Sat07222017

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The concept of insurance has been around for a long time; insurance is operated as a fund into which many people pay and which pays out in case of loss, meaning that one (the policy-holder) is not faced with a massive bill all at once, and shares the risk.

Insurance policies (in general insurance - we will address life assurance in another blog post soon) cover many different areas and scenarios, from building and contents insurance, to vehicle insurance, pet insurance and travel insurance.

Regarding the latter - travel insurance - this is something to which many people do not pay close enough attention. It can cover situations regarding lost or stolen luggage, illness and change of travel tickets due to a curtailed trip, for example. Some policies are taken out per trip whereas other policies are for 12 months. And, of course, you can have certain travel insurance when you pay by credit card too.

With the summer weather rolling in and schools and universities now finishing their academic year, many of us are thinking of getting away for a holiday and/or to visit relatives and friends back home.

Planning such trips can be stressful, and one's own home can suddenly become more appealing and attractive when contemplating what could go wrong. But the main issue here is addressing those concerns and planning to minimise the risks.

Working out what risks you are willing to take, and identifying which you would like to protect yourself against, can be a complicated and time-consuming exercise.

When travelling with family members, particularly small children, it can be a nightmare in a foreign land without the basic necessities at hand, including nappies and wipes, or being forced to stay at an airport overnight with a small child. Travel insurance can pay for lost and delayed (24+ hours) baggage as well as delayed flights, meaning that you won't be out of pocket after paying for food, accommodation and other bits and pieces that all add up.

Check the policy to see if items are replaced on a new-for-old basis, and if the insurer pays the cost of repairing damaged items or pays to replace them if they are stolen or destroyed. Also check to see if spectacles are covered - some travel insurance policies exclude these. Also check the amount of cash that is covered if you are robbed; some policies vary significantly.

Most travel insurance also covers emergency medical assistance, medical evacuations, hospital stays and surgery; some also cover repatriation to your home country.

When reserving flights, many online booking services ask if you want to include travel insurance; but exactly what does this cover? Do we actually bother to read the small print? Most of the time one is better off looking at other options regarding travel insurance.

Travel insurance can help with both catastrophic problems as well as those that are just inconvenient.

At ING Luxembourg we offer several types of insurance through our range of Visa Cards. Click here to check which card would best suityour travel needs

 

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The terms "solidarity", "corporate social responsibility", "sustainability", "volunteering", "environmental protection", etc., are ones that are spoken about more and more frequently. In today's world, we are often too stressed out and too busy to notice what is going on around us. We need to sit back, take a global view of things and look at issues from a wider perspective.

Many organisations are now doing their share; in fact, many young people nowadays are interested to learn a company's strategy in relation to the above issues, when applying for a position. Many companies are developing such strategies and are appointing people with specific responsibilities in these areas.

In addition, outside of the corporate environment, many people give their time and effort as volunteers, giving back to the community, and not only financially. These actions all make a difference, directly or indirectly, whether it is to the lives of people here or farther afield.

ING Solidarity Awards

ING Luxembourg launched an initiative last year to support and reward local initiatives as part of its overall Corporate Social Responsibility programme. There was a three-month period during which non-profit organisations could be proposed, followed by a one-month voting period and then the awards in front of a 250-strong audience at Geesseknäppchen in Luxembourg-Hollerich.

In total, 210 organisations were proposed and 48,000 votes were cast, resulting into the top 40 organisations being awarded €1,000 by ING Luxembourg. In addition, 8 projects out of a total of 116 entries were also awarded prizes, ranging from €2,000 to €8,000. These winners included projects in Luxembourg and abroad (supported by Luxembourg-based charities), with the judging panel comprising ING as well as non-ING representatives.

