Building Wealth During Studies

Personal finances
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The income limits for student financial aid are really low. What methods do you have for increasing wealth beyond the income limits, if full-time work and studying outside of aid are excluded? Student financial aid is probably the worst form of support for studying, as one can also study, for example, with earnings-related unemployment allowance. Other forms of support also have their own limitations, so all new and old students, regardless of the form of support, are welcome to share their experiences and ideas.

Here’s my formula for aspiring success:

  • student grants and general housing allowance together cover almost all rental housing costs
  • maximum student loan, all goes into investments
  • small-scale trading with an OST (OsakesÀÀstötili - Share Savings Account)
  • stocks for AOT (Arvo-osuustili - Book-Entry Securities Account) (preferably non-dividend payers) that I intend to hold at least for the duration of my studies
  • I don’t favor funds, only S-bonuses go directly into a fund
  • I do part-time work flexibly up to the student financial aid income limits, I can save part of my salary
  • all purchases with a Norwegian credit card, accumulating 1% CashPoints, so I can travel for free every one or two years
  • online gaming via Skrill:
    —poker has almost completely stopped, even though I used to get good results from tournaments
    —I bet daily, it’s easy to beat the house by utilizing risk-free bets and free bets from campaigns, providing a steady cash flow
    —casinos very moderately, I only play if I have an advantage over the house (e.g., deposit x return percentage + wager-free free spins), here one must be careful with oneself and maintain a strict line, small profits also come from these in the long run as long as one knows what they are doing
  • annual tax-free income from nature’s bounty, meaning I can sell some crayfish and, in a good year, also mushrooms; this would need other sources of income, cloudberry would be the best berry but good picking spots are far in the north

There would be enough time to earn more, but the income limits are an obstacle. I have been wondering if establishing an Oy (Osakeyhtiö - Limited Company) would be sensible for working during studies. Would it then be possible to work for the company during studies, but only enjoy the profits after graduation? Would this be an opportunity to get rich unnoticed by the income limits? Or would there be a better way to do this?

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Kysy & vastaa sijoittamisesta
Kysy & vastaa sijoittamisesta
Rahastot ja ETF:t sijoituskohteina
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Quick reply late at night:

I’m a master’s student myself and you’re thinking a lot of the same thoughts I’ve been through. I’ve supported myself for almost ten years with poker and accumulated enough assets that I’ve had to give up some benefits, which is only fair.

Time is everyone’s friend, especially in investment matters. That’s why it’s really great that you’re starting early. But on the other hand - if you’re in the fortunate situation where you’re hopefully studying your dream field, and in a good financial situation - I recommend traveling and enjoying life (along with good academic performance, of course). I ended up doing this after the first couple of years, when grinding ate up school time and I just had to earn and earn - now I focus on school and enjoy everything to the fullest.

Fill up your investment savings account (OST), various exchange-traded funds (ETFs), and even a little cash, and you won’t have to pay much in taxes or fear your benefits ending. Poker winnings in the European Economic Area (ETA) are tax-free, with lower limits around €10k or so. Do you mean to work so much alongside school that you’ll easily exceed that?

Founding a company is mainly a really good idea if you approach it from a learning perspective. The removal of the career counselor requirement and so on makes the decision even easier, although you must remember accounting costs and so on, if you don’t do them yourself. In small-scale operations, it’s easy, and growing assets for a company offers marginal tax benefits in certain situations. As for whether it’s worth the trouble for a few hundred euros a month - I don’t think so.

Overall, don’t worry about those benefits ending. You don’t have to pay anything - you just get less government support. Support that is primarily intended for those who otherwise wouldn’t be able to study. The student loan itself is already a gift, especially with its current compensation procedure.
P.S. We’ve seen people who work ridiculously hard alongside school and lose their student loan compensation because of it. Well, yes, a CV entry and so on, but that also depends on what they’ve done :blush:

P.S. Norwegian (Norski) is quite good, although for example, Finnair’s (Finski) card and 2p point accumulation are also nothing to complain about, although it costs €50/month. Especially if you happen to have Kesko’s better Plussa, you get those points with a good ratio to Finnair.

