TRIKRÁT chudobnejší ako ČESI. Ako sa stať bohatším a ako investovať?

0:00 YouTube and LinkedIn are full of gurus who will advise you to buy an apartment right after school and rent it out while living with your parents, or will recommend exceptional events or, even better, crypto currencies. All these lines are hidden behind motivational quotes, wise sayings about entrepreneurship and sacrifice, and the like. And of course they promise you get rich quick. Turning €20,000 into a million is just a matter of consistency and time. But an ordinary person with an ordinary education, who has simply saved up some small income and can use it to start building wealth, can purchase a rental property. You too should have an investment apartment, not just one, but five. And all this without the need for your own money. It sounds like total nonsense. You can buy your first apartment with zero money of your own. If you do it

0:46 right, you can buy another one every two years and in 10 years you have five apartments that pay for themselves. However, few of them will tell you all the possible risks associated with the given investments, fees, and the basic fact that you will not become rich, or rather richer, overnight, but rather it is a long-term process during which you try to achieve your goals and, of course, the most important thing. Everyone starts from a different base. This video will be a long guide and overview of how to manage money in Czech conditions and where you can save it if you have any left over each month. And believe me, it's better if they stay. The video will have chapters that you can skip between. First, we will give a theoretical introduction to budget management and then gradually go deeper into

1:33 investment options, pensions, insurance, and so on. This video was created in collaboration with my long-term partner Port, through whom I also invest. With the Port investment platform, virtually anyone can start investing. Portu will create a tailor-made portfolio for you and you can grow your savings without worry, just like more than 250,000 investors. You will also find preferential retirement and child accounts at the port. If you start investing from the port, you will receive €20 and three months free of charge. I'll put the link down in the description of this video. And by the way, we'll get to the port in the video anyway. Why are you watching this video? Probably because you don't know much about investing, but you would like to. And that's what surveys and data say. According to the alliance, which conducts long-term data collection on the wealth of individual nations in Europe, we are already worse off than Romania. The net financial

2:22 assets of Slovaks are approximately €9,000. That is, it is assets after deducting debts. For example, Poland has this property worth €13,500, Hungary €22,000, and the Czech Republic €31,000. Of course, this is bad news, but financial assets do not take into account real estate, in which we are kings. If you take these into account, the average wealth of Slovaks is around €100,000. On average, real estate makes up about 80% of Slovaks' assets. Of course, we live in most of them, so it can't really be called an investment asset. It's nice to be happy that the price of a property has increased by, say, 50% in 10 years, but we still live in it and it's necessary. In reality, this only has an effect if you move to a poorer region where real estate is significantly

3:07 cheaper or to a smaller property within the same city. But then again, few people do that. Let's be honest about that. But now to the question. Why do we have such low financial assets? In principle, we could argue that the economy is losing steam, we have low salaries and high prices, and so on, but that is a rather complicated debate with uncertain conclusions. An important fact is that on average we don't know how to handle money, despite the fact that we have relatively favorable legislation in this regard . Well, like where, but we'll get to that later. If we look at the distribution of financial assets, in Slovakia we have about 60% in cash accounts or poorly performing savings accounts. We have about 20% of our assets in insurance and pension funds, which will be the second and third pillars. We only have about 10% in investment funds. For comparison, in the Czech Republic it is 40%.

3:55 Why is that? Or education and historical experience. When you talk to our parents' generation, you'll find that people either know nothing about investing and only a little about saving, or they did know something, but the era of non-banknotes in the 1990s shattered it, when they were simply promised returns that not only did not materialize, but they also lost their initial deposits. If you talk to bankers or securities traders, they will also tell you that doing business in the Czech Republic is easier than in Slovakia. But since you opened this video, you probably want to erase this trauma of previous generations and so you are, on average, better off. Let's move on to another more theoretical topic before moving on to the practical. How to set a budget? Of course, having money to pay bills is bad, but not in such an amount, because inflation gradually takes it away from you, so you should

4:44 rather have the funds invested. The theory talks about the 40 30 rule. 40% should be the normal consumption. food, clothes, drugs and things for children and the like. 30% should be loan repayments. Of course, in the Czech reality it will be more and the vast majority will probably be mortgages. 20% should be for various savings, investments for various purchases in the future, retirement, and so on. You should save 10% for iron reserves. It is generally stated that it should be six net monthly salaries or six monthly expenses. It's always stated a little differently. The reason is that it should serve you for various unexpected expenses if something breaks down at home or if you lose your job. Of course, what you mean here is that it depends on what kind of employment you have. With TPP you are safe and basically receive

5:33 support equal to your net income from work for half a year. When you are self-employed, you do not pay unemployment benefits as standard, so you will not receive anything. In that case, you should have this pillow much larger. Of course, before you set out to achieve this goal, you must first audit your family budget. It is ideal to review your consumption on a three-month or six-monthly basis, once you are able to average for one month. Of course, divide the various annual payments by 12. Then you will take stock. Internet banking will also help you with this , although it doesn't always sort payments very well and sometimes I also have to work hard to find out what I actually paid a month ago. Well, in this case, various applications for monitoring consumption, such as the Spendy application, will come in handy. In this case, Revolut also seems good to me from experience. It is

