Not investing
When it comes to building long-term wealth through investing, we see most people fall into one of two traps:
1. Staying in the dark regarding your employer pension money (which is invested money).
2. Skipping investing privately altogether (and, therefore, letting inflation eat up your cash savings).
Let’s look closer at each.
Your employer pension is invested by default settings
Pretty much any pension system (the Dutch one included) follows a 3-Pillar structure:
Pillar 1: State pension
Pillar 2: Employer workplace pension
Pillar 3: Private savings and investments you set up on your own
State pensions in Pillar 1 are not invested money. They are funded on a pay-as-you-go basis through current taxes, meaning there is no individual investment pot being managed for you.
Employer pensions in Pillar 2, on the other hand, are invested money. And if you work for an employer, you likely have a workplace pension accumulating in the background.
But when we ask our coaching clients about their preparedness for retirement, we usually get blank stares and the same universal conclusion: “I have no idea what’s happening with my pension.”
Which usually means:
I don’t know how many pension providers I have given my work history.
I don’t know how much I’ve accumulated so far
I don’t know if that’s going to be enough at retirement.
I don’t know what they’re investing my money in.
I don’t know if I can do something about it, or what that would even be.
Lots of unknowns, so we start at the beginning: putting the pension puzzle pieces together, tackling one question at a time.
Until we get to the crux of it all: you often have far more control over your workplace pension than you think.
Many Dutch pension portals allow you to adjust your investment risk profile, select index-based options, or consolidate old pensions from previous employers.
Leaving your pension on "default" settings for decades can mean leaving a massive portion of your potential returns to chance.
Investing privately is a must-do, not a nice-to-do
Even if you have a solid workplace pension, relying on it alone is a risky strategy for two big reasons:
The retirement gap: Pensions rarely cover 100% of the lifestyle you need and want at retirement.
Inevitable inflation: Keeping your cash in savings accounts guarantees that inflation will erode your purchasing power year after year.
Investing has become a necessary tool to use by anyone who wants to secure their lifestyle and financial independence.
Unfortunately, the investing world is also filled with complex financial jargon, expensive and needless financial products sold by institutions who exist because they took a cut of your wealth.
It makes it a very intimidating place for anyone, let alone expats who are already juggling so many life-changing events at once.
Take control of your financial independence
If you're ready to stop procrastinating, organize your pensions, and build a simple, cost-effective investment strategy that runs in the background of your life:
As financial coaches, Carlos and I take clients through a 3-part Investing Module, designed to give you just enough knowledge and competence so you can invest confidently on your own, without relying on overpriced financial intermediaries.
We are not financial advisors or wealth managers. Meaning, we don't manage your investments, we don't take commissions, and we never tell you what to invest in or how.
We’d rather empower you to become your own investment manager, keeping things simple and saving you thousands of euros in fees over decades of compounding.
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