Let’s have a deeper look at the components of our pricing and how it’s a fairer deal for customers.
How do we set the portfolio targets?
The indicative portfolio gain target is set based on your selection of risk and investment's time period. A longer investment period and higher risk tolerance indicate a higher growth target, which means a larger proportion of stocks in your portfolio.
Our targets are based on the assumption that the average annual growth of bond ETFs is 2% and sustainable investments ETFs is 8%.
If we consider S&P500 to be the benchmark for the stock market and individual portfolios, we can see that the average annual return since adopting 500 stocks into the index in 1957 through 2020 is roughly 8%.
As of October 2020, the 10-year US Treasury bond yield is 0.85% and the German Government bond is -0,64%.
What’s the monthly fee?
We charge a €3.90 monthly fee to cover all operational, holding and transaction expenses that occur in the process of investing your money into sustainable instruments.
This means that you never have to incur any additional transaction costs.
To help people get started with sustainable investing on Grünfin, you don’t have to pay any fees until your portfolio reaches €1000.
How does it compare to other services?
Some investment products charge a percentage of your assets, meaning that the higher the value of your portfolio, the more you’ll pay every year.
We charge a flat fee, which means that the higher the value of your portfolio, the less you pay on a relative basis.
How does the success fee work?
Most financial institutions and banks charge a percentage of your total assets as their fee regardless of how your portfolio is doing. We designed our pricing model to depend on the performance — so we’re always on your side.
When you create your personal portfolio, we set an indicative gain target (see above). This becomes the threshold for our success fee, meaning that if the gain target for your portfolio is 50% and we don’t exceed the target, we charge no fee on the actual gain. If your actual gain exceeds 50%, our success fee will be 15% of the amount that is above your gain target.
An example of our success fee
Let’s assume you pay €200/month over 10 years (total payments of €24,000) with the indicative gain for your high-risk portfolio set at 50% (€12,000). Therefore, the indicative value of your portfolio by the end of the period is €24,000+€12,000=€36,000.
If the value of your portfolio by the end of the holding period does not exceed €36,000, you will pay no success fee.
However, in a positive scenario when the value of your portfolio reaches e.g. €40,000, reaching above the target by €4000, our success fee will be 15% of €4000 – that's €600.
So in this example, you end up paying a success fee of €600 on a portfolio valued at €40,000, and 0€ if it's €36,000.