6:22 clearer, more accessible and, for example, also warns about future payments. Otherwise, I only have experience with two banks and it is not entirely positive in this area. If you have any tips, feel free to write them down in the comments. Then categorize your consumption and it will definitely contribute. Be sure to start with the aforementioned reserve of six months' salary. Then, once you have it, you can theoretically use that 10% in other ways. Ideal if you move it to investment, non-ideal if you move it to consumption. When you make such an overview, you should see where you are spending too much unnecessarily. Usually, it 's enough to think about it from the perspective of the butter pyramid. Start by optimizing things that are not essential. Of course, it's a highly individual, subjective thing, and for example, I personally don't like paying a lot for coffees outside and in

7:08 restaurants, but it's also because I was never taught to do so since childhood and I just cooked at home. For example, I spend more on sportswear than on casual clothes. And casual clothes aren't that important to me. It 's a highly subjective thing, but you can still optimize these vices and pleasures to a great extent. And if not, you can still look for cheaper alternatives. Take a very close look at the different subscriptions you pay for. In recent years, the PayPal business has literally exploded, with more and more services switching to this model and, as a rule, the price always increases. The best example is various streaming services, where it is not uncommon for a family to pay for two or three at once. He doesn't use them much though. For example, I'm a pretty Excel-savvy person, so I have an overview of my expenses,

7:56 where I've invested, what the returns are, and so on. When I audited the services I pay for creating on YouTube, I got an extra €1,000 a year. Of course, it's a regular business, so it's an expense item that I ca n't do without. For example, I pay for music, the entire Adobe suite, and three or four extensions for Adobe After Effects, which simplify and shorten my work when editing and creating this video. Then of course newspapers like Jsme or Deník N or the New York Times, because I want to have an overview and so on and so forth. For example, I can optimize these services and ask for a 10 or 20% discount on some of them. Of course, Nko or Smečko won't just give it to you and you'll have to wait for an event. But for example, at the New York Times, I managed to get the first and second year for €2 per month, which is an unbelievable price for the amount of

8:42 information this newspaper has. I was able to optimize the Adobe package in a similar way. When it comes to physical things, you can use vinted quite cleverly. For example, we personally buy about 80% of the things for our little daughter from here. Often new at a fraction of the original price. And we probably don't need to talk about the fact that the child will grow up just as quickly . But for other things, it's better to plan, pack more, for example groceries, and make less impulsive purchases. For example, you can pay in cash. Research shows that this money hurts more than paying with a mobile phone, watch, or card. A special topic of optimization is various financial products, for which optimization also depends on individual conditions. You could also look at them and audit them. You will probably have some

9:28 life insurance, savings, PZP, accident insurance, and property or household insurance in your family. Insurance is a completely complicated topic and is quite individual and subjective, but a few general rules can be applied and you can pay attention to the basic things. By the way, I will be making another special video about insurance, interspersed with an interview. If you have any questions in this area, please write them down in the comments. I'll read it then. Nevertheless, even when saving and investing, as well as when dealing with insurance policies, the basic facts apply. Try to always have multiple offers and don't take the first offer you come across or someone offers it to you. Usually an agent who sells these products. There are a lot of comparison portals on the web, you can start from there. Of course, don't put your number and email there, because they

10:15 will call you right away and, let's be honest, even annoy you. Always read contracts. This applies in every case and even more so to insurance. In the event of an insured event, people are often angry that the insurance company did not pay them anything. Of course, the business of insurance companies is to make a profit, so the premiums received must always be higher than those paid out. However, in the vast majority of cases, the problem lies in the contract and various exclusions that are there and are, of course, written. An example is insurance against theft, which can happen and the bank won't pay you anything. You will then find out that you did not have a locked house, apartment, or otherwise secured property, and this is precisely what is excluded from the insurance. You don't get anything and you're upset, but at the end of the day it's your fault too. There are always enough exclusions, so ask and read. This also leads to

11:03 the last rule. Always ask questions when you don't understand something. The people who sell you the product are there to explain it to you. If you don't get a response, you have even more reason to go away and find someone else, and that person simply won't take out insurance and it's their fault. Let's now move on to the individual types of insurance. At one time, capital and investment life insurance was very popular in Slovakia . Brokers liked them because they sold well and who wouldn't want to be insured and save or invest on the side? Let's first talk about the difference between them. Endowment life insurance is a combined product that provides insurance, most often life, on the one hand, and on the other hand allows you to invest a portion of the premium. The entire premium paid by the client

11:49 will not be used for expenses, but the premium will be divided into two parts. The first part is used to cover insurance company costs, fees, commissions and overhead costs. And from the second part, so-called technical reserves are formed, which the insurance company works with and values . In the case of endowment life insurance, the insurance company guarantees the client a minimum return for a certain number of years. The minimum interest rate guaranteed by the insurance company is also called the technical interest rate. In addition to the technical interest rate, the insurance company also pays a share of the income it receives by investing capital in some of the assets, for example, if the funds appreciate more than agreed. However, there are several problems with this product . Since interest rates are still relatively low at the moment, insurance companies are now appealing to clients in droves to change their old policies and possibly increase the contracts or cancel them outright and change their insurance to a different

