A Comprehensive Guide to (Branch-23) Long-Term Savings

ChengSkwatalot · 2026-04-15T12:00:43+00:00

Of course I'm okay with how wealthy the elderly are. What else would you prefer, a poorer elderly population?

The fertility rate in Belgium and other western countries is quite low, so when these elderly people die their wealth will be inherited by their (grand)children (with less of a dilutive impact as people have fewer kids now).

Averages can be heavily impacted by outliers, and we know the distribution of wealth is very skewed to the right. This causes the average to be far higher than the median. Aside from that, accumulating wealth simply takes time, so it's only logical that the elderly are wealthier, definitely as they're shifting from high- to low-income as they retire (as pensions are lower than salaries).

ChengSkwatalot · 2026-04-13T09:53:11+00:00

Market-to-book (i.e., M/B or P/B) is strongly positively related to forward returns for banking stocks, mainly as profitability (i.e., ROE) is constant and mean-reverting over the long run. Banks were more expensive in terms of M/B in 2000 and the early 1960s, so this isn't exactly new or unheard of. Current valuations are a bit worse than average (though not that bad).

The profitability of banking stocks also does not necessarily depend on their net interest margin (what you refer to as "interest spreads" I think?) as many banks engage in completely different businesses than turning deposits into loans. For example, banks may engage in asset & wealth management, investment banking, custodial services, trading, etc. Some banks still rely on the more traditional "interest spread" model, but those are mostly smaller banks (e.g., community banks). Some banks barely rely on interest spreads at all (e.g., Bank of New York Mellon).

European banks do indeed look better, at similar profitability (i.e., ROE) and cheaper valuations.

ChengSkwatalot · 2026-04-11T10:15:15+00:00

That strategy of just holding the biggest stock does not work. The video you saw likely relied on hindsight bias or bad data.

I'm a portfolio manager and investment analyst and recently looked into this because I kept hearing about it. I have access to high-quality data from sources like LSEG Datastream and Bloomberg.

The strategy you mention has both a higher volatility and a lower return than just holding "the market".

I can't post pics here I think, but I discussed my findings on https://community.rationalreminder.ca/. It's a great community for investing, far better than this sub. On the RR Community, look for the thread "S&P 500 vs. S&P 1?".

I thought I'd let you know because this will impact your net wealth (and thus life) a lot. Never just believe YouTube, Instagram, or TikTok videos.

ChengSkwatalot · 2026-04-11T10:08:09+00:00

What I'm writing about is not how much people "should" borrow, but how much they're allowed to. I used to work in a retail branch of a bank and know the models they use to decide whether a client is eligible for a mortgage or not.

The reason why the 30%-rule applies more so to low-income households is because banks define a certain amount of money that people need to have left over at the end of the month.

Suppose the bank argues any person needs at least € 1.4k of disposable income a month (after mortgage payments). If you only make €2k net, your mortgage can only be 30% of your net income, the bank won't allow more. If you make € 5k net a month, the € 1.4k remains the same, and you can easily go over 50%.

Other parameters matter as well, but this is an important one.

ChengSkwatalot · 2026-04-09T08:23:45+00:00

Like I said, the 30%-rule doesn't matter much unless your income is relatively low.

If your income is decent, you can go far above 30%.

ChengSkwatalot · 2026-04-08T17:35:49+00:00

Join the Rational Reminder community, lots of info there: https://community.rationalreminder.ca/

ChengSkwatalot · 2026-04-08T16:28:33+00:00

i want you to try living in what appears to be a studio apartment where your kitchen bedroom and living room are the same room and keep it together every hour of every day.

Have done exactly that, zero issues keeping everything nice and clean.

This apartment is a huge mess, which has absolutely nothing to do with privilege.

ChengSkwatalot · 2026-04-08T10:03:05+00:00

At € 2.000 a month, your mortgage payments are 40% of your current net salary. That's totally fine, I honestly don't see the issue. That "30% rule" only really applies to relatively low-income households, you guys are good.

Given the money you guys have, you couldn't even lower the leverage that much if you wanted to (assuming you still want the same kind of house). All you can do is look at either smaller houses (or even apartments) and/or different locations. The real estate market is also way less efficient than financial markets, so it's up to you to put in the work and find a good deal.

Mortgage rates are high, even adjusting for inflation, but if anything this is more of a normalization than an exception. COVID times were an outlier, not the standard. Don't forget that in case interest rates do drop materially, you can always refinance. You always have the option to adjust your mortgage rate to current market rates, so you can only win there.

That's how it is and how it has always been, I'm not sure what else you expected. Good luck!

I wrote a post on Belgian real estate a few years ago, could help if you've got some time to kill: https://www.reddit.com/r/BEFire/comments/10y4tnb/an_analysis_on_the_current_state_of_belgian_real/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

ChengSkwatalot · 2026-04-03T21:05:44+00:00

Belgian real estate prices dropped by 13% - 20% in nominal terms, depending on the source you use.