The winning projects were from the following eight organisations across four categories: (A) Humanitarian Aid: Pour un sourire d'enfant Luxembourg (training young Cambodians in maternity); Ennerdaach asbl (building removation project in Differdange); Fondation Luxembourg - El Salvador (building of a community centre in El Salvador); (B) Handicap, Youth & Social Integration: Autisme Luxembourg (retraining of handicapped workers in technology); Schrett fir Schrett (supporting handicapped children to better communicate); (C) Health, Sport & Other: ALPAPS - Special Olympics Luxembourg (offering children with intellectual disabilities to participate in physical and sport activities); ALAN - Association Luxembourgeoise d'aide aux personnes Atteintes de maladies Neuromusculaires et de maladies rares (linking children suffering from rare diseases with renowned Luxembourg artists); (D) - Coup de Coeur: Amicale vun der Schoul fir Assistenzhonn (to train a dog for a handicapped boy, to provide him with a companion and to motivate him).

This initiative was not only a corporate social responsibility action by ING Luxembourg towards the local community, but it also raised significant awareness across the Grand Duchy of charities and voluntary organisations, with many actively encouraging their members and supporters to vote for them. Voting was feverish at times, particularly nearing the end of the voting period where nominated organisations were close to the magic cut-off line of 40!

The initiative was fun too for those at ING Luxembourg directly involved in it; with such a positive response last year, ING Luxembourg is gearing up to repeat the exercise this year, with the opening of the application period today. Get ready to vote!

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With Saturday’s ING night marathon coming up, I had not much time to write this week’s article. Luckily, we have many specialists within ING Group who regularly write very informative stuff - like this article that appeared last year on the site www.ezonomics.com on compound interest.

According to urban legend, Albert Einstein referred to compound interest as the most powerful force in the universe. Whether he truly said that or not, savers and borrowers should be aware of the tricks, traps and behavioural challenges associated with compound interest.

Compound interest is a key way to grow savings and investments. It works when interest is paid on interest. This leads to exponential growth over time. In more detail, interest compounds when money invested earns interest and then – when the original sum and the original interest are unspent – interest in the next period is paid on both. Over many years, the pattern is repeated, growing the original investment at an increasingly rapid rate.

But beware, compound interest on debt works in a similar way, growing the debt if interest is left to compound.

The immediate lesson for savers is the sooner you start, the more you will accumulate. For borrowers, the sooner and more quickly you start to pay off debt, the less will be paid in total. However, these immediate lessons hide four important issues – the interest rate earned (or charged), the frequency at which interest is paid (or charged), the need to re-invest and the perils of procrastination.

Interest pays

Higher interest rates mean money saved (or owed) grows more quickly. For example, over five years, €1,000 reinvested at 3% each year will grow to €1,159. At 5%, this increases to €1,276 and at 10% to €1,610. the Website Maths is Fun lists the formula behind the calculations.

Small changes in the interest earned (or charged) can add up to large differences over time. But be careful to scrutinise figures to avoid falling for thinking traps – such as the left hand digit bias – and remember that contract terms (such as penalties for withdrawing early) and service level can also be important.

Frequency pays

It can pay off financially for savers to get interest paid daily or monthly rather than annually as compounding starts earlier.

Agreements may offer lower interest rates for monthly rather than annual interest payouts – so do the maths. Still, a lower interest rate paid more frequently may pay more than a higher interest rate paid less often. Earning 1% a month compounding is a better deal than 12% a year.

Watch out for this if buying goods on payment plans, as advertised small monthly charges can add up over time. Economist Tim Harford highlights research showing 93% of people in a United States study chose a more expensive repayment plan partly because they misunderstood the implications of compound interest rates on loans.

Reinvestment pays

Savers must not take interest earned away from their original investment if they want interest to compound. Earning interest on past interest is essential. Keeping interest earned with the original investment is known as reinvestment.

In the eZonomics video I can’t possibly save that much, ING senior economist Ian Bright tells how reinvestment is important for reaching long term saving goals. For similar reasons, it is important for borrowers to keep up with agreed paymentschedules (and to pay more than the minimum amount on credit cards) to prevent outstanding loans from rapidly rising.

