The interest rates are zilch (in fact the bank fees just about cancel them out). I may need some of the money in the coming year, but definitely not in the short-term. Is there's something smart a novice like myself can do to make that money work for me?
As always with investments, it depends on your risk adversity. I don't want to repeat the content of hundreds of recommendations here, so just the nutshell:
(For qualified investments,) the more risk you are willing to take, the more returns you'll get.
The upper end is the mutual funds and share market, where you have long-term expectations of 8 - 10 % (and corresponding risks of maybe +/- 50% per year), the lower end is a CD, where you can expect little to no interest, corresponding to little to no risk.
Investing in shares/funds is not 'better' than investing in CDs, it is different. Not everybody likes financial roller-coasters, and some people mainly consider the high risk, which gives them sleepless nights; while others just consider the expected high long-term gains as all that counts.
Find out what your personal risk adversity is, and then pick accordingly.
Unfortunately I do not have much experience with European banks. However, I do know of ways to earn interest on bank accounts. CDs (Certificates of Deposit) are a good way to earn interest. Its basically a savings account that you cannot touch for a fixed rate of time. You can set it from an average of 6 months to 12 months. You can pull the money out early if there is an emergency as well. I would also look into different types of bank accounts. If you go with an account other than a free one, the interest rate will be higher and as long as you have the minimum amount required you should not be charged. Hope I was able to help!
You can do many things:
- Move your money to a high yield savings accounts, you can get up to 0.65% (http://netherlands.deposits.org/savings-accounts/)
- Buy a CD for 12 months, you can get up to 0.1% (http://netherlands.deposits.org/deposits/)
Risk of losing:
- Buy individual stocks (you'll need to open an account at a stock broker)
- Buy index funds (which is basically a basket of individual stocks)
- Buy mutual funds (more expensive than index funds)
- Borrow money to private lenders, for Netherlands, check out https://www.bondora.com and https://www.bitbond.com
You might want to just keep it in cash.
For one step further you could do an even split of USD, EUR and silver. USD hedges against loss of value in the euro, precious metal hedges against a global financial problem. Silver over gold because of high gold:silver ratio is high. You could lose money this way. There are some bad things that can happen that will make your portfolio fall, but there are also many bad things that can happen that would result in no change or gain.
With careful trades in stocks and even more aggressive assets, you could conceivably see large returns. But since you're novice, you won't be able to make these trades, and you'll just lose your investment. Ordinarily, novices can buy an S&P ETF and enjoy decent return (7-8% annual on average) at reasonable risk, but that only works if you stay invested for many years. In the short term, S&P can crash pretty badly, and stay low for a year or more. If you can just wait it out, great (it has always recovered eventually), but if some emergency forces you to take the money out you'd have to do so at a big loss.
Lately, the index has shown signs of being overvalued. If you buy it now, you could luck out and be 10-15% up in a year, but you could also end up 30% down - not a very favorable risk/reward rate. Which is why I would hold on to my cash until it does crash (or failing that, starts looking more robust again) and then think about investing.