Showing posts with label savings. Show all posts
Showing posts with label savings. Show all posts

Monday, November 12, 2018

Comparison between a fund policy and a fund savings plan

A fund savings plan has no sales charge. So there are no closing costs. In addition, there is no annual management fee and therefore more flexibility. The withholding tax essentially influences the decision whether to resort to a fund savings plan or the fund policy in the old-age provision. The so-called final withholding tax applies from the year 2009. Thus, profits on church tax and solidarity surcharge are taxed at 25% per fiscal year.

When does a unit-linked pension plan pay off?

On the other hand, unit-linked pension insurance is more favorable if no payment is made before the age of 60 or the term is at least twelve years. With a personal tax rate, only half of the investor's income will be taxed.

Check the policies

Before concluding the contract, investors should scrutinize it because there can be huge differences in ancillary fund policies that, at first sight, are not immediately apparent due to lack of transparency. In the first few years, investors must pay some of the high administration and termination fees that are often included in many insurance policies. Even though they generally offer better after-tax returns, the investor escapes high interest rates in this insurance variant.

If you invest in so-called fund of funds you will often pay three times the fees, especially for fund policies. These include the administration and distribution fees, as well as the management fee of individual target funds.

It should not only be considered in the decision on the pure cost. Also, the selection of offers, on which he can fall back with his insurance, is an important criterion. The more funds available to the interested party, the better he can put together a coordinated portfolio tailored to his personal needs.

Unit-linked insurances are interesting if a longevity risk is to be covered by the saver. With a fund savings plan you can often fall back on a large range of funds, which shines through their variability. As deposits vary from year to year, a fund plan is more appropriate because in the meantime the savings plan can be suspended without incurring drawbacks because the expense ratio for this insurance model rises, while the initial charge on fund savings is only the attributed to each paid installment. The depot thus grows faster at the beginning, because there are no existing closing fees.

An example

If a stock fund pays $ 100 per month for 20 years and thus earns a return of eight percent per year, assets of $ 47,920 will be earned after deducting withholding tax under existing tax law. If the 100 EURO are instead paid into a unit-linked insurance, the saver receives, after deducting taxes, 51,130 Euro in the same investment period and with the same return.

What's the best option?

The decision for or against a product depends on running costs and the calculated return after deduction of the tax. Due to tax treatment, the fund policy is slightly ahead of the pack, while generally higher return opportunities are achieved by a fund savings plan.

Sunday, March 11, 2018

The usefulness of Daylight Savings

The usefulness of Daylight Savings

Twice a year it's Daylight Savings time. Well once you advanced the clocks by one hour, months later clocks are set back. Luckily in our automated world there are rarely any clocks left you have to set. NTP (network time protocol) or radio signals do this for us. But do we need Daylight Savings?

Different countries have adopted Daylight Savings in different years, handle them differently, some countries ignore them completely. The USA used Daylight Savings inconsistent between 1916 and 1966. But only in 1966 a federal law was established to regulate the proper use. During the oil crisis 1973 a year-round experiment was conducted to extend DST. 1976 the National Bureau of Standards found no significant energy savings or differences in traffic fatalities. Still DST was observed until today.

Benefits and drawbacks

Longer summer evenings

The daylight phase is at a later time. This is perceived by many people as an extension of the daylight time. Let's assume the time of sunrise at the beginning of summer is 4:30 am summer time instead of 3:30 pm standard time. Accordingly, the time of the sunset moves from about 9:00 pm normal time to 10:00 pm summer time. As the majority of people sleep at 3 and 4 o'clock in the morning, but not at 10 o'clock in the evening, and since today's society is based more on the time of day than the actual time of day, the wake-up phase of most people shifts more in the bright phase of the day. Thus, the leisure activities in the afternoon and evening are longer in daylight and pleasant outside temperatures possible; In contrast, daylight and temperature can be felt as disturbing at night.

Energy consumption

One of the official reasons for the introduction of summer time was already at the beginning of the 20th century the saving of energy. This argument has been controversial for most of the time. Because compared to other influences, the effect of the time shift on the energy consumption is negligible.

Although it was clear very early on that summer time could not have a decisive influence on energy consumption, this argument persisted in public awareness. However, in particular with the reintroduction of summer time in the Central European countries between 1976 and 1981, a possible energy saving - if at all - played only a minor role compared to the argument of a world wide standardization of times.

Summer time can have regionally adverse effects on energy consumption. In parts of Indiana, for example, it increased by about one percent after the 2006 summer season, which compares the electricity consumption of nearly 224,000 households. The originally pursued goal of energy saving could not be achieved. Rather, the energy balance was unfavorable, as "slight savings in the spring opposed an even greater power consumption in late summer and autumn". In particular, an increased need for heating in the early morning hours and a greater use of air conditioning in the longer afternoons and warm summer evenings increased overall energy consumption, for which the inhabitants of the examined parts of Indiana paid about 8.6 million US dollars per year more. The authors also calculated the cost of more pollution for society at $ 1.6 million to $ 5.3 million annually.

The data of this study, however, referred only to private households. Industrial plants and other economic sectors were not included. However, the authors suspect that most companies stick to normal working hours in daylight and are therefore less affected by the summer time change than private households.

The Federal Environmental Agency also found no positive energy-saving effects, since the saving in electricity for lighting is "overcompensated" by the additional consumption of heating energy due to the advance of the main heating time. The increasing use of energy-saving lamps would further increase this effect in the future.

Human nature

Advocates of summer time argue that it is beneficial for people to be able to spend more time in the evening in daylight hours, which increases their productivity. Opponents argue that adapting to the new daily rhythm takes at least several days, is harmful to health and reduces productivity during the changeover phase. Physiological studies suggest that some circadian fluctuating hormone levels, similar to those of stress hormones, may take up to four and a half months to fully adapt to new circumstances. Otherwise, "natural" direction when deferred to normal time, this adjustment would take only about two weeks. Whether these hormone level fluctuations already promote disease, but is not proven.

Technical effort

All watches have to be changed twice a year. More and more clocks are automatically set today via a radio signal, only few have to be changed manually, especially in private households. Computer clocks can also be set automatically via a function of the operating system. However, there are computer programs with real-time function, which do not use the operating system function for daylight saving time conversion and must be manually reconfigured. The same problem also exists with leap seconds.

Why we don't abandon Daylight Savings?

Suppose because in our interconnected world one country cannot just get rid of DST. Might cause too many problems negotiating around these obstacles. The United Kingdom BREXIT is not much of a help since countries from continental Europe are still her biggest trade partner. On the other hand if we tried hard enough to get rid of it everybody should benefit from it in the long term.

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