Edit:
If we’re talking about earning, it’s convenient through a company; all capital income and so on are within it and easily controllable for your personal taxation annually. I’ve also considered transferring from the real estate side to a company, but I haven’t decided on that yet. If you plan to invoice work through your own company, you should be extra careful and familiarize yourself with the law. That is, if the employer’s and your relationship remains the same, and you don’t work for example for several companies.
At worst, both you and the employer will face hefty fees :blush:

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3

In my opinion, it’s a bit unnecessary to start messing around with growing wealth too much during studies, as you’re unlikely to accumulate any huge pot anyway. There will be plenty of time to accumulate wealth in working life when the situation allows it better. But great nonetheless, if one has the energy to optimize wealth at this stage of life. However, one must also remember to live, not just maximize wealth. Otherwise, life might become boring. Or well, who am I to give such advice at a quarter-century old :smiley:
Anyways, I’ve done the following:
Full loans, as much as possible to the market.
Housing support.
Working in the summers.
Financial support for living from parents. (And yes, silver spoon in my ass, I know)

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4

The best investment is to graduate on time, or at least in a way that extra work doesn’t slow down graduation.

I did study something back then. In hindsight, I would have drunk even more beer and focused on accumulating social capital. Adult life with all its responsibilities isn’t always so fun, no matter how much money you have.

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Does the €1000/year tax-free limit also apply to benefits or just taxation?

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Edit: Let’s remove the story if the arrangement isn’t quite above board.

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I don’t think it did
 :I (I guess)

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8

Free education and student aid are a pretty unbeatable combo. Earnings-related unemployment benefit doesn’t allow full-time study, so studies would slow down if one wanted to receive it in full – of course, one would also have had to work to get it. Adult education support is the only form of support that combines full-time study and earnings-related benefit, but Kela does not pay it.

In my opinion, it’s worth having sufficient savings while studying, but don’t stress about getting rich. Whether you’ve managed to save a couple of thousand by pinching pennies during your studies doesn’t really matter, but one backpacking trip to Asia certainly would.

The best way to increase wealth is to study a field that leads to employment, build networks, save and invest student aid, and, if possible, graduate on time.

(For investments, I would personally favor index funds while studying.)

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Thanks for all the replies. I appreciate your opinions about prioritizing life and forgetting about unnecessary penny-pinching during your studies. I completely agree and would give the same recommendation to all young people. However, my situation is a bit different compared to the average student, so in that sense, the “categorization” wasn’t quite accurate for me.

I’m already studying my third profession, and I’ve gained more than enough life experience and stories to share at this point, having been an adult for over 14 years. I’ve lived in several places and even abroad, traveled independently for months at a time annually, etc. When you consider that I’ve worked full-time for only 7 months out of that period, and part-time for perhaps 4 years, I can be very satisfied with how much of the world I’ve been able to see. Although I’ve often sold off my belongings before longer trips, always returning to nothing. However, living hand-to-mouth has gone on long enough. My youth is starting to be behind me, but I definitely don’t regret my choices!

So, I don’t need student life; I’m ready to move forward in life. I will continue to travel, but a couple of weeks abroad a year will suffice. I’ve never engaged in unnecessary penny-pinching. Now, in my opinion, I live a luxurious enough life: a new but expensive rental apartment in a good location, significant investment in making my home comfortable, no skimping at the grocery store, I own everything I need and more. All purchases are only quality items, so there are practically no small purchases in sight for several years.

I’m studying remotely and working flexibly part-time. School takes maybe a maximum of 10% of my time, work 10%, and the rest is basically free time. However, internships will increase the weight of school in the future. Now, it would be possible to use the extra time to grow my wealth, but the means are relatively limited in this situation. An ASP account and buying an apartment have been considered, but a two-year saving period + two years in the same apartment isn’t appealing at this stage, as there’s no certainty of a job after graduation. I should have opened an ASP earlier so I could happily pay down the loan already while studying. Buying a holiday home would be more appealing if I could get a 25-year loan so the repayments would be small at these interest rates. Of course, it would need a good location and a plot on the beach so that it could also be easily sold off if necessary without major losses. This wouldn’t prevent ASP saving and buying an apartment in the near future. Does anyone know if there’s any connection between a holiday home and first-time homebuyer benefits?