Procrastination doesn’t pay

Although the benefits of starting to save or pay off debt sooner rather than later are well known and publicised, people often put it off. In fact, as the Cost of procrastination video says, a UK Financial Services Authority study identified procrastination as one of the main factors affecting the amount people saved. eZonomics offers tips to cut procrastination. There are informal approaches (such as using reminders and making deals with friends) and more formal approaches (such as companies asking workers to commit in advance to saving for pensions).

With compound interest, cutting procrastination now could really pay off in the future.

By eZonomics team

And there you have it, a pretty clear article on how the interest on your savings account can grow over time. By the way, did you know that in My ING our clients get on their homepage a clear visualisation of the interests they have received? Check it out for yourself.

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It's springtime and some of us are already thinking of the summer and what we will be doing. While many will be planning holidays, either to the beach or for an activity holiday, or to visit relatives and friends back home. Some of us with youngsters are also thinking about what are they going to be doing all summer long during the school holidays.

By the time the summer is upon us, our darlings will have been working hard (for most of the time, we hope) and they will have sat exams (and hopefully passed), and will deserve a break.

A break can be a rest, including relaxation, but it can also involve a change. Have your youngsters/teenagers thought about a summer job at all? These can be a great way to occupy them during the summer holidays, gain some independence - both emotionally and financially - as well as providing them with a first opportunity at work experience and a certain amount of responsibility and maturity.

Certainly regarding the latter, summer jobs may enlighten them in such a way as they then discover what they would like to study at university and/or to work at when older, while some may have the opposite effect and provide them with an insight into a job or an industry sector in which they definitely don't want to work. Or maybe it opens their eyes and they realise that if they want to achieve a certain career or university course, then they will need to focus their academic studies more in a specific subject(s). One thing all jobs will do is contribute to the financial education of your teenagers.

On the financial side of things, having a bit of extra cash in their pocket will teach them more about their own finance and that money doesn’t grow on trees! Summer jobs provide youngsters with a dose of reality. Some may already be counting the number of weeks or days to a summer music festival or rock concert, or a trip away with friends. While they may end up doing some or all of these, who is going to pay for these? In their adult life, if they want to buy something, they need to work for it. They should learn an introduction to budgeting and saving, with the joy of being able to purchase something at the end of it, without relying on pocket money or hand-outs.

Some youngsters may wish to offer their services to friends and neighbours, by babysitting, gardening or painting. Others may find something more structured and work in an office with a team where, amongst other things, they learn about teamwork and getting along with others in a team environment. And a summer job will keep them out of trouble. Nobody enjoys a bored teenager; they certainly don't and parents don't either.

In Luxembourg, youngsters from 15 years old can take on summer employment. Some may be part-time, others full-time. Some may be for a week or two, others may be for up to two months (the maximum allowed for students, according to Cedies who manage university loans and grants for Luxembourg-resident students).

You may also like to suggest a couple of websites to your teenagers. http://www.cij.lu (Centre Information Jeunes), although it is just in French, offers information on what is happening around the Grand Duchy, including activities in which your teen may wish to participate. For example, some posts address the 2013 JobDay and Young Driver's Day, a casting opportunity for film extras, an art workshop and grants to study in Japan.

There's also the Youth Jobs Page at http://Jobs.youth.lu which lists positions from internships/stagiaires to assistants across a range of business sectors. Real jobs resulting in experience in the real world.

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Do you remember using a Piggy Bank as a child? The story behind why they are so named is an interesting one.

Piggy Banks are used in many countries worldwide for children to save money, with banks and other organisations using them in promotions. While some traditional Piggy Banks are made of porcelain, some of plastic and various other materials, many require to be broken or damaged in order to access the coins inside. This irreparable damage can be a fairly swift deterrent for a young mind should they be tempted to access their savings.

But why pigs? Historically, farmers used real pigs to save. Pigs are animals that thrive on being fed scraps, bit by bit. Despite being small when born, a pig can grow very large indeed and only when it is “full” can it then be slaughtered. So, when the Piggy Bank is full, it can then be opened and the rewards of the regular savings be realised.