12:38 type of policy. This is also the first reason for the withdrawal of this product from the market. The second disadvantage of capital life insurance is the low return. Although in the past, endowment life insurance policies could have a certain level of guaranteed return, in most cases the insured will only receive about as much as they invest in the policy. Others will eat up the fees and the client will be in almost the same situation as if he had been saving money every month. As many people realize the inappropriateness of such insurance, they are gradually moving away from them. Even though financial literacy is still relatively low in Slovakia , people are gradually distrusting this product more and more. An example of another, in my opinion, unfortunate type of insurance is unit-linked life insurance. In unit-linked life insurance, the insurance company, very similarly to the case of

13:24 capital insurance, divides the premium into two parts, one of which is invested. Unlike capital insurance, the client has the opportunity to determine where to invest the funds. In most cases, funds are invested in mutual funds. Unlike endowment insurance, the insurance company is not bound to pay out a certain amount of funds, but the funds are paid out in the amount that the investment performs. At the same time, the client can choose a product that either already has a calculated risk of death, meaning the insurance company will pay a fixed amount in the event of death, or without an insurance premium. In such a case, the insurance company will pay out the value of the investment account or the premium paid. The reason why unit-linked life insurance in particular was a big hit with all intermediaries is mainly due to the fees. This product is in most cases disproportionately expensive and if the client

14:10 invested more wisely instead of paying for the investment part, he would probably not only achieve a higher return, but would certainly pay fewer fees. However, the product itself sounded very tempting at the beginning: "Come get insured and earn something by investing." But the reality was that the client rarely made a profit at the end of the day. The common standard is also fees of 9% per year, with the majority of the fees paid by the client in the first few years. Since several clients eventually discovered the disadvantages of this product, the insurance company thus secured high income right at the beginning of the contract. Contracts are often very disadvantageous and the solution for the client may be to cancel and move to other more efficient products. It was the enormous amount of fees that became the reason for the Ministry of Finance's legislative policy

14:55 . This dictated to insurance companies the size of assets they should regularly invest during individual years. For example, from 2025, the insurance company is required to invest 70% of the premium paid in the first year, 85% in the second, 95% in the third, and 100% at the end. Such introduction of limits led to a reduction in sales commissions, and reduced sales commissions in turn lead to a reduction in agents' motivation to sell the product. By the way, the first changes occurred in 2020, but they have become stricter again. If you want life insurance, it makes sense to deal with it separately. Let's move on to property insurance. When it comes to property insurance , it's important to get multiple quotes and carefully consider which elements affect you. At the same time, it makes sense to update your old insurance policies, as the price of

15:41 real estate has changed significantly over the last five years, so you may only have half of your apartment or house covered. Of course, distinguish between property and home insurance. First, it insures the apartment or house as such in the real estate sense. Home insurance insures equipment and, to put it simply, movable equipment. I'll save the other insurance for another video because it would be for half an hour. Let's get to investing. So, the part about what to do with the money if I have any left over. Investing is a fairly complex topic that can be analyzed from different perspectives, and I will try to explain it to you as simply as possible so that you can invest and understand the entire topic. Investing, like business, has a relatively simple goal: to be profitable at the end of the investment horizon and thus achieve

16:28 a return. Usually stated on an annual basis, i.e. per annum. Yield is simply the relationship between potential profit and risk. The higher the potential profit, the higher the risk you take to achieve it. Each type of asset has a different potential return and risk, and each asset can behave differently in each market and also changes over time. No one has yet discovered an asset that is high-yield but very low-risk. Plus, the rule is that the more volatile the asset, that is, the more its price changes over time, to put it simply, the more it is recommended to hold the investment longer in order to eliminate potential drops. This applies, for example, to events or Bitcoin. For example, government bonds are considered a safe haven. But there is a difference whether you

17:14 buy American government bonds, Greek or Italian bonds, and actually even Slovak bonds, because the risk premium on Slovak government bonds is slowly approaching that of Italian bonds. But back to the assets. They are different. You can buy commodities like gold, silver, platinum or oil and others. Then real estate or securities, which include, for example, various stocks and bonds, but also their various derivatives. You can invest in currencies, both regular ones and cryptocurrencies. In short, there is a shortage of activation and it is not like under socialism, when you could just have a positive deposit in a savings book and a coupon book. Even after the fall of socialism and the beginning of privatization. In addition to the fact that each asset is different in terms of return and risk, it is often subject to different legislation, which makes it more or less attractive in Slovak conditions

18:01 . This makes the whole investing thing even more complicated. In short, you can invest in stocks directly in the form of ETFs or through mutual funds. In each case, it looks different and you will pay different taxes or contributions. Plus it depends on who you invest through. This means that you will still pay the company for management and brokerage. And last but not least, it's very subjective. I know people who have an economics degree. I know they could invest themselves as cheaply as possible, but still, to feel better and sleep better, they invest through a bank, which they consider the safest of financial institutions . Of course, you should invest through regulated entities that are already established on the market, but we will get to that in another section. But let's go step by step. Let's start with the least profitable and