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I didn’t have time to read it, but I suspect your idea was interesting. :grin:

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Kela will certainly regard all capital gains as income. However, this must be utilized every year if there is a buffer of one or two hundred in the income limits.

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One option would be to work alongside your studies. However, you’d need a flexible job, that’s a must. Let your studies stretch to 6-7 years, take out loans. Don’t stress about the compensation, which is very small compared to being able to earn that amount in 2 months otherwise. Plus, utilize the benefits of affordable student living. You’ll also understand schoolwork better with business experience in the background.

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It remained a bit unclear how capital gains affect housing benefit. Occasional capital gains from a regular brokerage account (AOT) do not affect housing benefit, but do occasional capital gains within a savings account (OST) affect housing benefit? Kela didn’t define this very precisely. If anyone has 100% certain information, please share.

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So all capital gains affect housing benefit. When applying for it, you have to declare your household’s income, etc., and you’ll receive support based on that. There are automatic deductions and some “reserve” amount that you can exceed from your declared information without having to report new income. Of course, within an OST (owner-occupied housing benefit), it doesn’t matter if you make 50k a day :blush:

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I don’t think KELA would approve regular capital gains even with an equity savings account. Why would they treat an equity savings account differently in their case, when dividends are also considered income even if you don’t withdraw them from the equity savings account?

https://www.kela.fi/ajankohtaista-henkiloasiakkaat/-/asset_publisher/kg5xtoqDw6Wf/content/uusi-osakesaastotili-vaikuttaa-osaan-etuuksista

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I think I messed up the situation a bit. I had read somewhere on a news site that capital gains would affect general housing allowance with an OST. However, this is not mentioned on Kela’s (Finnish Social Insurance Institution) website. So, it was fake news.

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Hmm. The question arises, why on earth are you still studying? Why don’t you go to work?
You’d have more money for investing, and you wouldn’t have to optimize with subsidies or anything like that. Investments often grow slowly over decades. So continuous investing is the best. If you try to make your investments grow ‘like a mad monkey’, you might succeed, but it’s very possible you won’t. None of us here has a philosopher’s stone. It’s easiest to talk about success, but many who haven’t done so well are silent.

Investing in an ASP account now within a couple of years is not a stupid idea at all because of the bonus interest paid on savings. In the long run, it’s not worth wasting your money on high rent, even if owning your own home isn’t the only right way to live.

Perhaps with your active lifestyle, the best thing would be to continue living as before and regularly put aside something you don’t need to check on. And then at some point, when you know what you want to do (for work) and where you want to live, then you dig out your savings/index investments/equity savings account portfolio of quality companies and make decisions according to the situation.

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I don’t know if this is the right channel for these types of questions, but how should one “game the system,” so to speak, with various student benefits while studying?

My studies at a university are starting in about a month, and it’s slowly started to feel like the Finnish government doesn’t want students to get rich in any way, but rather wants them to live on all sorts of benefits (I’m not surprised at all anymore why Finns prefer to lottery rather than invest, when everything is made so damn difficult). :roll_eyes:

In a way, I understand that one shouldn’t burn themselves out with work during their studies, but in my opinion, this taxation of capital gains (capital gains & dividend income) is incredibly stupid.

It’s probably worth mentioning that I essentially have all my investment assets in a stock savings account (osakesÀÀstötili), so funds must be completely ruled out, as I absolutely do not want to liquidate my stock savings account. I do also own an ASP account (ASP-tili) with some money in it; that’s diversification too, I guess.

Is buy & hold the only way to avoid unpleasant surprises with Kela (the Social Insurance Institution of Finland), when it seems that even capital gains within a stock savings account directly affect things like housing benefit?
Should I fill my portfolio with companies that don’t pay any dividends at all, meaning practically only US stocks :thinking:? I’m not really interested in selling off my portfolio either, as I own companies (all Finnish companies) that I genuinely want to own. The problem here (too) is that each of these companies pays some dividends (not insane percentages, of course), as we seem to be a dividend-hungry nation here in the Nordics.