In teaching children to save, a Piggy Bank is a wonderful place to start. The sooner they start, the sooner they will have something to show from regular savings. By regularly emptying the piggy bank at the bank children are also introduced to the concept of deposit interest. When they are older you can explain how to save with a specific goal in mind, be it a consumer item, a holiday or even a deposit for a mortgage.

Why not open a Savings Account at ING Luxembourg now for your child? Give them a Piggy Bank (or other form of money box) and teach them to feed it regularly and then bring it down to one of our branches, open it and deposit the accumulated proceeds into your child's account.  

Of course saving is also for adults! To help along the way, regular savings can be realised with an automated savings plan. Don't use the savings account as an emergency fund (set up a separate account for that), stay strong! In addition, if you get an unexpected windfall, don't spend it all and put some away in your savings account.

ING have published six simple tips on how to boost your savings - click here for details.

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Are your children starting to ask about money? Are you considering giving them pocket money for the first time?

There are many issues surrounding this exciting time in your child's life and in your life as a parent, often yielding more questions than answers. Hopefully this article will provide some guidance and will help you in your decision-making.

There are four main steps to teach your child about money:

1. Discuss money together. “Money does not grow on trees”. Explain earning and spending money, Explain saving, paying and receiving interest, borrowing money. Discuss advertising and the goals of it. Do this at home, while shopping, etc., but not too much information at once. A little information and often is usually the best way.

2. The road to independence

a. First contact: giving your children pocket money allows them to familiarise themselves with mony. At this age children prefer cash. Discuss together what they will use the money for and adapt the amount accordingly.

b. Rules of pocket money: set a fixed amount, given on a fixed day; when it is gone it is gone! Set rules together on what it can be spent; pocket money should not be used as a punishment or reward

c. Earn extras doing chores, either around the house or in the garden, when they can see that this is helping someone else, e.g. you or your spouse, a neighbour, …

d. Save: children like saving. Give them a piggy bank they can open to count their money. Create a savings goal together, e.g. a picture on a paper with a “thermometer” next to it. Open a bank account together and empty the piggy bank at the bank, then “watch” it generate interest.

3. Control the risks

a. Arm your child against advertising: teach them the tricks used, watch advertising together, discuss advantages of promotional offers, discuss pros and cons of brands, importance of quality and guarantee, compare prices, etc.

b. “Confront” your child over the last expenditures: does (s)he use what (s)he bought? Why did (s)he buy it (publicity, peer pressure,..)? Would (s)he buy it again?

c. Internet use: teach your child about the virtual world, understand what your child does, explain the catch (it is all about making money), teach them not to leave their name or email on the Internet.

4. Let your child go: let them make (controlled) mistakes, do not over-protect, let them learn from their experience.

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Today I would like to share with you an article written by one of our portfolio managers, Richard Edwards:

“There are several thousand investment funds available to a potential investor, and the universe just keeps expanding. Trying to select the one that is most appropriate to your investment needs can feel like being a child in a sweet shop. Surrounded by a myriad of products which use slick marketing, it’s easy to be persuaded by what’s on the wrapper. However, what looks tasty on the shelf can end up being a bitter pill to swallow!

Investment magazines and investor websites produce lists of the “Top 10 Best Performing Funds”, but does that mean they are still the best ones to buy now? A strategy of “buying the winners” is not always the wisest approach.

When attempting to navigate in this vast universe, there are 5 areas that you should investigate in order to ascertain whether a particular fund suits your investment needs and your risk profile.

1. Performance. Absolute performance numbers can be deceiving. It is best to put this data into context by comparing with an appropriate market benchmark and/or similar funds from the same category.

2. Risk. Attractive high levels of return can often mean a greater level of risk and therefore the potential for greater losses. As an investor, just how much risk on your capital are you prepared to take?

3. Underlying investments. What exactly is the fund manager investing in? Different asset classes have their own characteristics and these can influence performance and risk. Sometimes the name of a fund does not give a clear indication of what is contained in the portfolio.

4. The fund manager. As an investor you are entrusting your savings to a third party. They will be making investment decisions on your behalf so it is therefore wise to seek some background information on the manager. Is the current manager the one responsible for the fund’s track record or has there been a recent change?