18:47 risky assets. Somewhere at the very bottom we could put various term deposits or savings accounts in banks. These are usually set up alongside current bank accounts. The problem with these deposits is the low appreciation, usually somewhere around 2% inflation. The advantage is that they are short-term investments and quite liquid. You can exit them at any time, even if at a lower valuation. The disadvantage is that you pay 19% income tax, but it is usually already deducted, so you don't have to deal with a tax return. If you want to set aside a short-term reserve, this is the way to go, because in principle it increases in value by at least something, which is more than nothing. The specialty of banks in this sphere is various products that they usually try to cross-sell. So if you have a mortgage, a current account, and a product at the bank, you can have the

19:34 account maintenance fee waived. Well, it's usually a trap, because when you put money into mutual funds through a bank, the fees you pay there are not returned to you in the account maintenance fee. Therefore, you need to calculate it carefully when trying to achieve the highest possible net return. In addition, banks have all sorts of products that they try to package into something more beautiful. For example, Wubčka has a combo product. Not that I have anything against Wubčka, but it just came in handy. It combines 2/3 investment in mutual funds and 1/3 term deposit with interest of 4.8% per annum. That's a decent assessment. However, you need to consider an administration fee for the other 2/3 of approximately 2% and also a 2% entry fee. Additionally, the disadvantage is that you

20:20 have to pay tax on the entire income from both products together. I'm not bashing savings accounts, but it's simply a product for short-term reserves and not long-term savings, even though banks sometimes try to sell it that way. If we forget about various savings accounts and term deposits that you usually find in banks, the most popular form of investment are so-called mutual funds, which are a form of collective investment and are securities, i.e. share certificates. The term mutual funds is also often used in English. The reason they are called that is because you do not invest in the fund yourself, but usually a management company creates a fund where it collects money from investors and then invests it according to a pre-known investment strategy, which you can find in the fund prospectus. To be terminologically correct, you will purchase

21:07 so-called participation certificates. These mutual funds may have different assets in which they invest. for example, stocks, real estate, currencies, precious metals and bonds. That's why I said in the introduction that you can invest in stocks or real estate in various ways. So the form can be different and then taxation or fees, for example, depend on this. When you come to a bank branch, or you don't even have to come, but they definitely call you, 99% of the time they will offer you investing in their mutual funds through their asset management companies. Mutual funds are the most popular, but the truth is that they are not as advantageous in terms of taxes and contributions . The reason is that you pay 19% or 25% income tax on the income you earn when you exit the investment, as mutual funds most often

21:54 return. The advantage is that in the case of a domestic fund, the manager will automatically deduct your tax. In the case of foreign ones, you admit it yourself. Another disadvantage is the fees of management companies, because these funds are actively managed and therefore their operation is more expensive. Let's take the very well-known first real estate fund from IAD as an example. The fund has a performance of around 5-6% per year before fees. If you look at the fund prospectus, you will find that for a cumulative investment of up to €16,000, the fixed entry fee is 3% of this amount. You then pay 1.8% per year for management and also a 10% performance fee when they exceed their all-time high. Plus, there is a depository fee of approximately 0.2% per year, so on an annual basis you will definitely pay about 2%. From a yield of 5-6%

22:44 per year, you have 3-4%. Which is slowly at the level of inflation, although it must be acknowledged that investing in real estate funds is more or less stable, because their value depends on the occupancy of office space, shops or other types of real estate. But be careful, Slovak real estate funds cannot purchase residential properties, i.e. those in which people live. Virtually all mutual funds, not just real estate funds, have this fee structure. This means an entry and exit fee, which is usually waived based on how long you have been invested or how much you have invested. And then the management and depository fee. This is usually around 2% per year. As another example, let's take the global equity fund in Tatra banka. The bank rates it four out of seven in terms of risk. The fund invests mostly in stocks and

23:33 only about 10% in bonds. The management fee, which is what you pay every year, is more than 1%. However, Tatra Asset Management charges an exit fee. If you withdraw the money within a year, then 3%, if within 2, then 2%. If within three years, then 1%. For another fund, which is riskier and invests in American companies, the management fee is over 2%, including the depositary fee and other administration. In translation, this is not a low-cost investment and the annual fee will take some of your annual income. Here I am, taking a clever detour, getting to real estate. You can invest in these in Slovakia through real estate funds for as little as €20, but at the price I mentioned. And then there is the chronically popular direct

24:19 investment in so-called investment properties, which every serious investment guru on Instagram recommends. Don't get it wrong. I'm not bashing investment property, but it's not a universal risk-free asset and I think it's wrong to recommend that young people live in a Mama Hotel until they're 40 and rent out the property they buy. Without a doubt, the return on this investment can be double-digit and fabulous, but that's only because you invest with leverage, i.e. through a mortgage. But keep in mind that it's not passive income, because you have to deal with remodeling, tenants, taxes, financing, repairs, and so on and so forth. And at the same time, you expect to spend five years until you sell the property, with a monthly income around zero, since most of the costs associated with the property are

25:04 equal to the rent. At the same time, it is important to keep in mind that this is not a liquid investment, which means that you cannot cash it out within a week. Plus there is geographical and political risk. All of this is very difficult to explain in Slovakia. People are obsessed with real estate. Everyone around us has something, and usually due to cognitive distortions, we quickly forget the stories of people who got burned on investment properties and only think of those who made a fortune. By the way, after the 2008 crisis, it took until 2020 for prices to reach the same level. Let's move on. The second option is investing in gold or precious metals, which today are considered a more conservative approach to investing. However, almost every one of us is familiar with this form of investing. Since each of us owns some valuables or jewelry, which is

