General Tipps

Again, this article is a work in progress. But it still provides you some useful tools while I work on it to make it better and more comprehensive 😉 Here we go:

Track your investments. When you invest, write it down how much, where and when in an excel file. Imagine a squirrel hiding nuts in dozens of places for winter – but eventually forgetting where some of the delicious winter food is hidden! Diversifying like a pro by investing through a variety of platforms is a great way to spread your risk. But that’s of no use if you forget where you invested – which can easily happen if you’re a very active investor. Plus it allows you to track the performance and find out if you need to change your strategy.

Something to watch out for when investing in different currencies. Say you live in Belgium and your own currency is EUR. Investing in CHF, $ and £ allows you to make use of additional investment opportunities and add to geographic & currency diversification. But you need to consider currency fluctuations and additional fees that you pay when transferring money to an investment in a different currency.

Foreign exchange fees are the fees charged by your bank whenever you make a transaction involving a different currency. This could be through your credit card bill when you buy something online or whenever you buy shares or another investment in a foreign currency. Fees typically range around 1-2%, which doesn’t sound like a lot. But once you have invested a several thousand Euros, this fee can easily be worth a few hundred. If you want to check how much your bank charges you, compare your last transaction statement with the “interbank rate” shown on www.oanda.com (don’t forget to enter the exact date the transaction took place) and compare it
Fortunately, the fee can easily be avoided nowadays by opting for fancy new Fintech start-ups, such as Revolut. Revolut allows its users to exchange currency using the interbank rate, i.e. at a fee of virtually 0% most of the time. Here’s how it works:
1. Open a Revolut account and top it up with the sum you would like to invest in your own currency, either by bank transfer or credit card (but first check if your credit card provider charges fees for transactions in your own currency as well; if yes, go for the bank transfer if you can wait a few days for it to arrive).
2. Transfer the money in the new currency to the recipient by bank transfer or using the virtual credit card Revolut offers. Pay attention to the currency of the target account though and make sure it’s actually in your target currency. Bonus: You can order a physical credit card for your next vacation as well! Check out their website for more information.

Personal Example:
1. Because I don’t pay extra fees in my own currency Swiss Francs (CHF), I top up my Revolut account in CHF with my credit card (I even get loyalty points then, hehehe…).
2. For my impact investments, I can transfer the money directly to the target account, which is usually in EUR or GBP. The money is taken directly from my Revolut CHF account, converted into EUR at the interbank rate and sent to the recipient.
3. When I buy shares, on the other hand, I do so via my normal bank no matter the currency. But to save my bank’s exchange fees, I transfer the money first to Revolut, before transferring it back to the EUR/USD accounts I have with the same bank. It’s a bit complicated, but it allows me to buy shares in other currencies at no extra cost.

Currency fluctuations mean that your investment can gain or lose value through no fault of its own. Say you invest your own Euros in an American solar project. The solar project will need your investment in Dollars to buy equipment and pay salaries in the United States. If the Dollar gains in value relative to the Euro by the time you get your investment back (interest aside), you will get the same amount of Dollars. But once they’re converted back to Euros, you’ll end up with a different amount in Euros. In this case, this means additional return – but the opposite is just as possible. Just consider it something to watch out for and perhaps don’t change your investment back if your own currency is currently very weak.