Spaargids.beLet’s say you want to invest and your bank suggests an investment fund. Or: You want to invest and your insurance broker suggests you a Section 23 investment insurance policy. What’s the difference? And when is the best option? Spaargids.be sorts it out for you.
By Johan Van Geyte, in association with Spaargids.be
What is an investment fund?
Such a fund collects money from many savers and uses it to buy stocks, bonds, real estate, gold… or a combination thereof. Because different savers unite, the amounts are larger. As a result, the fund can immediately purchase an entire portfolio of stocks, bonds or real estate. So it does not depend on the performance of a single stock, bond or real estate, but immediately provides the possibility to spread risk over a whole group of stocks, bonds or real estate.
How the value of a mutual fund develops depends on the investments it makes. If you invest in stocks, you depend on the development of the stock market. If you are investing in bonds, the evolution of the interest rate also plays a major role. The value of your investment can go up or down.
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What is TAK23 Investment Insurance?
The same thing happens with an insurance policy. Here you enter into an agreement with an insurance company that it will return an amount to you on a certain day. How much depends on the investments he makes with your money. After all, he also invests it in an investment fund. Hence, insurance policies associated with Section 23 can also generate a positive and negative return. There is a branch 23 investment insurance policy with fixed term and indefinite term insurance policies.
An investment insurance policy is actually an investment fund in a life insurance package. It also gives you the option to select the beneficiary who may receive the investment value. So the formula is regularly used to settle inheritance issues.
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What guarantee do you have for your money?
Neither investment funds nor the investment insurance policy of section 23 with a guarantee of 100,000 euros per person are covered with the protection fund. However, this is not a disaster …
After all, the assets of the investment fund are completely separate from the assets of the bank. It is determined by the investments he has made. Those are jointly owned by the investors.
With unit linked insurance you have a claim against your insurance company, but here too the investments are put into a separate structure. In the event of an insurer’s bankruptcy, you, as the policyholder or beneficiary, have a preferential right to the separate capital and thus have priority over other creditors.
It is not necessary to have a huge capital: MeDirect Asset Management starts from €5,000.
What are the costs?
With an investment bank fund, you usually pay one-time entry costs.
With a Section 23 investment insurance, you also pay a 2.00 percent insurance tax plus one-time entry costs — which are usually much higher than bank money.
Mutual funds also have annual management costs. Exactly how much depends from fund to fund.
With Section 23 investment insurance, you pay management costs to the insurance company in addition to annual management costs for the underlying funds in which you invest your money.
Comparison advice: View here a selection of investment insurance policies for Branch 23, including a selection with reduced entry costs.
What about withholding taxes?
Section 23 investment insurance return is generally exempt from withholding tax. You will only have to pay if you invest in a fund with a guaranteed return.
Investment insurance has an advantage here over a traditional mutual fund. After all, you have to pay a stock exchange tax of 1.32 percent if you invest in a fund that doesn’t pay dividends in the meantime. If you choose a fund that pays dividends, you will have to pay withholding tax on the coupon. You will also be exempt from the so-called Reynders tax. This is the 30 percent tax you have to pay on the fund’s capital gains when you sell it if your fund is at least 10 percent invested in bonds.
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What investment plan should you rely on?
Most mutual funds and a Section 23 investment insurance policy offer you the choice between a one-time investment, an investment in several steps (for example a certain monthly amount) or a combination. This also makes it suitable as a savings plan.
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This article was brought to you by our partner Spaargids.be.
Spaargids.be is an independent comparator of bank products and looks for competitive pricing and better interest rates.
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