An Update on the ETF Situation

This Blog Post was originally published on adagia.org.

Last week I finally pulled the trigger on my building savings account at my house bank.

First, let me explain what a building savings account is here in Austria: basically, it is a simple savings account that gets a benefit from the state, as it is meant to be a base for a mortgage later on. They run for fixed lengths (six years) and have a fixed amount of interest.
You can pay the "full amount" beforehand or save up over the years (at least 1200€ per year).

Since my old one was running out before I've got the Apartment, I created a new one with the 100€ per Month option.
Well, a few years (two) did pass and I got more interested in money things and did research. In the two years of "lock" time on the savings account, I got a whopping 0,2% interest rate per year. Yes, you're reading right. The inflation this year is expected to exceed 3% in Austria, so my money lost 2,8% in value this year alone.

After a few nights of thinking about it, I contacted my bank about if it would be possible to cancel the monthly payment and get the capital out of those 2,8 % losses (per year!). Since it is a locked contract I wasn't sure if it would be possible, but it was with a downside: I would lose some money.

A phone call later I knew I would lose 170€ of interest if I would cash out, but my adviser said it would be possible to only cancel the monthly payments and let the money sit. As I hate talking on the phone because it forces you to make decisions I was weak enough to be talked into that option.

With 2400€ (well, a little bit more in it as it started mid-year but the exact sum isn't necessary) I would lose 67,20€ this year because of the inflation. I didn't look up the inflation of last year, but if it was around that percentage rate I would have already lost around 60€ last year. 
Summing that loss up is already 127,20€. Which is only 50€ short of the 170€ I would lose if I cancel the account.
So if I would only cancel the monthly payment and we assume the inflation would stay the same for the next few years I would lose 60€ per year or a total of 360€ over the total locking period.

The day after the call I contacted my advisor again and told him I slept over the decision and I would like to cancel the account anyways. I got the cancel form the same day and cancelled the account. The money was in my normal bank account the next day.

So what I'm going to do with the money? 1000€ already jumped over to my Broker and I bought 20 pieces of the 21Shares Crypto Basket Index ETP. It is basically a bet on the top 5 cryptocurrencies by their market capitalization by 2050. That took about 500€ of the 1000€. The remaining 500€ were dived to the three other ETFs I mentioned before.

That leaves me with another 1700€ on my main bank account which will be transferred over to my broker as soon as we get our Christmas bonus (enforced by law here in Austria) at the end of November.

The main thing to take away from this post: If you only have a small amount of money (I would count everything below 100k, but your sum might differ), don't let banks rob you. If I only learned one thing this year, it is that you should never ever trust banks on money, they are only good at preventing you from making a fortune and getting richer themselves.