25:53 also a form of investment in precious metals. Investing in gold is possible in two ways. The first and more popular one in Slovakia is the purchase of physical gold. In such a case, it is of course not wise to buy out the goldsmith, as decorative gold and jewelry contain certain impurities, and jewelry is usually also burdened with a higher margin. Of course, especially for wealthier investors, it may be interesting to buy an extremely expensive piece of jewelry with high artistic value, where the price is expected to increase in the future. But here we can also talk about investing in art. But in the case of an ordinary investor with a few hundred or thousand in his account, we should rather think about another form of purchasing physical gold. Now that we think about it, it is advisable to prioritize purchasing gold bullion or investment gold coins.

26:38 However, when making such a choice, it is necessary to choose a reputable seller and personally I would prefer to buy gold coins, because gold experts agree that they are more difficult to counterfeit. The coins are of different weights, but a simple equation applies. The smaller the coin, the higher the fees you pay on it, i.e. the margin. Therefore, purchasing single-coin gold coins is most recommended. There are also sellers in Slovakia who offer the option of gradually purchasing gold, i.e. gradually settling, for example, €20 per month, and after reaching a certain amount, they will either send the investor a physical gold coin or store it in their own safe. However, such investing is usually associated with higher fees, so an alternative is to gradually save funds in an account and then make a purchase. However, some experts do not rule out

27:27 gradual gold purchases. Since it is possible to average the price in this way, it is worth remembering again that caution is needed in the area of fees. The advantage of saltpeter is the smallest markup, which is why you can buy physical gold in Slovakia at a price very close to that on world markets. Of course, plus a slight seller's commission. Technically, this is also called in advance. This varies, but can range from around 3% of the market price of gold to dizzying heights of around 50%. Therefore, investing in physical gold requires caution. Before buying physical gold, it is a good idea to check the current price on world markets and compare individual sellers. Furthermore, the purchase of investment gold is exempt from VAT. High liquidity is also an advantage. In particular, coins can be sold while waiting at the current price. Another advantage is the greater anonymity of gold

28:14 compared to money in a bank account, which some politicians or officials in Slovakia already know. The disadvantage may be certain storage costs, such as purchasing a safe and the like. Another disadvantage is the lower yield of gold, and some economists also point out the fact that gold does not carry a dividend. However, for someone who wants to tap into wealth in quotes, buying physical gold is an interesting alternative and, in my opinion, a better alternative to keeping cash under the pillow. At the same time, from a tax and levy perspective, the legislation treats physical gold like real estate. The proceeds of sale are exempt only after five years of possession. Not all economists are advocates of buying physical gold. They point to the relatively lower liquidity of gold compared to securities such as stocks or bonds. The

29:00 second alternative to investing in gold is to purchase securities evidencing ownership of gold. In particular, so-called gold-linked ETFs are gaining popularity. The purchase of such securities in Slovakia is possible through some securities dealers or you can use one of the investment platforms that I will mention later. The advantage of such a gold purchase may be lower fees, as well as high liquidity and the ability to benefit from short-term drops or increases in gold. The disadvantage is the loss of anonymity, which some economists argue is the case when purchasing physical gold. At the same time, in uncertain times, some view physical gold as a store of value that you can take with you if, for example, you are forced to leave the country. Of course, you can't do that with an ETF. Let's go to the events. It is, like

29:49 share certificates, a type of filter paper and you are probably most familiar with hearing them . You may not even know it, but you have already purchased shares if you are in the second pillar. DSKY has funds in it that invest in shares of European or American companies. And of course, mutual funds also invest in company shares . You can also invest in securities through specialized companies, which in Slovakia are called securities dealers . For a long time, this form of investing was accessible mainly to wealthier clients, who are also referred to as qualified investors. Well, in recent years the market has changed and today it is possible to invest as little as €20 per month. Mutual funds do not, in principle, create funds, but they allow you to enter financial markets and provide advice. It depends on the specific company, who it

30:34 targets and in what form. On the one hand, you have Partners Investments among OCPs , which has intermediaries, and then you have Porta or Finax, which are robo-advisors. And we'll explain that later. Otherwise, to the intermediaries. I often get questions from them and I admit that I don't know how to answer them very well. Every company using intermediaries has a slightly different approach. Very often, their goal is to make you a detailed financial plan, where you want to invest, but as a bonus they also want you to have some insurance, change your health insurance company, change your second pillar fund, and so on. And of course, you don't need that, and you don't need new insurance policies every year or two if nothing fundamental has changed in your situation. I admit that I can't give you good advice on this because companies and advisors are different.