5. Costs. “There’s no such thing as a free lunch”! The fund manager will be charging a fee in return for his/her investment expertise. The investor needs to know whether the fee level for a chosen fund is in line with market norms, and whether there are there any hidden “extras”.

Researching, and then analyzing, the above information is no easy task. Fund managers publish regular “factsheets” but these can still be fairly technical and not always very transparent.

In order to facilitate these investment decisions, at ING Luxembourg there is a team that is dedicated to the analysis and selection of third party funds for use in our Private Banking network. By applying strict criteria to a vast universe, we are able to filter out any inappropriate investments and create a list of what we consider to be “best in class” funds. ING Luxembourg clients can benefit from this in-house expertise and so navigate in smoother waters.”

Thank you Richard for this clear explanation.

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The exhibition The Colours of Night is at the Villa Vauban in Luxembourg city from 9 March to 16 June 2013. ING Luxembourg has sponsored this cultural delight, encouraging the public to see and appreciate this creative excellence.

The exhibition of works by Petrus van Schendel (1806-1870), which is organised in collaboration with Breda's Museum, is the first retrospective of the painter, one of the most important artists of the Dutch Romantic School. It comprises more than 60 paintings, drawings, sketches and silhouettes as well as historic objects from public and private collections.

Van Schendel was born into a family of merchant farmers in the village of Terheyden, near Breda. His drawing skills became apparent when he was still a child. In 1822 he left for Antwerp, where he studied at the Academy of Fine Arts. In 1828, having completed his studies, he exhibited a self-portrait inspired by the chiaroscuro of the Old Masters, in which his exceptional talent for nocturnal scenes lit by lamps or candles was first revealed.

Later he enhanced his repertoire with other sources of artificial and natural light such as oil lamps, open fires, gas burners, fireworks, electricity and moonlight. In the course of his career he specialised in compositions with varying light effects. Around 1830, van Schendel, who was by then living in Amsterdam, produced his first painting of a market scene bathed in candlelight - a romanticised image which had no equivalent in reality, but earned the artist a tremendous reputation in The Netherlands and abroad. Struggling to earn a living, however, he left Amsterdam with his wife in 1832 and settled in Rotterdam where he was offered a position as a drawing teacher. There he produced mainly commissioned works, but also a wide array of paintings demonstrating his mastery in recreating the effects of artificial light. In 1838, after his first exhibitions abroad, he settled in The Hague, where he hoped to attract a new clientele.

This exhibition also explores another aspect of the artist's personality: his talent as an inventor. Van Schendel was indeed awarded several patents for innovations in maritime navigation, railway technology, agriculture, drawing and even aviation, which were presented at several world fairs from 1851 onwards, but failed to be implemented.

During his years in The Hague, van Schendel successfully established himself on foreign art markets and sold several paintings to various European royal collections. In the 1840s he was awarded several medals in exhibitions and salons abroad, including Paris, Brussels and Manchester. In 1845 he left The Hague and settled in Brussels. His studio in Schaerbeek received many visitors, among which collectors, members of the royal family and important art dealers. His large-scale masterpiece, The Birth of Christ from 1858, attracted countless enthusiasts to his studio and was later successfully exhibited in England.

After van Schendel's death in 1870, his works fell into oblivion as new artistic tendencies emerged. Today, however, they are highly valued, as Romantic art is attracting growing interest by experts and the wider public alike.

This exhibition falls under ING Luxembourg's strategy regarding sponsorship which focuses on Sport and Music as well as on Art & Culture.

The ING own Art Collection was founded in 1974 and comprises 15,000 works of art - contemporary art by professional artists - that are on display at 900 ING office locations worldwide. The works include painting, sculpture, drawing, photography, glass, video and graphic art. The ING Collection is highly international and always in motion thanks to the history, traditions and growth of ING throughout the world. All countries where ING is active are supplied with art from headquarters in The Netherlands.

