What is freely investable capital?
Free investable capital is all the money that you own and that you won’t need for the next three to five years, minus your debts. The result of this calculation is your freely investable capital. You can read how to calculate this yourself here.
Freely investable assets: fixing money
If you’re going to commit money to build up capital, for example in a savings deposit or with an investment through crowdfunding, you usually can’t access your money for an agreed period of time. This means that you can’t use this money either, if you do need it. That’s why it’s important that you always read the terms and conditions of the products in which you put your money.
Securing money: 1 year, 5 years or 10 years?
One of the things you should take into account is that you should only use money that is your property and that you are sure you can temporarily miss out on. This is your freely investable capital, calculated according to the calculations:
Free investable wealth and investment via crowdfunding
If you invest in risky products, which for example includes investments in business loans via crowdfunding, you should do so with a maximum of 10% of your freely investable capital.
We would like to explain it with two examples. Cindy and Bas both have € 28,000 in their savings accounts. Yet their freely investable assets are very different.
Situation 1: Cindy
Cindy has € 28,000 in a separate account. She does not have to use this money for the next three to five years to earn a living. She has a permanent job. If she loses her job, she can fall back on an unemployment benefit and the money she still has in another savings account. Cindy has no debts. Her freely investable assets in this case are € 28,000.
How much could Cindy invest through crowdfunding?
Cindy could choose to make risky investments with up to 10% of her freely investable assets, such as investing or investing in business loans via crowdfunding. In her situation, the maximum amount that she could invest in such business loans would be 10% of € 28,000. This amounts to a maximum investment amount of € 2,800. She would have to divide this amount over as many business loans as possible in order to spread her risk.
Situation 2: Bas
Bas also has € 28,000 in a separate savings account. He plans to use part of this amount (€ 5,000) for a study in the coming year. Bas is a freelancer. If he temporarily has no assignments, this means that he will also temporarily have no income. He will then have to use his savings.
He has calculated that he will need € 20.000 a year to be able to support himself. He also has a credit card on installment. The outstanding amount to the credit card company is € 3,000. In this case Bas’ freely investable assets are € 0, because he can’t miss the money for the next three to five years.
How much could Bas invest through crowdfunding?
Bas should not invest his money in risky products. He would be better off putting his capital into paying off his credit card and leaving the rest of the money in a savings account in case he is temporarily out of work.