Green investment: lucrative or only good for society? | NOW

In addition to the popular cryptocurrencies, ETFs and other investments, you can also put your money in so-called green investments. It gives you a tax advantage. But is green investment or green savings really attractive? And what are the catches?

Green savings or investments exist to encourage people to contribute to society, says financial planner Nihal Vogels from TAART By Nihal. “But it is often not purely technical. Such social projects cost a lot of money, and then an interest payment or return is left behind.”

Nevertheless, the government considers it important to stimulate investment in society. That is why there are special green funds or green banks. “These are appointed by the government and the return on them is less high, but in return you get a tax advantage. If you have many assets in box 3 for income tax, green investment or savings can be interesting.”

“Your deposited money is generally not easy to withdraw.”

Guido Rodenburg, Independent

There are two ways to invest money in a green fund: You can save money in a green savings account, and you can invest in green with the green funds specified by the government (pdf). The banks that manage these funds must invest at least 70 percent of the ‘green’ savings that private individuals deposit in, for example, sustainable energy projects or organic farming.

“The green fund accounts were not always open to new savers and investors,” says Guido Rodenburg, Independer’s domain manager, income and wealth. “They were popular because of the tax advantage, but there weren’t enough projects to lend the money to. Most funds are now open again to deposit (savings) money.”

Pay attention to the conditions

For example, banks such as ABN AMRO, ASN and Rabobank run such green projects. “It’s relatively easy to open such an account,” says Rodenburg. “But it’s very important to look at the terms. Your deposit generally can’t be withdrawn just like that, so it can’t be compared to the normal savings account that we all have.”

For example, Rabobank’s starting point is that your investment is fixed for one year at a fixed interest rate. After this, the amount can be freely withdrawn again and the interest rate becomes variable. Vogels adds: “These terms are different from financial institution. It’s because they want continuity in sustainable projects.”

What is your advantage?

People with a lot of money pay tax on their wealth in box 3. Everyone has an exemption of 50,650 euros (for tax partners 101,300 euros). It is called a tax-free allowance and you do not pay tax on that part.

An additional exemption of EUR 61,215 will apply in 2022 for green investments (for tax partners EUR 122,430). This means that you have a total tax-free allowance of EUR 111,865 per person if the value of your investments in green funds was EUR 61,215 on 1 January.

“You do it to contribute to society.”

Nihal Vogels, financial planner

In addition, an additional tax credit of 0.7 percent on your exemption will be added to your tax return. “Whether it’s ultimately worth it depends on your own situation, with yield, total assets and income being determining factors,” says Rodenburg.

Green investment is therefore not attractive if you want a pure return on your investments. “You do it to contribute to society, and you also have extra returns because you save on capital gains tax,” says Vogels.

Don’t wait too long

“A golden tip: Usually people don’t start thinking about net worth until the end of the year,” says Vogels. “But then funds or savings accounts are sometimes already full. Then you can no longer deposit and you have to wait until new funds are opened. You call that a problem. So look at it early.”

“And when you open an account, you must also pay attention to the deposit guarantee system. It says how much and whether your savings will be refunded if the bank goes bankrupt.”

There are always risks associated with investing and investing. You have no guarantee that your money is well spent. Your investment may increase in value or stay the same, but you may also lose money or lose your invested amount entirelytouch. Always be aware of that when investing your money.

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