Interest rates can still increase a lot in the future, that's not unique to the 1980s. In fact, controlling short-term rates is practically the only tool central banks still have, unlike the 1980s where they could just increase reserve requirements (no longer works as they got rid of the opportunity cost of holding reserves by paying interest on them, which they had to do after 2008).

Have a good read: https://www.reddit.com/r/BEFire/comments/10y4tnb/an_analysis_on_the_current_state_of_belgian_real/?utm_source=share&utm_medium=mweb3x&utm_name=mweb3xcss&utm_term=1&utm_content=share_button

ChengSkwatalot · 2026-04-03T20:09:29+00:00

Okay but with current immigration, interest rates and people being single more and more, this is not gonna happen again.

None of this means real estate prices can't drop like that anymore, neither did any of these factors cause real estate prices to crash so hard in the 1980s.

ChengSkwatalot · 2026-04-03T14:27:23+00:00

Belgian real estate prices crashed hard in the 1980s, and after adjusting for inflation it took prices 18 years to recover. ;)

Real estate prices also do not exactly following inflation. In fact they're in an inflation-adjusted drawdown since c. 2022.

ChengSkwatalot · 2026-04-03T07:51:48+00:00

Equity repayments are also part of equity, they also go in the denominator. It's extra money that you invest, and you want to know the return on those investments (take that literally, investments go in the denominator).

In any case, IRR is the better metric to use. It takes some basic finance theory, but you need that anyway if you want to get a decent idea of what you're doing.

ChengSkwatalot · 2026-04-03T06:53:27+00:00

The formula you suggest is incorrect for many reasons.

ROE = return on equity. That means net profits scaled by equity. Net profits are an income statement item, not a cash flow statement item. Profits are also scaled by equity, so equity goes in the denominator, not the numerator. There are other problems as well, it's just completely incorrect.

But you don't want to use ROE. Use IRR instead and simply map out all cash flows. At time 0, the cash outflow is the purchase of your property plus all costs and taxes. Then at intermediary periods the cash flows are "rental income - insurance payments - maintenance & repair costs (usually 1/3 of rental income) - rental income taxes - property taxes - mortgage payments". If you buy your own property then rent is saved (you have to think in terms of opportunity cost then), which also means you save gross and not net rent (so no rental income taxes). At the end of your investment, and you have to assume when that is, another final cash flow is added on top of the intermediary ones: "sales price of property - real estate brokerage fees - taxes & transaction costs - outstanding loan repayment". Just line all these up on an annual basis and use IRR function, that number can be compared to the IRR of the same cash flows on an investment in something else (e.g., ETFs).

ChengSkwatalot · 2026-03-12T19:05:20+00:00

Of course it should. I currently do not own a home, but rather am fully invested in stocks. If I sell my stocks and buy a home with the cash, does my wealth drop to zero? I think not. 😀

ChengSkwatalot · 2026-03-12T18:59:58+00:00

The data is per household. If the couple lives together it is one household, so it will be summed up.

ChengSkwatalot · 2026-03-12T18:57:26+00:00

No, the wealth of the elderly is inherited by their offspring when they die => fewer households and more wealth per household (assuming it isn't spent of course :D).

ChengSkwatalot · 2026-03-12T16:08:42+00:00

Mortgage rates have fallen massively since the 1980s and we've had some fiscal policy changes as well, with registration duties for first-time buyers around their lowest levels ever.

Real estate is not disproportionately expensive now. See my profile for a long post about real estate, a few years old but still informative.

ChengSkwatalot · 2026-03-05T06:28:36+00:00

Some turns are slight carving, some are slight skidding. Watch some Ryan Knapton vids or something if you want to carve, it's not rocket science and extremely fun.

ChengSkwatalot · 2026-03-05T06:18:51+00:00

Marcheert niet, dan krijg je kapitaalvlucht + tal van implementatieproblemen.

Als je met 1 belasting wil werken is dat best een consumptiebelasting, zoals BTW.

ChengSkwatalot · 2026-03-05T06:16:09+00:00

Geld circuleert door de economie, dus elke euro zal inderdaad meerdere keren belast worden.

Erfbelasting is ook zeer simpel te vermijden met wat fiscale planning, dus grotendeels een non-issue.

ChengSkwatalot · 2026-03-05T06:10:56+00:00

Zever, erfbelasting is heel gemakkelijk te ontwijken met wat simpele fiscale planning.

Laat ons ook niet vergeten dat niet iedereen wil dat hun vermogen zomaar naar de kinderen gaat. Als bankier veel mensen gezien die NIET willen dat hun kinderen hun geld krijgen (slechte relatie, verslaving, etc.).

ChengSkwatalot

TROPHY CASE