31:22 But back to the securities traders. The securities market is already quite diversified today. However, several of the companies provide interesting forms of investment. Investing in so-called ETF funds has gained popularity in particular. Let's stop by them. ETFs, or Exchange Traded Funds, are a very suitable tool for small investors. This is a fund that is essentially like a mutual fund, but is directly traded on the stock exchange and is passively managed. And it's a not-so-old innovation in financial markets, brought about by John Bogle, for which he is recognized even by Warren Buffet, who said that no one has done more for the average investor than Bogle. The advantage of ETFK is high liquidity. It usually copies some index. An index represents a certain portfolio. For example, the most famous index, the S&P 500, represents

32:10 the shares of the 500 largest companies in the USA. An ETF that copies such an index could simply be said to be a mutual fund that copies the development of the S&P 500. Therefore, an individual investor from Slovakia does not have to laboriously purchase individual shares of the 500 largest companies. The black market trader will do it for him and simply buy this fund. Another advantage of ETFs is the low fees, which are well below 1% per year, usually around 2%, and this fee is also called the fund's fee, not the broker's fee . The attractiveness of ETFs in Slovakia was further increased by a tax amendment in 2016. It made it possible to exempt the income of individuals from such securities if they are held for at least a year. That's the time test mentioned. This provided a

32:58 huge advantage to ETFK. and stocks compared to classic mutual funds. For the average consumer, ETFKs today represent the simplest form of investing in securities in Slovakia and are most often accessible through the aforementioned securities dealers. Then there is another option for buying stocks, bonds or indices with minimal worries, and that is the increasingly popular Robo advisors, i.e. robo-advisors who invest primarily in ETFs, which are low-cost. These robo-advisors usually charge around 1% per year per report and nothing more. Which makes them very interesting securities traders. In addition, as part of PR, they take advantage of the fact that in Slovakia an annual time test is applied to ETFK shares . This means that after a year of holding, you do not have to pay income tax, i.e.

33:46 de facto on the profit. The most popular ones include Finx in Slovakia or Portu in the Czech Republic. Each platform is a little different from each other. For example, Portu offers a discount on fees for longer investment horizons and also has children's and retirement accounts, where the fee is around 0.5% per year. At the same time, you can build your own portfolio to some extent and invest in growing sectors and regions, such as defense, artificial intelligence, or Indian stocks. As I mentioned in the introduction, if you would like to invest in sports, you can find the link in the description. After investing, you will receive €20 and three months free of charge. In addition to these options, some securities dealers also provide the option of individual investment in securities. For example, you can only buy shares of Tesla or Google, i.e.

34:31 Alphabet. Banks have also started to provide such an option, but it is very limited. For example, the fee for buying and selling securities via a mobile application is set by Největsí Slovenská banka at 1% of the transaction volume, while it also charges account maintenance at 0.2% per year and a holding fee for managing foreign securities at 0.4% per year. The truth is that banks much prefer mutual funds, which simply work for them, and therefore they have little incentive to go into anything else. Individual investors can also use one of the platforms through which they can trade directly on the stock exchange. The advantage of these trading platforms is mainly the lower fee. The most famous include XTB, Itoro, and Interactive Brokers, which is essentially the

35:16 largest in the world. The fees for this type of investment are certainly the lowest and close to zero. However, again, it largely depends on the platform. However, such investing generally requires some knowledge of English, as well as some knowledge of at least the basics of finance. Most amateur investors investing through these platforms, actively selecting individual stocks or bonds, have unrealistic expectations and very often over-perform, especially when comparing it to a larger index. At the same time, these platforms are trying to attract more passive investors, and you can buy fractions of shares there or directly create a portfolio where the money credited to you is automatically distributed. Of course, sometimes these are beginner products, so the selection may not be large enough. For example, at XTB you

36:04 can create such a portfolio, but only from a few ETFs and you can't add stocks to it. There is a constant battle between bankers selling mutual funds and robo advisors selling ETFs, mainly due to the disagreement over whether passive or active management is better. However, it appears that the vast majority of managers are unable to beat the market, and therefore ETFs that track indexes have lower returns in the long term . There is another special type of investment in securities, namely the purchase of corporate bonds. As a rule, you need more cash with them because they have a set minimum purchase price and are often promoted as an alternative to savings accounts in banks. This can confuse people because corporate bonds are not covered by deposit protection or the investment guarantee fund, and therefore your invested money is not protected in any way.

36:53 Whose bonds you buy can also be a problem. In Slovakia, for example, companies established for the purpose of building a development project are financed in this way . They will get money from investors and use it for the project, and in return you will receive interest, i.e. a coupon, which is, I don't know, three or 10% per year on your investment. The payment of interest, i.e. coupon, is usually made annually, semi-annually or quarterly. At the end of the maturity period, which is typically three to 10 years, you will receive the principal you invested. Problems arise when construction becomes more expensive or developers encounter some problems, which is not at all uncommon. Therefore, caution is needed when investing in corporate bonds . There is even an analysis that looked at the financial condition of the companies that issued these bonds, and the result was that most were

37:40 in the non-investment grade range. However, it should be taken into account that these are often so-called special purpose vehicles, or companies established only for that purpose. If the mother does not provide guarantees, this is a very risky investment. The last alternative investment option is cryptocurrencies, especially in recent years when they have become known to the general public. There are several ways to invest in cryptocurrencies. Buying cryptocurrencies through one of the exchanges is very popular. However, it is important to note that while trading on the stock market and, for example, the New York Stock Exchange is subject to certain rules and regulations, cryptocurrency trading mostly takes place on unregulated exchanges. Therefore, various scenarios can occur, the most dramatic of which is the total collapse of such an exchange and the loss of your money. Of