Thanks in advance if anyone bothers to answer. :+1:

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Internal capital gains within an equity savings account do not belong to Kela (Social Insurance Institution of Finland) and do not affect benefits, so you can trade as much as you like. The only peculiarity is that dividends from an equity savings account are considered income.

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Those who are not on top of their own finances find themselves in unpleasant situations with Kela. Kela directly supports your studies in the following ways:

  1. Housing benefit (asumistuki) - you receive this year-round, but its amount gradually decreases if your income becomes too high.
  2. Study grant (opintotuki) - you mainly receive this for 9 months, but you can apply for additional months for the summer. This is recovered if Kela’s income limits are exceeded (Opiskelijan tuet | Henkilöasiakkaat | Kela).
  3. Student loan (opintolaina) - you can apply for €650/month yourself, for which the state provides a guarantee. You repay these later. Not mandatory, but an option nonetheless.
  4. Social assistance (toimeentulotuki) - you only receive this after you have taken out a loan and liquidated your assets. Avoid this by all possible and impossible means.

Generally, there is very little room for trickery with benefits: if you have assets, you only get two benefits, and the state knows how much it will recover from you if you decide to play tricks. There are no restrictions regarding the student loan: if you decide to take it out, you can use that money as you wish, and the state will not interfere.

However, with your investment style, you can lose quite a bit. If you receive capital gains from stock trading, it is counted as income. I tested this a few years ago when I had to return quite a bit of study support after selling hype stocks for a profit. Capital losses, on the other hand, you cannot deduct from gains, which is simply a middle finger to students. So you are on the right track with favoring a buy and hold strategy. Fund investing is also OK, as it does not produce dividends counted as income in your name (although if your wealth is even slightly lower, those dividends do not play a significant role in the big picture). Investing with an OST (OsakesÀÀstötili - Equity Savings Account) is also a viable option, to my understanding, although the dividends being counted as income, as @El_Nila mentioned, is noteworthy. ASP (AsuntosÀÀstöpalkkio - Housing Savings Premium) also falls into the same category. The most important thing, however, is that you should not open an AOT (Arvo-osuustili - Securities Account) and actively trade with it.

So how does a student accumulate wealth during their studies when Kela keeps a close eye on earnings and studies limit working? My formula is as follows: work almost up to the income limits + invest long-term + live frugally + study quickly. This way, I aim to maximize the amount of money I can set aside to grow with interest. This is achieved by the following means:

  1. Summer is for working. The summer months are the only time of the year when you can earn money without interruption. Therefore, I aim to work so much then that I get close to the €12,498 sum that one can earn while receiving study support for 9 months. Of course, I don’t reach that sum, but it doesn’t matter: it leaves room for dividend income and potential capital gains that may arise during the year.
  2. Returning benefits = unpleasant. It’s sad to say this out loud, but a student should not work beyond the point where they would have to return study support. At that point, the real earning level drops so sharply from the edge of the abyss that practically no paid work is worthwhile anymore. It is easier to aim for receiving full study grants and almost full housing benefits to finance student life. The income register (tulorekisteri) and stockbrokers’ own 9A reports are excellent tools for this.
  3. Life is not always abundant. Everyone’s lifestyle is their own decision, but I personally aim to live moderately and sparingly. This way, more is saved. However, this is entirely up to you, and you should also consider how much you want to struggle in your youth.
  4. Focus on studying. Dealing with Kela is inherently frustrating, so you don’t want to prolong receiving benefits. The faster you graduate, the less time you have to think about the profitability of working in the jungle of benefit limits.
  5. Do not sell stocks on light grounds. If you happen to have expensive stocks in your portfolio, selling might feel tempting. But every euro of capital gains reduces the amount you can earn for your own use without getting into the benefit roulette. This has become particularly familiar to me recently.

Finally, a piece of advice: you should also not completely optimize your earnings. For some, that exchange year can be one of the best moments of their lives, and sometimes the summer can be used for something other than working long days in a summer job. I myself have, contrary to these principles, accepted an internship position because it will be greatly beneficial in the future. However, I wanted to list a few basic things that can help one review their own situation and think about investing differently during studies so that earnings do not immediately lead to problems with Kela.

If you have any further questions, I’ll be happy to answer. :slight_smile:

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