid seeing your investments go down temporarily(!)

  • and you first investment should not be into niece areas like real estate
    – Pepone
    Commented Sep 6, 2015 at 12:40

The partition is more or less ok, the specific products are questionable.

Partition. It's usually advised to keep 2-3 monthly income liquid. In your case, 40-45 kEUR is ca. 24-27 kEUR netto, i.e. 2000-2250 a month, thus, the range is 4-7 kEUR, as you are strongly risk-averse then 7k is still ok. Then they propose you to invest 60% in low-risk, but illiquid and 15% in middle or high risk which is also ok. However, it doesn't have to be real estate, but could be.

Specifics. Be aware that a lot (most?) of the banks (including local banks, they are, however, less aggressive) often sell the products that promise high commissions to them (often with a part flowing directly to your client advisor). Especially now, when the interest rates are low, they stand under extra pressure.

You should rather switch to passively managed funds with low fees. If you stick up to the actively managed funds with their fees, you should choose them yourself.

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