Supporting cultural institutions is an integral part of ING Group's sponsorship policy. Conscious of the fact that both our customers and staff are aware of culture and art, our sponsorship undertakings aim to establish deeply-held, long-lasting contacts with the citizens in the many countries where our Group is active. As such, ING wants to make art and culture accessible to as broad an audience as possible.

ING Luxembourg is proud to regularly support exhibitions at the Villa Vauban – Musée d’Art de la Ville de Luxembourg.

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The answer to the question “Will we ever be able to retire?” seems to be “yes” for many people – but later than before.

Have you considered your retirement? I'm sure you have, thinking about relaxing on a beach or by a pool, with a drink in one hand and a book in the other, or maybe playing golf and exploring far-off destinations. We can all dream, but preparing for retirement is something that not everyone has prioritised. It's easy to put off such decisions, yet the benefits at retirement can be significant if you start planning early.

The ING International Survey on Pensions and Long Term Savings polled 12,073 people in 12 countries across Europe to find out more on attitudes towards retirement, savings, the future and more. Some of the highlights might take you by surprise.

People in different countries plan and fare differently concerning retirement. In Spain, for example, the majority of retirees earn at least 60% of their last salary; yet Spaniards are the most anxious about having enough money to retire - Austrians, Dutch and Turks are the least anxious. The British are the most likely in Europe to consider that their house is an asset than can help fund their retirement, with many selling their home to part fund their retirement

In Luxembourg, the current average retirement age is 57, but respondents expect to retire themselves at 62 years, both figures being 5 years less than the EU average. In the survey, Luxembourg residents were the 3rd most concerned at not having enough money upon which to retire but felt neutral when asked if they expected the same standard of living once they retire.

Concerning retirement income as a percentage of last salary, Luxembourg ranked second highest. Luxembourg residents were the second most satisfied regarding financial comfort for those who have already retired, behind The Netherlands.

Although information is key at pension fund pre and post sales, customers can be confused when it comes to pension plans. Luxembourg is top of the 12 countries concerning long-term savings; Luxembourg residents mainly invest in savings accounts (82%). 55% of respondents here do not have private pension plans, yet the majority have health, property and life insurances, however they are unprotected from risky life events such as sudden loss of income or long-term care.

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The issue of education in developing countries is a challenge that continues to face many societies. In particular, the education of girls is an issue that is receiving more attention.

93 million children worldwide do not have access to primary education. The direct link between access to education and access to the labour market and quality healthcare makes this high figure all the more surprising and shocking.

Spurred on by this, the ING Group decided to help to improve access to primary education in less developed countries. In a world-wide partnership with UNICEF, ING put an international development programme in place in 2005 to enable deprived children in India, Zambia, Brazil and Ethiopia to attend school; this is the ING Chances for Children programme. ING’s aim is for its global charitable programme to contribute to the physical and moral welfare of deprived children by giving them the chance to blossom.

Since the launch of the partnership with UNICEF, ING employees have been the cornerstone of the continued success of the programme, enthusiastically giving their valuable time and money. All financial contributions from ING's employees are doubled through the ING matching scheme. The Group’s staff around the world rallied round as soon as ING Chances for Children was launched. Thanks to their support, over 690,000 children have been able to attend a primary school since 2005.

Your donation could shape the future of deprived children. For example, a donation of €30 sends a child in a developing country to a primary school for an entire year - in India, Zambia, Brazil and Ethiopia. By giving them the chance to learn to read, write and count, you are giving them access to a job, a proper salary and good health. You can increase your contribution by multiples of this sum, depending on the number of children you want to support.

Donations can be made to account IBAN LU33 0141 5251 1420 0000 (account holder: Unicef Luxembourg). All donations to Unicef amounting to €120 or more can be deducted from your total annual income tax. In addition, ING Luxembourg Clients can support Unicef by using their Visa card. For each transaction in 2013 with an ING Luxembourg Visa card, ING Luxembourg will donate 1 cent to UNICEF (in 2011 and 2012 another organisation received a total of circa €56,000 from ING Luxembourg on behalf of its clients).

For further information, click here.

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