1Yr·

Moin Moin,

I'm thinking about saving up some money to buy a garage in 2-3 years in order to gain some initial experience with real estate with a manageable capital investment and to further diversify my asset class.

But I don't want to just leave the money lying around.

My idea was to put 25% of my savings rate into each of the following:

1. transfer to an overnight deposit account (as a security amount) possibly later to a fixed-term deposit

2. into an ETF (MSCI World or FTSE All-World) as a (hopefully) small booster

3. a money market ETF LU0321465469 $XFFE (-0.11%)

4. a bond ETF

As I have no experience with bonds so far, I would be happy to receive suggestions for an ETF. Can you make a loss with these? Bonds actually work in such a way that you receive the sum including interest if you wait until the end of the term, right? Please enlighten me here.

I am also wondering whether there is a better ETF for the money market.

Briefly about my previous investment experience:

I have been investing in individual shares and share ETFs, gold, P2P loans and some tangible assets (Timeless) for 2 years, but only as a test for the time being

15 Comments

Justus41@Justus41

1Yr

Hello, first of all I would like to mention that I find it very interesting that you invest in so many different asset classes. I do the exact opposite, which is why I find it all the more interesting and would find it interesting to exchange ideas. But now to the garage: I'd first like to know where the garage is. A garage in the center of Berlin would be completely different from one in a village with 20 inhabitants in Brandenburg. Then there's the fact that the beauty of real estate is the use of borrowed capital, by which I don't mean 110% financing, which in my opinion is unsuitable for beginners in the real estate market, except in exceptional cases. Nevertheless, it usually makes sense to finance at least 70-90% of the purchase price, as this significantly improves the return on equity. But as far as I understand from the post, you want to finance the apartment completely yourself. And I can say quite clearly about the breakdown of the savings installment: it's better not to use money market ETFs or bonds. If you have a call money account with 3% interest or more, save the money in it and perhaps save the ETF as well.

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Tom@Garfield204

1Yr

@Justus41 I myself live in Hamburg and I would also like to buy one in Hamburg or the surrounding area (approx. +50 km). I actually wanted to cover 80-90% with equity, also to minimize any default risks or similar. In that case, I might even go for 100% and put my 13th salary into it rein🤷🏼‍♂️
I also consider overnight money to be relatively ok at the moment, but in the longer term I don't see any significant return, which is likely to be similar for money market funds. I find the bond part quite interesting and relatively low-risk. With the sum of 10K to 20K in total (at the end), I'm not hugely afraid of a bond default. If I do end up giving up, I can invest the money in my own home later, as I'm only 24 years old.

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Justus41@Justus41

1Yr

@Garfield204 Would you also consider buying a condominium as an investment? I recently bought my first apartment and only needed about 10% equity. So about €15,000 of €135,000 + ancillary purchase costs, i.e. a total of about €150,000. With an increase in the value of the property of around 2% per year and an average rent increase of 2% per year, I have a return on equity of around 10.4% per year. Without financing, it would be around 5.72%

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Tom@Garfield204

1Yr

@Justus41 In theory, yes, but not for the time being, I wanted to gain experience with something manageable like the garage first. What's more, I'm still an apprentice after AI made my first plan and my bachelor's degree virtually worthless. After that, I would like to do a technician and possibly a technical business administrator. I don't want to have a financial burden in the form of a loan for the time being, especially as my son is due to be born in September (at a somewhat inopportune time). That's why it would be important for me to have as much equity cover as possible. However, if I were to reject the garage plan, I could definitely imagine putting it into a residential property.
However, I would still be very interested in your calculation and in particular how you went about it😁

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Justus41@Justus41

1Yr

@Garfield204 I can send you the calculation table.

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Tom@Garfield204

1Yr

Comment was deleted

Justus41@Justus41

1Yr

@Garfield204 I copied the e-mail address and will send you the table today or in the next few days

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Tom@Garfield204

1Yr

All right, thank you😊

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Justus41@Justus41

1Yr

@Garfield204 I didn't get around to it before my vacation, but I'll keep it in mind

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Tom@Garfield204

1Yr

@Justus41 All right, it's not so bad, I've been a bit distracted this week too😅
Because my little man was born😊

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Justus41@Justus41

1Yr

@Garfield204 Congratulations, have a good time together!

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View one more answer

Sparfuchs@Reinecke

1Yr

Do you have a business plan for your garage project? How much do garages cost? How high is the expected rent? What are the costs of the garage during the rental period? When will the garage pay for itself? My parents bought garages after reunification - 50 of them for DM 150,000. They currently get 40,- per garage at 96% occupancy. That works quite well. Today you pay almost 15,000 euros for a garage. I would sharpen my pencil again.

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Tom@Garfield204

1Yr

@Reinecke Hi there,
I don't have a building plan yet and am only in the initial phase of finding out about it (which doesn't stop me from saving money🤓)
Garages cost around €10,000 to €20,000 here. The expected rent is around 70-100€ (if I take local rents as a reference) it should then amortize after about 15-18 years I guess (I'm only 24 myself so that's perfectly ok)
What do you think about the idea of splitting the savings rate for this? That only makes up part of my total savings rate😊

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Sparfuchs@Reinecke

1Yr

@Garfield204 you would have to know exactly in the end and determine the return. Sometimes you will get more out of an All World. You really have to do the math. The savings rate ... well, that's more like youth research. In the long run, you'll find out what works best for you and then probably choose the best ones.

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