What Your Bank Will Try to Sell You (and 5 Questions to Ask First)

You walk into your bank with €10,000, and one question: where should I invest this? There's a good chance you'll be offered the bank's own fund, with yearly costs of around 2%. Over 20 years, that can mean more than €10,000 less than a simple, cheap ETF. Same money, same market. In this video: what banks typically offer, why, what it really costs, and five questions that protect you.

So what do banks typically offer? Usually one of three things. One: the bank's own actively managed fund. A manager picks investments, and you pay for that every year. Two: a managed portfolio, where the bank invests for you, with a management fee on top of the fund costs.

Three: an investment plan wrapped in an insurance product. These can come with entry costs and penalties if you stop early. None of these is a scam. But they're often much more expensive than doing the simple version yourself. Why do they offer these?

Because the bank earns from them, through yearly fees, entry costs, and sometimes commissions. The person across the table may be friendly and well meaning. But they work for the bank, and they usually can't recommend a cheap index fund from a competitor. Now the math. €10,000, twenty years, and let's assume the market returns 7% a year before costs.

With 2% in costs, you end up with around €26,500. With a cheap ETF at 0.2%, around €37,300. A difference of almost 2% a year doesn't sound like much. Over twenty years, it adds up to more than your entire original investment. So if you do talk to your bank, ask these five questions.

One: what are the total yearly costs, everything included, in euros, not just percentages? In the EU, they have to show you this. Two: do you, or the bank, earn a commission on this product? Three: is this an actively managed fund, or an index fund? And how has it done after costs compared to its index?

Four: what does it cost to stop, sell, or move my money? And five: is there a cheaper index alternative? Watch how they answer that one. To be fair, some banks now offer cheap index funds or ETF savings plans of their own. If the total costs are low, that can be a perfectly good choice.

It's not about bank versus broker. It's about knowing what you pay. So: banks often offer their own, more expensive products. Ask about total costs in euros, commissions, and cheaper alternatives, and compare before you sign. What did your bank offer you?

Tell me in the comments. I read them all. If this helped, subscribe for more money videos made for Europeans. This video is for education, not financial advice. Thanks for watching.