38:28 course, selling cryptocurrency on the exchange via a Slovak debit card is not anonymous either. And of course, some exchanges are already regulated, such as Coinbase or Binance. However, there are still exchanges that avoid this. Even though some are regulated, it is still not comparable to the regulation of traditional exchanges. The second option for investing in cryptocurrencies is to purchase at a cryptocurrency ATM. These are usually located in most major cities and the biggest risk is choosing the right software wallet for storing cryptocurrencies. The advantage of such cryptocurrency trading is mainly the anonymous purchase and sale of cryptocurrency for cash. The disadvantage is that ATMs have a fairly large upfront fee compared to the market price. If you were looking for the easiest way, such as buying Bitcoin, you would probably buy on Binance and then transfer it to a hardware wallet. which

39:17 costs up to €100 to keep your crypto safe. The third option for trading cryptocurrencies is to use one of the interesting startups that have emerged, especially recently. Through such a fintech company, you can buy and sell cryptocurrencies relatively easily, and from a trading perspective, it is a relatively safe method where the purchase and sale is carried out on your behalf by the fintech company. However, this is a poorly regulated sector and legislation is still being created in principle. Therefore, it is necessary to carefully select the company to ensure that it is not some form of pyramid scheme. It is also important to remember that in such a case, the funds are not protected by a deposit or investment protection fund. Therefore, in the event of the collapse of such a company, you lose your funds in full. Another disadvantage is the fees, which may be higher than the commission provided by such a fintech

40:05 company. The last and fundamental disadvantage is the tax burden, and profits from cryptocurrency trading should be included in the tax return. Taxed not only at a tax rate of 19 or 25% depending on the amount of the tax base, but also subject to health contributions of 15%. In general, however, cryptocurrencies are extremely volatile. So their value can grow like a fairy tale, but it can also fall by tens of percent. Sometimes even in a day. And that's why they are one of the riskiest assets to invest in. Every investor should consider purchasing them and invest only a small portion of their funds. Most investment advisors will tell you that it is worth having no more than 10% of your assets in cryptocurrencies. If you have to choose a cryptocurrency, then definitely Bitcoin, possibly Ethereum and a few other large

40:53 traditional cryptocurrencies. I would rather not recommend the remaining thousands. An interesting investment option can also be through the Crowdberry platform, through which you can invest in Slovak and Czech companies. Investments take place in two forms. Either by purchasing a share in the company or in the form of a joint company loan. The advantage of the platform is often an interesting evaluation. The disadvantage is higher risk and at the same time higher initial investment, usually in the order of thousands of €. For loans, the limit is at least €2,000 and for co-ownership, €5,000. I also had an interview with the co-founder himself about how Crowdberry works and what the risks of the platform are, which you can find on my channel. Well, I won't remember other forms of investment. These are basically all the main pillars of investing in Slovakia. Of course, we

41:40 can also talk about some peer to peer loans, investing in art or various crowdfunding and investing in startups and so on. You can invest in some of them directly. For some, you have to be a wealthier client, and some only companies invest in. And now for taxation. This is quite significant in your final yield. I have already indicated some aspects of taxation. In general, this is a relatively complicated topic for individual types of investments . And if you consult tax advisors, they will tell you that it is not exactly the best and most unambiguous setup. But I will mention the most common cases. When buying bonds, it is quite complicated, as it depends on the domicile of the issuer, the type of debt security, and the method of generating the income. With bonds, you can have a capital return and a coupon return.

42:26 Generally, you pay 19% income tax for everyone, and possibly also health contributions of 15%. For classic bonds, it is recommended to prefer bonds admitted to trading on a regulated market and to dispose of them before maturity, if possible. For example, from a purely tax perspective, corporate bonds are recommended over government bonds. Well, the best bonds are traded on the stock exchange with a zero coupon, so-called zero bonds, which pay interest in the form of a higher nominal value compared to the bond's issue price or the price at which it was issued. Of course, this all changes when the bond is packaged in a mutual fund or VTFU. For mutual funds, the rate is 19%, which you pay for the difference between the current and purchase price. What is interesting here is

43:11 that a three-year time test passed by parliament, during which time if you held the shares, you would no longer pay income tax. The next government immediately repealed it before it was supposed to come into effect. Income from shares and ETFs is subject to income tax and health insurance contributions as standard. However, you are exempt from this after the aforementioned one-year time test. The reason is that both instruments are traded on the stock exchange, thus fulfilling the given condition. You also need to be careful with dividends in stocks and shares, because they have been paid since 2017 and their rate is therefore variable. Various approaches are applied in this area and the cost ratio is from seven to 19 to 25% and health contributions are 15%. The best thing you can do is to buy so-called accumulation ETFs, which

43:57 reinvest dividends directly and you don't have to declare them on your tax return. The tax and contribution costs are not negligible at all. Let's just take the aforementioned 19% tax. If you have an annual return of 9% and you invest a lump sum of €50,000 in year zero and after 10 years it will be €118,000, you will have a net profit of €68,000. You will pay 19% tax on this amount, so your annual appreciation will drop to 7.3%. And we're still not talking about fees. For this reason, it is necessary to always look at the fee structure and take taxation into account in every situation. Investing can also be viewed from the perspective of accessibility, simplicity, and of course, you should always consider your personal situation and investment horizon.

