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High net profit, low cost and no tax burden: Saving in Collectibles

In the quest for long-term wealth growth through straightforward and low-maintenance investment strategies, investors typically find themselves choosing between ETF savings plans and actively managed funds. However, a new savings strategy is emerging as a cost-effective alternative (or complement) to traditional options: the savings plan for collectibles.

High Fees or High Returns: Which Investment Path to Take?

Savings plans, particularly those focused on ETFs, represent a passive investment strategy designed for wealth accumulation over time. These plans operate by channelling funds into a diversified portfolio that mirrors a market index or specific sector, making them attractive for their simplicity and lower costs. ETFs generally charge low expense ratios, ensuring that investors retain more of their returns.

In contrast, actively managed funds offer a dynamic approach with professional portfolio managers aiming to outperform the market through strategic decisions. This active management can potentially yield higher returns but comes with higher fees. Annual management fees for these funds can range significantly, reflecting the expertise and resources invested in managing them.

A Cost-Effective Alternative: Saving in Collectibles

Tokenized collectibles provide an additional layer of diversification to any traditional investment portfolio, as they often have a low correlation with the stock market, bonds and other financial instruments, potentially reducing overall portfolio risk. High-quality collectibles such as watches, art, cars and whisky can appreciate significantly over time due to their rarity, historical significance and demand among collectors. Additionally, collectibles can serve as a hedge against inflation, as their value tends to retain or even increase during times of economic uncertainty.

The Timeless Savings Plan, launched in May 2024, allows users to invest regularly in tokenized collectibles through the Timeless app in an even more accessible way. Investors can automate and personalise their investments, starting with as little as €50 per month, guided by an algorithm that selects investments based on user preferences. As the first collectible savings plan worldwide, the Timeless Savings Plan stands out with three distinct advantages over traditional options such as ETF savings plans and actively managed funds:

How Investors Benefit: High net profit, low cost and no tax burden

Tax Efficiency: Unlike many investment vehicles, a collectible savings plan incurs no tax burdens after the speculation period ends, ensuring investors retain more of their returns and potentially boost their net profits significantly.

Lower Costs: While traditional funds often charge hefty annual management fees, the Timeless Savings Plan features a one-time management fee for its fractions, resulting in higher net profits over time.

Competitive Returns: Despite its higher cost relative to ETF savings plans, the Timeless Savings Plan projects higher net profits than both actively managed funds and ETFs.*

Incorporating collectibles into your savings strategy can provide a balanced approach to wealth accumulation. With the potential for high net profit, low costs and tax efficiency, allocating part of your investment budget towards collectibles is a prudent choice. This strategy not only diversifies your portfolio automatically but also leverages the unique benefits of collectible assets.

Author: Malte Häusler, Co-Founder und CEO Timeless Investments

Website: Timeless Investments

*Comparative profit and cost development forecast of monthly investments of €250 in the Timeless Savings Plan, the iShares Core MSCI World UCITS ETF, and the actively managed Quantex Global Value Fund. The future performance is based on the simplified assumption that the performance of the last 10 years (8.5 years for the Quantex Global Value Fund) will continue over the next 10 years. The performance of the Timeless Savings Plan is based on the performance of currently available categories over the last 10 years from the Knight Frank Wealth Report 2024. For tax calculation purposes, it is assumed to be a single person without religious affiliation who has not yet used their tax-free allowances, and all assets are sold simultaneously after the forecast period.

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