44:43 stocks and cryptocurrencies, which are volatile and offer adequate returns for the risk, but it is recommended to invest for a longer period of time to compensate for market declines. It will certainly be cheapest for you to invest on your own. On the other hand, you need to have some knowledge and manage it yourself, which is fundamentally different from, for example, a port. Now how to watch out for scams? During normal operation, you will almost certainly encounter fraud, not only with various phishing emails or SMS messages, which are becoming more and more common, but also with very lucrative investment opportunities. More than one person has written to me on social media asking if such and such a company is trustworthy. It usually turned out that it didn't. Various courses on how to make money trading currencies, such as Forex

45:28 or Commodities, are very popular. Usually they are just expensive courses that will teach you something, but it is usually just a pyramid scheme of training. The reality is that on Forex and other platforms, approximately 80% of traders typically reroll CFD contracts . You also need to be very careful with cryptocurrencies, where various VCKAS Wall Street-style fiduciary projects have appeared in recent years. They will call you directly and get your number from a database somewhere and pester you to buy something through them. Never do this and always verify the project with the company. Many of these companies do not even have their company ID listed on their website and you will not find it in their personal data management statement. This is already a big redflex. Other factors include the clearest investment conditions and the absence of the company in any register, especially in the register of the National Bank of Slovakia. Also, there is

46:15 no about us section where you can find the people behind the company, which you can then find on LinkedIn, for example. These are all just big exclamation points. It is important to remember that investing is one of the most regulated sectors. Well, here you need to realize that Slovakia has some of the best data on companies far and wide, so you can easily find and investigate the company or people behind the projects. Don't forget that. After all, it's your money and savings. You can also look up companies on Finstate, or in official state registers, and of course, always read the terms and conditions. Well, a special category are various MLM projects, which I have a heavy heart about, because they are not exactly the most transparent form of sales. Let's stop at the second pillar and pensions, because in

47:02 principle you are required to be there. Let's not now discuss the calculation of pensions and the first pillar, which we are all in and cannot influence, but let's discuss the second and third pillars. The data and current settings suggest that the second pillar will pay off for most savers who do not have an income of just the minimum wage, because the money appreciates there. Of course, when they are in the right funds. Recently, the second pillar has been fundamentally changing for the better, and old grievances have been corrected. But still. To be sure, check whether you are in index or stock funds. If you are a young person, for example under 40, it is worth it because retirement is still quite a long way away. You don't need to do anything more. It's not worth switching between funds every year, or doing something else. Although you won't be able to come up with much more in the second pillar, as it is quasi-mandatory. And now for the

47:48 third pillar. Since management companies charge approximately a percentage for management annually, it is not very worthwhile compared to robo-advisors or investing in your own home. Unless your employer contributes to you as an extra benefit. In this case, go for it. Otherwise, I would rather go my own way, because the funds in the third pillar are in principle fixed and you cannot withdraw them at any time, which can be an advantage for some. Let's stop at one more thing, and that is mortgages. A common question is whether it is worth paying off your mortgage early. It's a highly subjective thing, but purely numerically and in Excel terms, it's not worth it. Let's consider two scenarios. I have a 120,000 mortgage with an interest rate of 4.5%, which makes a €608 payment. After the first

48:33 year, I will start making early repayments of €2,400 once a year. If I paid the same installments, I would pay off the mortgage in about 18 years and save about €41,000 in interest. If I were to invest €2,400 per year alternatively, for example, in the S&P 500 index, which has an average annual appreciation of 10.5% over the last 30 years, in our example we will take an appreciation of 9%, then after 18 years we will have €108,000, with a net return of almost 65%. This means that from the perspective of 18 years, it is more profitable for me to invest the remaining money than to repay it early. And basically the same applies to inheritance. Let's say you receive an amount of €50,000 after the first year. You would pay off the mortgage after 12 years and

49:18 save €76,000 in interest. If you put that into the S&P 500 index, you would get over €90,000. However, it is important to take into account that this is a relatively short investment horizon and that conditions may change. For example, continue to auction or make mortgages cheaper. But this example is purely for illustration purposes, so that you can think about it well. To sum it up, definitely do a budget audit. Try to cut out payments that are unnecessarily expensive and substitute them. Then start auditing various insurance policies and excesses that are not paying out or are not being used. And then, if you're willing enough and lazy enough, even Buffett theorized that the best thing you can do is put your money in the broadest possible index that tracks hundreds of global stocks, in order to

50:06 diversify as much as possible. and ideally, in Czech conditions, you can move it via Portou or another platform, depending on how you prefer. Because tax and contribution legislation is currently very favorable towards stocks and ETFs, and at the same time, they are low-cost assets. Of course, you always need to take your situation into account. If you want to withdraw money in a year, investing in indices that track purely stocks can be, let's just say, quite risky. Well, this is the end of this endless video, which I hope will help you and feel free to share it further. And don't forget, if you liked the video, give it a like and subscribe to this channel so you don't miss any more videos. And if you want to support me, you can buy me a coffee.